$223 million isn’t cool. You know what’s cool?
News broke yesterday that Mikhail Prokhorov had reportedly secured wealth management group Evercore to help him facilitate a potential sale of the Brooklyn Nets. There had been rumblings for some time that Prokhorov was looking to get out, and he himself had acknowledged he’d been speaking with others about minority shares when he spoke with the NBA media at the beginning of the year.
Prokhorov bought 80 percent of the Nets and 45 percent of Barclays Center for $223 million back in 2010, and he’s set to make an enormous profit on that now should he decide to sell only his Nets stake. The NBA welcomes its new $24.9 billion TV deal in a couple of years, and disgraced former owner Donald Sterling sold the Los Angeles Clippers — a the secondary team in valuation in Los Angeles’s primary market, like the Nets in New York City — recently sold to Steve Ballmer for $2 billion, which I’m told is a lot of money.
So what’s the next price? Certainly not under $1 billion, and maybe above $2. According to Robert Leib at Leib Advisors, who spoke with the New York Times, the Nets could sell at “crazy levels” above the Clippers price tag:
“You’re dealing with an asset that is exceptionally rare,” said Robert Leib, a principal at Leib Advisors, a financial consultant to the sports and entertainment industries. “It could go well north of the Clippers’ price; in an auction situation, it could go to crazy levels.”
Leib suggested that an available team in New York could lure bids from wealthy people who would view a purchase as “one of the last great ways to shield taxable income.”
Selling the team might be Prokhorov’s last chance at making money on it — they lost $144 million in basketball-related operations last season, and they’re deep in the luxury tax for the third straight year, which would trigger the repeater tax in 2015-16. Their front office has been working to unload at least one of their bigger contracts before the February trade deadline, with the team sinking and needing to cut costs.
New York Times — Mikhail Prokhorov Is Said to Be Seeking Potential Buyers for Nets