NBA's Nets Sold to Russian Billionaire
With a bank account estimated at in excess of $13 billion, there is little Mikhail Prokhorov wants that he cannot have. But the ease with which Russia’s richest man bought the NBA’s New Jersey Nets speaks volumes about the ailing financial state of the league.
By striking a deal for $200 million (as well as assuming $180 million in team debt) in exchange for an 80 percent stake in the team and 45 percent of a new the Brooklyn arena at Atlantic Yards, Prokhorov and the NBA have taught us something.
First, we now know that the NBA’s financial problems are not collective bargaining posturing by management but in fact very real. In years past, it’s been hard to imagine the strait-laced NBA commissioner David Stern rolling out the cashmere carpet for someone with the Russian plutocrat’s checkered past. Like many of the new billionaires in Russia’s “great frontier” capitalism of the last decade, the precious metals magnate is nobody’s saint. He is at the top of the infamous oligarchs who seized control of the USSR’s state-owned businesses, and while the country’s economy collapsed, he made out like a bandit.
As Jeffrey Mankoff, author of Russian Foreign Policy: The Return of Great Power Politics, said, "The Russian business climate is a little bit… I’m trying to find a politically correct way to put this… it operates in a murky environment that facilitates the success of people who have done things in a dubious environment. Because Russia is such a murky place in which to do business, there are not a lot of people who are completely untainted. Anybody who has made that much money has had to make some compromises along the way.”
Prokhorov, it was revealed in April, has extensive business arrangements with Robert Mugabe's regime in Zimbabwe. These dealings have been very lucrative yet could, if they continue, be in violation of US sanctions, now that Prokhorov has become league owner. Whatever one may think of the hypocrisy of the United States enforcing sanctions on Mugabe while linking arms with numerous noxious regimes, it is a stubborn fact that the nearly 90-year-old strongman has spent a career brutally repressing social movements—when he hasn’t looted the country with his IMF-backed structural adjustment programs.
When news of the Prokhorov-Mugabe partnerships became public, Representative Bill Pascrell Jr. said, "This is disgusting. Obviously, the Board of Governors of the NBA didn't do their job properly when they vetted this deal." Prokhorov was also arrested in 2007, although not charged, for arranging prostitutes for guests at a French Alpine Villa. The pressure on France by the Russian government to release Prokhorov was said to be very intense.
Yet NBA commissioner Stern vociferously denied that there was anything even slightly shady in Prokhorov’s past, saying, "We are pleased that the NBA's Board of Governors approved Mikhail Prokhorov's purchase of majority ownership of the Nets, welcoming into the NBA ownership ranks the league's first majority investor from outside of North America.” He has also told everyone to just “call him Mike.”
Stern's sycophancy is rooted in Prokhorov's deep pockets: deep enough to push through a grand goal of the league: the conquest of Brooklyn and the rehabilitation of the New Jersey Nets.
The Nets are the league’s bottom feeders. Playing in front of a near empty arena, the team only narrowly avoided, at 12-70, the worst record in NBA history. Their decaying arena in East Rutherford is like something out of a Philip Roth novel: a symbol more of sorrow than of nostalgia. For years, led by developer Bruce Ratner, the team has aimed to move to Barclays Center at Atlantic Yards in Brooklyn (ironically, or perhaps not-so-coincidentally, Barclays has its own relationship with Mugabe’s regime). The Ratner plan represents the largest single-source development in the history of New York City. It has also come up against heavy opposition from a community that has seen Ratner lavished with tax breaks, people moved from their homes and massive civic disruption, and all for a project that some economists believe will have to over-achieve to break even. But Prokhorov, who long made it clear that without a Brooklyn arena the deal would be off, is now crowing at the thought of being the King of Crooklyn.
“This much-anticipated day has finally come and now the real fun begins of building a championship team with a state-of-the-art home in the Barclays Center at Atlantic Yards,” Prokhorov said.
No one is happier about this than Ratner, who has been knocked on his heels repeatedly by community resistance. As Candace Carponter, the legal director of Develop Don’t Destroy Brooklyn said, “The NBA is so desperate to bail out Bruce Ratner and to get a wealthy international owner that, despite their claims, they failed to do a proper investigation of Mikhail Prokhorov."
Mikhail Prokhorov’s reputation as a win-at-all costs “gangster capitalist” may be well earned. But he might actually have to sharpen his chops to keep up with how they have taken care of business in Brooklyn. As Mankoff said, “Given the antics of some former and current professional sports owners in the US, I don’t think he’ll be any better or worse than some of them."