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Russian Tycoon Bids for NBA Team


Russian Tycoon Bids for NBA Team

Russian Tycoon Bids for NBA Team

Russian billionaire Mikhail Prokhorov is seeking to buy a controlling interest in the New Jersey Nets of the National Basketball Association. In Russia, some see the move as savvy business, others say it is not patriotic.

He played basketball in his youth. At about two meters tall, he is tall enough to play in the National Basketball Association. And with a fortune worth an estimated $9.5 billion, the 44-year-old Mikhail Prokhorov has enough money to own an NBA team. If his offer is approved, the tycoon would become the NBA's first majority owner outside of North America. In May, Chinese investors bought a 15 percent share in the Cleveland Cavaliers.

In a deal announced Thursday, Prokhorov's Onexim Investment Group would invest $200-million for an 80 percent stake in the New Jersey Nets. The team was purchased six years ago for $300-million by American developer Bruce Ratner. He wants to move the team to Brooklyn, New York, where he hopes to build an $800-million arena that would anchor a 10-hectare real estate project. It would cost nearly $5-billion.

In Russia, where Prokhorov is the country's wealthiest man, reactions to his proposed purchase range from smart to unpatriotic.

Sergei Nechuvilin, head of the sports management center at Moscow's Financial-Industrial Academy, cautions that unforeseen expenses could end up costing Prokhorov more than the $200-million he is now offering. Nonetheless, Nechuvilin told VOA the tycoon is likely to profit from the investment.

Nechuvilin says there is no doubt the investment is more profitable and more promising than any investment in a Russian sports brand.

But some Russian politicians and activists are criticizing Prokhorov for investing in an American team instead of helping Russian sport, which lost significant government subsidies following the Soviet collapse.

The editor of Russia's "Finance Magazine, Oleg Anisimov, says the tycoon's U.S. investment is not right from the standpoint of Russian patriotism. But in remarks to VOA, he gives Prokhorov credit for domestic investments such as the CSKA, a sports enterprise that includes basketball and soccer teams.

Anisimov says the sum for the New Jersey Nets is insignificant compared to his overall investments in various Russian companies.

In April of last year, Prokhorov sold his large stake in Norilsk Nickel, the world's biggest nickel producer, following a bitter business dispute. A few months later, the sale proved timely, allowing the tycoon to avoid significant losses when the stock market plummeted in the global economic crisis. Through Onexim, he also has stakes in other metal companies, real estate, energy and insurance.

Prokhorov's purchase offer must be approved by three-fourths of all NBA owners. Among their considerations may be the tycoon's life style. He is known for lavish parties and was arrested in France in 2007 on suspicion of supplying his guests with prostitutes. Charges were not pressed, but he refuses to do business in France until he receives an apology.

NBA Commissioner David Stern said in a statement the deal with Prokhorov can help expand the league's global audience. Sergei Nechuvilin says that is likely to happen.

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