Friday, December 04, 2009

Neil deMause: gaps in bond offering statement add skepticism regarding returns for arena project and Nets

In a Village Voice piece headlined As Atlantic Yards Gets Pricier, How Much Red Ink Can Ratner Absorb?, Neil deMause suggests that the bond offering document released by Goldman Sachs suggests reasons to be concerned about the profitability of the arena project.

He notes some gaps:
[I]t doesn't account for the fact that Ratner and Prokhorov will presumably want to be repaid for their cash outlay on the arena, currently estimated at $293 million. Not to mention the $300 million Ratner spent to buy the Nets originally, or the tens of millions he's lost since then while running the team into the ground.

And what could be more interesting is what's not on the chart: the projected finances of the Brooklyn Nets once they land in the borough of overpriced Asian fusion cuisine. With all those other arena revenues dedicated to paying off the arena, that would leave the Nets to survive mostly just on ticket sales — which, while no doubt higher than they're getting in the Meadowlands, could amount to a pretty thin gruel compared to their NBA brethren, especially if the team never wins another game.
Then again, as deMause acknowledges, if the prospective new owner, Russian billionaire Mikhail Prokhorov, wants to treat it all as a vanity project, then the losses don't matter much.

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