Ali's "God of Wealth" Cai Chongxin, with one-third of his net worth, fried the team to 40 billion in 5 years

City Boundary

2024-07-03 13:34Posted on the official account of Beijing City

Ali's "God of Wealth" Cai Chongxin, with one-third of his net worth, fried the team to 40 billion in 5 years

Ali's "God of Wealth" has recently made a new move.

Recently, according to Bloomberg, Blue Pool Capital, a family office founded by Alibaba's chairman Joe Tsai, quietly registered a new fund last year. Recently, the fund has raised US$500 million (about 3.5 billion yuan) and attracted funding from a large sovereign wealth fund and a number of global family offices, with a focus on hedge funds and private credit funds.

Not long ago, Joe Tsai had just created one of the most valued equity deals in the history of American professional sports.

On June 26, according to media sources, Tsai Chongxin bought the NBA Brooklyn Nets (hereinafter referred to as the "Nets") in batches at a valuation of $5.8 billion, selling 15% of his shares, a sum of about 5 billion yuan.

In just a few years, this investment has inadvertently doubled. In 2019, when Tsai Chongxin bought a stake in the Nets, he took out $3 billion.

Considering that many domestic technology and real estate tycoons have failed when trying to cross the overseas sports industry; Cai Chongxin was able to use 5 years to speculate the team's valuation to tens of billions, and his "financial skills" and vision are worthy of the reputation of "God of Wealth".

However, when Tsai Chongxin resolutely won the Nets, Zeng Hao threw a third of his net worth. Why is he looking for a home for the team after 5 years?

The market speculated that the former Tsai Chongxin seized the golden window of opening American sports assets to technology upstarts; Successfully entered the NBA owner's "Old Money Club". But nowadays, things are quietly changing.

1. Sky-high bills are in hand

In 2019, Tsai Chongxin bought all of the shares of the Brooklyn Nets in two installments from Russian billionaire Mikhail Prokhorov. This time, he was doing business with the Koch family, the second-largest private company in the United States and behind Koch Industries.

According to Forbes estimates, the Koch family's assets are about $65.2 billion. It is worth noting that the Koch family also received a right of first refusal to sell shares in the future. In other words, it cannot be ruled out that the Nets will change hands next.

The 15% stake in the deal is BSE Global, the parent company of the Nets, whose main value is concentrated on the Nets, who have repeatedly entered the NBA playoffs and signed the "Big Three" of well-known stars Durant, Harden and Irving, and have a wide fan base. In addition, BSE Global owns the New York Liberty, a WNBA team, and the Barclays Center, a multi-purpose indoor sports competition venue.

To some extent, the bill Tsai Chongxin got can be called "sky-high". According to Sportico's latest valuation, the team lost a lot of money in the 2022-2023 season and the Barclays Center lost even more, so the Nets are reasonably worth about $3.85 billion.

The Koch family values BSE at 14 times its revenue — according to statistics, capital purchases of North American sports teams in recent years have generally been valued at less than 10 times. In 2023, the Dallas Mavericks have a $3.55 billion trade with a multiplier of about 9.5x. Considering that more than 90% of BSE's revenue comes from the Nets and arenas, this valuation multiple is generous.

▲ (Middle-Tsai Chongxin)

Judging from the return, Tsai Chongxin's eyes are vicious. But when it bought the Nets in 2019, the investment was seen as a "big gamble." According to the calculation of $9.6 billion in personal net assets announced by Forbes, a one-time acquisition of $3 billion, Tsai Chongxin took a third of his net worth.

Why does Joe Tsai have a soft spot for the team? In the official caliber, he is a strong sports enthusiast. While studying at Yale, Joe Tsai played for the varsity basketball team. Buying the Nets was described by him as "an emotional decision." He once said, "It would be a pleasure if I could sit on the sidelines and come to New York to watch basketball 40 nights a year." ”

But the "true colors" of CFO are also always shown in Tsai Chongxin.

He once revealed in an interview that he once calculated that the NBA is characterized by the ability to maintain profitability regardless of whether the team is successful or not. Because the NBA (at the time) was able to earn about $2.7 billion a year from national television rights. The proceeds are evenly distributed among the 30 teams, "and it ensures that everyone who invests in the league doesn't lose too much money." ”

According to reports, the NBA league may agree to a broadcast contract of up to $76 billion for the next 11 years. This means that the Nets will receive a significant dividend from the increasingly increasing broadcast rights fee in the future. This may also be an important reason why BSE Global was able to sell a $6 billion valuation.

2. The investment territory of Ali's "money bag".

daring to go to the ocean to buy the team is very much in line with the outside world's consistent impression of Tsai Chongxin. 20 years ago, Cai dared to lower his own value and fought side by side with the little-known Ma Yun to found Ali. This is all due to the greatest strength of his character: vision and decisiveness.

After Tsai Chongxin retired from Alibaba in 2018, he has acquired a number of sports assets in the United States in a short period of time. In addition to buying all the shares of the Nets and the Barclays Center, Tsai Chongxin also bought the American women's professional basketball "New York Liberty" and became the majority shareholder of the "San Diego Seals" of the lacrosse league.

At that time, Tsai Chongxin stepped on the NBA, which had been controlled by "Old Money" for a long time, and opened its arms to technology upstarts.

For a long time, NBA owners mostly come from real estate, finance, communications, transportation and other local industries in the United States. However, with the rapid expansion of technological wealth, the upstarts also need the blessing of topics and social status to enter the upper class, and sports is an excellent lever to help them leverage their head connections.

Over the past decade, tech bigwigs have packed teams into their shopping carts.

In 2010, Joe LaCobow, a partner at KPCB, a Silicon Valley venture capital firm, spent $450 million to become the owner of the Warriors. In 2014, Steve Ballmer, the former CEO of Microsoft, won the Clippers, which were valued at only $1 billion in the market, for $2 billion. In the years that followed, Robert Pera, founder of wireless networking equipment company Ubikuai, Vivek Lanadiv, founder of software company Tibco, and former Facebook executive Chamas Brown. Parhabtia has become the owner of the Grizzlies, Kings, and Warriors.

However, in the United States, where capital giants gather, the investment business can be played like a fish in water, and Tsai Chongxin's superb financial skills cannot be underestimated.

As Alibaba's "God of Wealth", after Tsai Chongxin took over the group's strategic investment and investor relations in 2013, Alibaba's investment in AutoNavi, UC, Yintai, Momo, Ele.me and other businesses has appeared in his operation.

Especially after Alibaba's IPO, the Nets are only one of Tsai Chongxin's many overseas capital layouts, and Tsai also "silently" undertook a lot of work to manage assets for Ali's executives who are free of wealth.

In 2015, Joe Tsai set up a low-key investment platform "Blue Pool Capital" in Hong Kong. According to the "investment community", Blue Pool Capital manages most of the wealth of Jack Ma, Tsai Chongxin and Alibaba executives and friends, such as billions of dollars from Alibaba's IPO, but the information has not been verified.

In recent years, Blue Pool Capital has been actively and actively exploring the most popular fields such as the metaverse, blockchain, e-sports, artificial intelligence, and medical health. In November 2023, Blue Pool Capital participated in the investment of Tabby, a Middle Eastern unicorn, also known as the "Huabei" of the Middle East.

According to media reports such as "Investment Community", from 2016 to 2018, Blue Pool Capital successively invested 10 equity investments in the medical field. In December 2019, Joe Tsai invested $10 million in German esports club G2 esports. As of September 2023, Joe Tsai has invested in the Web3 space as many as 10 times.

Since 2021, Blue Pool Capital has liquidated more than 30 U.S.-listed companies, increased investment in luxury hotels and real estate, and put more funds in equity investment in start-ups.

3. The center of gravity returns to Ali

However, Tsai Chongxin sold the team's equity and became more active in financial operations, and a very important reason is that the focus of his career is shifting back to Alibaba.

In September 2023, Joe Tsai succeeded Daniel Zhang as Chairman of Alibaba Holding Group, while Wu Yongming became Group CEO.

At the juncture of the reset of the e-commerce pattern, it is not surprising that Tsai Chongxin will return to Ali by Ma Yundian. At present, to help Ali regain the lost ground of e-commerce from a market full of strong enemies, Cai Chongxin's resources, financial skills, and vision are all ballast-like existences.

▲ (When Alibaba was listed on the U.S. stock market in 2014, Jack Ma (middle) and Tsai Chongxin (right) and others)

According to the "City Boundary", Wu Yongming's current focus is on the business level, such as on the Taobao platform, gathering low-price supply. Joe Tsai, on the other hand, focuses on the operation and integration of capital.

For example, at the end of 2023, Tsai Chongxin reversed Alibaba's plan to spin off and go public in 2022. And cloud computing, logistics and other businesses, back into the basic plate of e-commerce,

At the end of 2023, Alibaba announced that it would no longer promote the spin-off of Alibaba Cloud, but instead increased strategic investment. At the same time, Ali is quite "aggressive" to the large model, and has successively invested in the dark side of the moon, MiniMax, Zhipu AI, Baichuan Intelligence and Zero One Everything. This is also seen by the market as Ali's need to hold on to AI, a ticket to "renew his life" for Ali's next stop - and behind this, it is inseparable from the bold decisions of Tsai Chongxin and Wu Yongming.

On March 26 this year, Ali announced the withdrawal of Cainiao's listing application. According to people in the logistics industry told the "City Boundary", this decision was also led by Tsai Chongxin. This means that rookies need to shrink and return to serving Taotian well, giving full play to the role of logistics standards and formulating processes.

At the same time, Tsai Chongxin is also actively doing the work of "breaking away" for Ali.

According to market news, Tsai Chongxin said internally: non-core business cannot continue to stick to the main business "blood transfusion". At the earnings conference, he said more directly: Ali has set up a special team to execute the sale of the capital market. In the second nine months of 2023, Alibaba has exited $1.7 billion in non-core assets and will also exit its traditional brick-and-mortar retail business.

After the beginning of 2024, Ali has successively reduced its holdings of assets such as Kuaigou Taxi, Xiaopeng Motors, and Bilibili, and its plates such as Yintai and Hema have also been frequently rumored to be sold.

At the same time, Cai Chongxin, together with the elders of Ali, also devoted himself to the action of increasing his holdings of Ali.

In January this year, Tsai Chongxin bought about $151 million worth of Alibaba U.S. stocks, and Jack Ma also completed a large increase in holdings during the same period. In April this year, Alibaba announced that it would repurchase shares equivalent to 90.4325 billion yuan in the past fiscal year. Ali has also become the Internet company with the largest buyback in the past year - all of which also rely on Tsai Chongxin's capital skills.

In fact, this is not the first time that Tsai Chongxin has witnessed Alibaba's crisis. In 2000, he rejected SoftBank Son's $40 million investment and only accepted $20 million in Alibaba's shares, avoiding the subsequent dilution of Alibaba's equity.

In 2008, Tsai Chongxin raised another $82 million for Alibaba, led the merger of Yahoo China, and explored the business model of search advertising, which finally helped Alibaba get out of the quagmire of losses.

In an exclusive interview with the media in February, Tsai said: "With the restructuring and new management in place, we are more confident that we will become one of the top e-commerce companies in China. Although we had periods where we were not as confident as we were before and felt the pressure of competition, now we are back. ”

Although this time, if Tsai Chongxin wants to "activate" Ali, he needs to face more and more difficult opponents than in the past.

Author | Dong Wenshu

Edit | Li Yuan

Operations | Liu Shan

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