Report: Joseph Tsai, co-founder of Chinese site Alibaba, to buy 49 percent of Nets

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The NBA and Joseph Tsai have been flirting for a while. The co-founder of powerhouse Chinese shopping website Alibaba has had interest in buying all or part of an NBA team, and the NBA loves the idea of expanding its reach into China.

It’s no longer flirting — Tsai is going to buy 49 percent of the Brooklyn Nets (and likely eventually the entire team), reports Zach Lowe and Adrian Wojnarowski of ESPN.

Joseph Tsai, the executive vice chairman and co-founder of Chinese e-commerce goliath Alibaba, has reached an agreement in principle to purchase a 49 percent minority stake in the Brooklyn Nets that includes the option to acquire controlling interest of the NBA franchise in several years, league sources told ESPN.

The purchase price will be based upon a $2.3 billion valuation of the team, league sources said.

Mikhail Prokhorov will remain principal and operating owner of the Nets for an additional four years, with a presumption that he will sell his majority stake upon the triggering of Tsai’s option, league sources said.

First off, that valuation — for a team that has struggled both on the court and to generate deep excitement from fans in the region — is eye-popping. That is more than the Rockets just sold for ($2.2 billion), and that factored in the building, Tsai is buying just the team, not the Barclay’s Centre. Prokhorov retains control of the building (there were some around the league who always thought this was more a real estate move for the Russian billionaire than it was about owning an NBA team, he also is involved in development around the Barclay’s Centre).

What Tsai will not have is a say over basketball operations. Well, not a final say, he will have his voice heard. The Nets are just starting a long rebuild process under GM Sean Marks, one where he had few assets to begin with thanks to decisions of the previous regime. It’s going to be a long process that will require patience, but Tsai is reportedly on board with that.

Tsai is paying all that money for a team that, according to a leaked NBA report, lost $23.5 million a season ago. Tsai is making a bet on the rise in franchise valuations for NBA teams to keep going up (and for better lease and local television deals in the future to help with that bottom line).

Tsai was born in Taiwan, is a Canadian citizen, and went to college at Yale. Prokhorov had worked to position the Nets as one of the NBA’s biggest international teams, and that certainly will continue.

For the NBA, this is potentially huge. Prokhorov has been looking to sell part of the team for a while, and he struck a deal with one of the richest men on the globe. You can be sure between that and the franchise valuation a lot of owners are seeing dollar signs in their eyes this morning.