(Bloomberg) -- After spending about $3.3 billion to gain control of a Brooklyn-based sports empire, owners Joe Tsai and Clara Wu Tsai have won their first title. Now they want to keep expanding.
“Look what can happen when you have an intention,” Clara Wu Tsai said on Sunday at the Barclays Center in Brooklyn after the New York Liberty won their first WNBA title, beating the Minnesota Lynx. “And you put resources and care and attention to it.”
BSE Global, the parent company of the Nets, Liberty and Barclays Center that the Tsais acquired in 2019, has a strategy to make Brooklyn a bigger destination, which will help build a larger fanbase. It has the capital to do so. In June, members of the billionaire Koch family bought a minority stake in BSE Global at a $6 billion valuation.
The expansion initiative is eclectic, including a wine club, online magazine and potential investments in nearby performance venues, and eventually restaurants and hotels. The Tsais will also shift their focus to another team that needs attention. The Brooklyn Nets began their 13th season this week, hoping to rebound from missing the playoffs and to not get too overshadowed by the ascending crosstown Knicks.
Since their founding in the late 1960s, the Nets have mostly struggled, with just two Finals appearances and zero titles. The franchise has bounced around and played in multiple arenas, which weighed on its finances. In 2004, an investor group bought the team with plans to move it to a new arena, which would become the Barclays Center, in Brooklyn.
However, delays caused the team to spend another eight years in New Jersey, playing in front of dwindling crowds before limping to Brooklyn in 2012. The Nets’ future in the Barclays Center initially looked bright. The team made the playoffs, acquired star players and announced Jay-Z, a Brooklyn native and as a minority owner, which built buzz.
However the deep approach they took into leaning into Brooklyn rubbed fans from New Jersey the wrong way.
“When they moved in 2012, you started seeing a marketing push, The Brooklyn way , ‘Hello Brooklyn’, established in 2012, as if this was a new expansion franchise.” Rick Laughland author of A History of the Nets -From Teaneck to Brooklyn told Bloomberg. “What they did was they alienated and ostracized fans in New Jersey.”
The Nets admit to feeling like they don’t have generational fandom, even though the franchise’s history does stretch out over 50 years.
“We are a young team,” Sam Zussman, BSE’s chief executive officer, said during a recent interview at the Barclays Center. “We haven’t won a championship yet. And so we have to work really, really hard. I don’t want to wait 50 years to generate a generational fan.”
All the hype and star power led to just two playoff series wins. The Nets missed the postseason last season and then traded their best player, Mikal Bridges, to the Knicks, a franchise that it’s taken a back seat to for decades. When the Nets joined the NBA in 1976, the club had to pay the Knicks a fee for playing in the same area. To raise the funds, the Nets sold superstar Julius “Dr. J” Erving to the Philadelphia 76ers, who became one of the best teams of that era.
That volatile history has made developing a local fanbase difficult, although attendance has improved recently. It hit an all-time high for the regular season two years ago with an average of 17,669 a game, good for a 99.6% capacity rate, according to ESPN. During last season, attendance declined less than 1%.
Zussman aims to build on that. He joined BSE as CEO two years ago after more than 15 years at IMG, a conglomerate that includes a media company and events manager.
When talking about where BSE is headed, Zussman conjures something similar to IMG. He references building a “platform” and “ecosystem” of assets leveraging each other to make Brooklyn and the area around the arena a bigger draw for potential fans of its teams.
It’s a “vision where you’re coming here; you can stay at our hotel; you can go to our game; you can dine at a restaurant; you can do a conference at our conference center; you can go to the magic show venue; you can go have a drink at our bar,” Zussman said. “And you’re constantly in our ecosystem.”
BSE has started a division called Brooklyn Media that it sees as a way to promote the borough’s arts and culture scene. It has plans to launch a social media brand. The firm also recently acquired Brooklyn Magazine, a digital outlet with podcasts, restaurant reviews and happenings that bills its email newsletter as “dispatches from the better borough.”
The Nets are the only professional franchise in a major sports league to have Brooklyn in its name, “so enhancing the value, enhancing the credibility, enhancing the attraction is good for us,” Zussman said.
15 Million Visitors
BSE also sees a need to make Brooklyn more of a place to stay, not just visit for a game or concert. That means more hotels and other attractions, a common strategy by sports franchises nowadays as a way to drive growth.
According to Randy Peers, President and CEO of the Brooklyn Chamber of Commerce, 63 million people visited New York in 2023, but only 15 million people made it to Brooklyn. Expanding around the Barclays Center would be a strong economic driver “they can leverage a lot of resources. Not everything has to be in Manhattan.”
Zussman has his sights on a development such as LA Live, the giant entertainment area surrounding the arena where the Los Angeles Lakers play with amenities that include a 54-story hotel, 14-screen movie theater, restaurants and performance venues.
BSE is looking to invest in other venues around the borough. It’s already done that by taking a stake in the Brooklyn Paramount, a nearly century-old theater with a capacity of 2,700 that recently reopened after a lengthy renovation.
The company is also launching the Brooklyn Wine Club for this season in another push to offer more than a concert or basketball game. It will offer education, and conversations with sommeliers at Barclays and possibly other venues. On Friday, it announced the first phase of a $100 million five year plan to improve the area, opening to new members clubs at the Barclays.
“We want to offer options so that overall somebody does things around the arena and goes back home and says, ‘I had a great day,’” Zussman said.
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