Sunday, September 20, 2009

Does Ratner have a Plan B for the Brooklyn Nets? Not beyond more government concessions, I'll bet

A Brooklyn reader describing himself as an opponent of the Atlantic Yards project but a Nets fan asked if there were alternate arena site plans if Atlantic Yards somehow failed. I don't think so, and I take Forest City Ratner at their word when they say they have no Plan B for Brooklyn.

Nor, at this moment, do they need one. For now, Atlantic Yards--well, at least the arena portion of Atlantic Yards--looks ever more likely, with the project facing an uphill challenge in the state Court of Appeals in October from eminent domain opponents, as well as perhaps more formidable financing challenges.

Other lawsuits, say the Empire State Development Corporation (ESDC), couldn't stop the project, though presumably a challenge to the environmental review that overturned blight findings could have a big impact.

What's Plan B?

More importantly, I think we've already seen Plan B. Plan B means renegotiating the deal when possible. Forest City Ratner has long been said to have cash flow difficulties. After Thursday's approval by the ESDC to amend the city and state funding agreements, the developer will get the final $40 million of $200 million pledged, without having to fulfill certain milestones.

Moreover, the developer apparently will get some portion of the additional $105 million the city has set aside for infrastructure; rather than the city spending it, the money would go directly to FCR.

Central Brooklyn

There's no reason or incentive for Forest City Ratner to move the Nets to another site in Brooklyn. The Atlantic Yards side is "a great piece of real estate," to quote CEO Chuck Ratner of parent Forest City Enterprises and, crucially, it sits across the street from Forest City Ratner's Atlantic Center and Atlantic Terminal malls.

Parking lots at Forest City Ratner's MetroTech would help with arena overflow. That's all called synergy. And he can't build Atlantic Yards without the arena.

Alternate plans?

The Coney Island site that Borough President Marty Markowitz once promoted is now destined for residential towers and green space, according to the recent rezoning.

There have been reports about putting a roof on the U.S. Open Stadium in Queens, and a new arena has been suggested as part of a megadevelopment over the yet-undeveloped Sunnyside Yards in Queens.

But Brooklyn's the place with the huge financial upside. If the AY arena falls through, the easiest place for the team to go is Newark, because there's already an arena there and the New York market can surely support two basketball teams. But Ratner wouldn't be the owner, unless--and this is a big if--it comes as part of a package for urban development in Newark.

That's unlikely, given that Brooklyn-based Forest City Ratner has no experience in New Jersey, and developers like to know the local political byways.

Beyond Newark, the most likely destinations would be cities with a new arena but no team, like Kansas City or a former NBA city with an arena that needs renovation, like Seattle. That would mean a sale of the team.