Tuesday, March 25, 2014

Geopolitical pickle: Nets owner Prokhorov pursues unprecedented effort to move team under a Russian company

So, the Russian savior of the Nets, who has a cordial relationship with President Vladimir Putin and is own political ambitions, is caught up in a bit of a geopolitical pickle, yet unresolved, an unprecedented effort to move the company owning the team overseas. 

Less than two years after taking the New Jersey Nets over the Hudson River to Brooklyn, billionaire owner Mikhail Prokhorov is planning a longer move: to Russia.
No, they won’t play their home games there, but Prokhorov is planning on putting the basketball team under the control of one of his Russian companies. The move would help Prokhorov fulfill President Vladimir Putin’s request that Russian-owned overseas companies be registered locally and pay taxes to his government. Prokhorov told reporters in the Kremlin yesterday that such a transfer would comply with the National Basketball Association’s rules.
That also would ensure the Nets weren't subject to economic sanctions against Russia after the country annexed Ukraine’s Crimea peninsula.

Reuters reported yesterday Brooklyn Nets Owner Will Bring Club Under Russian Jurisdiction:
"A Russian company will own the basketball club," Prokhorov said before receiving a medal for services to Russia along with other national sports officials.
"This (move) does not violate any NBA (U.S. National Basketball Association) rules and I will bring it (under Russian jurisdiction) in accordance with Russian law."
NBA pushback

But the above articles were a bit conclusory. The New York Times this morning reports, in N.B.A. Denies Clearing Nets to Become ‘Russian’, that the NBA says, contra Prokhorov, that it hasn't given him approval to move the Nets’ ownership:
“The Nets are owned by Mikhail Prokhorov through an American-based company,” Michael Bass, an N.B.A. spokesman, said in a statement. “We have received no application nor is there a process underway through our office to transfer the ownership of the Nets to another company.”
Any transfer of ownership must be vetted within the league and approved by at least 23 of 30 N.B.A. owners. Prokhorov’s application to buy control of the Nets took eight months for approval.
An application to transfer the Nets to Russian ownership would be treated as seriously as the sale of a team.
The importance of a local domicile

Sports consultant Marc Ganis told the Times: “There are two distinct issues here: ownership by a foreign entity or person, and ownership by the team that is domiciled in a foreign location. There is no rule against foreign ownerships, but there are rules against foreign domiciles of a franchise. Owning a team is not like owning a business; it’s owning a franchise in an association that is in the United States.” 

Ganis told the Daily News there was no precedent in American professional sports for a league allowing a franchise’s business operations to go overseas.

“I would expect that the only way that would be approved by the league is an agreement whereby the entity agrees that all legal matters are settled according to U.S. laws,” he said. “The association has to be able to have legal recourse for any actions related to the franchise.”

Update: a response from Onexim

The Brooklyn Game reports that U.S. ONEXIM Sports and Entertainment, Prokhorov's company that owns 80% of Brooklyn Nets, released this statement this morning:
“Preliminary discussions with the NBA were held in spring, 2013 and, at that time, the League indicated its willingness to work with us in the event we needed to reregister the ownership vehicle of the Nets as a Russian entity to comply with the Russian law regarding candidates for political office. This is a long process which may or may not come to fruition and nothing is imminent. Of course, no steps in this direction could or would be taken without the full knowledge and approval of the NBA. ”

2 comments:

  1. Anonymous11:18 AM

    All politics might be local, but not necessarily local to Flatbush and Atlantic.

    It is unfair to link Prokhorov to Putin just because you don't like the Barclay's Center. I've never seen their relationship described as "cordial" anywhere but here. Prokhorov's all but announced his attention to challenge Putin for the presidency, which tends to annoy strongmen who scoff at the rule of law.

    Maybe you have access to information I don't, but my impression has that because Prokhorov doesn't want to be thrown in jail on trumped-up charges, he walks on eggshells when it comes to Putin, but that the two are definitely enemies. Nonetheless, I was happy to see Prokhorov's positive comments about gay rights, despite the fact that Putin must have been unhappy about it.

    At any rate, unless you can supply a link backing up your claims, it seems and gratuitous to mention the Crimea in this post, and myopic to dismiss the most viable challenger to a strongman who has a nuclear arsenal and is unwilling to obey international law over unrelated land use concerns half a world away.

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  2. Here's the FT on "cordial": http://www.ft.com/intl/cms/s/0/9faecdd2-24c8-11e1-ac4b-00144feabdc0.html#axzz2xMjzyOFk

    Here's TIME on Crimea sanctions possibility: http://time.com/36577/nba-brooklyn-nets-russia-ownership-crimea-sanctions/

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