Bloomberg News

Stern Sees Nets’ Revenue in NBA’s Top Five With Move to Brooklyn

September 06, 2012

The National Basketball Association Commissioner David Stern said the Brooklyn Nets may jump into the league’s five highest revenue teams in the franchise’s first season in the Barclays Center.

Speaking at the Bloomberg Sports Business Summit hosted by Bloomberg Link in New York, Stern also stressed the league’s desire to increase its brand in India, the world’s second most- populous country. Those inroads include a Hindi-English website, television agreements, tournaments and possibly a league that bears the NBA name.

The Nets’ revenue should improve from “pretty bad” during their last season in Newark, New Jersey, to one of the league’s top five or six, according to Stern.

“The Nets have these wonderful tent-pole sponsorships, they’re doing spectacularly in their season-ticket sales and they have retained a team that, in reading about it, looks like they’re going to compete,” he said.

The team’s new arena, part of a $4.9 billion, 22-acre project next to Brooklyn’s main public-transportation hub, opens for basketball next month. This offseason, the Nets acquired six-time All-Star Joe Johnson and brought back point guard and Brooklyn native Deron Williams, a three-time All-Star.

Team ownership, led by Russian billionaire Mikhail Prokhorov, also redesigned the logo, further distancing itself from the team’s 35 years in New Jersey, where it lost almost 500 games more than it won.

Value Up

The Nets may generate revenue of $140 million and turn a profit of as much as to $15 million, the New York Post reported last month citing an unidentified person with knowledge of the matter. The team is now worth $575 million, 60 percent more than its $357 million valuation last season in Forbes Magazine’s annual rankings, the newspaper said.

“Before, we had to have brochures and video of, ‘This is what it’s going to be when we’re in Brooklyn,’” Nets General Manager Billy King said in July. “Now we can take them there. It’s a reality now, and I think it’s going to be great for the people of Brooklyn and our fan base. It’s going to be great for our players to be part of something special.”

NBA Growth

The Nets’ projected revenue and value increase is part of the NBA’s total growth, Stern said. More than 20 of the league’s 30 teams will be profitable in the coming year, according to Stern, the NBA’s first full season under a 10-year collective bargaining agreement signed in November. The league reported annual losses of $300 million before the new labor accord, and Stern had said that half the teams lost money.

Stern said there are now at least 10 cities that have expressed interest in hosting a team and over a dozen “high net worth” prospective owners, whose interest will further increase franchise values. He didn’t identify the cities or people involved.

“I’m not looking at a lot of movement, but I am looking at a lot of price increases simply because when someone offers you a very high price for your asset, you have to decide whether you’re in it to pass it to your family or if it’s an asset that you may love but may not love enough to turn down a very high offer,” he said.

Some owners have objected to the NBA’s overseas investments, including a heavy focus on China and India, because there isn’t always a high return, Stern said. The league made its first deal in China in 1988, sharing a portion of advertising revenue in return for games being broadcast on the country’s CCTV.

Investment Focus

“We can deliver more dollars, but frankly my view has been that if there’s one area you should be investing in heavily is international and digital,” Stern said.

The NBA has games broadcast on India’s television networks, including Taj TV’s Ten Sports, in addition to an office in Mumbai and five permanent employees in the country. The Hindi website comes from the model of webpages the league has in China with Sina.com and Tencent.com, according to Stern.

The league is also sponsoring events in India, which has a population of over 1.2 billion, second only to China. It sponsors the Mahindra NBA Challenge, a grassroots clinic that started last year, and is scheduling a four-city tournament presented by Coca-Cola Co. (KO:US)’s Sprite brand, which will include more than 100 teams in Delhi, Hyderabad, Chennai and Mumbai.

The NBA and IMG Worldwide Inc. have been in talks about creating a league in India, Bloomberg News reported this year citing two people with knowledge of the discussions.

“Frankly we don’t think the market is quite ready for a full-blown league,” Stern said today. “We’re more anxious in building up the other aspects of our business, our marketing partnerships, our merchandise, our television and our events.”

To contact the reporter on this story: Eben Novy-Williams in New York at enovywilliam@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net


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