2017-10-27 13:55:03
Alibaba Co-Founder Joseph Tsai Said to Buy Brooklyn Nets Stake

13:55, October 27 179 0

One of the Alibaba Group’s co-founders, the billionaire Joseph C. Tsai, has agreed in principle to buy a 49 percent stake in the Brooklyn Nets, people briefed on the deal said on Friday.

The transaction between Mr. Tsai and the Nets’ majority owner, the Russian mogul Mikhaul Prokhorov, values the team at about $2.3 billion, including its existing debt, according to the people familiar with the deal. They spoke on the condition of anonymity because they were not authorized to discuss it publicly.

The sale does not include the Barclays Center, the $1 billion arena in which the team plays and which Mr. Prokhorov will keep.

Still, the transaction, which was reported earlier by Reuters and ESPN, highlights the continued draw that owning a sports team poses for billionaires — and the climbing prices that prominent teams can command. Three years ago, Steve Ballmer paid a then-unheard of $2 billion for control of the Los Angeles Clippers.

Prices have risen since then. Last month, the billionaire Tilman J. Fertitta paid $2.2 billion for the Houston Rockets, which set the record for N.B.A. team price tag.

This year, Forbes valued the Nets at about $1.8 billion, making it the seventh-most valuable N.B.A. franchise. Topping the list was the Knicks, which are owned by the Dolan family and which the publication valued at about $3.3 billion.

The Nets have had ups and downs under Mr. Prokhorov’s ownership: They reached the Eastern Conference semifinals three years ago, but have fallen apart since then, crippled by a series of misguided player personnel moves.

Under the terms of the agreement in principle, Mr. Tsai will not have any role in either the basketball or business sides of the Nets. Yet he will have the option — but not the obligation — to buy out Mr. Prokhorov at some point in the future.

Mr. Tsai is buying the Nets stake with his own money, and he will carry on as Alibaba’s executive vice chairman, one of the people briefed on the matter said.

A representative for Alibaba declined to comment.

It is perhaps the most notable trophy acquisition yet for Mr. Tsai, a Taiwan-born lawyer who moved to the United States to attend high school, before attending Yale. He became a corporate lawyer and then a private equity executive. But it was a meeting in 1999 with Jack Ma, a former English teacher turned entrepreneur who had the idea for an e-commerce company, that set him on a path to wealth.

Mr. Tsai helped build Alibaba into a titan of China’s internet community, creating a company that earned $6.3 billion in profit and $23 billion in sales in its most recent fiscal year. Its $25 billion initial public offering in 2014 was the biggest stock market debut in history.

That success has buoyed the wealth of Mr. Tsai: Forbes estimates that he is currently worth about $9 billion.

He has already spent some of his wealth in sports, an interest of his dating back to his time as a lacrosse player at Yale. In August, he bought the San Diego expansion team of the nascent National Lacrosse League for what Bloomberg News reported was a $5 million price tag.

The acquisition is the latest example of an executive from a Chinese conglomerate — or a Chinese company itself — spending heavily to snap up sports properties, ranging from Premier League teams such as Manchester City and Birmingham to top European teams such as AC Milan and Atletico Madrid. They have also invested in FIFA sponsorships and in companies that handle international broadcast and media rights.

With a population of 1.3 billion people and a rising middle class with an unquenchable thirst for sports, China is considered a lucrative and largely untapped market for both consuming and participating in sports.

But deals such as Dalian Wanda’s $650 million purchase of the Ironman competition and its expansion into marathons and road races have been questioned by analysts for the high prices that have been agreed. Buyers from China and Chinese companies have also pumped money into everything from professional cricket to world snooker tournaments and cycling.

In March, the Chinese government acknowledged that its companies had gone on a buying spree abroad, spending $225 billion in 2016, a record-breaking number. Commerce Minister Zhong Shan vowed to slow down what he called “blind and irrational investment.”

Zhou Xiaochuan, the country’s top central banker, took particular aim at sports and entertainment acquisitions.

“Some are not in line with our requirements and policies for overseas investment, such as in sports, entertainment and clubs,” he said. “This didn’t bring much benefit to China and caused some complaints overseas.”

Chinese investment in American teams have been met coolly by the major sports leagues and it owners.

It is rare that professional sports teams go on the selling block, and leagues such as the N.F.L and N.B.A demand comprehensive information on who is buying into the club, and where their money came from, as well as assurances that it will continue to flow.