According to foreign media reports, Alibaba's Chairman of the Board, Cai Chongxin, has sold a portion of his equity in the NBA Brooklyn Nets to the Koch family, who valued the Nets at $5.8 billion (approximately RMB 42.1 billion) and acquired $688 million (approximately RMB 5 billion). Market analysis suggests that Cai Chongxin's partial ownership of the Nets may be aimed at investing more energy into Alibaba to cope with current challenges and fierce competition.
As one of Ali's "Eighteen Arhat" entrepreneurs, Cai Chongxin's "feelings" for sports, especially basketball, have long been no secret. As early as 2018, Cai Chongxin began investing heavily in sports, first acquiring a 49% stake in the NBA Nets, and then acquiring the remaining 51% stake in the Nets in September 2019, becoming the sole controller of the team.
In addition, Cai Chongxin also spent $700 million to take over the home court of the Nets at Barclays Center and bear the latter's net debt of about $300 million. It is understood that Cai Chongxin invested approximately $3.05 billion in two acquisitions of the team and home court.
Based on this calculation, now only selling a portion of the shares to the Koch family has doubled Cai Chongxin's sports investment. According to foreign media reports, Cai Chongxin stated in an internal letter to employees, "I would like to emphasize that both sides are committed to making necessary investments in the team to establish a sustainable culture of success, while also investing in talent and infrastructure to bring the best sports and entertainment to fans and audiences."
Cai Chongxin once elaborated on his growth process and the origin of sports in a media interview. He stated that investing in sports is entirely based on personal preferences. He not only delves into investment projects, but also invests personal passion and experience, and hopes to turn sports investment into ecological investment. "I infused the values of Alibaba's customer first, employee second, and shareholder third into the basketball team," Cai Chongxin once said.
Moreover, one of the projects of the public welfare foundation established under Cai Chongxin's name is to promote basketball education in China.
However, with the structural adjustment and organizational reform of Alibaba, Cai Chongxin, one of the "Eighteen Arhat", returned to Alibaba as the chairman of the board of directors and assumed greater responsibility.
In the second half of 2023, while restructuring the organizational structure of Alibaba Group, a deep restructuring transformation was initiated, with Cai Chongxin, then the Executive Vice Chairman of Alibaba Group, serving as the Chairman of the Group's Board of Directors. After a series of bold reforms, several subsidiary groups under Alibaba with independent listing expectations have temporarily postponed their plans to spin off or go public, and the group's market value has been repeatedly surpassed by its competitor Pinduoduo.
In an interview video released by Norwegian sovereign wealth fund Norges Bank Investment this year, Cai Chongxin revealed his various reflections on Alibaba. He said, "In the past few years, when we conduct internal reviews and self reflection, we know that Alibaba has fallen behind because we have forgotten who our true customers are. Our customers are people who use the app for shopping, and we have not given them the best experience."
Despite facing fierce market competition and various internal problems, the "new team" composed of Cai Chongxin and Alibaba Group CEO Wu Yongming, who have been in charge of Alibaba's reform for nearly a year, has still been supported by Jack Ma. On April 10th of this year, Jack Ma posted on the Alibaba intranet titled "To Reform and Innovation", stating that Alibaba has returned to a healthy growth track and supports continued reform.
When disclosing its performance report for the fiscal year 2024 (from April 1, 2023 to March 31, 2024), Alibaba also defined the current development trend as "strategic effectiveness, Alibaba is returning to the growth track".
Not only that, Alibaba has also sold non core assets one after another, including Xiaopeng Motors and Bilibili. As of the end of December last year, Alibaba completed the withdrawal of $1.7 billion in non core assets within the nine months. Cai Chongxin once stated that Alibaba has made significant progress in capital management, including exiting non core asset investments, increasing shareholder value through dividend payouts and stock repurchases, and will continue to improve capital efficiency and shareholder returns in the future.
On May 23rd, in the first co signed letter to shareholders after Alibaba's one-year anniversary of self transformation, Cai Chongxin and Wu Yongming elaborated on "who Alibaba is" in the new development stage, why they made the strategic choice of "user first, AI driven", and shared Alibaba's development strategy and how to invest in the future.
The shareholder letter pointed out that Alibaba has two core businesses: e-commerce and cloud computing. Among them, e-commerce includes platforms that serve Chinese consumers and businesses - Taotian Group, as well as platforms that serve international consumers and businesses - Alibaba International Digital Business Group; The goal of cloud computing is to become a leading provider of public cloud infrastructure and platform technology in China. Looking towards the future, Alibaba will continue to invest in two major areas: accelerating core business growth, and maintaining a leading position in basic technology and innovation, including AI.
"Alibaba always focuses on the future." Cai Chongxin and Wu Yongming candidly stated in shareholder letters that in the past 25 years, Alibaba has experienced continuous growth and has also experienced some symptoms of "big company disease". They also expressed their determination to actively treat "big company disease" and maintain entrepreneurial spirit: "In the next 10 years, we will once again see ourselves as a startup, adhere to the mission of 'making the world no difficult business', and continue to innovate with the spirit of entrepreneurship. We will uphold long-term principles, choose for today, and invest for tomorrow."
Selling some equity in the Nets may be a trade-off made by Cai Chongxin with a longer-term perspective.