Here’s what’s often left out when discussing the spending of Mikhail Prokhorov and the finances of the Brooklyn Nets: This is a much bigger play for him than just the team. This is a real estate deal.
In addition to the majority of the Nets Prokhorov owns 45 percent of the Barclay’s center and has the right to buy up to 20 percent of the surrounding Atlantic Yards development (worth an estimated $4 billion and increasing). This is why reading into the money lost by teams in a year-over year basis gets convoluted, owners have their hands in a lot of pockets.
But the Nets basketball operations are bathed in $144 million of red ink and are screwing with the NBA’s profit/loss curve, reports Zach Lowe at Grantland.
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.
Again, that is basketball operations, it does not include any money Prokhorov makes with his other hand on the Barclay’s Center. Still, that is a whopping amount of red ink.
Prokhorov reportedly has ordered a round of belt tightening, which is understandable (and tied to making minority owner Bruce Rattner’s minority share that is for sale look more attractive, Lowe reports). But all this red ink starts with the Russian oligarch himself — he ordered Billy King to put together a big roster that could “open” the Barclays Center and win games. Doing that means thrashing future assets and spending. Billy King has his flaws as a GM but here he was the good employee following company orders.
However the NBA is not the Barclays Premier League — a Russian billionaire cannot just come in and buy players and get his team a title. Not the way it works in a salary cap world.
The Nets may have upgraded their coach if they bring in Lionel Hollins as expected. But If they are really serious about winning it’s going to take some better roster management, not squandering of resources.
And that will help the bottom line, too.