Wednesday, February 25, 2015

Barclays Center still well behind income goals, according to 2014 results

Thee Barclays Center is still well behind its plan to boost Net Operating Income (NOI) to $65 million by 2016, earning about $40.5 million in 2014.


While 2014 represented a better year financially for the arena than 2013, according to 2014 financial results released yesterday by Forest City Enterprises, which owns 55% of the arena, the Barclays Center actually did better in the 12 months ending in the first half of 2014.

As I reported, total revenues for that split-year period were $120.4 million, with operating expenses of $74.5 million, leaving NOI of $46 million. (After payments in lieu of taxes to pay off the construction loan, that left $17.5 million in profit, some of which went to additional interest.)

In an 8-K document filed yesterday with the SEC, Forest City reported $116.7 million in revenues in 2014, with expenses of $76.1 million. In 2013, according to the company's filing, the arena earned $111.5 million, with expenses of $77.7 million.

Net Operating Income for 2014, according to the company, was $40.5 million, compared with $33.4 million for 2013. (Those numbers differ slightly from the figures above, if you subtract expenses from revenues.)

Part of the challenge may be that NOI for the last quarter of 2014 was $11 million, compared with $13.7 million for the last quarter of 2013.

Net Income After PILOT payments was supposed to hit $47.2 million last year.

The move of the New York Islanders to the Barclays Center in fall 2015 should boost income, but it's unclear how much it will make up the gap.

Warnings from the annual report

This is boilerplate, but worth noting:
We Are Subject to the Risks of Owning and Operating an Arena

Barclays Center is the home venue for the Nets basketball team and future home of the New York Islanders professional hockey team which will relocate to Barclays Center for the 2015-2016 hockey season. In addition, the mix of events at the Barclays Center include a variety of concerts, family shows, and other sporting events. As we approach stabilized operations, which is taking longer to achieve than originally anticipated, our investment in the Barclays Center is dependent on a number of factors, that could adversely affect us, including:
• Pricing and sales pace for suites and sponsorships, including new sales and renewals of existing agreements;
• Performance of the third party asset manager to operate the Arena efficiently and effectively;
• Attendance at games and events, which drives on-site spending for concessions and merchandise;
• General economic conditions that affect corporate and individual spending on entertainment and leisure activities;
• Ability to secure event bookings through relationships with promoters, artists and other clients;
• Popularity of live entertainment events as a whole and individual acts;
• Popularity of the Nets and New York Islanders, their performance, and fan base;
• Competition from other event venues in our marketplace;
• Competition from other leisure-time activities, such as television, radio, and the internet;
• Organized labor matters; and
• Actions of the NBA, NHL, the Nets and the New York Islanders.

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