The Business of the Nets: Finding Reasons to Believe
With a new co-owner, young talent and an uptempo style of play, the rebuilding Brooklyn team is sparking optimism
Nets star D'Angelo Russell puts up tenacious defense against Isaiah Taylor of the Atlanta Hawks in October. The Nets won, 116-104. (Photo by Noah K. Murray/USA TODAY Sports/Reuters)
It has been about ten days since SI.com extolled in a headline “Don’t Look Now, But the Nets Are Fun Again.” At the time, the team was 3-2 with a solid win at home against LeBron James and the Cavaliers.
It would have been understandable to expect the worst this season. The Brooklyn Nets ended last year in the basement of the Eastern Conference and the worst record in the NBA with a paltry 20 wins. Then, in the first game of the season, the only player a casual Brooklyn fan would have heard of, point guard Jeremy Lin, was lost to a season-ending injury. With him, one might expect, went a healthy amount of optimism … and ticket sales. Still, three wins in five games earned them that Sports Illustrated headline.
Then, in a return to last year’s form, came four straight losses to the Knicks, Nuggets, Suns and Lakers. Today the Nets carry a record of 3-6 and sit in third-to-last place in the Eastern Conference.
Still, there may be hope. It’s early, they aren’t quite in the basement again, and a 33-point game from D’Angelo Russell on Halloween (the loss to the Suns) offers at least a glimmer of hope that coach Kenny Atkinson’s recipe of youth mixed with high-octane offense might make some noise.
The ownership had better hope so. Through their first five home games, the Nets are averaging the third-worst attendance in the NBA: just 15,116 per game, leaving about 3,000 empty seats. All of which might help explain that the most exciting thing out of Atlantic and Flatbush of late is the news that Alibaba co-founder and vice chairman Joe Tsai has agreed to pick up a 49% minority stake in the team along with an option to take a controlling interest in 2021. Russian billionaire owner Mikhail Prokhorov will maintain his control until then and will continue to be in charge of basketball operations as well. Tsai, as a minority owner, will not affect what you see on the court. For now.
Lofty Valuation
The deal to bring in Tsai has the team valued at $2.3 billion, beating the previous NBA record of $2.2 billion, the price billionaire and Landry’s Restaurant CEO Tilman Fertitta paid for the Houston Rockets earlier this year. This further proves the hypothesis that there is no such thing as a bad investment in the four major sports leagues anymore. According to NBA financials outlined in this ESPN article, the Nets lost an eye-popping $144 million in 2013-14 and $23.5 million last year. Its local TV deal and local revenue ranked in the same place as the team last year: Dead last. Yet still, that valuation!
Not part of the deal is the ownership of the Barclays Center itself. That will be retained by Prokhorov, while the team is expected to settle in for the long haul with a new lease to be negotiated soon.
Joseph Tsai, who is acquiring a 49% share of the Nets team (Photo courtesy of Alibaba Group)
Who is Joe Tsai?
Joe Tsai was born in Taipei, Taiwan, and was educated in New Jersey (Lawrenceville Prep) and Connecticut (Yale). In 1999 Tsai, along with Jack Ma and 16 other co-founders launched the Chinese online shopping service Alibaba with $25 million in investments from the likes of Goldman Sachs and Softbank. Eighteen years later the company, traded on the New York Stock Exchange (symbol: BABA), sports a market capitalization of nearly $480 billion.
As for Tsai, the Brooklyn Nets won’t be the first sports team he calls his own. Tsai played lacrosse in both high school and college and announced this summer that he would bring a new team to the National Lacrosse League (an indoor league), the San Diego Seals.
NBA in Asia
The NBA as a league must be excited to have Tsai on board. His strong ties to Asia will certainly come in handy as American sports grow in prominence across the Pacific.
The NBA is now the most-followed sports league online in China. During last year’s playoffs, Weibo, a major social media platform there, reported 2.9 million video views as Steph Curry and the Warriors made their run to the championship. The Warriors responded with a week-long trip there last month before the season began, including several preseason games.
Weibo’s parent company, Tencent, is in the middle of a five-year deal for the Chinese digital rights to the league’s games and other content, worth $700 million.
Barclays Center, packed in the early days after it opened, is averaging about 3,000 empty seats when the Nets play (Photo by jadeylouisewoodfield/Stockimo/Alamy)
Finding a Way to Win Again
Still, back home in Brooklyn, all this doesn’t mean much unless the Nets can find a way to win again. With only the Bulls and Hawks sporting a worse record in the Eastern conference, it seems it will take more than the solid play of Russell to get the job done. There’s plenty of room for second-guessing about the deals involved in the team’s recent makeover. The Nets last game, the loss to the Lakers last Friday, featured great performances from two players who, under different circumstances, might have been on Brooklyn’s roster but are now leading Los Angeles in points per game: former Net Brook Lopez and rookie Kyle Kuzma, who the Lakers signed with the draft pick they got from the Nets.
The Nets are a young team, with room to grow. Behind Russell’s average of 21.1 points per game is Rondae Hollis-Jefferson who, in his third season, is tallying up 15.7 points per game. That’s nearly double his season-long PPG average last year, a strong sign that he’s reaching his potential. After Hollis-Jefferson there’s DeMarre Carroll, Allen Crabbe and a host of other solid-but-not-stellar talent. General Manager Sean Marks has turned over virtually the entire roster since coming on board in February 2016, but it may take help from another trade to get the fire started in Brooklyn.
The other glimmer of hope lies in Atkinson’s Xs and Os. The Nets have the highest “pace factor” in the NBA, a statistic measuring the number of possessions a team has in a game. The Nets’ is over 109. The key now is to improve the efficiency of those possessions. The Nets are 15th in the NBA in that regard. That’s not too big a mountain to climb, and perhaps one well-placed personnel move can get that ranking high enough to bring back some winning ways.
Who’ll step up to fill the void, either from within the team or outside, is the No. 1 point of speculation about this rebuilding team.
Go here to read our story about how the Nets picked five local designers to supply the look for their new apparel-and-accessories line, dubbed Brooklyn Cool.
