Brooklyn Nets’ Kyrie Irving (left) slaps teammate Kevin Durant as the Celtics extend their lead in the second half of Game 4 of their first NBA playoff series at the Barclays Center in Brooklyn, NY on April 25, 2022.
jim davis | Boston Globe | Getty Images
The superstar-laden, super-expensive, super-hyped Brooklyn Nets were supposed to be a super team. Instead, the otherwise lucrative NBA franchise is taking another early exit from the playoffs and looking for answers as a costly offseason looms.
Since committing more than $300 million to former NBA champions Kevin Durant and Kyrie Irving in 2019, the team hasn’t made it past the second round of the playoffs. Earlier this week, they were swept from the playoffs by the Boston Celtics. Another of their highest-paid players, Ben Simmons, hasn’t played since the Nets traded superstar and former league MVP James Harden for him. (Harden and the Philadelphia 76ers are still alive in the playoffs.)
The team is also looking for its third CEO in three years under owner Joseph Tsai. Rival NBA executives describe the $3 billion organization as “dysfunctional.”
“The Nets’ failure,” veteran columnist Michael Wilbon said on ESPN this week. “It’s the greatest story in sports.”
There are still some bright spots for the Nets. An NBA executive said the team should always be optimistic about adding business partners since Durant and Irving are marquee attractions, for example.
This year, the Nets are also expected to recover from a $25 million revenue drop due to the pandemic. The team made a league-high $30 million a year for its jersey crest ads. In February, Tsai noted that the team “set franchise records in attendance, ticket revenue and sponsorships.” The team also collected two games of playoff revenue. It’s considered extra profit after regular season revenue covers expenses. Ticket prices are also increasing.
But Brooklyn, the seventh most valuable franchise in the NBA, can’t afford to fall short of exorbitant expectations. Sponsors don’t like to be associated with franchises that don’t live up to the hype, says a longtime sports marketing executive Tony Ponturo.
“It’s not good for the image of the team – afterwards it’s not good for a sponsor,” said Ponturo, the former vice president of global sports and entertainment marketing at Anheuser-Busch. “You want everything to be positive and win-win, and you certainly don’t want a high-potential team to go flat in the playoffs.”
Brooklyn Nets’ Kevin Durant #7 passes the ball as he comes under pressure from Boston Celtics’ Jaylen Brown #7 in the second quarter during Game 4 of the Eastern Conference First Round Playoffs against the Boston Celtics at Barclays Center on May 25 April 2022 in the Brooklyn neighborhood of New York.
Elsa | Getty Images
Over the past two seasons, Brooklyn had the makings of a title-winning juggernaut, at least on paper. The New York Times Magazine wondered last year if the Nets – which featured the playoff-experienced trio of superstars Harden, Durant and Irving at the time – could finish greatest team of all time.
“We were all fascinated by that,” an NBA executive said of the Nets. “And we were wrong to assess these guys as a real title threat. It’s the perfect example of where marketing really took the place of substance.”
Instead, the now deceased Harden was injured and the team lost in the second round of the 2021 playoffs. This year, the Nets traded Harden, who was only with the team for 80 games over two seasons, against Simmons. Simmons did not play, and the Nets finished seventh in the Eastern Conference, beating the Cleveland Cavaliers in a playoff for the right to be swept by the surging Celtics.
Injuries were a factor, as was Irving’s refusal to get a Covid shot. The Nets initially banned Irving from playing, only to welcome him back after New York dropped its vaccination requirement. He only played 29 of 82 regular season games.
One executive described the Nets as “besieged by noise – the distractions, the controversy, the miscommunications” during Irving’s absence. This ultimately led to their demise.
NBA executives who diagnosed the Nets as dysfunctional spoke to CNBC on the condition of remaining anonymous because they are not authorized to discuss team business publicly.
James Harden #1 of the Philadelphia 76ers looks for a pass in the first quarter against the Toronto Raptors in Game 5 of the Eastern Conference First Round at Wells Fargo Center on April 25, 2022 in Philadelphia, Pennsylvania.
Tim Nwachukwu | Getty Images
One of the leaders said that the decision to trade for Harden in January 2021 was the real turning point as it hurt the depth of the team. The Nets lost center Jarrett Allen, who became an All-Star in Cleveland. Guard Caris LeVert and forward Taurean Prince were also traded.
“They bought the penny stock,” one of the executives said of the Harden deal. “They didn’t do the fundamentals, they swung big and it exploded.”
Now the Nets are stuck with the talented but troubled Simmons, who owes an estimated $112 million over the next three years, including $35 million next season. It’s unclear when the former All-Star will make his Nets debut. Simmons suffered a back injury and is still struggling with mental health issues after his lackluster performance in the playoffs last year.
Simmons’ situation “only creates more noise and distractions for the franchise,” the exec said.
The Nets also face other potentially costly roster issues this offseason.
Irving is set to decide on a $36 million player option, but said he plans to return. An agent has suggested to CNBC that Bruce Brown’s market value could eclipse $10 million a year after his outstanding playoff performance. His salary is now around $4 million. Patty Mills has a $6 million player option and center Nic Claxton is eligible for a new contract.
Net operator BSE Global has shown its willingness to pay the NBA’s luxury tax, which is a penalty the league applies after a team’s salary exceeds a certain point. This money is then distributed to teams that do not pay the tax.
For the 2021-22 season, the team’s estimated tax bill topped $90 million, second only to the Golden State Warriors’ tab, according to spotrac, a website that tracks sports offerings. This is slightly higher than the previous season’s bill.
Next season, the NBA’s so-called soft salary cap will increase to $122 million, with the luxury tax threshold set at $149 million. The Nets’ total payroll is $187 million for eight players under contract, according to spotrac. Expect this number to increase.
Executives wondered how long Tsai, the billionaire co-founder of Chinese e-commerce giant Alibaba, would pay to chase what could be earlier exits from the playoffs.
“At one point an owner looks at the payroll and says, ‘It’s unreachable.’ [the roster], even at a loss? And if you don’t produce the result – a championship – at some point, will it cost Sean?” an executive said, referring to Nets general manager Sean Marks.
Marks did not return a call from CNBC to discuss the matter.
Nets owner Joseph C. Tsai and Clara Wu Tsai during the game between the Brooklyn Nets and the Indiana Pacers on December 21, 2018 at Barclays Center in Brooklyn, New York.
Nathaniel S. Butler | National Basketball Association | Getty Images
The uncertainty has created a power vacuum, and one of the team’s stars has asserted herself. After losing to the Celtics, Irving suggested he would collaborate with Durant, Marks and Tsai to “make some moves this offseason” and be “intentional about what we build and have fun with.”
On the business side, the Nets are looking for another CEO after John Abbamondi has announced his resignation effective in July. The move came as a surprise since Abbamondi took office in July 2020 after the current Gender Sports executive David Levy left as CEO of the Nets in January 2020 after only five months of work.
The departures created a sense of confusion over who runs the club and led to other pressing questions. The franchise, for example, will be scrutinized to see if it will hire a black CEO.
The predominantly black NBA has just three black CEOs, down from seven in 2007. NBA commissioner Adam Silver has acknowledged the diversity problem, saying the NBA “can do a better job” of hiring among “CEO of the business side of teams.”
Two league sources told CNBC that the Nets have already identified a candidate to replace Abbamondi. The Nets did not return a request for comment on whether the team’s CEO search included a black candidate.