April 29, 2014

NBA needs younger, more ethical owners, like Mikhail Prokhorov

Mikhail Prokhorov and 3 players on his Brooklyn Nets
With today's lifetime ban on NBA owner Donald T. Sterling and moves to force him to sell his Los Angeles Clippers team, the NBA is showing it wants to move beyond its roots in tacky and embarrassing low rent jerks like Sterling and embrace a new culture of sophisticated, morally sensitive, and just plain awesome owners. From the NYT:
New Guard of Owners Could Be Key in Sterling’s Fate 
By SCOTT CACCIOLA and BILLY WITZ  APRIL 28, 2014

When the N.B.A.’s Philadelphia 76ers were sold in 2011, a group of private equity investors bought the team for $280 million. When the Memphis Grizzlies were sold in 2012, a 34-year-old wireless technology entrepreneur paid $377 million. This month, two hedge fund billionaires shelled out $550 million for the lowly Milwaukee Bucks. 
And then there is Donald Sterling, the former divorce lawyer who bought the Clippers for $12.7 million some 33 years ago and now finds himself at the center of swirling debate over racist remarks. 
Mr. Sterling is part of the old guard of N.B.A. owners, a group of men who bought teams before the league became a global phenomenon worth billions of dollars. 
Now, the new guard of owners could help determine Mr. Sterling’s fate as they await findings from the investigation led by Adam Silver, the N.BA. commissioner, into the racist statements. Mr. Silver, who has been commissioner only since February, scheduled a news conference for Tuesday afternoon. ...
Three decades ago, a successful local businessman interested in a team as an extravagant plaything could join the elite club of N.B.A. owners; today, the teams are within reach of few outside billionaire hedge fund managers, tech moguls and Russian oligarchs.

For an example of the new, morally superior type of owner that the NBA has been welcoming, consider Mikhail Prokhorov, during the Yeltsin era, right hand man to Vladimir Potanin, one of the Seven Oligarchs. Prokhorov bought the New Jersey Nets a few years ago on condition of being allowed to move them to the gleaming new stadium in gentrifying Brooklyn.

The dispossession of Sterling will clear the way for the NBA to ethically upgrade its owners to the high standards set Prokhorov, a man of such sterling character that he has managed to have highly profitable working relationships with both Boris Yeltsin and Vladimir Putin.

From Wikipedia:
Mikhail Dmitrievitch Prokhorov (Russian: Михаи́л Дми́триевич Про́хоров; born 3 May 1965) is a Russian billionaire, politician, and owner of the American basketball team the Brooklyn Nets. ... His paternal grandparents were relatively wealthy peasant farmers (known as kulaks) who were persecuted as class enemies under the Bolsheviks and again under Stalin. ... 
In 1992, at the age of 27, Prokhorov partnered with Potanin to run Interros, a holding company that they used in 1995 to effect the purchase of Norilsk Nickel, one of Russia's largest nickel and palladium mining and smelting companies.[10] During the largely un-regulated privatization of former state-controlled industries after the collapse of the USSR, Prokhorov and Potanin (the latter by then a deputy prime minister who oversaw privatization) were able acquire the shares from the workers of Norilsk Nickel for a fraction of their estimated market value and seize ownership of the company. When he departed in 2007, Prokhorov's share of the company was worth US $7.5 billion.[11] 


... In the 1990s, the Russian government needed loans to operate. Prokhorov partnered with Potanin. Their Onexim bank ran auctions for the government, in which bidders won the right to loan the Russian government money. Onexim and its affiliates were the winning bidders at the Norlisk Nickel and other auctions they conducted. The Russian government secured the loans with blocks of shares of the newly privatized state enterprises. The government never repaid the loans, and, as a result, Onexim received ownership of the collateral, which was the shares in the privatized enterprises.[13] 
When cash privatization eventually replaced the failing voucher privatization phase, the government came up with a scheme to leverage the privatization process and quickly raise money for its cash-strapped operations. Under the "loans for shares" program, the administration sold off majority stakes in some of its prized companies in the energy, telecommunications, and metallurgical sectors in exchange for loans taken from the new private sector banks owned by rich businessmen. According to the terms of the loan, the lender could stake equity ownership in the company if the government failed to repay the loans by September 1996. Auctions conducted under the "loans for shares" program were executed in such a way that only the few businessmen who owned these banks were allowed to partake in auctions. Following these bogus auctions, the majority stakes in some of the biggest Russian companies were acquired by a small number of major banks at abysmally low prices. These businessmen also bankrolled Yeltsin's 1996 presidential election victory, exerting their influence over the then president.[14] 
Onexim purchased SIDANKO, which was a part of the Novolipetsk metallurgical industrial complex, and also the Novorossiisk marine shipping company and a large share of the Northwest marine shipping company. All of these enterprises were purchased by Prokhorov and Potanin for approximately one third of their estimated market value.[clarification needed][citation needed] 
In April 1996, Prokhorov was appointed to the Board of Directors of Norilsk Nickel (which then still belonged to the state). In November 1995, Onexim Bank won 38 percent of Norilsk Nickel in a loans-for-shares auction for US$170.1 million, a mere US$100,000 or less than a fraction of a fraction of 1% higher than the bid starting price. At the time, Norilsk produced 25% of the world's nickel output.[15] 
Onexim managed the Norilsk Nickel auction, with a reservation price of US$170 million. It arranged three bids from affiliates, all at US$170 or US$170.1 million. Rossiiski Kredit Bank offered US$355 million, more than twice the starting amount. However, Onexim disqualified Rossiiski Kredit's bid on the basis that the bid amount exceeded Rossiiski Kredit's charter capital (the nominal value of its outstanding shares). Ironically, when Onexim allows its own affiliate to win the bidding at US$170.1 million, that amount also exceeded the affiliate's charter capital. The auction rules required Onexim to provide any objections in advance of the auction, to give bidders time to cure them. None of the submitted bids even closely approximated the market value of Norilsk Nickel, which had annual profits of around US$400 million.[16] 
60 Minutes, the American news program, interviewed Prokhorov. The program alleged that 
Kremlin leaders gave him what amounts to an insiders opportunity to buy one of the state's most valuable assets. It was acquired from the Kremlin in a so-called auction for the measly sum of a few hundred million dollars in a process that even Prokhorov's business partner admits wasn't perfect, and probably not even legal under Western standards. But it was legal in Russia". 
During the interview, Russian business correspondent Julia Latnina stated about the auction of Norlisk Nickel, "Yes, it was rigged. But, it cannot be explained in normal economic terms to an outsider, especially an American. You had robber barons, we have oligarchs."[17] 
In September 2009, he made an offer to buy a controlling interest in the New Jersey Nets of the National Basketball Association and half of a project to build a new arena in Brooklyn.[22][23] On 11 May 2010, the NBA approved the sale of the Nets to Prokhorov, making him the majority owner of the team with an 80% stake. He also acquired a 45% interest in the new Barclays Center sports and entertainment arena.[24][25] 
He became the first non-North American team owner in the NBA and also the tallest, standing at 6′8″.[22] In December 2011, after announcing his run for the Russian presidency, the NBA confirmed that Prokhorov's ownership interest would not need to be altered in the event of his election (Herb Kohl, a then sitting but since retired U.S. Senator, owns the Milwaukee Bucks).[26] On 30 April 2012, the Nets officially made the move to Brooklyn, rebranding themselves as the Brooklyn Nets. 
Controversies[edit] 
At a Christmas party for the Russian nouveau riche at the French Alpine resort of Courchevel in January 2007, he was arrested on suspicion of arranging prostitutes for his guests.[22][27]  
Regarding Prokhorov's political efforts and the Right Cause party, critical commentators claim that the entire endeavor is just a project of the Kremlin closely curated by Vladislav Surkov and that Prokorov was effectively appointed to be the party leader rather than being chosen by independently minded party members.[33][34] According to them, the "puppet party" was designed to divert opposition voters by using liberal rhetoric. 
Awards[edit] 
In August 2006, he was awarded the Order of Friendship for his significant contribution to the growth of Russia's economic potential, when the President of the Russian Federation, Vladimir Putin, signed an order for the granting of state honors on 18 August 2006. ... 
In December 2011, after the legislative elections, Prokhorov announced that he would contest the 2012 presidential election against Vladimir Putin as an independent.[38] He called it at the time "probably[39] the most important decision of my life".[38] Communist leader Gennady Zyuganov and opposition leader Boris Nemtsov both saw the move as an attempt "to preserve Putin's regime".[40] In the 4 March 2012 presidential polling, Prokhorov gained 7.94% of the vote.[4][41]

The dispossession of Sterling will clear the way for the NBA to ethically upgrade its owners to the high standards set by this man of such sterling character that he has managed to have a solid working relationship with both Boris Yeltsin and Vladimir Putin.
     

19 comments:

SFG said...

He's only 1/4 Jewish from the article, Steve. You've got to try harder. ;)

Steve Sailer said...

Like I said in the posting, this 6'8" guy's grandparents were kulaks. And Potanin, his sponsor, was the only fully gentile Oligarch on Amy Chua's list.

Anonymous said...

Wonder if Mikhail Prokhorov knows the Chechen Pro-Putin leader? Wonder how chummy he is with him?


Seriously, re: Sterling. This is a case for the ACLU. They always claim that they're on the side of free speech.

If personal private opinions made in private do not constitute free speech, then nothing does.

If it is indeed illegal in CA to record private conversations without the knowledge of the person being recorded, then the ACLU has a strong case on Sterling's behalf.

Sterling should attempt to hire the ACLU and get a judge to dismiss the lifetime ban and the fine.

It is free speech, constitutionally protected, so where is the ACLU? Paging ACLU, where are you?

Ok, well someone had to state the obvious and it is around the time that they'd normally agree to represent a high profile client in court.

If the ACLU could agree to represent Rush Limbaugh yrs ago, then they can also represent Donald Sterling. He has a case; its winnable. He's lost the girlfriend; might as well keep the team or sell it to his kids.

And should he win, he can put that picture of his victory for free speech on his Instagram.

Mr. Anon said...

"After graduating from the Moscow Finance Institute, he worked in the financial sector and subsequently went on to become one of Russia's leading industrialists, owning major stakes in multinational corporations in the precious metals sector."

"went on to become one of Russia's leading X, owning major stakes in Y" is such an anodyne formulation. A great deal of history could be rewritten in that style: "King Leopold went on to become one of Belgium's leading real-estate moguls, owning major stakes in world ivory production". "Al Capone went on to become one of Chicago's leading entrepreneurs, owning major stakes in the beverage, gaming, entertainment, and personnel-management industries".

Such neutral and harmless-sounding words to describe great acts of theft.

Semi-employed White Guy said...

I still don't get the $550 million for the Bucks. It would seem that the sports team bubble is about to pop. The only way this valuation even begins to make sense, is if the new owners plan to move the team to a major market. But what big market in this country doesn't already have an NBA team? SD is the biggest market without a team and they couldn't keep the Clippers. St. Louis would hardly seem worth it, and Tampa isn't exactly a sports hotbed.

Steve Sailer said...

Seattle.

Steve Sailer said...

Also, Las Vegas has been boycotted by big league sports for its legal gambling, but in the New, Ethical Era being ushered in, that can't last forever.

peterike said...

Just like there are the wrong kinds of white people, there are the wrong kinds of Jews, these old school embarrassing ones that haven't gotten with the program and think there are differences between racial groups.

Anonymous said...

>>peterike said
""""these old school embarrassing ones that haven't gotten with the program and think there are differences between racial groups.""""""

It's so embarrassing that this particular old school, wrong kind of Jew was about to receive the NAACP's humanitarian award of the yr at their centennial anniversary next month.

Thin-Skinned Masta-Beta said...

If being Mikhail Prokhorov's strawman can be profitable for Jay-Z, Magic deserves a piece of the action.

@peterike said...
"Just like there are the wrong kinds of white people, there are the wrong kinds of Jews, these old school embarrassing ones that haven't gotten with the program and think there are differences between racial groups."

Our contemporaries of the progressive left, in spite of their pious adherence to "diversity," know better than to publicly express their true beliefs that they clearly show in their drive to "insulate" from the wrong kind of folks by segregating themselves in the right neighborhoods, school districts, the ivy league, etc.

Sure they may publicly show their contempt for the God-fearing and gun-toting white-trash. But they know better than to say anything critical or even acknowledge the existence of the vibrantly colored kind of trash that also inhabits their country. Both Belmont and Fishtown have citizens of all races.

Rainer said...

By the way, what's the background of this Adam Silver who has just become NBA commissioner?

Whiskey said...

The idea is a Dodgers type deal of $250 million a year for thirty years is worth a lotof money. NBA teams are a monopoly and the mostly Black fans will pay anything to see their heroes.

Me? F1 and Sports car racing. Can't ait for Monte Carlo and Le Mans. But the idea is to extract monopoly rents va pricey cable deals ... that leave 75% of Dodger fans unable to see the games bc the other cable satellite cos have to jack up prices too high.

Sean said...

At least his business takeover wasn't associated with dozens of murders like a certain Russian owner of a British football team.

Prokhorov was arrested in France in 2007 in a crackdown on prostitution, and there was a Russian TV advert (for yogurt or something) mocking him for his unwholesome lifestyle.

This has come up at the wrong time for him. Putin is going to retaliate aginst US businesses. Prokhorov would have to square anything he does in the US with Putin or face losing his Russian assets. (A bit like the way political pressure on Sterling's business is going to mean him losing about a billion on this).

It just shows how the US is run differently to Russia: on the surface.

Anonymous said...

Can rappers like Jay-Z and Nelly be even part owners of NBA teams at this point? Wouldn't any sexist and homophobic rapping they might have done in the past disqualify them from involvement with the NBA? Let's ask The Commissioner.

Sean said...

The market value is over $1 billion.

Anonymous said...

"Semi-employed White Guy said...
I still don't get the $550 million for the Bucks. It would seem that the sports team bubble is about to pop. The only way this valuation even begins to make sense, is if the new owners plan to move the team to a major market. But what big market in this country doesn't already have an NBA team? SD is the biggest market without a team and they couldn't keep the Clippers. St. Louis would hardly seem worth it, and Tampa isn't exactly a sports hotbed."

Basketball is either the second or third most popular sport in the world. Behind Soccer and Cricket, depending. The Bucks sold for that much because the NBA is poised to make a lot of money in countries other than the US. We may go to the games in person here in the states but more people watch it overseas than ever before.

Anonymous said...

The insane valuations of sports teams are no different from the insane valuations of just about every asset in the general economy, due to Bernanke/Yellen money printing. The oligarchs have the freshly printed money and they are desperately snatching up assets while the money is still flowing.

The rich know that the party can't last forever and that those holding dollars will be left holding the bag - hence the scramble to get rid of the dollars and buy up anything they can.

Anonymous said...

""""Basketball is either the second or third most popular sport in the world. Behind Soccer and Cricket, depending."""""

Cricket? Try Rugby. Globally, the NFL, MLB, PGA, Formula 1 all outearn the NBA and so does Rugby, by the way. Basketball is nowhere near in popularity of the other sports and its lower revenues show that.

You do know that MMA and the X Games also outearn the NBA nationally at this point of time? OR very close to it?

Half of all NBA teams are in the red.

The NBA finals will not come anywhere close in TV revenue that the NCAA tournament earns (which every year out earns NBA finals).

At the world cup this year, the finals will be played in a stadium that can seat nearly 200,000. This is over 10x what the most attended NBA game hosts.

The World Cup's 200,000 actual in person attendance for the finals will be equivalent to what most of the failing NBA market teams manage in average TV attendance during their regular season.

Oh, surrre the NBA's where all the smart money's at, especially when it's not even in the top 5 in its own home market. But it's going to challenge soccer globally soon, just you wait an see.

What color is the sky in this pipe dream generated world?






The Bucks sold for that much because the NBA is poised to make a lot of money in countries other than the US. We may go to the games in person here in the states but more people watch it overseas than ever before

Semi-employed White Guy said...

Steve Sailer said...

Seattle.


Completely forgot about Seattle. In my mind, the Supersonics are still there. But hell even they left for "greener pastures" in freaking OKC. WTF!