As evidenced by the recent $2 billion sale of the Los Angeles Clippers, NBA franchises have entered an era of enormous price tags.
With that in mind, the 2013-14 earnings report must have been rather frustrating for the Brooklyn Nets.
Not only were the Nets just one of nine teams to actually lose money last season, they led the pack by an incredible margin.
According to Zach Lowe of Grantland, the Nets lost $144 million in 2013-14 -- $131 million more than the next team, the Washington Wizards:
"It’s important to note that the figures here stem from basketball activities only, and do not appear to include benefits the Nets and Prokhorov get from their ownership stake in the Barclays Center. And Prokhorov, of course, is heli-skiing levels of rich. But taking a $144 million bath when the rest of the league is swimming in profits does not sit well."
So, just how did the Nets lose 11 times as much money as the next team? The majority of that $144 million comes from the team's luxury tax payments for its extravagant payroll. The additions of Kevin Garnett, Jason Terry and Paul Pierce bumped the Nets' payroll to more than $100 million. That was the highest ever by an NBA team and it triggered a $90 million luxury tax. The previous high for an NBA team's luxury tax was the $51.97 million paid by Portland Trail Blazers owner Paul Allen in 2002-03.
To put that $90 million in perspective, the Nets paid more in luxury tax than every other team in the league paid in salary.
Billionaire owner Mikhail Prokhorov has said he'll pay whatever it takes for the Nets to win, and before last season he made light of the enormous sum he would owe between salary and luxury tax.
“I think they’re still counting money in the back office,” Prokhorov joked, referring to the NBA's offices in New York. “But frankly speaking, I just hope the check doesn’t bounce.”
For Prokhorov, losing $144 million is nothing compared to the multi-billion dollar losses he's taken in years past. Plus, when taking into account how the Nets have increased in value the past few years and the fact that Prokhorov owns 45 percent of Barclays Center, this probably isn't going to keep Prokhorov up at night.
Still, with the Nets already on the hook for nearly $90 million in payroll and another large luxury tax payout in 2014-15, the team will need to quickly figure out a way to minimize these huge losses.
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