On his game
Prokhorov earns winning return on losing Nets
The S&P 500 index is up 111 percent since the beginning of 2010.
The Brooklyn Nets have done slightly better.
When Mikhail Prokhorov bought 80 percent of the NBA team in 2010, Forbes estimated the team’s value at around $312 million.
On Tuesday, the Russian billionaire bought the remaining 20 percent from developer Bruce Ratner’s Forest City Enterprises at a valuation of $875 million — up 180 percent since Prokhorov first invested.
Two factors conspired to inflate the value of the team.
The US economy began a sustained rebound, and sports TV rights deals enjoyed unprecedented growth.
ExMicrosoft boss Steve Ballmer’s $2 billion purchase of the LA Clippers in 2014 didn’t hurt, either. It not only shattered the league’s previous record sale, it reset the bar for future NBA team valuations.
Five NBA teams have been sold since January 2013, and three of them set new records for the league.
Vivek Ranadive bought the Sacramento Kings in a 2013 deal that valued the franchise at $534 million, 19 percent richer than the previous NBA high, paid in 2010 by Joe Lacob and Peter Guber for the Golden State Warriors.
Then things got crazy. Less than a year later, Avenue Capital Management’s Marc Lasry and Fortress Investment Group cofounder Wesley Edens bought the Milwaukee Bucks, which Forbes ranked that year as the NBA’s least valuable franchise, for $550 million.
Enter bombastic Ballmer, who paid almost four times as much for the Clippers in the fallout from racist com ments made by previous owner Donald Sterling.
In June 2015, the Atlanta Hawks were sold for $730 million to a group led by Ares Management’s billionaire cofounder, Tony Ressler.
The increases are directly tied to the enhanced value of live sports programming, which helps networks boost viewership and licensing fees from cable and satelliteTV distributors.
Last year the NBA renewed its contracts with Walt Disney and Time Warner, tripling what the league is paid by its partner networks. The NBA will receive $24 billion over nine years, starting with the 201617 season.
On the other hand, owning a pro sports team is not like buyandhold investing.
If Prokhorov were just looking to use sports to get even richer, he could have saved himself a lot of trouble and just bought shares of Nike.
The Oregon company’s stock has quadrupled in the five years since Prokhorov bought the Nets — currently struggling with an 820 record — the same amount of time the Russian billionaire said it would take for the franchise to win an NBA title.