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Rivals crying foul over Nets owner Joe Tsai’s latest business venture

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Brooklyn Nets owner Joe Tsai is looking to widen his investments in the NBA — and his unusual play has some competitors crying foul.

The billionaire co-founder of China-based e-commerce giant Alibaba is poised to take a stake of less than 5 percent in the firm behind HomeCourt Partners, a fund that has won special permission from the NBA to raise $2 billion to buy small stakes in numerous basketball franchises, many of which are now losing money.

Tsai — who as the right hand of Alibaba chairman Jack Ma boasts a personal fortune of $11.7 billion, according to Forbes — is making his move as the COVID-19 pandemic has devastated the NBA, with yearlong lockdowns wiping out ticket sales and forcing wealthy team owners to cough up cash to keep operations afloat.

But as Tsai’s deal moves forward, critics point out that the NBA bylaws explicitly prohibit team owners from taking stakes in competing franchises, even indirectly, unless they get the league’s OK or own less than 1 percent through a publicly traded stock.

“No owner … shall hold any direct or indirect financial interest in any other member [team],” without league approval, according to the bylaws.“

This is a huge conflict,” a rival private equity fund manager told The Post of Tsai’s planned ties to HomeCourt Partners. “It sounds like there is one rule for Joe Tsai and one for everyone else.”

Tsai aims to close the deal through his Hong Kong-based hedge fund Blue Pool, which owns a stake in Owl Rock Capital, a direct lender that’s in the process of merging with Dyal Capital, the private equity firm behind HomeCourt.

Normally, NBA team ownership stakes are sold directly to individuals. But the NBA has given Dyal, a unit of asset manager Neuberger Berman, special permission to raise money as more minority owners search for exits amid endless capital calls.

The planned $12 billion tie-up, which aims to close this summer, promises a big payout for Tsai, who will be able to sell preferred shares in Owl Rock as part of the deal, a source close to the merger said. It will result in a new investment company called Blue Owl that will trade on the New York Stock Exchange and manage $45 billion in assets, according to public documents.

NBA Commissioner Adam Silver has not yet studied the issue, the league said. “It’s premature to comment given that the Owl Rock/Dyal transaction hasn’t happened and the league has yet to review it,” an NBA spokesman said.

Tsai declined to comment, but a rep for Dyal denied the transaction will result in any violation of NBA rules, noting that Tsai will own a stake in the asset manager and not in the HomeCourt Partners fund itself.“

Dyal’s Homecourt Partners fund will invest in passive minority stakes in NBA teams on behalf of its fund investors. Believing that a Blue Owl public shareholder owns a stake in a team through its Blue Owl shares is ridiculous,” the Dyal spokesman said.

But critics say Tsai’s investment in HomeCourt’s parent company not only violates the letter of the law, it also creates the potential for the Brooklyn Nets owner to gain a sneak peak at rival team financials, which could be used to his advantage in player trade talks.

Tsai bought the Brooklyn Nets for a record $2.35 billion from Russian billionaire Mikhail Prokhorov through his J Tsai Sports group in 2019. Oliver Weisberg is CEO of both J Tsai Sports and Blue Pool Capital.

“Either Tsai is going to have to get a waiver from the league or figure out a way to exit these stakes,” a former NBA team CEO familiar with the ownership rules said.

After launching HomeCourt last year, Dyal is expected to close on its first $750 million funding round in the coming weeks with plans to buy stakes in six unidentified NBA teams, according to Sportico.

Mark Rosentraub, a professor of sports management at the University of Michigan, told The Post he believes the transaction is a clear-cut violation of NBA rules if it gives Tsai even an indirect financial interest in other NBA teams. If Silver has another private equity firm that can quickly replace Dyal, he could choose it and bench HomeCourt, he said.

“If he has an option, I think he should play the option,” Rosentraub said.

Otherwise, Rosentraub believes Silver should find a way to give Tsai a waiver, including by getting him to place any proceeds he stands to collect from HomeCourt in a blind trust. Sources say Tsai stands to profit from a management fee Blue Owl will collect from the fund. A performance fee also will kick in after seven years when the fund’s investors are allowed to sell their positions.

“Let’s solve the problem but not jeopardize the solution,” Rosentraub said, adding that the bigger issue is helping money-losing teams get liquidity to pay their bills. Of course, such an exception would likely never be allowed if it weren’t for the pandemic, he added.

“You never would allow this conflict if there was not a crisis of this scale,” Rosentraub said.

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Glasses retailer Warby Parker eyeing IPO as soon as this year

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Hipster glasses retailer Warby Parker is eyeing an initial public offering.

The 11-year-old business, which started out as an e-tailer before rolling out some 130 stores across the US, is considering an IPO as early as this year, Bloomberg reported on Wednesday.

The New York-based company has amassed a huge customer following by offering less expensive prescription glasses. Warby Parker raised $120 million in its most recent funding round giving it a $3 billion valuation, according to the report.

“We’ve always explored various financing opportunities in both the debt and equity markets,” the company said in a statement. “To date, we have successfully and deliberately raised money within the private market on favorable terms and have plenty of cash on our balance sheet. We’ll continue to make strategic decisions in line with our commitment to sustainable growth.”

Founded by college buddies Dave Gilboa and Neil Blumenthal, who met at the Wharton School at the University of Pennsylvania, Warby Parker has attracted some large investors including the mutual fund company, T. Rowe Price.

It turned it first profit in 2018, Gilboa told The New York Times at the time.

Warby Parker co-founder Neil Blumenthal
Warby Parker co-founder Neil Blumenthal
Brian Ach/Getty Images

Customers can get prescriptions through their apps on their smartphones and use cameras to pick out frames. The company also has an optical lab in Sloatsburg, NY where it produces lenses.

While Warby Parker is not the least expensive option, it beats Costco in a recent comparison with Costco charging as little a $126 for a pair of prescription glasses compared with Warby Parker’s least expensive pair at $95.

“As consumer walk into a LensCrafters or Sunglass Hut, they see 50 different brands of glasses but don’t realize that all those brands are owned by the same company that owns the store that they’re standing in, that probably owns the vision insurance plan they’r using to pay for those glasses,” Gilboa said in a recent CNBC interview.

“And so, it’s no surprise that a lot of those glasses are marked up 10 to 20 times what they cost to manufacture,” he said.

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Dogecoin hits new high boosted by DogeDay hashtags

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Dogecoin prices hit an all-time high on Tuesday, with a market capitalization above $50 billion, after social media fans used hashtags to fuel a rally in the meme-based cryptocurrency.

An 8,000 percent price surge this year has seen Dogecoin, which was launched as a satirical critique of 2013′s cryptocurrency frenzy, overtake more widely-used cryptocurrencies like Tether to become the fifth-largest coin.

While Dogecoin, whose logo features a Shiba Inu dog at the center of the meme, a represents only a fraction of bitcoin’s $1 trillion value, it can be traded on crypto exchanges and more popular mainstream trading apps.

“The Doge rally represents an interesting convergence,” said Diana Biggs, CEO of crypto start-up Valour, after Dogecoin’s price soared by more than five-fold in the last week to a record 42 cents, according to CoinMarketCap.

“A meme coin created as a joke for early crypto adopters whose community found that kind of thing to be fun, with now a new generation of retail investors for whom memes are a native language,” Biggs added.

Dogecoin fans used the hashtags #DogeDay and #DogeDay420 to post memes, messages and videos on Twitter, Reddit and TikTok, referring to the informal April 20 holiday to celebrate cannabis which is marked by smoke-ins and street parties.

“GIMME THAT DOGECOIN LAMBO!!! #DogeDay” one tweeted, referring to the Lamborghini car popular in crypto culture.

Dogecoin’s rise has come amid a surge in online trading of stocks and crypto by retail investors, stuck at home with extra cash because of the COVID-19 pandemic. It has not coincided with a growth in usage of the coin for payments or in commerce.

The same trend has spurred a boom in usage of online trading apps like Robinhood, and also fueled the social-media driven rally in GameStop stock that pitted retail investors against hedge funds earlier this year.

“It’s an extension of the same phenomenon that has led Tesla stock to be valued well beyond fundamentals and more recently to the GME (GameStop) short squeeze,” said Ajit Tripathi, head of institutional business at decentralised finance startup Aave.

Like other cryptocurrencies, Dogecoin’s price is heavily influenced by social media users including Tesla chief Elon Musk, whose tweets on the cryptocurrency in February sent its price soaring over 60 percent.

“If this goes as planned and everybody including Mr. Musk go ahead and just pour money into Doge on April 20th all at once Doge will reach prices that originally were not even conceptual,” a TikTok user said in a video promoting the coin.



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Amazon is opening a beauty salon in London

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Amazon is opening a hair salon in London — its latest odd lurch into new businesses as the pandemic continues to fuel the e-commerce giant’s torrid growth.

The Amazon Salon, unveiled in a Tuesday blog post, will occupy a two-story, 1,500-square-foot space in Spitalfields, a trendy neighborhood in East London that is also home to Amazon’s UK headquarters, which houses about 5,000 employees.

Indeed, the new salon, which will be open seven days a week, initially will only cater to Amazon workers. Members of the public will be able to make bookings in “the coming weeks” by calling, emailing or visiting the salon, the company says.

“This will be an experiential venue where we showcase new products and technology,” Amazon said in a blog post on Tuesday, adding that there are no plans to open other salons.

That will include making Amazon’s Fire tablets available at each station, allowing customers to use augmented reality technology to see what they look like as a platinum blonde, brunette or with highlights, the company said.

The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
Amazon

The salon will also test new “point-and-learn” technology, where customers can point at a product they are interested in on a display shelf and the relevant information, including brand videos and educational content, will appear on a display screen.

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