Wednesday, September 23, 2009

Unanswered questions remain about the Prokhorov deal, "certain contingent funding commitments," and subsidies for foreign billionaires

In a page 1 article for Thursday's print paper headlined Richest Russian’s Newest Toy: An N.B.A. Team, the New York Times's Charles Bagli, who covers commercial real estate, adds only around the edges to his earlier analysis of the deal between Bruce Ratner and Mikhail Prokhorov.

Bagli, who nails the "tentative deal" as a "rescue package" for Ratner, still leaves the crucial questions open:
Under the terms of the deal, which was agreed to Wednesday morning in New York, Mr. Prokhorov would invest $200 million for an 80 percent stake in the team and a 45 percent interest in the arena. But the deal is conditional on Mr. Ratner’s obtaining financing for the arena project and control of all the land required for it by the end of this year.

Ratner and his ownership group bought the Nets for $300 million in 2004. If 80% of the team goes for $200 million, that's a $40 million loss. Then the arena's a gift. There's got to be more to it, but we don't know what "certain contingent funding commitments" have been pledged.

More details

There's more in the article about foreign ownership in American sports, Prokhorov's interest in leveraging the team to assist Russian basketball, and the question of NBA owners' receptiveness (positive so far, though Prokhorov has a rep as a playboy bachelor).

(Two Times sports reporters are contributors to the piece.)

The unanswered critique

The article closes with this sequence:
Develop Don’t Destroy Brooklyn, the local group that has fought Mr. Ratner’s development plans, criticized the deal on Wednesday, with a spokesman, Daniel Goldstein, contending that the “only reason Ratner would make this deal is because he is in dire financial shape.”

He said Mayor Michael R. Bloomberg and other politicians who supported the project were, in effect, agreeing to the use of “massive taxpayer subsidies to enrich a Russian oligarch and modernize the Russian basketball system.”

Ultimately, though, Mr. Ratner and Mr. Prokhorov will hope to have the last word — a new arena and a new owner in a borough that has not had a major professional sports team since the Brooklyn Dodgers departed in 1957.


Those last two paragraphs are a non sequitur. Whether they are massive subsidies or not, elected officials have to feel a bit squeamish--maybe even played--about providing subsidies that, indirectly or directly, would assist Russia's richest man. (Steve Politi of the Star-Ledger agrees.)

After all, would Atlantic Yards have received all its political blessings had Prokhorov been involved from the start?

In other words, just because professional sports might return to Brooklyn doesn't mean the deal avoids scrutiny. Haven't we learned something in six years?

(Update 6:45 am September 24. The final paragraphs are now compressed:
Mr. Goldstein said that Mayor Michael R. Bloomberg and others who supported the project were, in effect, agreeing to the use of “massive taxpayer subsidies to enrich a Russian oligarch.” Ultimately, though, Mr. Ratner and Mr. Prokhorov will hope to have the last word — a new arena and a relocated team at the intersection of Atlantic and Flatbush Avenues.

Maybe that's because the team already got a new owner--when Ratner and his ownership group bought it in 2004.)

No comments:

Post a Comment