Serving the scholastic field hockey and lacrosse community since 1998

Jan. 13, 2015 — Is the Jenga stack about to fall?

Today, it was reported that Mikhail Prokorov, a Russian oil tycoon, was going to sell his stake in the Brooklyn Nets and its home arena, Barclay’s Center. It’s estimated that his original buy-in into The Franchise Formerly Known As The New Jersey Nets was about $225 million about five years ago, and that the franchise may command up to $1 billion in today’s market.

It’s a nice return, but why the quick sale? Look at your local corner gas station.

Oil prices on the open market is going under $50 a barrel, and a number of oil interests that have started throwing money into the world of sports have lost money over the last four months.

This includes Russian oil oligarchs such as Prokorov and Roman Abromovitch, as well as oil, media, and transportation companies propped up by so-called “petro-authoritiarian” states that depend heavily on oil revenue.

Prokorov is the first one to get out. If the price of oil stays low and oil companies fall short of revenue goals, the long-term ramifications could be enormous.

Will more owners sell their teams to get cash to pay off debts? Will oil sponsors pull out of major competitions? Could entire businesses collapse? What about oil-dependent economies, such as Qatar? A continued downturn in the oil economy could very well put the 2022 World Cup in jeopardy, but it could also signal the end of beIN Sports, which has been the Qatari government’s chief apologist during the FIFA selection scandal.

Stay tuned.


1 Comment»

[…] I do wonder, however, whether the Russian largesse is going to last. The team is bankrolled by a copper-mining Uzbek billionaire, Iskander Makhmudov. As such, the team’s finances are not as likely to be affected by the current drop in the world price of oil that has forced the hand of a number of Russian oil oligarchs owning sports teams around the world, most notably the Brooklyn Nets. […]

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