Despite a statement that Barclays was "unwavering" in its commitment, it's reasonable to question whether Barclays, which had some leverage and has faced losses of its own, renewed at the previously announced $400 million ($20 million a year over 20 years) figure.
We don't know, as the Record's John Brennan noted yesterday. I'd bet they managed a better deal of some sort.
Barclays helps with financing
The press release also stated that "Barclays continues to play a major role as the co-lead in the financing of the Barclays Center," which is news to me, since previous news coverage described Goldman Sachs as the lead. Has Goldman tried to spread the risk, reward, and responsibility of getting the deal done?
Both Forest City Ratner and Barclays have indicated patience, as legal challenges persist at least through next year; last month they welcomed the news that tax-exempt bonds for the arena would be grandfathered in under more lenient federal rules.
Should the arena be successful, a naming rights deal might prove to be a prudent investment for Barclays, which could acquire financially weak banks in the United States and continue to expand.
Stock price still sinks
In the short term, however, there's reason for dismay.
I imagine that officials at parent company Forest City Enterprises hoped that the announcement might nudge investor confidence. Instead, the stock went down more than 5%, to $7.16, continuing a stunning decline.
It was over $70 in May 2007, over $50 a year ago, and $19.79 on October 10.
More on layoffs
Also, Forest City Ratner has begun layoffs, and while the following information can't be confirmed, a commenter on NetsDaily stated, "It may be good that the Nets are going to Brooklyn. But I happen to know they let go of almost ten key internal employees earlier this week and several that were selling for the new arena suites and seating."
I'm also told--secondhand, but from a source I consider reliable--that the fellow occupying the Atlantic Yards Community Liaison Office has departed.
Barclays "affirmed its commitment to the future arena in Brooklyn and the updated timeline for a 2009 groundbreaking."
In translation, "updated timeline" means "delayed timeline."
Even if the project survives legal challenges, Forest City Ratner has requested at least $100 million in subsidies--and hasn't gotten them.
The press release
Barclays Affirms Steadfast Commitment to Arena in Brooklyn and 2009 Groundbreaking
Says Support for Atlantic Yards is "Unwavering"
Barclays, a leading global financial services company and the naming rights partner for the future Barclays Center, today affirmed its commitment to the future arena in Brooklyn and the updated timeline for a 2009 groundbreaking. The Barclays Center, which is designed by Frank Gehry, will be the world-class home of the Nets.
"Barclays is unwavering in its commitment to the Barclays Center and we are very pleased with our long-term alliance with our great partners, the Nets and Forest City Ratner Companies (FCRC)," said Gerard LaRocca, Chief Administrative Officer, Americas, at Barclays Capital, the investment banking division of Barclays PLC. "We are very excited about being part of the continued renaissance of Brooklyn and we eagerly look forward to opening night at the Barclays Center."
"Since we announced our 20-year naming rights partnership in January 2007, Barclays has offered nothing but resolute and great support," Nets Chief Executive Officer Brett Yormark said. "We deeply appreciate our partnership with such a well-respected and distinguished company, which shares our love for Brooklyn and our strong sense of community."
"We are thrilled to have Barclays as a partner," said Bruce Ratner, chairman and CEO of Forest City Ratner Companies, a subsidiary of Forest City Enterprises, Inc., and the chairman of Nets Sports and Entertainment, LLC, which owns the Nets. "The Barclays Center will be one of the most spectacular sports and entertainment arenas in the world. Even more importantly, it is a centerpiece of a development that will bring thousands of jobs and affordable housing units to Brooklyn." Forest City Enterprises (NYSE: FCEA and FCEB) has an equity interest in Nets Sports and Entertainment.
In addition to its naming rights commitment, Barclays continues to play a major role as the co-lead in the financing of the Barclays Center. Momentum for the Barclays Center continued recently when the Internal Revenue Service issued a new regulation that confirms that tax exempt bonds may be used to finance the arena.