News: Jay-Z Loosens Up The Tie, Begins Process To Give Up Nets
Tuesday, Apr 9, 2013 7:40PM
A week after rap mogul Jay-Z officially launched his Roc Nation Sports company, new reports claim the Brooklyn Nets minority owner is on the verge of losing his portion of the NBA team.
While nothing is official yet, reports claim Young Hov is making strides to end his business relationship with the team.
Entertainment mogul and rapper Jay-Z has started the process of divesting his small share of ownership with the Brooklyn Nets to extend his Roc Nation Sports representation business into basketball, sources told Yahoo! Sports. Jay-Z - whose real name is Shawn Carter - owns less than 1 percent of the Nets, but has been a central public figure in the franchise's marketing and move from New Jersey to Brooklyn. Selling his share of the Nets is a necessary prelude for Jay-Z to obtain his National Basketball Players Association certification as an agent. NBA rules mandate that no one individual affiliated with a player representation company can have an ownership stake with an NBA team. (Yahoo News)
Late last week, speculation on Jigga possibly giving up his stake in the Nets spread across the Internet.
"I would expect there to be significant issues raised, even potentially forcing a sale of his interest in the Nets, if this matter was not addressed to the satisfaction of the NBA," says Marc Ganis, president of the consultancy Sportscorp, Ltd. Jay-Z wouldn't have to sell his Nets stake to represent baseball players, that's for sure. But there are two major issues, says Ganis, that would arise if he tried to represent NBA players: whether or not he could handle their basketball-related matters given his status as a co-owner of the Nets, and whether he could handle non-basketball related matters like endorsements as well. There seems to be no question that Jay-Z would be prohibited from doing the former, and though the latter is a slightly more complicated issue, it appears that wouldn't be permitted by the NBA, either. (Forbes)
Since Hov owns such a small stake in the Nets, analysts predicted he would easily be persuaded to sell it to billionaire team owner Mikhail Prokhorov.
But Jay-Z may have already found a work-around. Though he once owned as much as 1.5% of the $530 million team, his stake has dwindled to one-fifteenth of one percent. Why? Jay-Z's representatives didn't immediately respond to a request for comment, but it seems he may have converted the difference into equity in the Barclays Center. He now owns roughly one-fifth of one percent of the billion-dollar building. Given that his remaining stake in the Nets is worth about $350,000--comprising less than 1% of Jay-Z's net worth--it's no longer a financially significant sum to the rapper or the team. Jay-Z could easily sell his stake back to billionaire owner Mikhail Prokhorov or trade it for more equity in the arena itself. Either way, his existing interest in the Barclays Center would allow him to keep profiting from the Nets' success while staying within the NBA's rules. Knowing Jay-Z, that was probably his plan all along. (Forbes)
Jay issued a formal statement backing his decision to launch Roc Nation Sports last week.
Robinson Cano will be co-represented by CAA, a leading sports and entertainment agency, and Roc Nation Sports, a branch of a company founded by Jay-Z. Jay-Z announced the launch of Roc Nation Sports as a full-service sports management company on Tuesday. "Because of my love of sports, it was a natural progression to form a company where we can help top athletes in various sports the same way we have been helping artists in the music industry for years," Jay-Z said. (Fox Sports)