The orchestrated timing of the Prokhorov deal: just after the main opportunity for public agencies to ask questions
DDDB reminds us that, as I wrote on July 24, Forest City Ratner Executive VP MaryAnne Gilmartin was asked about reports that principal owner Bruce Ratner was selling the Nets to minority owner (and Brooklynite) Vinny Viola.
"That's not true," Gilmartin said.
Maybe so, I wrote, but it was a narrow answer to a narrow question. Indeed, the team was on the block and Dave D'Alessandro of the Star-Ledger was even mentioning the possibility of a billionaire industrialist from Russia.
The AP this week reported that Bruce Ratner flew to Moscow in July to meet with Prokhorov.
In an AP story published the day after the AY project was approved, Nets President Brett Yormark would not confirm that Prokhorov is a potential investor.
As noted in the Utah press, Russian-born hoopster Andrei Kirilenko "learned the news about a week before reports surfaced that Prokhorov was set to buy the struggling Nets."
The project was approved September 17. The deal was announced September 23.
Effect on approval?
Michael D.D. White, in his Noticing New York blog, wonders whether the Empire State Development Corporation could disapprove the Prokhorov transaction and suggests it might.
I'm not so sure, given that the ESDC's agreement would still be with the majority owner of the Atlantic Yards project and arena.
Housing bonds for Prokhorov?
Going forward, however, White suggests another tension:
But even if ESDC and the MTA manage to somehow sidestep the question of such approval or even if they do approve Prokhorov, the next question is the review that Prokhorov will need to be subjected to if he is to be a major participant in owning the rest of the project. After all, everyone knows that the arena is projected to be at least a $220 million net loss for the city. The ostensible reason for proceeding with this mega-project anyway was that affordable housing might speculatively be provided someday. Well, if Prokhorov has to be involved, the awkwardness in redirecting housing subsidy away from other housing developers to the Prokhorov tainted team becomes pronounced. The housing, per se, becomes less likely. For ESDC and the MTA to approve the new Prokhorov deal now makes for exceedingly awkward nonapprovals in the future.
Prokhorov has an option on 20% of the project as a whole, so Forest City Ratner would still be the majority owner.
Other billionaires get tax-exempt financing--hey, that helps them stay billionaires--so that's not the argument. There are some clouds over Prokhorov's reputation--a prostitution investigation in France, alleged Mafia ties--but nothing solid.
Still, there's something to it. Forest City Ratner, for all the criticism it has engendered, has a track record in New York City and Brooklyn. Elected officials were happy to work with it.
Do the profits stay in New York? Not necessarily--they go to Cleveland. But the idea of scarce housing bonds going to help a Russian oligarch surely would give some local officials reason for pause.
And maybe that's why Borough President Marty Markowitz has been so quiet--though I fully expect an effusive statement explaining that he's happy that, in such tough times, the announced benefits of Atlantic Yards are on their way. Even if many of them are not.
From the MTA bid
As a reminder, the page at right comes from Forest City Ratner's May 2005 bid to the MTA:
Forest City Ratner is the leading developer of commercial and retail properties in the New York City metropolitan area and has developed more commercial projects in New York City over the last 16 years than any other development firm.
Had the text mentioned the Onexim Group a few eyebrows would've been raised.
(Click on graphic to enlarge)