NY Post: Prokhorov preparing to sell arena (operating) company to Nets (eventual majority) owner Tsai
The New York Post's Josh Kosman and Brett Cyrgalis had a scoop last night, Joseph Tsai in talks to buy Barclays Center, become majority owner of Nets:
The price of the Barclays Center deal was not mentioned, but, given the NBA preference and the history of arena financial underperformance, it's not like Prokhorov has much leverage. So it'll be interesting to see if the valuation exceeds $825 million, which was attached to the 2015 deal Prokhorov made with former 55% majority owner Forest City Enterprises, which similarly lacked leverage. (Now, more than three years later, the amount of debt factored in should be lower.)
A Post update noted that "A spokesman for Barclays and the Nets disputed this story, declining to give further details." That's standard practice, to dispute the story even if only a detail is off, rather than the big picture, because they're--duh--not authorized to discuss it publicly.
Note: Prokhorov's BSE Global (formerly Brooklyn Sports & Entertainment) owns the Barclays Center operating company, as I wrote for City & State, given that the arena's nominally owned by New York State, to enable tax-exempt financing. Also, Nassau County owns the Coliseum; BSE owns the operating company.
Multiple motivations
From the Post:
Joseph Tsai, the billionaire co-founder of Alibaba, is in talks to buy Brooklyn’s Barclays Center and the new Nassau Coliseum in Uniondale from Russian billionaire Mikhail Prokhorov, The Post has learned.The Taiwanese-Canadian Tsai has already bought 49% of the Brooklyn Nets, and is expected to buy the rest, at a valuation of $2.35 billion, by 2021. The NBA likes having the ownership of teams and arenas aligned.
The price of the Barclays Center deal was not mentioned, but, given the NBA preference and the history of arena financial underperformance, it's not like Prokhorov has much leverage. So it'll be interesting to see if the valuation exceeds $825 million, which was attached to the 2015 deal Prokhorov made with former 55% majority owner Forest City Enterprises, which similarly lacked leverage. (Now, more than three years later, the amount of debt factored in should be lower.)
A Post update noted that "A spokesman for Barclays and the Nets disputed this story, declining to give further details." That's standard practice, to dispute the story even if only a detail is off, rather than the big picture, because they're--duh--not authorized to discuss it publicly.
Note: Prokhorov's BSE Global (formerly Brooklyn Sports & Entertainment) owns the Barclays Center operating company, as I wrote for City & State, given that the arena's nominally owned by New York State, to enable tax-exempt financing. Also, Nassau County owns the Coliseum; BSE owns the operating company.
Multiple motivations
From the Post:
By buying Barclays, it will be easier for Tsai to buy the Nets because the NBA likes its owners to own the arenas where their teams play, sources said.Not only would Prokhorov lower the costs of ownership, but NetsDaily observed:
It also lets Prokhorov, who Forbes estimates is worth $9.8 billion, sell Tsai his 51-percent stake in the Nets ahead of schedule, a high-ranking sports executive familiar with the talks told The Post.
A sale to Tsai would be embraced by the NBA, which is anxious for him to take control of the Nets so he can help them grow in China, sources said. Tsai is a member of NBA China, which conducts league business in that country, even though he doesn’t yet control a team.
The Post did not discuss Prokhorov’s motivation in selling the team but other Russian oligarchs have been sanctioned by the Trump administration, limiting their ability to operate US-based businesses. Although Prokhorov has not been sanctioned and there’s no indication any such action is imminent, the threat remains.Then there are the financial opportunities for players:
Will reports of @joetsai1999 accelerating his control of Nets prove a distraction? Doubt it and remember this: Nets players, current and future, will have enormous endorsement opportunities and not just in China but throughout Asia. Another plus in recruiting free agents.— NetsDaily.com (@NetsDaily) March 29, 2019
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