Saturday, May 02, 2009

"Everything changes when we get to Brooklyn," insists Nets CFO (which is why AY won't fade away easily)

In an interview in CFO Magazine headlined "It Still Hurts When You Lose." New Jersey Nets CFO Charlie Mierswa expresses unbridled optimism--and even convinced the reporter to state, without equivocation that "[i]n two years the franchise says good-bye to New Jersey and heads for a Frank Gehry–designed arena in Brooklyn."

Well, that timetable is in doubt, but Mierswa's interview is a reminder that Atlantic Yards backers are still betting on the new arena to reverse huge Nets losses, bring in new revenues, and raise the value of the team, which has actually declined since an ownership group led by Forest City Ratner's Bruce Ratner bought the team in 2004.

"Everything changes"

From the interview:
What will the move to Brooklyn mean for the financial growth of the organization?

Everything changes when we get to Brooklyn — I would expect us to be one of the most valuable teams. The difference is the density of the population. Also, we will be in control of the building. Just look at the sponsor values when we move to Brooklyn versus what we're able to garner in New Jersey; it's night and day.

The arena will be a destination in the center of Brooklyn, with clubs and amenities that you can't find in other buildings in the marketplace, because they were built 20 or 30 years ago. It's more than just basketball. There will be concerts and family shows. It will be another market for artists to play in.


Well, New Jersey is pretty dense too. Beyond controlling the (nominally publicly-owned) building, the owners would take advantage of a location very close to a mass transit hub, and a financing scheme that critics say relies mostly on taxpayers.

Bond issue would go smoothly?

Do you anticipate any problems raising the funds to build the stadium?

The project has the political support that it needs, and the reason is the number of jobs it's going to bring. The recent financing that the Mets and Yankees did — municipal debt with PILOT payments [payments in lieu of tax] — that's the same vehicle we are going to use. The Yankees's $370 million issue was oversubscribed. Clearly there's an appetite for that kind of financing. We met with the rating agencies and they were very enthusiastic. All we need is the green light. We expect to get it in the next three or four months. We think we will prevail in the remaining lawsuits.


Housing pledge diminishes?

If the political support depends on jobs, the Mierswa either hasn't listened to Nets CEO Brett Yormark's affordable housing mantra or AY backers have given up on predicting that such housing would arrive in a timely fashion.

While it's likely that the state will prevail in the remaining lawsuits, appeals may last beyond Mierswa's timetable.

Beyond that, Forest City Ratner's cash crunch also may stall plans. Remember, the developer must deliver $100 million to the Metropolitan Transportation Authority before the Empire State Development Corporation starts exercising eminent domain.

Value engineering

But you're also scaling back the architectural plans for the arena, right?

We're going through a process of "value-engineering" the stadium plans. That will bring down construction costs to a level that will facilitate the financing. There's no question it will continue to stand as a landmark in Brooklyn; it will also be economically viable in this marketplace.


That doesn't tell us whether Frank Gehry is still working on the arena or why, given Gehry's pride in working "tight to the bone," costs need to be cut nearly in half.

1 comment:

  1. To compare themselves to the Yankees is ludicrous, and unintentionally ironic, too. Haven't the Nets noticed all the empty luxury seats at Yankee Stadium? You can bet the financiers have.

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