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Alibaba Group Holding Ltd. Executive Vice Chairman Joe Tsai has agreed to buy 49 percent of the Brooklyn Nets from Russian billionaire Mikhail Prokhorov in a deal that values the National Basketball Association club at a record $2.3 billion, according to people familiar with the matter.

The agreement gives Tsai the right to buy the remaining stake of the team in 2021, according to the people, who asked not to be identified because the deal hasn’t been announced. Prokhorov has the right to keep a 20 percent stake in the team, the people said. Prokhorov, the Russian billionaire who announced his intention to sell a minority stake last December, will remain principal and operating owner for the next four years, per the report. Tsai would be able to activate his option and take over majority control of the franchise at that time.

Mikhail Dmitrievitch Prokhorov is a Russian billionaire, politician, and former owner of the American basketball team the Brooklyn Nets. After graduating from the Moscow Finance Institute, he worked in the financial sector and subsequently went on to become one of Russia’s leading industrialists, owning major stakes in multinational corporations in the precious metals sector. While he was running Norilsk Nickel, the company became the world’s largest producer of nickel and palladium. He is the former chairman of Polyus Gold, Russia’s largest gold producer, and the former President of Onexim Group. He resigned both positions to enter politics in June 2011.

In December 2011, Prokhorov capped a year of higher-profile political activity in Russia with the December declaration that he would run as an independent candidate in the 2012 Russian presidential election. He was third in the voting, amassing 7.94% of the total vote. In June 2012 he declared the establishment of the new Russian political party called the “Party of Civic Platform”. As of 2017, Forbes estimates his wealth at $8.9 billion.

Tsai, 53, will not have management or business responsibilities as a minority partner. He is purchasing the 49 percent stake for $1.12 billion.

The deal does not include the acquisiton of Brooklyn’s Barclays Center, of which Prokhorov owns a majority share. A new long-term lease for the Nets is also reportedly in the works.

The price tag is $100 million more than the record $2.2 billion Tilman Fertitta paid for the Houston Rockets last month. That deal included operational control of the team’s arena.

In 201O Prokhorov’s Onexim Sports & Entertainment paid $223 million for an 80 percent stake of the team and a 45 percent share of the arena that, for now, also houses hockey’s New York Islanders. In 2015 the Russian billionaire consolidated ownership of the team and arena. That purchase from real estate developer Bruce Ratner’s Forest City Enterprises Inc. valued the team at $875 million and the building at $825 million, including debt.

The team is worth is worth $1.8 billion, seventh in the 30-team NBA, according to Forbes magazine’s most recent valuations. Prokhorov has a net worth of $11.3 billion.

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Prokhorov last year retained Allen & Co. to sell what he said at the time was up to 49 percent of the franchise. That said, Prokhorov has always maintained that he would listen to offers for the franchise that relocated to Brooklyn from New Jersey for the 2012-13 season.

The first non-North American owner of an NBA team, Prokhorov, at his introductory press conference in 2010, said the Nets would win a championship within five years. They didn’t. The Nets haven’t had a winning season since the 2013-14 campaign, finishing last season with a 20-62 record.

On-court struggles aside, the sale comes at a time of ballooning franchise values across sports, a boom fueled in large part by media rights. Even with ESPN losing subscribers, those so-called rights fees show no signs of abating as new bidders such as Amazon.com Inc., Facebook Inc. and Twitter Inc. wade into the distribution of sports content, including live games. And many would-be owners say that legalized sports betting, which NBA Commissioner Adam Silver has said is inevitable, will be worth billions to the major U.S. sports leagues.

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The would-be buyer is getting something rare: a major professional sports team in New York, the nation’s number one media market. It’s unlikely that any of New York’s other marquee teams — the Jets and Giants, baseball’s Yankees and Mets, or basketball’s Knicks and hockey’s Rangers — will be on the market anytime soon.

Tsai, whose net worth is $10.7 billion, in August bought the National Lacrosse League’s expansion team in San Diego. 

  • Tsai is vice chairman and cofounder of Alibaba Group, and ranks as its second-largest individual shareholder after chairman Jack Ma.
  • Alibaba’s revenue in the 12 months ending in March 2017 rose by 56% to $23 billion.
  • Tsai holds an undergraduate degree in economics and East Asian studies and a law degree from Yale.
  • Taiwan-born Tsai holds a Canadian passport.