Russian industrialist Mikhail Prokhorov is trying to buy his way into the brotherhood of basketball billionaires. In September his company, Onexim Sports, announced it would pay $200 million for a majority stake in the NBA’s New Jersey Nets.
He might want to think twice before writing the check.
Over the last year, basketball’s 10 billionaire owners saw the value of their teams shed a collective $110 million as the recession and job losses punished ticket sales. Team values for the entire NBA fell 3 percent to an average of $363 million – the first drop in the 11 years that Forbes has calculated team valuations.
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Despite the drop in value, NBA players are raking in the cash. Player costs were $2.3 billion during the 2008-09 season – up $100 million from the last year.
Prokhorov, the sports-crazy metals billionaire with a net worth of $9.5 billion as of March 2009, will get an 80 percent stake in the middling Nets, plus 45 percent ownership of team’s proposed new Brooklyn home, the Barclays Center.
The NBA could rule on the deal in early 2010. Current Nets owner Bruce Ratner bought the team for $300 million in 2004.
Two billionaire-owned teams suffered double-digit losses over the past year. The value of the Minnesota Timberwolves plunged 11 percent to $268 million as five poor seasons and only 24 wins in 2008 have dampened ticket demand.
Billionaire owner Glen Taylor, who made his $2.2 billion fortune from greeting cards and agriculture, gave away 5,000 tickets in 2008, and has lowered prices on 95 percent of the seats.
The value of the Memphis Grizzlies has dropped 13 percent to $257 million since last season. Nine years of terrible records and team turmoil (they’ve had eight coaches since 2000) have helped make Grizzlies tickets the cheapest in the NBA.
Turn-around specialist Michael Heisley bought the team – then playing in Vancouver – for $160 million in 2000. He moved them to Memphis the next year.
In 2005, he built an expensive stadium that draws the second worst attendance numbers in the NBA. The Grizzlies’ debt makes up 58 percent of the team’s enterprise value (the league average is 29 percent), and operated at a $7.1 million loss in 2008.
Other billionaires with teams losing value were Charles Dolan (New York Knicks down 4 percent), Mark Cuban (Dallas Mavericks down 4 percent), Micky Arison (Miami Heat down 7 percent), Stanley Kroenke (Denver Nuggets down 3 percent), and Herbert Simon (Indiana Pacers down 7 percent).
Not every billionaire-owned NBA team lost value over the past year. The Los Angeles Lakers, co-owned by billionaire Phillip Anschutz, enjoyed both an NBA Championship and a 4 percent bump in valuation. The Lakers are now the league’s most valuable team, worth $607 million.
Thanks to stars like Kobe Bryant(notes), the team has the Staples Center filled every night – with some of the highest ticket prices in the NBA. Anschutz, who also owns hockey’s L.A. Kings, keeps the arena packed with sports and concerts to help keep revenue flowing.
Microsoft co-founder Paul Allen enjoyed a 10 percent increase in the value of his Portland Trailblazers (despite operating at a $20.3 million loss in 2008). Last year the team made its first trip to the playoffs in six seasons. With former Nike executive Larry Miller as team president, Portland has increased revenue 48 percent in two years.
There might be hope for Prokhorov yet.
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