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Brooklyn Nets dysfunction weighs on business prospects

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Kyrie Irving from the Brooklyn Nets watches as Kyrie looks on at the Boston Celtics during 2021 NBA Playoffs, May 25, 2021, Barclays Center in Brooklyn.

Getty Images| National Basketball Association | Getty Images

Super-expensive and superstar-laden Brooklyn Nets were meant to be a great team. The otherwise profitable NBA franchise has been left reeling after another disappointing playoff exit. They are now seeking answers in an expensive offseason.

In 2019, they committed over $300 million for former NBA champions Kyrie Irving, and Kevin Durant. The team has not advanced beyond the second round. The Boston Celtics swept them out of the playoffs this week. Ben Simmons has been absent from the team since James Harden was traded by them to become a superstar player and league MVP. Harden is still in playoff play, as are the Philadelphia 76ers. 

Joseph Tsai is currently searching for the third team’s CEO. The $3 billion-plus organization is described by rival NBA officials as “dysfunctional.”

Michael Wilbon, a veteran columnist said on ESPN this week: “The failures of the Nets.” It is the greatest story in sports.

Still, there are some benefits for the Nets. An NBA executive suggested that the team must remain positive about adding business partners because Durant, Irving and other marquee players are a major draw.

The pandemic caused a 25 million revenue drop for the Nets. This should help them recover. For its jersey patches ads, the team earned a league record $30 million annually. Tsai stated that in February the team set “familiar records” for attendance, ticket revenue, and sponsorships. Tsai also noted that the team earned playoff revenue for two additional games. After expenses are covered by regular season revenues, this is considered additional profit. Additionally, ticket prices are rising.

Brooklyn, seventh-most valuable NBA franchise can’t afford not to live up to its lofty expectations. According to a long-standing sports marketing executive, sponsors do not like being associated with teams that don’t live up to their expectations. Tony Ponturo.

“It’s not good for the image of the team – subsequently, it’s not good for a sponsor,” said Ponturo, the former vice president of global sports and entertainment marketing at Anheuser-Busch. It’s important for everything to go well and win. You don’t want your team to fail in the playoffs.

Kevin Durant #7 from the Brooklyn Nets attempts to overcome Jrue Holiday #21, of Milwaukee Bucks, during overtime in game seven of Eastern Conference round two at Barclays Center in Brooklyn on June 19, 2021. This was in Brooklyn Borough of New York City.

Elsa | Getty Images

Brooklyn: What happened?

Brooklyn, for two consecutive seasons, had all the ingredients of being a title-winning team, at least in paper. The New York Times Magazine wondered last year if the Nets – which featured the playoff-experienced superstar trio of Harden, Durant and Irving at the time – might end up the greatest team of all time

“We all got mesmerized by it,” one NBA executive said of the Nets. They were mistaken in not identifying those players as a serious threat to the title. This is the best example of marketing trudging substance.

The Nets lost to the Hawks in round two of the 2021 playoffs because Harden, who is now deceased, was hurt. Harden, who had been with the Nets only 80 times over the course of two seasons, was traded by the Nets this year for Simmons. Simmons did not play and the Nets came in seventh place in the Eastern Conference. They beat the Cleveland Cavaliers to win the right of being swept by the rising Celtics.

Irving refused to receive the Covid vaccine because of injuries. Irving had been banned by the Nets at first, but they were able to accept him back once New York removed its requirement for vaccination. Irving played only 29 of the 82 regular-season games.

One of the executives described the Nets as “besieged by noise – the distractions, controversy, miscommunication” during Irving’s absence. They eventually lost their way.

CNBC spoke with the NBA executives that diagnosed the Nets to be dysfunctional on condition they remain anonymous as it is not allowed for them to discuss team matters publicly. 

James Harden #13 of the Brooklyn Nets dribbles against Georges Niang #20, Philadelphia 76ers during the second period at the Wells Fargo Center in Philadelphia on October 11, 2021.

Getty Images| Getty Images

The decision was made by one of the top executives. trade for Harden in January 2021 was the real turning point because it hurt the team’s depth. Jarrett Allen was traded to the Nets, where he went on become an All-Star for Cleveland. Also traded were guard Caris LeVert, forward Taurean Princess and forward Taurean King.

One of the Harden executives stated that they had bought penny stock. They didn’t understand the basics, they swung big and it crashed.”

The Nets have now stuck with Simmons, a talented, but unstable player who is owed $112 million in the next three seasons, and $35 million for next season. He is yet to make his Nets debut. Simmons was injured in his back and has been placed on the DL. still contending with mental health issuesAfter his disappointing performance in the playoffs last season.

Simmons’s situation is “only creating more noise and distractions to the franchise,” said the executive.

What will nets do with more money?

The Nets face other potentially costly roster issues this offseason, as well.

Irving must decide whether to pursue a $36million player option. However, he said that he will return. CNBC received a suggestion from an agent suggesting that Bruce Brown’s market price could exceed $10 million annually after his outstanding playoff performance. He earns an estimated $4 million per year. Patty Mills can choose to play as a player for $6 million, while Nic Claxton (center) is eligible for an extension.

Nets operator BSE global has shown a willingness to pay the NBA’s luxury tax, which is a penalty the league applies after a team’s salary goes above a certain point. This money is distributed to those teams who do not pay the tax.

The estimated tax bill for the 2021-22 season was $90 million. This is second to the tab of the Golden State Warriors. SpotracThe website tracks deals in sports. It’s slightly less than last year’s.

The NBA will increase its soft salary cap to $122million next season. Luxury tax threshold is set at $149million. For eight contract players, the Nets total payroll amounts to $187million. Spotrac. You can expect this number to increase.

Tsai was asked by executive whether he would continue to invest in his billionaire cofounder at Chinese e-commerce giant Alibaba to pursue more lucrative exits from the NBA.

An owner will look at his payroll and say, “This is impossible.” This money won’t go to charity. It is dispersed among your adversaries. He doubles down and funds. [the roster], even at a loss? And if you don’t produce the result – a championship – at some point, will it cost Sean?” “Sean Marks is the Nets’ general manager,” said an executive.

CNBC called Marks but he did not answer.

Clara Wu Tsai (Nets Owner Joseph C. Tsai) and Clara Wu Tsai attended the match between the Brooklyn Nets, Indiana Pacers and Barclays Center on December 21, 2018, in Brooklyn, New York.

Nathaniel S. Butler | National Basketball Association | Getty Images

Who runs the Nets

One of the team’s most prominent players, Irving, has declared himself to be ready for whatever comes next. Irving said that he was open to working with Marks, Durant and Tsai in order to make some moves and to be intentional about the things we are building. He also suggested having some fun.

The Nets need a new CEO to run their business. John Abbamondi announced he’s stepping down effective this July. This was unexpected as Abbamondi had assumed the position in July 2020, following current Genus Sports executive David Levy quit as Nets CEO in January 2020 following just five months on the job.

These departures caused confusion and created pressure by asking many other questions. For example, the franchise will have to be evaluated over its plans to hire a Black chief executive.

Only three Black NBA CEOs are currently employed, compared to seven who were the league’s highest number in 2007. Adam Silver, NBA Commissioner, acknowledged that diversity is a problem. He said the NBA can do better in terms of hiring CEOs for the business side.

CNBC received confirmation from two league sources, that Abbamondi’s replacement had been identified by the Nets. A request by CNBC for comments from the Nets on whether or not their CEO search involved a Black candidate was unreturned.

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