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Prokhorov's Nets success: "incredible intuition," luck, or something of both?

You can't completely trust the machine translation of a 12/19/19 Forbes Russia profile of former Brooklyn Nets owner Mikhail Prokhorov, but the title seems pretty close, Billionaire with incredible intuition: how Prokhorov manages to go into the cache over and over again and what he is passionate about right now.

Prokhorov, smart and lucky (and connected, which gave him the base for wealth in a corrupt country), managed to get rich(er) from selling two companies, Norilsk Nickel and Polyus Gold, before the respective markets collapsed.

And he (via his Onexim Group) bought into the New Jersey Nets--thanks to a connection from NBA Commissioner David Stern--when the team was cheap. As the team value role, thanks to the league's new business deals--labor, TV, streaming--and the Nets' move to Brooklyn, Prokhorov looked to sell:
“We realized that there was a reassessment of the NBA teams,” says [Prokhorov deputy Dmitry] Razumov. The second factor, according to him, was the general uncertainty in world markets: “We actively did not offer a team to anyone, but in 2015–2016 we thought that if there was an interested buyer, we would consider selling part of our package in order to take profit and stay in the risk-free zone. " In 2017, investment bankers hired by Prokhorov told Razumov that billionaire Joseph Tsai was interested in buying the NBA club.
"We have increased the fan base, increased revenue by 4-5 times," Razumov told Forbes. Still, the team's revenue, as a percentage of value, is less than that of other teams. No wonder Prokhorov took Tsai's $2.35 billion offer.

The article quotes Razumov as scoffing at a New York Post article that said Prokhorov was looking to sell the Nassau Coliseum operating company. "The arena is a nice, good asset that we continue to develop,” he said.

Or, perhaps, the arena will be cannibalized once a competing venue opens up at Belmont Park, becoming the home of the New York Islanders.

Doing the math?

NetsDaily summarized it by suggesting Prokhorov may have made a profit of $2 billion on the sale of the Nets and the Barclays Center operating company, despite expenditures (like a new training center).

I think that's over-optimistic, but there was a headlined Luck or calculation? How Mikhail Prokhorov earned $2 billion on Brooklyn Nets, by Forbes contributor Pavel Danilov, a former Onexim (non-basketball) employee, who acknowledged, "Possible inaccuracies in the data are the actual costs of building the arena, the club’s net losses (only operating profit data is open)." Also, that doesn't go into arena operations.

Danilov cited multiple factors, including the NBA market, the Brooklyn move, and, crucially, the investment cycle, at a time when "technology entrepreneurs and financial tycoons" have been bidding up prices for teams.

He writes, again in machine translation:
If we talk about the contribution of each value driver, then, in my partly subjective assessment, of the $2 billion increase in the value of the Brooklyn Nets team, $500 million (25%) brought market growth, $600 million (30%) were the right decisions of the management and investor, and the remaining $900 million (45%) is an increase in the multiplier between the moments of entry and exit.
He cites the success of creating a brand in Brooklyn, working with Jay-Z and Forest City Ratner, as well as good timing in buying the team, and good luck in seeing team values rise.

He muses, "It is interesting that the team’s sports results did not become a negative factor for the investment result." Indeed, as Tom Ziller wrote in SB Nation 8/14/19, Mikhail Prokhorov was a total failure running the Nets, except in the way that counts.

More on the back story

NetsDaily, citing TASS, reported 8/21/19 that Prokhorov looked at the New York Knicks, who sought a "bizarre sum," and the Phoenix Suns before pursuing the Nets:
“Prokhorov started toying with the idea of purchasing an NBA team back in 2007,” said [Sergey] Kushchenko who was his GM at CSKA Moscow and member of the Nets board. “And in 2008, during the Summer Olympics in Beijing, we were already holding negotiations on this issue with NBA Commissioner David Stern.
A reflection from Prokhorov:
“A small, but very significant crowd of Brooklyn community organizers were dead set against dismantling the rusty railways and old buildings to clear the area for the construction of the future arena, but the price of the deal was really appealing,” Prokhorov said. “I recall gaping at the construction site, which was simply a huge excavated pit, and hoped that everything would turn out to be all right in the end.”
Yup, that was it.

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