The Putin-Crimea-NBA Connection: Will Ownership of the Nets Move to Russia?
The political battle between Russia and the United States over Crimea has extended beyond diplomacy and economic sanctions and now threatens the ownership of an NBA franchise.
The Brooklyn Nets have been owned by Russian billionaire Mikhail Prokhorov since 2010 through a U.S. company, Onexim Sports and Entertainment Holdings USA, Inc.
But in the wake of Russian President Vladimir Putin’s takeover of Crimea, Prokhorov has announced he intends to relocate the company owning the Nets to Russia.
The team would remain in New Jersey.
Prokhorov’s move is not a show of solidarity with Putin. On the contrary, Prokhorov ran against Putin in the 2012 presidential election. His motive for moving the company may be two-fold.
One reason is that Prokhorov still has political ambitions back in Russia, where it was rumored he wants to run for mayor of Moscow. But currently he can’t run for office, not since Putin pushed through a law outlawing any Russian with foreign assets from being elected.
Second, the Obama administration has already imposed some sanctions against Russia’s elite, and if more are put into place, that could leave Prokhorov’s NBA franchise vulnerable.
He’s already taken a financial hit from the Crimea crisis, Bloomberg reported, saying Russia’s eighth wealthiest man lost $811 million of his net worth this year following a selloff in Russian markets that impacted his holdings, including OAO Uralkali, the world’s biggest potash maker. Don’t feel too bad for Prokhorov, though. At last count, his fortune was estimated to be as much as $12 billion.
As for the NBA, its top officials don’t seem supportive of Prokhorov’s business relocation plan. “The Nets are owned by Mikhail Prokhorov through a U.S.-based company,” league spokesman Mike Bass told the New York Daily News. “We have received no application nor is there a process underway through our office to transfer the ownership of the Nets to another company.”
However, last year Prokhorov, who happens to be 6’ 8” tall, said he had received permission from the league to transfer the team, and the company controlling Barclay’s Center arena where it plays, to a Russian company. At the time, an unnamed NBA spokesman was quoted in The Wall Street Journal saying “We are aware of the Russian election laws and are working with Mr. Prokhorov to resolve any conflicts should he choose to run for future office.”
Marc Ganis, a sports business consultant with SportsCorp LTD, said it would be unprecedented in American professional sports for a franchise to be owned by a foreign entity.
“I would expect that the only way that would be approved by the league is an agreement whereby the entity agrees that all legal matters are settled according to U.S. laws,” Ganis told the Daily News. “The association has to be able to have legal recourse for any actions related to the franchise.”
To Learn More:
Mikhail Prokhorov Plans to Move Nets Ownership to Russian Company (by Nathaniel Vinton, New York Daily News)
Billionaire Prokhorov Heeding Putin Call With NBA’s Nets (by Halia Pavliva and Ilya Arkhipov, Bloomberg)
The Nets Are About To 'Move' To Russia (by Paul Sonne, Wall Street Journal)
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