Alibaba co-fonder Joe Tsai will gain both full control of the National Basketball Association’s Brooklyn Nets and the Barclays Center in a record-setting deal officially announced Aug. 23.
In a move strongly rumored for several days, Tsai will gain the 51 percent of the Nets he didn’t already own from Russian billionaire Mikhail Prokhorov. The agreement, however, will also involve control of the Brooklyn, New York, arena in which the Nets play.
Financial terms were not disclosed. But industry sources said the Nets franchise was valued at $2.35 billion in the deal, a figure that would set a new record for the most expensive team sale in US pro sports history. The Barclays Center added roughly another $1.15 billion to bring the full value of the deal up to about $3.5 billion, including debt.
The deal represents a two-year acceleration on an option Tsai to gain the 51 percent share of the Nets by 2021.
“I’ve had the opportunity to witness up close the Brooklyn Nets rebuild that Mikhail started a few years ago,” Tsai said. “He hired a front office and coaching staff focused on player development, he supported the organization with all his resources, and he refused to tank. I will be the beneficiary of Mikhail’s vision, which put the Nets in a great position to compete.”
The Nets’ reviving fortunes, marked in part by reaching the playoffs last season for the first time in four years, were also lifted this summer by the acquisitions of free agent stars Kevin Durant and Kyrie Irving.
As part of the Tsai transaction, current Nets chief executive Brett Yormark will leave the team after 14 years following a transition period to the Tsai-led ownership. Yormark, a key figure in the Nets’ relocation from New Jersey and rebranding in Brooklyn, will announce in the coming weeks his next career move.
The deal represents a massive financial windfall for Prokhorov, originally purchased the Nets in 2010. In his initial deal for the team, he gained an 80 percent share of the Nets and 45 percent of Barclays Center for $223 million, the assumption of $160 million debt, and $60 million in operating costs for two season in New Jersey before the team moved to Brooklyn. Five years later, he then acquired the remaining shares of the Nets and the arena, with the franchise valued then at $875 million, and the Barclays Center valued then at $825 million.
“The team is in a better place today than ever before and I know that Joe will build on that success,” Prokhorov said.
The deal requires NBA Board of Governors approval, though that is a foregone conclusion since Tsai was already vetted and approved when he first become a Nets co-owner. The transaction is slated to close by the end of next month.
And Prokhorov said regarding Yormark’s pending departure, “Brett had always made it clear to me that when the arena and team sold, he would move on and begin his next journey.”