Joseph Tsai and the Brooklyn Nets now dominate New York basketball, but the organization’s sights are set on much bigger triumphs.
The Brooklyn Nets made headlines this summer after achieving their most successful offseason in franchise history.
The summer signings of NBA superstars Kevin Durant and Kyrie Irving, combined with Joseph Tsai’s recent purchase of the remaining shares of the Brooklyn Nets points to a Chinese connection that is bigger than basketball, bigger than Brooklyn and much bigger than New York.
It’s big business of the highest order both globally and domestically.
On social media, many disgruntled New York Knicks fans, feeling spurned after their organization struck out on Durant and Irving (and other superstars), lashed out with commentary while bashing the Nets organization and their fans for trying to take over the New York basketball market.
The reality of the situation is the Nets had much bigger plans than just taking over the New York market. Their goal was to take over the world’s basketball market by strategically targeting the Chinese and Asian markets.
In doing so, taking over the New York market was just a side effect of a much broader comprehensive global business plan.
In this week’s Nets press conference, general Sean Marks was asked if taking over the New York market was ever the goal for the Nets franchise. He wasn’t lying when he denied it. It was merely semantics, as Marks was probably privy to the more important global expansion goals of Nets ownership.
It’s well known NBA movers and shakers continuously look to expand their growth in the international market. With Chinese billionaire Joe Tsai as the primary owner of the Nets franchise now, and Irving and Durant signed to long-term deals with Brooklyn, the Nets represent that endeavor in a major way.
Adam Silver was more than pleased to announce Tsai as the official principal owner for the Nets and for good reason. The NBA’s collective bargaining agreement has revenue sharing in place and with business booming for the Nets, business will ultimately boom for the NBA, regardless of the Nets’ success on the court.
The Nets have essentially cornered the Chinese and Asian market. This is one of the biggest expanding basketball markets in the world, if not the biggest. On the surface, the additions of Durant and Irving appear as clever personnel decisions that make the Nets title contenders for the foreseeable future. While that’s probably true, it still remains to be seen, but it’s already apparent their additions have transformed the Nets franchise into a financial global juggernaut.
Locally, the Nets have already surpassed their ticket sales revenue for the 2018 season. They accomplished that goal on July 9. According to Front Office Sports, “The Nets saw more ticket sale activity than any other day in franchise history when it was first announced that Durant and Irving were signing with Brooklyn on June 30.”
From a merchandising standpoint, the Nets have come a long way since April of 2015 when they dropped out of the top 10 in the NBA. Even in those low times, former Nets CEO Brett Yormark said, “We encouraged them to put our merchandise anywhere they can put it. Our merchandise in China went from No. 10 in the league to No. 3 – I give all the credit to Adidas; they really worked at seeding our product.”
Already a popular brand in China, the Nets franchise is primed to be vastly more popular there by a substantial margin. Roughly 15.8 percent of NBA players wear Adidas sneakers. 62.6 percent of NBA players proudly showcase Nike.
China and Adidas may have seeded the Nets product in the past but now the Nets are more deeply seeded by China and Nike. The latter is a much more potent seeding that will likely return revenues of record proportions for both the Nets, Nike and the NBA respectively.
Currently, Nets merchandise revenue is at an all time franchise high. On July 9, the Nets Store saw a 304 percent increase in sales when compared to that of an average day during the season. With the new release of the Biggie inspired White “Coogi” uniforms just released this week there’s even more revenue on the way.
Without question, business is booming for the Nets and it looks like that trend will continue for the next three to four years and possibly even longer if the Nets continue to be a popular superstar free-agent destination.
According to Sports Pro Media, the Nets are projecting up to 15 percent revenue growth for 2019-2020, but their report came out on July 3. That figure could easily climb with future endorsements potentially looming for other Nets players on the rise. It could grow even larger in 2020-22, correlating with the team’s success and Durant’s inevitable return, especially if the team makes a title run.
New Nets CEO David Levy has a much easier job than his predecessor Brett Yormark ever did, as his superstars are already bringing in massive revenue and he hasn’t even held the position for a month. Levy’s true legacy as Nets CEO will be defined by just how much he capitalizes on the Nets new star power and how well he does if and when the Nets lose that star power (possibly three or four years from now) depending on how things turn out with Durant and Irving.
According to Forbes, “China is a $7 billion market for Nike and represented 40 percent of the company’s sales growth last year.” Both Durant and Irving are endorsed by Nike.
Durant’s business partner Rich Kleiman said, “Nike sells more KD shoes in China than in North America.” The Durant Nike franchise grew double digits in 2019. Durant makes $26 million from that endorsement.
As per Forbes, “The Nike signature shoes of Irving have been one of the NBA’s best-sellers since they were introduced nearly five years ago. Nike released a collaboration this summer with Nickelodeon for a SpongeBob SquarePants x Kyrie collection.”
Irving makes $11 million from this endorsement. It’s worth mentioning newly extended Net Caris LeVert wears Irving’s Nike’s Kyrie 4 shoes and it’s possible a Nike endorsement could be in his future as well if he continues to blossom into an NBA star.
Wilson Chandler and DeAndre Jordan are also endorsed by Nike, which could have been a partial impetus for Nets GM Sean Marks signing them, aside from them filling obvious team needs.
Chandler also played professionally in China for Zhejiang Guangsha of the Chinese Basketball Association in 2011-2012. That connection cannot be ignored as his brand was surely boosted in the region during his short stint there.
Tsai’s current net worth is $9.8 billion and that figure will almost assuredly grow beyond that within the next five years. He acquired much of his wealth as co-founder and Vice Chairman of the Alibaba Group, a company that operates similarly to Amazon but primarily in Asia, and specifically China.
Alibaba shipping Nike products endorsed by Nets players into the Asian market would be making money coming and going for Tsai. This is a brilliant business strategy.
Tsai and the Nets are wasting no time making their impact on the Chinese market as the Nets are scheduled to play two preseason games there. The team will head to China to play the Lakers in the NBA China Games with one game in Shanghai and another in Shenzhen on Thursday, October 10th and the other on Saturday, October 12th.
Considering the financial implications of the Durant and Irving signings one can’t help but wonder if Tsai’s purchase of the remaining majority of the Nets franchise shares in conjunction with these star additions was merely a coincidence or if it was part of a larger business plan many months in the making.
Tsai is the only Chinese majority owner in the NBA. That’s worth noting.
It’s no secret that Spencer Dinwiddie helped recruit Irving and it’s been a widely held belief that Irving, in turn, recruited Durant to sign with Brooklyn.
Prior to June 30, most NBA fans, and especially Knicks fans were expecting the tandem to sign with the Knicks.
Is it possible that Tsai’s influence over the Chinese and Asian market was the determining factor that ultimately culminated into both stars signing with Brooklyn rather than New York? If Tsai was a minority owner of the Knicks is it possible that Irving and Durant would have chosen New York over Brooklyn? These are fair questions to ask.
Was it merely a coincidence that Tsai opted to purchase the remaining shares of the Nets shortly after these superstar signings?
While such conjecture technically enters into the conspiracy zone, when the series of franchise moves are analyzed in hindsight, it makes sense when following the money trail, the pot of gold at the end of the rainbow and paying close attention to the details.
The official stories that both Durant and Irving loved the Nets culture is heartwarming. The notion Irving wanted to play for his favorite NBA team from his childhood is endearing to Nets fans but it would be remiss to ignore the big money at stake behind their decisions and the events that transpired this summer for the Nets.
Brooklyn, a bridge away from New York City is in one of the largest American basketball markets. China is one of the largest basketball markets in the world surrounded by a burgeoning Asian market that includes Japan and Malaysia as well.
Irving was in Japan doing commercial work boosting his brand in the months leading up to free agency. The star signings happened almost immediately on June 30th at 6pm. Another coincidence? Perhaps.
Again, according to Forbes, “China has 300 million people who play basketball, according to the NBA, and it is a critical market for the sneaker brands. LeBron James, Stephen Curry and other stars make pilgrimages to China almost every summer for appearances and pep rallies in cities throughout the country. The trips are the price of admission to getting a $10 million-plus yearly sneaker deal.”
The NBA wanted to investigate the Nets for alleged tampering according to the New York Post in July. The investigation was short-lived but it was virtually evident that player collusion did occur although not via Nets management, only through player correspondence.
Since then, NBA Commissioner Adam Silver implied the NBA would not deem such conversations to be in violation of the new NBA tampering policy. For more specifics: The New NBA anti-tampering policy as per Sports Illustrated.
The Nets were not the only team that allegedly engaged in tampering either. Perhaps the NBA did not aggressively pursue these tampering allegations because the end result of this past summer’s free agency period was beneficial to the NBA product.
The 2019 NBA season now features star duo heavy teams and long coveted competitive parity that did not exist in prior years due to superteams dominating the league. This is good business for the NBA and subsequently beneficial to the Nets as they now have two of the best players in the NBA on their roster – bolstered by a well-rounded formidable supporting cast.
The Nets Chinese connection has put the Nets on the map in a major financial way. Nets fans, however, will be spending more than ever in franchise history on merchandise and game tickets as prices will undoubtedly skyrocket.
Let’s just hope the unprecedented financial success of the Nets franchise is mirrored ultimately on the court and the team eventually contends for and wins the ever-elusive
NBA Championship in the near future. For the fans that would make it all worth it, literally.
It could definitely happen if the Chinese connection market branding is as important as it appears to be for the Nets and the NBA.