Friday, July 04, 2014

Catching up on Jason Kidd: it's a business. The larger context is the Nets' huge losses, by far the most in the league.

In Grantland, NETW3RK wrote 7/3/14 Why Jason Kidd’s Move to Milwaukee Is Business as Usual
“This is a business, I think Billy said it best, and that’s what it comes down to.” —Jason Kidd
Jason Kidd’s career path is littered with the bleached bones of various teammates and franchise personnel who had the misfortune of having career ambitions that ran counter his. A quick list of people who at one time or another (allegedly) found themselves on the short end of Kidd’s basketball intrigues: Cal coach Lou Campanelli, Mavs teammate Jim Jackson, Lawrence Frank (twice), Rod Thorn, the Barclays Center mop person, Mark Cuban, Billy King, and now ex-Bucks coach Larry Drew (not to mention his staff), whose next stop is probably the fired-coach unemployment sinecure known as NBA TV.
...So, while Kidd’s attempted power grab and subsequent move to Milwaukee is certainly a distasteful display of unvarnished asshat ambition, it is not without precedent. And, anyway, it’s Jason Kidd! What, exactly, did we expect would happen?... After all the shit Kidd has done over the course of his career — the backstabbings, the petulance, the broken verbal agreements, the drunk driving, the spousal abuse, the faked migraines — Kidd had built up goodwill JUST BY WINNING A FEW BASKETBALL GAMES. It’s a business; a results business. Wins will wash away all sins.
The longer story

Zach Lowe, in Grantland Exclusive: The Jason Kidd Mess Has a $144 Million Price Tag, reported that Kidd in December raised questions about GM Billy King with the Russian ownership, and did not at first try to get the job himself.

"Kidd may well develop into a great coach," Lowe wrote 6/30/14. "He was a genius player, and he was creative in both the regular season and the playoffs."

The larger context of losses

Lowe writes that the Nets, despite their enormous jump in valuation, are losing money thanks to their huge payroll:

This is all unfolding within the broader context of the Nets’ organization. Bruce Ratner, a longtime Nets higher-up, is open to selling his minority stake in the team, and the New York Post reported last week that Mikhail Prokhorov, the team’s principal owner, would like to cut costs and scale back spending to make that minority stake more appealing.
That’s a valid concern. The basketball side of the Nets’ business is projected to have lost $144 million over the 2013-14 season, according to a confidential memo the league sent to all 30 teams in early June. (Grantland has reviewed and verified the memo with a half-dozen sources.) If that strikes you as out of whack, that’s because it is.
The NBA expects nine teams will end up having lost money once luxury-tax distribution and revenue-sharing payments are finalized. The Nets, with that monster $144 million figure, are the biggest losers. Next in line? The Wizards, with projected losses of about $13 million. That’s right: The Nets lost $131 million more than any other NBA team last season. This is what happens when you pay $90 million in luxury tax for an aging roster and play in a market so large you are ineligible to receive any revenue-sharing help.
It’s important to note that the figures here stem from basketball activities only, and do not appear to include benefits the Nets and Prokhorov get from their ownership stake in the Barclays Center. And Prokhorov, of course, is heli-skiing levels of rich. But taking a $144 million bath when the rest of the league is swimming in profits does not sit well.
This is a bit of an uneasy time in Brooklyn. The roster King built drove those losses, but ownership’s desire to win right away upon the team’s move to Brooklyn drove those roster-building decisions. The team is tossing away more than $1 million every year on [fired coach Lawrence] Frank, and it’s unclear why the front office signed Frank to a six-year contract with escalating year-over-year salaries — a longer deal than either Kidd or King have.
Prokhorov cutting spending?

The Post article noted that Prokhorov wanted to cut spending so, when Bruce Ratner and fellow investors sell their 20% share, they will reap at least $200 million and the results will reflect a $1 billion valuation.

However, there's an approximately 20% discount for minority shares, and buyers may not want to help cover the team's losses. The Post suggested the losses were about $50 million, far less than the seemingly authoritative Grantland number.

Prokhorov, in an effort to ensure a solid number of the sale, also can promise to absorb some or all of the losses. The billionaire can surely afford it.

And in the long run, the valuation of the team reflects a huge gain for Prokhorov, which earlier this year was estimated by Forbes to be worth $780 million, itself a huge jump.

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