Tuesday, September 30, 2008

Arena, 2012? The Nets likely have four more seasons in New Jersey

Bruce Ratner admitted yesterday that a state appeals court decision not to dismiss the pending eminent domain lawsuit "may" delay an announced December groundbreaking for the Atlantic Yards arena by six months. It almost certainly will do so--and could delay it even longer.

That means that the long-promised 2010 arena opening, already discredited by Ratner's own words (after promises of openings in previous years went by the wayside), is impossible.

Also, though Ratner previously told investors the arena would open in 2011, it's highly unlikely the arena would open that year. An early 2012 opening seems more likely. Given the difficulty of moving a team in mid-season, that suggests, in the best-case scenario, that the New Jersey Nets would not become the Brooklyn Nets until the fall of 2012.

That means four more seasons in the creaky Meadowlands--2008-09, 2009-10, 2010-11, and 2011-12--unless there's a move, say, to Newark.

Looking at the timetable

Let's do the math. An oral argument in the eminent domain case next March means a decision, perhaps, by May. If the plaintiffs lose, they will try to appeal, which, even if denied, would add--I speculate--another month.

Keep in mind that the pending case involving the project's environmental review might linger, and/or that other legal challenges would emerge. However, let's assume that all lawsuits would be wrapped up in the six months Ratner mentioned, by the end of June 2009.

That would leave just 28 months to build an arena to open (late) by November 2011.

Yes, arenas often take 24 months to construct, as noted yesterday in the Bergen Record.

Not this one. Ratner told investors in June that "it will be about two and a half years to build our arena." That suggests, in a best-case scenario, an arena opening in January 2012.

But even Ratner's 30-month scenario may be too optimistic. As I wrote last month, Chapter 17 (Construction Impacts) of the Final Environmental Impact Statement (FEIS) indicates that the arena would take "less than three years" to build or, by my calculations, 32 months.

That would bring us to March 2012, nearly to the end of the 2011-12 season. Maybe the Nets' four-year deal with Vonage Holdings at the Izod Center really will go the distance.

Barclays claims support

As noted in the Times report (published only online), Barclays Capital reaffirmed its sponsorship and naming rights deal for the arena, which has been reported as $20 million a year over 20 years--money the developer needs to repay the arena bonds, should the IRS give the go-ahead for tax-exempt bonds.

Only one news outlet (the Post) pressed Barclays on whether it would renew or modify its contract with Forest City Ratner, which requires financing to be closed by the end of November. (The answer: Barclays skirted the question.) It's highly unlikely that a financing deal could close while court cases are pending.

Could Barclays, which bought part of Lehman Brothers for a song, have leverage to renegotiate a deal with Forest City Ratner? If so, that might leave the developer asking public agencies for even more money to support what Brooklyn Borough President Marty Markowitz again called an "economic engine."

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