Mikhail D. Prokhorov introduced himself to the N.B.A. three years ago with a swaggering stride, a mischievous smile and a cold-war quip.
"America, I come in peace," Mr. Prokhorov said in May 2010 after buying a controlling interest in the Nets.
A roomful of reporters burst into laughter.
It should be clear now that Mr. Prokhorov, a 48-year-old Russian billionaire, renowned playboy and aspiring politician, did not come on a peace mission. He came to conquer the N.B.A. by setting a standard for unbridled spending and general audacity.
That truth was unmistakable Thursday at Barclays Center in Brooklyn, where the Nets introduced two pricey new stars, Paul Pierce and Kevin Garnett, to join the three pricey stars the team already had.
The Nets' payroll next season will surge to a league-high $101 million, triggering a league-record luxury tax bill of about $82 million. In three years, Mr. Prokhorov has morphed from the N.B.A.'s international man of mystery into a Russian George Steinbrenner - only taller, richer and with a cool accent.
"I think they're still counting money in the back office," Mr. Prokhorov said, grinning, when asked about the $183 million outlay. "But frankly speaking, I just hope the check doesn't bounce."
There is little chance of that. Mr. Prokhorov's fortune was valued at $13 billion by Forbes this year, making him the N.B.A.'s second-richest owner, behind the Portland Trail Blazers' Paul Allen, at $15 billion.
Fourteen of the N.B.A.'s 30 owners are billionaires, according to Forbes. But few spend on their teams as eagerly as Mr. Prokhorov does, or with as much overt glee. There seems to be no limit to his largess, at least when it comes to assembling elite talent. Last summer, Mr. Prokhorov committed to $330 million in player contracts, including rich deals for Deron Williams, Joe Johnson and Brook Lopez, who were at the time the Nets' biggest stars.
"Frankly speaking, I'll do whatever I can do in order to reach championship here in Brooklyn," Mr. Prokhorov said. "For me, it was the goal when I bought the N.B.A. team. Because from inside, for me, there is only one place: first one."
The Nets' payroll and tax bill ballooned when General Manager Billy King devised a trade to acquire Mr. Pierce and Mr. Garnett, the cornerstones of the Boston Celtics' 2008 title team and two likely Hall of Famers.
The trade turned the Nets into title contenders, with a current or former All-Star at every position, each of them earning at least $11 million next season.
The Nets' odds of winning the 2014 championship jumped to 10-1, from 40-1, after word of the trade leaked in late June, according to Bovada, a sports gambling Web site. (They are now listed at 14-1.)
Other N.B.A. teams have surpassed $100 million in payroll. But none have paid as much as Mr. Prokhorov will next season, because of a strict new tax system that was intended to punish the free spenders and, indeed, to dissuade any owner from doing what Mr. Prokhorov just did.
Since 2002-3, the N.B.A.'s big spenders have paid a dollar-for-dollar tax after exceeding a set threshold. Under the new system, the penalty starts at $1.50 per dollar, and the rate keeps increasing for every additional $5 million spent beyond the threshold, set at $71.75 million next season. Having pushed past $100 million, the Nets are paying an additional $4.25 million for every $1 million more they spend.
The estimated $82 million bill will be more than triple what the Nets paid in luxury taxes for the last 11 seasons combined. It is more than all teams combined paid last season. It will easily eclipse the previous single-season record, $51.97 million, set by Allen's Trail Blazers in 2002-3, under the previous, less punitive system.
Most teams are rushing to duck under the tax threshold, or at least to minimize their liability. The defending champion Miami Heat just waived Mike Miller, their top 3-point shooter in the finals, to cut their tax bill.
Even the free-spending Knicks - who have paid a league-high $205 million in luxury taxes since 2002-3, according to ShamSports.com - suddenly look frugal compared with their Brooklyn rivals. The Knicks' $84 million payroll is currently the league's second highest, but they trail the Nets by $17 million - the equivalent of one superstar or three top-shelf shooters.
Even more jarring is that the Nets' spending spree comes two years after a costly lockout that nearly canceled the 2011-12 season. N.B.A. owners fought hard two years ago for a restrictive system that would rein in the big spenders and narrow the gap between the highest and the lowest payrolls.
Mr. Prokhorov has blown that premise to smithereens. The Nets will spend nearly $40 million more on payroll than the Houston Rockets, who last week signed Dwight Howard, the N.B.A.'s top center. The Nets' luxury tax bill alone will be higher than the payrolls of at least 25 teams.
Undoubtedly, Mr. Prokhorov can afford the added outlay. The Nets' value increased by 48 percent, to $530 million, with the move to Brooklyn from New Jersey last year, according to Forbes. Mr. Prokhorov said his investment had increased "minimum, fivefold" since his purchase of the team and a share of its arena.
"That's why I'm ready to invest more in order to make Brooklyn franchise the best in the league," he said.
The excitement generated by Mr. Garnett and Mr. Pierce can only push profits higher.
As of Monday, the Nets had seen a 27.2 percent spike in season-ticket sales and a 41.4 percent increase in season-ticket revenue compared with this time last year, much of it coming after the trade. They have about 800 season seats left before hitting a self-imposed cap between 12,500 and 13,000.
The team has also gained more than 40,000 fans on various social-media platforms since the trade was announced July 12. Sales at the team store were brisk Thursday, the first day that Garnett and Pierce jerseys were stocked.
"From a business perspective, it's been terrific," said Brett Yormark, the chief executive of the Nets and Barclays Center.
The new sales will probably not offset the luxury tax bill, but that really is not the goal.
"He wants to win," Mr. Yormark said of Mr. Prokhorov. "And it's driven by winning."
In the N.B.A., spending does not guarantee winning (just ask the Knicks), and the talent does not always mesh as hoped. The Dallas Mavericks' owner, Mark Cuban, has been one of the league's top spenders for the last decade, but he has only one title to show for it.
"The Nets have made their choice," Mr. Cuban said in an e-mail. "It will be interesting to see how it works out. Winning the summer isn't always a good thing."
Asked, however, if he would pay an extra $82 million if he thought it would get him another title, Mr. Cuban said, "In a nanosecond."
Though the N.B.A.'s new system failed to slow Mr. Prokhorov's check-writing, it will provide some benefit to the less-wealthy teams. Half of the Nets' tax payment - about $41 million - will be redistributed to the teams that stay below the tax line. Those teams will each receive an estimated $1.66 million. The remainder of the Nets' tax payment will go into the league's revenue-sharing pot.
From the moment he arrived, Mr. Prokhorov has been single-minded in his goals, insisting that if the Nets failed to win a title within five years, he would do the unthinkable and marry. He has two years left to avoid that fate.
"I can assure you that no process, for the time being, in looking for a wife is under way," Mr. Prokhorov said. "This is for sure."
No comments:
Post a Comment