How is it that the Brooklyn Nets—already capped and taxed up the you-know-what while employing the likes of Deron Williams, Joe Johnson and Brook Lopez—can afford to take on the Boston Celtics' expensive trio of Kevin Garnett, Paul Pierce and Jason Terry, along with the approximately $80 million luxury-tax bill that will accompany their $100 million payroll, per Adrian Wojnarowski of Yahoo! Sports?
Mikhail Prokhorov, that's how.
The majority owner of the Nets (and 45 percent stakeholder in Barclays Center) also happens to be one of the richest sugar daddies in the NBA. Prokhorov's net worth of $13 billion, per Forbes, is second only among his basketball-invested peers to that of Portland Trail Blazers overseer Paul Allen, whose $15 billion fortune, per Forbes, was derived largely from co-founding Microsoft.
Prokhorov, though, didn't come by his wealth quite as "honestly" as Allen did his. The 6'8" Muscovite is often described as one of Russia's infamous business oligarchs, a collection of self-made billionaires who profited handsomely off the collapse of the USSR during the late 1980s and early 1990s.
Over the years, his business portfolio has expanded to include interests in mining, metallurgy, nanotechnology, financial services, media, real estate development, utilities and, of course, professional sports.
Selling Soviet Scraps
Prokhorov's path to imperial wealth began in 1989 when, as a new graduate of the Moscow Finance Institute, he began a three-year stint in management with a number of Russian banks, including the International Bank of Cooperation and the MFK bank.
He eventually climbed the ladder to the presidency of the Union Export-Import Bank, known otherwise as Oneksimbank, where he became acquainted with Vladimir Potanin, a future business associate and fellow soon-to-be-tycoon. Potanin had been closely connected to members of the Soviet Kremlin and other power players in Moscow during the prior decade.
Once the Communist regime collapsed, Potanin ditched his post with the Ministry of Foreign Trade and became one of the first in line to open a private bank. Shortly thereafter, Potanin joined forces with Prokhorov, forming a duo whose combination of political relationships and financial know-how would propel their partnership to ridiculously lucrative heights.
In 1995, the two worked their connections to land Oneksimbank a plum gig as the manager of a major government auction. As part of Russia's suspect "loans-for-shares" program, the government auctioned off holdings in Norilsk Nickel, a mining conglomerate that stood as one of the world's largest producers of nickel and palladium, in exchange for capital with which to fund civic functions.
Oneksimbank not only administered the auction but also awarded the 38 percent stake in Norilsk Nickel to Interros, an investment group owned and run by (you guessed it!) Prokhorov and Potanin. That deal was shady enough in and of itself, and it only grows shadier when you consider that, per Bernard Black, Reinier Kraakman and Anna Tarassova:
1. The closing bid was $170.1 million, just $100,000 more than the reserve price.
2. The above prices were rather low (to say the least) for a chunk of a company the size of Norilsk Nickel, which, at the time, produced 25 percent of the world's nickel and raked in $400 million per year in revenues.
3. There were only three bids officially fielded, all between $170 million and $170.1 million and all from affiliates of Oneksimbank.
4. The largest bid, of $355 million from Rossiiski Kredit Bank, was rejected on the (suspicious) grounds that the offer exceeded the bank's credit.
With the rigged acquisition complete, Prokhorov and Potanin set off to expand and streamline Norilsk Nickel's operations. They sold off non-mining assets, separated the company's gold-mining interests into an $8.5 billion entity that became known as Polyus Gold and sought out new opportunities to exploit resources across Russia.
By 2007, Prokhorov and Potanin had Norilsk Nickel generating annual revenue of more than $10 billion and turning yearly profits of approximately $1.5 billion, per Brian Warner of Celebrity Net Worth.
Needless to say, that growth made these two men very, very, VERY rich. Prokhorov was even awarded Russia's Order of Friendship by President Vladimir Putin in August 2006 for his supposed contributions to the country's economic development.
Fortune Favors the Fortunate
Prokhorov's rise to power hit a snag, though—or appeared to—in January 2007, when he was arrested by French authorities on suspicion of soliciting prostitutes.
Prokhorov had arranged for his guests to be "entertained" by a group of eight Russian "models" during an annual celebration of the Russian Orthodox New Year in the exclusive resort town of Courchevel in the French Alps.
The French police held Prokhorov for four days, and though the charges were eventually dropped, the incident would be brought to bear on the Russian billionaire's fortunes, monetary and otherwise, long after his release.
Potanin seized the opportunity to push Prokhorov out of Interros, especially with Norilsk Nickel's stock price reaching record highs. Prokhorov "resigned" his post at Norilsk Nickel in February 2007, thereby kicking off a long and arduous separation of assets between himself and Potanin.
The following May, Prokhorov used his newly differentiated wealth to found ONEXIM Group, a private investment fund whose interests came to include mining, energy, nanotechnology and real estate, among other things. He tried his hand at media holdings shortly thereafter with a role in JV!, a high-profile venture in Russia.
By April of 2008, Prokhorov had sold his 25 percent stake in Norilsk Nickel to fellow tycoon Oleg Deripaska in exchange for $7 billion in cash and $3 billion worth of shares in RUSAL, Deripaska's mining operation.
Prokhorov's cash-out—and the opportunism by Potanin that led to it—took a fortuitous turn when the global financial crisis struck in the fall of 2008. Many of Russia's wealthiest oligarchs saw their fortunes shrink as their companies took a collective beating from a crashing market.
Prokhorov, on the other hand, escaped the downturn largely unscathed. He'd already pulled most of his money out of the market. As a result, he was left standing as the richest man in Russia and watched as the value of his estate expanded to upward of $13 billion.
Not bad for a once-alleged peddler of prostitutes.
Along the way, Prokhorov added substantial stakes in various companies to his impressive portfolio, including Renaissance Capital (a major Russian investment bank), IFC (a smaller bank), RBC Information Systems (a media group) and OptoGan (a nanotechnology firm).
A Return to His First Love
But none of those ventures did much to satiate his love of athletic competition.
Prokhorov's passion for sports had been borne of his father Dmitry's role as the head of Soviet Sport Committee's international department. Mikhail had dabbled in dealings with CSKA Moscow during his days with Norilsk Nickel, overseeing the famed club's run to two Euroleague championships.
In 2009, Prokhorov decided to try his hand at doing the same in the NBA when he stepped forward to take over the then-New Jersey Nets. The sale closed on May 10, 2011, with Prokhorov garnering 80 percent of the Nets and 45 percent of the Brooklyn arena development project that would give rise to the Barclays Center.
At the time of the purchase, Prokhorov proclaimed that the Nets would bring home the Larry O'Brien Trophy within five years or else he'd quit his playboy ways and get hitched—a bold statement from which he's yet to run (via Steve Serby of the New York Post):
"I have said that if the Nets don’t win the NBA championship within five years, I will punish myself by getting married. We are in year three. So no one is more interested in winning a championship than yours truly."
Since taking control of the Nets, Prokhorov has overseen their transition to Brooklyn while pursuing his own political interests back in Russia. He finished third in the Russian presidential election in 2012 with a shade under eight percent of the vote.
He was recently disqualified from running for mayor of his hometown of Moscow on account of a curious law barring prospective candidates with foreign holdings from partaking in the election, per RIA Novosti. Prokhorov still intends to dabble in Muscovite politics, albeit not as a direct candidate just yet.
In the meantime, he'll have plenty with which to busy himself stateside. His Nets will soon sport a payroll that, assuming Dwight Howard's departure from the Los Angeles Lakers, ranks as the highest in the NBA.
Not to mention the enormous expectations that come with fielding a starting lineup that features five All-Stars (Kevin Garnett, Paul Pierce, Deron Williams, Joe Johnson and Brook Lopez), along with one of the most accomplished reserves (Jason Terry) to ever play in the NBA.
But if there's any owner in the NBA today who knows how to turn the tables in his favor (to put it nicely), it's Mikhail Prokhorov.