The New York Liberty won again Monday night at Barclays Center. Former Secretary of State, U.S. Senator and First Lady Hillary Clinton sat courtside with Clara Wu Tsai, getting a standing ovation at one point from the 15,312 fans. It was the first appearance by either Joe or Clara Wu Tsai since last week’s news that the power couple who control the Liberty, New York Nets and Barclays Center were divorcing.
But the game, not the impending split, was the news. It was the Libs fifth win in six games, their best stretch since early in the season … and that’s just fine with Brooklyn Sports & Entertainment. BSE and no doubt the Tsais would prefer it that way: the game is the the thing … with no one bothering to mention news of the dissolution of the couple’s 30-year marriage. As their original statement to the New York Post’s Page Six claimed,
“Joe will remain Chairman and Clara will remain Vice Chair of Brooklyn Sports and Entertainment. Joe will remain Governor of the Brooklyn Nets and Clara will remain Governor of the New York Liberty. They will continue to own and be stewards of the teams with professional management in place as they always have.
“In the long run, they also plan to involve their children.”
A team insider said it more bluntly in talking with ND, “We are not splitting our basketball operation … The Nets and Liberty will work even more closely together in fandom, analytics, performance.”
And why not? While some fans think they see the news of the split as a prelude to a sale, there is no evidence to suggest that but plenty to support the idea that the Brooklyn assets are, as the insider noted, the “family business.” It’s a great business to be in, in some ways even more so than their other corporate holdings whether in Alibaba, the giant Chinese e-commerce, AI and cloud computing business; or their minority investments in everything from SpaceX to Fanatics to ByteDance, developers of TikTok, even the NFL’s Miami Dolphins. Brooklyn is generational and all three of the Tsai children have played competitive sports at a high level.
Indeed, a deep dive into the financial structure of the NBA shows that this would be precisely the wrong time for any kind of fire sale of an NBA or WNBA team. The leagues aren’t just booming. They’re exploding. Valuations and profits are about to take off like a rocket once again, putting the league on a trajectory that may never reach the stratosphere of the NFL, but narrow the gap between the two sports.
Currently, Sportico estimates the Nets along with Barclays Center are worth $6.22 billion. That’s around double what the Tsais paid for those assets — $3.3 billion — back in 2019. The Liberty’s value has jumped even more. Earlier in 2019, they paid $12-to-14 million to James Dolan for the then-moribund W team, mostly in debt relief. Sportico put the Liberty value at $600 million. In those ensuing seven years, there’s also been significant investment in the properties. Barclays is midway through a four year, $140 million upgrade and the Liberty’s new $80 million practice facility is underway in Greenpoint.
In the next couple of years, most analysts believe, things will get even more lucrative for the owners of NBA franchises. The league has announced it will add two new teams with Seattle and Las Vegas the leading candidates. In recent weeks, the rumored price tag for each of the two has jumped from early estimates in the $5 billion range to as much as $7 to $8 billion. The fees that new investors pay to get in will be shared among the 30 current owners. Assuming the total price tag is $15 billion, each current owner could wind up with a $500 million windfall.
Expansion would also mean the valuations of all NBA teams will rise. If teams in Seattle and Las Vegas are going to be worth $7 to $8 billion on arrival, what valuation would financial analysts pin on the Nets playing in New York in an established arena? Does $10 billion maybe more sound reasonable? (There’s a reason James Dolan, even before his team won the NBA championship, was talking about spinning off the Knicks from the Rangers, and separately suggesting he could sell off a piece to passive investors, perhaps a sovereign wealth fund in the Middle East, reaping a huge billion dollar profit.)
Then, there’s the league’s international expansion. The NBA is finalizing plans to create a 12-team European league which by some estimates could result in another $20 billion for current owners. It won’t end there. The NBA already owns and operates the Basketball Africa League and last October cemented new arrangements with NBA China after a seven-year hiatus.
Ratings under the new NBA TV contract in North America are setting records and the NBA’s popularity worldwide is on the rise. No, it didn’t hurt that a team in the biggest market was in the Finals.
Beyond the league’s overall popularity, the Nets and Liberty have their own advantages that add to a distinct value. To start with, there are few owners better suited for taking advantage of international expansion than the Tsais.
The Nets are the third most popular team in China, the league’s second biggest market, by most measures. Its pages on Weibo, the Chinese combination of Facebook and X.com, are the third most popular in the league, behind only the Warriors and Lakers. They have a five-person team that examines Chinese business opportunities. It was not a coincidence that the Nets hosted the NBA China Games last October in Macao. There are simple things as well. The Nets created a version of the Brooklynettes that tour China called “Cheer Nets,” a dance team that performs around the PRC, pushing the brand. Just this week, they were in Shanghai and Huangzhou along with Day’Ron Sharpe, Kenyon Martin and assistant coach Juwan Howard, a tour sponsored by the team.
Beyond China, the league put out numbers three years ago showing Brooklyn’s team had more than 10 million fans outside North America and estimated they were the third most popular team in France as well as China. As we’ve noted, the Long Island Nets have played 10 “home games” at Place Bell in suburban Montreal over the last two years, hoping to build a fan base in French-speaking Canada. So far, so good, each of the games was a sell-out with sales of “Les Nets” gear to match.
Sure, the Nets, the centerpiece of Brooklyn Sports & Entertainment, has “issues,” following their two-year tank and the Liberty have had some “growing pains” under new head coach Chris DeMarco. And, of course, the team across the East River just won it all but the Tsais show no indication they’re giving up. That’s from a performance aspect. From a financial aspect, BSE was an attractive enough asset that members of the Koch family invested nearly $700 million for a 15% stake. Nor did Jack Ma, one of China’s richest men, blanch when he bought an approximate 10% stake in the Liberty along with a number of American sportswomen.
Nor are they abandoning generational fandom, getting fans while they’re young. In fact, they are making more use of their latest investment, the Brooklyn Basketball Training Center for the city’s youth, employing it for the first time as a venue for a press conference last month when introducing their draft picks. And their program to offer free basketball clinics to New York school children now encompasses 50,000 kids, up from 44,000, last year.
Division of assets in any divorce proceeding can be a slow, grueling process, but for the Tsais, the big decision appears to have been made: they’re not going anywhere.
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