Jay-Z may be selling his stake in the Nets, but he’ll still continue to cash in on the franchise he helped bring to Brooklyn.
Though FORBES first reported this last week, you don’t have to take our word for it–the rapper explained the situation in his own words on a new song called “Open Letter,” released via SoundCloud earlier today.
Note the last line. Jay-Z is exaggerating here–he doesn’t own the billion-dollar Barclays Center outright, but holds one-fifth of one percent of the building in question, according to the Times. That’s an incredibly important piece of information, and most have missed it amid the recent frenzy around the planned sale of his Nets stake (and his anniversary trip to Cuba with wife Beyonce).
Jay-Z is selling his piece of Brooklyn’s first team since the Dodgers left town for one main reason: he’s launching Roc Nation Sports to represent professional athletes as an agent, starting with Yankees second baseman Robinson Cano. If he wants to work in basketball, he must divest. Whether inking players to deals with NBA teams or with big brands, owning a stake in the Nets would put him on the wrong side of the league’s laws.
“The likelihood is that other teams would consider even non-basketball related matters as potential violations of the salary cap,” explained Marc Ganis, president of the consultancy Sportscorp, Ltd., to me last week. If Jay-Z retained his stake, it would give the Nets “a means to circumvent both the cap and the restrictions on contact with other teams at certain periods of time.”
So that’s why Jay-Z is selling his piece of the team. It’s a tiny chunk, to be sure–just one-fifteenth of one percent–worth about $350,000 by our estimates, roughly the sticker price for one of his trademark Maybachs.
In typical Jay-Z fashion, though, he’s found a way to keep profiting on the team anyway: through his ownership in the arena itself, as he said in “Open Letter.” That means he’ll share in the stadium’s success not just for Nets games, but for concerts and other events held there.
The cleverness goes deeper. Through his involvement with the Nets, Jay-Z managed to get an outpost of his 40/40 Club installed at the Barclays Center, along with a store that sells Rocawear clothing (Jay-Z founded the line and sold it for $204 million five years ago, but the deal kept him on board as a creative consultant and offered him generous stock awards for hitting sales targets).
The arena also features placements for Hublot watches and Armand de Brignac “Ace of Spades” champagne, two products to which he has financial ties, as detailed in my Jay-Z biography Empire State of Mind.
The Nets looks to be in terrific shape this year, clinching their first playoff spot in five years, and have a talented core of players who should keep them in contention for years to come. That’ll keep the crowds coming to the Barclays Center, and the cash flowing into Jay-Z’s coffers–regardless of whether or not he owns a stake in the team itself.