So if the Newark Star-Ledger adds more to the Nets-to-Newark rumors, in an article headlined Nets eyed for Newark: Plan is afoot by N.J. group, well, Rubenstein is there to douse the flames:
"The team is absolutely not for sale," Ratner said through his spokesman, Howard Rubenstein. "We're inches away from completing the deal in Brooklyn."
The article assembles evidence for and against a sale, and I add a little more context.
Jeff Vanderbeek, whose New Jersey Devils team is the main occupant of Newark's new Prudential Center, and Newark Mayor Cory Booker have been trying to assemble a group of investors to buy the Nets, the newspaper reported. Despite no-comments from the two about such meetings, it's quite plausible that they'd be talking.
Booker has apparently tried to entice Bruce Ratner by offering him development possibilities in Newark, a city with numerous potential development parcels. (Then again, he can't exactly present single-source, no-bid deal, can he?)
Carl Goldberg, chairman of the New Jersey Sports and Exposition Authority, suggested that increases in the cost of construction materials make it tougher to build a new arena. Of course Goldberg wants the Nets to stay at the Izod Center run by the authority.
While an affidavit filed in January by Forest City executive Andrew Silberfein raised questions about the capacity to get arena financing, Ratner, through Rubenstein, told the newspaper, "We are very confident we will get the funds necessary for the arena."
While the company has recently closed on two deals totaling more than $1.3 billion, those deals were not facing lawsuits and one, the Beekman Tower in Lower Manhattan, relied on scarce Liberty Bonds, it should be pointed out.
Lawrence Swift, a partner at Troutman Sanders, a Manhattan law firm that specializes in sports facility financing, told the newspaper that investment banks have raised interest rates and fees. Then again, Goldman Sachs told the newspaper they are "confident we will close on the financing for the project by the third quarter."
In the 1/29/08 New York Times, however, the news from Goldman was put in greater context:
Goldman Sachs — the lead manager of the arena financing and the group that has done the deals for the Yankees’ ballpark and the Giants’ half of their new stadium with the Jets — cannot wrap up deals without the cessation of legal hostilities.
It's possible that the federal eminent domain case may be dead by the end of the third quarter, but the state case challenging the environmental impact statement will still be pending before a state appeals court. Is only the federal case dispositive here?
Doing the numbers
The Nets are losing $40 million a year; the team's value has risen less than $40 million since Ratner and fellow investors bought the team, the Star-Ledger suggested.
George Zoffinger, former chief executive of the New Jersey Sports Authority, asserted that Forest City Ratner couldn't make a profit on a billion-dollar arena. Nets CEO Brett Yormark, however, cited "incredible interest" from ten potential Barclays Center "founding partners" he met with in Europe.
Indeed, the potential revenue from partnerships and sponsorships, luxury suites, and television deals might make even a billion-dollar arena economically viable, especially since the developer needs not to pay taxes but rather bond payments in lieu of taxes.
So the upside in a Brooklyn arena remains significant. But Forest City Ratner's numbers people must have a spreadsheet that factors in the costs of delay, including those annual $40 million losses.
Removing the $12 million penalty the Nets face for a Newark move would be one factor in the spreadsheet. Development opportunities in Newark--a new frontier for Forest City Ratner--would be another. A setback in court would be another. So, despite the denials about discussions, it makes sense to keep the lines of communication open, at the least.