August 5, 2012
What's behind the rocketing value of the Brooklyn Nets? Not just Prokhorov and Jay-Z, but public assistance
Atlantic Yards Report
An article in Crain's New York Business is headlined Nuts for the Nets: How a freewheeling Russian businessman turned the NBA's doormat into its hottest property.
Buoyed by the basketball team's move to Brooklyn from New Jersey, the duo have turned the Nets from a laughingstock that played to empty arenas and hemorrhaged cash into a franchise expected to sell out nightly and increase revenue by more than $50 million this season. Sponsorships are soaring, merchandise is flying off the shelves and the once-shunned Nets have become a desired destination for NBA stars.
Mr. Prokhorov's free spending—he committed about $340 million to player salaries last month alone—and his move to tap Jay-Z's star power have made the Nets the talk of the league. If that chatter translates to wins, the Nets could become the NBA's hottest story of the year.
There's something barely hinted in the article: a new arena, with luxury suites and enormous sponsorship opportunities, in the country's biggest media market, is key to Prokhorov's willingness to spend money and the new attention paid to the team.
And what enabled that? Public subsidies and other assistance, including the gift of naming rights for a (nominally) publicly-owned arena.
In other words, the upside goes significantly in one direction.
Posted by steve at August 5, 2012 7:11 PM