Analysis, News

Forbes: The Brooklyn Nets, The 7th-Most Valuable Franchise

Forbes released their NBA franchise values for 2016. After shock and awe, it was revealed that the Brooklyn Nets are ranked as the seventh-most valuable franchise in the NBA. Their worth is estimated at a whopping $1.7 billion.

I understand that this team is 11-31 and at times look as exciting as two dead flies smashed, but that is on the basketball floor. This is the business side of the team. After reading this, you learn that Adam Silver is running a league that is so wealthy at times, you would think the NBA printed their own money.

The New York Knicks own the top spot at an unbelievable $3 billion (which is amazing considering they are .500 and coming off their worst season in history last year), followed by the Los Angeles Lakers (now you understand why Kobe Bryant is worth that contract), the Chicago Bulls (they are still collecting coin from the Michael Jordan days), the Boston Celtics, the Los Angeles Clippers, and the World Champion Golden State Warriors.

Here’s an excerpt from Forbes:

Mikhail Prokhorov, through his Onexim Sports & Entertainment bought the 20% of the Nets and 55% of the Barclays Center from Bruce Ratner that he didn’t already own. The Nets have struggled to draw fans to Barclays with attendance ranking among the bottom three halfway through the 2015-16 season.

Forbes also notes that the Brooklyn Nets have a revenue of $220 million. That sounds very impressive until you get to the other side of the equation. Forbes estimates the Brooklyn Nets at a operating income of minus-$5.7 million. This loss is linked directly to the NBA luxury tax that Mikhail Prokhorov was all but willing to pay for his “shortcut” to winning in the NBA.

Yes, folks, that is a loss. The Brooklyn Nets are the only team in the NBA that is losing money on an operating basis. The other teams are turning a profit, while the Nets are in the red on their income statements. Let’s put this in proper perspective…

The New York Knicks are far more valuable a franchise than the Nets, but they far out earn the Nets as well. The Knicks, led by owner James Dolan, turned in a cool $108 million dollar profit according to Forbes. Remember the back and forth insults between the two owners? Well we can see who got the better of this financial battle. To quote the Wu-Tang Clan

Cash Rules Everything Around Me…Cream get the Money…Dollar Dollar Bills y’all!

To billionaires, they can still sleep at night and just wake up to fire certain head coaches and reassign general managers. To you and me, that means we are broke.

Here’s how we crunch the numbers… it can be as confusing as Lionel Hollins’s basketball decisions this year.

Mikhail Prokhorov recently closed the deal, buying out Bruce Ratner and his partners, which included Jason Kidd and Milwaukee Bucks owner Marc Lasry (See? I told you this was confusing!). Now Prokhorov has complete control of the Brooklyn Nets and the Barclays Center. Prokhorov expanded his sports portfolio by owning 85 percent of the Nassau Coliseum, where the NBA D-League team, the Long Island Nets, will play starting in 2017-18.

According to reports, the Brooklyn Nets are worth $875 million and the Barclays Center commands $825 million.

There will be many reasons that will leak out about the “reset” of the Brooklyn Nets. Some are legit and some are just rumors. But make no mistake here, there were financial reasons behind this move.

The NBA is about that money. Adam Silver is the landlord to 30 mansions in a neighborhood called the National Basketball Association. There is no way Mikhail Prokhorov could have bought the Brooklyn Nets outright, in my opinion, without Mr. Silver giving out marching orders on how this team needed to improve in the front office and on the financial ledger. The reason Lionel Hollins lasted as long as he did was because the final touches were being done on the deal for full ownership by Mikhail Prokhorov. The NBA is a powerful league, but it is considered embarrassing to the league for a team to be in the red while competing with the king of sports leagues, the NFL. With a team with no future draft picks and dwindling attendance, it was approaching New Jersey 2.0, and Mr. Silver was not having it.

Things are not all gloom and doom for the Nets. Forbes’ Chris Smith did report that Prokhorov has done all he can at maximizing his investment over all of the other billionaires. This billionaire list does includes James Dolan. But that’s just like losing a fight and saying that you got one good shot in.