Prokhorov has deal to buy Nets

Updated: September 24, 2009, 3:39 PM ET
Associated Press

EAST RUTHERFORD, N.J. -- Could the New Jersey Nets become the Nyets?

The basketball team once known as the New Jersey Americans is a step closer to being owned by Russia's richest man, Mikhail Prokhorov, who on Wednesday said he has a deal to buy 80 percent of the NBA team and nearly half of a project to build a new arena in Brooklyn.

The proposed blockbuster deal would give the Nets' current principal owner, Bruce Ratner, the needed cash to move forward with the centerpiece of his Atlantic Yards development, which includes plans for retail and residential projects.

It would make Prokhorov, a 44-year-old Russian billionaire and former amateur basketball player, the NBA's first non-North American owner.

It would mean the Nets really do seem headed to Brooklyn, a New York City borough without a major pro sports franchise since baseball's Dodgers decamped for Los Angeles in 1957.

[+] EnlargeProkhorov
AP PhotoWould-be Nets owner Mikhail Prokhorov, seen in 2008, has an estimated net worth of $9.5 billion.

And it would be a sign the NBA is serious about building a worldwide identity. Commissioner David Stern immediately praised the deal, saying it will help the NBA expand its reach and would ensure that the Nets, who play in the aging Izod Center in East Rutherford, will have a state-of-the-art arena.

"Interest in basketball and the NBA is growing rapidly on a global basis, and we are especially encouraged by Mr. Prokhorov's commitment to the Nets and the opportunity it presents to continue the growth of basketball in Russia," Stern said in a statement.

Dallas Mavericks owner Mark Cuban, too, is ready to welcome Prokhorov to the NBA.

"I love it. I think he will bring fresh ideas and viewpoints, and hopefully this will be the start of a trend towards international investors," Cuban said in an e-mail to The Associated Press. "Plus, I took Russian in high school, so it will give me a chance to refresh."

Stern has long touted the NBA's international reach, proudly boasting that two-thirds of the players on the medals podium at the Beijing Olympics were NBA players. The league plays preseason games in Europe and China, and its All-Star and NBA finals games have been televised in hundreds of countries.

In going global, Stern could be welcoming quite a globetrotter.

Prokhorov, who is 6-foot-6 and was an avid basketball player in his school days, is a fixture in glitzy European resorts and once was held in France for four days of questioning -- but never charged -- in a prostitution investigation. Even in Russia, he raises eyebrows for his penchant for private jets and a gorgeous entourage. A 2007 TV commercial for a Russian juice company lampooned him, although it did not name him.

Prokhorov's love of the high life is rivaled by his devotion to basketball. He owns a share of the Russian team CSKA Moscow, and he said on his blog he wants to buy the Nets partly to get access to NBA training methods and help Russian coaches get internships in the league.

Russia has a proud basketball tradition, having won the Euro championship in 2007, and CSKA is a perennial Euroleague power. Yet Andrei Kirilenko, a Utah Jazz forward, is the only Russian currently in the NBA.

It remains to be seen how Prokhorov's jet-setting lifestyle might play with Nets fans, but the NBA will be far more interested in his finances. Prokhorov has been ranked as his country's richest man in the Russian edition of Forbes, with an estimated $9.5 billion -- even after shrinking by some $7 billion in the world economic crisis.

He weathered the financial storm by cashing out some lucrative assets before the downturn battered commodity markets.

Another rich Russian oligarch, Roman Abramovich, is the owner of the British soccer power Chelsea. Uzbekistan-born billionaire Alisher Usmanov owns more than 25 percent of another British soccer team, Arsenal.

"In any sport nowadays, if you can bring someone in who is financially stable, it is great for the sport, and I think it will be great for the NBA," former player and current TV analyst Charles Barkley said. "If he's going to do some work on the building and not take advantage of the fans, that's great for the city."

The franchise started with the ABA in 1967 as the Americans and then the Nets, bouncing around to different arenas in New Jersey and New York before settling in East Rutherford in 1981-82.

It's not clear how Brooklyn's sports fans, who have nursed their wounded pride ever since the Dodgers left, might take to a team with foreign ownership.

There's already been community grumbling over the British bank Barclays buying the naming rights to the arena -- and also the rights to name the subway station beneath it.

Brooklyn's famed Russian enclave of Brighton Beach is only a few miles from the proposed arena, but for many Russian emigrants Prokhorov symbolizes everything wrong in their homeland -- a smooth operator who made a fortune when Russia sold off its state industrial treasures for a song.

Nets president Rod Thorn said he expects little reaction about a Russian owner: "I don't think players really care who owns the team."

Los Angeles Lakers guard Derek Fisher, who also is president of the NBA players' association, said the deal "speaks to the fact there's something that potential ownership groups still see about the NBA that is good because you wouldn't have anybody -- European, Russian, American -- buying into an NBA team at this point if they didn't see something that was a positive for them to get out of the deal."

Prokhorov's Onexim Group announced the deal jointly with Forest City Ratner Cos. and Nets Sports and Entertainment. According to the agreement, entities to be formed by Onexim Group will invest $200 million and make funding commitments to acquire 80 percent of the NBA team, 45 percent of the arena project and the right to buy up to 20 percent of the Atlantic Yards Development Co., which will develop the non-arena real estate.

The NBA will review the proposal, and the deal must be approved by three-fourths of its board of governors. Ratner and Prokhorov said they hope to have the sale completed by the first quarter of 2010.

"I have a long-standing passion for basketball and pursuing interests that forward the development of the sport in Russia," Prokhorov said in a statement. "I look forward to becoming a member of the NBA and working with Bruce and his talented team to bring the Nets to Brooklyn."

While the proposed deal would give Ratner's group an infusion of money for the arena project -- he faces a December deadline to break ground or lose access to financing from tax-free bonds -- there is fervent opposition to the additional 22-acre residential and commercial real estate development. It would create more than a dozen residential and office towers with more than 6,400 apartments built over property that includes a rail yard, warehouses and several blocks of homes and businesses.

Critics include homeowners who say the government is illegally claiming their property and thousands of residents who worry about how the skyscraper project will affect their neighborhoods.

New York's Court of Appeals is to hear an eminent domain challenge to the project next month.

Develop Don't Destroy Brooklyn, the project's leading opponent, accused Ratner of being untrustworthy, noting he had repeatedly said the Nets were not for sale.

"The only reason Ratner would make this deal is because he is in dire financial trouble," spokesman Daniel Goldstein said. "If Ratner has to go overseas to get major funding for the arena, how on earth is he going to finance the rest of the project?"

Prokhorov shot to prominence in the chaotic early years of privatization deals that followed the collapse of the Soviet Union. In 1993, the Onexim bank he headed acquired Norilsk Nickel, one of Russia's huge but lumbering industrial conglomerates.

Under Prokhorov, Norilsk become more efficient and profitable. He resigned as Norilsk chairman in 2007 and sold his shares for $7.5 billion, but retains substantial interests in other metals companies through Onexim, including shares in gold-miner Polyus and Rusal, the world's largest aluminum company. Onexim's other interests include real estate, insurance and energy.


Copyright 2009 by The Associated Press

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