Brooklyn Nets Owner Watches Warriors Win Title And Dreams Of Making $1 Billion

As the Golden State Warriors were winning their fourth NBA championship in seven years, Brooklyn Nets billionaire owner Joe Tsai was handing over the keys to his team’s third CEO since Tsai bought the team in 2019. Tsai is hoping his newest executive will help him lead the Nets to $1 billion in revenue within seven years, a goal some NBA experts say is as much of a dream as the Nets winning a title.

It’s an audacious projection for Tsai, a cofounder of Chinese e-commerce juggernaut Alibaba Group who Forbes estimates is worth $8.7 billion, considering where the Nets stand on the New York sports hierarchy among consumers. On the court, they’re a punchline after being swept in the first round of the playoffs after being projected by many to go all the way. The new CEO, Sam Zussman, will need to repair the team’s image, fix an arena that’s good for little profit and navigate the Nets out of the joke mill. Tsai, who owns BSE Global, the sports company that operates the Nets, has decreed it.

“Notes on a piece of paper don’t create music,” said longtime sports executive Andy Dolich. “You can say in this case, ‘Hey, I want to be at a billion.’ That’s nice. How are you going to get there?”

Forbes currently values the Nets at $3.2 billion. That’s up from $2.4 billion three years ago, when Tsai purchased the team from Russian billionaire Mikhail Prokhorov. The transaction included the Barclays Center for $1 billion.

On Wall Street, Tsai, 58, is praised for his role in making Alibaba one of the biggest tech companies in the world. Alibaba, which has a market capitalization of $270 billion, is considered China’s version of Amazon. Tsai is the company’s second-largest shareholder; he ranked 254th on the 2022 Forbes Billionaires list.

As a team owner, though, rival executives suggest Tsai is on a learning curve.

He hired Zussman earlier this month. The former IMG executive follows the departure of John Abbamondi, who took over in February 2020. Tsai told website Sportico that he’s “confident” the Nets would make $1 billion over a “seven-year period.”

Forbes estimates the team made $212 million in revenue through June 2022. Last year, the Nets made $280 million. That’s down from $304 million in 2022, according to Forbes data.

It’s unclear if Tsai’s goal of $1 billion is just counting the Nets or BSE Global as an overall enterprise. The company also operates the WNBA’s Liberty, an NBA G League team and an esports team. BSE Global declined a Forbes request to discuss the matter.

Should Zussman reap $1 billion for the Nets, that would place Tsai’s company with bigger entertainment firms like the publicly traded Madison Square Garden Sports, which owns the Knicks and NHL’s Rangers. The Dallas Cowboys top the NFL with roughly $1 billion in annual revenue.

Charles Grantham, a sports management professor at Seton Hall University, suggested the Nets owner is being optimistic. “The key is: do they win?” Grantham said. “I’m sure that’s what he’s counting on.”

Obstacles to the $1 billion goal abound. BSE Global doesn’t have much real estate under its umbrella. The Barclays Center sits on land owned by New York City. More sports owners are becoming landlords via developing areas near arenas as it aligns revenue streams like naming rights and sponsorships for entertainment districts that attract large crowds.

Former Nets owner Bruce Ratner initially planned for Barclays Center to be the anchor of Atlantic Yards, a $4 billion commercial and residential project. Local politics and lack of financing spoiled the plan, however. In 2013, Ratner sold the majority stake in the project to a China-based real estate firm, Greenland Holdings. As a result, Atlantic Yards has renamed the Pacific Park Brooklyn project.

“Once (Ratner) saw it couldn’t work,” Grantham said, “he slowly got out of it. They were using the Nets to create that kind of real estate project. It didn’t work.”

Barclays Center isn’t the worst sports arena in the NBA, but it has problems. Rival executives that spoke with Forbes highlighted the arena’s inept parking, overcrowded entrances, unattractive suites and the exterior design of the building.

Barclays Center is losing money, too. A September 2021 audit reviewed by Forbes shows Barclays Center had a net loss of $112 million last year. That was likely due to the pandemic. To get a better glimpse of finances, Forbes reviewed a 2019 audit of holding company Brooklyn Events Center LLC. The audit shows Barclays Center had a net loss of more than $60 million.

The arena is now squeezed between the famous MSG and the prestigious $1 billion UBS Arena in Elmont, New York. The NHL’s New York Islanders moved there in 2021 after a failed experiment playing at Barclays Center. To lure non-sporting events, BSE Global needs to negotiate favorable terms with promoters, leaving little room for profit.

Dolich, a former team president of the NBA’s Memphis Grizzlies and MLB’s Oakland Athletics, said BSE Global is “firewalled” with its real estate. That limits business opportunities. Asked for any advice he’d give the new Nets CEO, Dolich said identifying the “real number.”

“When the doors close,” he said, “is it $1 billion or $750 million? Where do you want us to be? You can say one thing that becomes public and another private.”

Though $1 billion looks like a stretch, BSE Global should make additional revenue in the coming years. Ticketing and local media rights aside, there’s potential in immersive sports, and online betting is active in New York.

In addition, the NBA is next in line for a media rights increase, which should boost the Nets’ revenue. The league’s current deal is valued at $24 billion and expires at the end of the 2024-25 season. After the NFL brokered a $100 billion rights package in 2021, media executives predicted the NBA would land one worth $75 billion.

Still, that won’t bring the Nets close to Tsai’s projection. If the team remains competitive, says Grantham, “it’ll be like the Los Angeles Lakers and Clippers. Although the Clippers are the second team in L.A., he (Tsai) wants to be them compared to where they are at this point.”