Skip to main content

As rumors fly about possible (partial) sale of the Nets and arena, valuations skyrocket thanks to new TV contract

Or, as Slate put it, Russian Plutocrat Set to Make $1.6 Billion in Brooklyn Via Tax Money, Threat of Property Seizure.

There's been a lot of chatter in the past ten days on the possible sale or "combination of assets" involving the Brooklyn Nets, the Barclays Center, and the owners of the Los Angeles Dodgers and other sports properties.

Many of the sources are unnamed and/or on background, so it's hard to tell how serious the deal is, and how much each source is using a leak to jockey for advantage. 

But the bottom line is this: Nets' principal owner Mikhail Prokhorov has seen a huge rise in the value of his share of the team and the Barclays Center operating company. 

So too has Forest City Ratner scored on its 55% share of the arena, and though Bruce Ratner sold the Nets and a share in the arena to Prokhorov at an unwise time, in retrospect, the boom in the team's value has made Ratner's 20% remaining share of the team quite valuable.

NetsDaily's Bob Windrem (aka "Net Income") broke the story 10/2/14, Brooklyn Nets in talks with Guggenheim, Dodgers owners, on "combination of assets":
The ownership of the Brooklyn Nets is in "ongoing discussions" with Guggenheim Sports and Entertainment Assets on a "combination of assets." Mikhail Prokhorov would remain in control of the Nets and Bruce Ratner would remain in control of Barclays Center, say sources close to the discussions.
Guggenheim Sports and Entertainment Assets is an affiliate of Guggenheim Partners. Another affiliate, Guggenheim Baseball Management, own the Los Angeles Dodgers.
In the discussions, the team is being valued at $1.7 billion and the arena at $1.1 billion, said multiple sources. There is no agreement yet, nor a deadline for a conclusion of the discussions. The next step would be an agreement in principle followed by a closing. The combined assets of a new entity could be as high as $8 billion.
... Presumably, in a combined entity, both Prokhorov and Ratner's shares would be reduced, but still be controlling.
...Also uncertain: would Nets ownership have any role with the Dodgers following a combination of assets. 
Note that in April of this year Forbes estimated the Nets were worth $780 million, while in May those selling Ratner's share valued the team at $1 billion. That now seems conservative. In other words, it's possible that Forest City will get more in cash for the sale of 20% of the team than the $200 million it did for 80% of the team. 

(Prokhorov also some of Forest City's losses, up to $60 million, took on debt, and has absorbed ongoing losses due to the league's most expensive payroll.)

The league's TV deal

Increasing the value of the team and the rest of the league, and complicating future labor negotiations, was a TV deal announced last week that triples revenues. The Times reported 10/7/14, Owners Can’t Line Their Pockets Now and Cry Poverty Later, LeBron James Says:
At the Cleveland Cavaliers’ practice facility,LeBron James threw down the gauntlet on future collective bargaining negotiations three years after the players were locked out and lost ground with team owners in a settlement on shared revenue.
“The whole thing that went on with the negotiation process was that the owners were telling us that they were losing money,” James said. “There is no way they can sit in front of us and tell us that right now.”
The Times reported 10/7/14, ESPN Will Stream Out-of-Market Games on Web as Part of N.B.A. Deal, with an incredible quote from one owner:
The N.B.A.’s new deals with ESPN and Turner Sports, which are worth $24 billion over nine years, provide the two media giants with the sort of sweeteners that are common in sports television contracts: more games, more highlights and more video to enhance their studio shows, as well as new programming like a postseason awards show on TNT.
...The renewals with ESPN and TNT, which go into effect in 2016, represent the first television deal done by [NBA Commissioner Adam] Silver since he became commissioner this year. The deals will bring an average of $2.66 billion to the league each season, up from the average $930 million it will receive for the final two years of the current deal.
The increased media revenue will fuel salaries, raise the salary cap and almost certainly push up consumer’s cable bills.
For owners, the new deals symbolize the increased value of their franchises and could lead to profits for teams that had been losing money.
Expectation of the payoff provided a rationale for the sale of the Milwaukee Bucks at $550 million and the Los Angeles Clippers at $2 billion. Ted Leonsis, the owner of the Washington Wizards and head of the league’s media committee, said, “There’s never been a better time to be an owner of an N.B.A. franchise or frankly any professional sports team.”
The Brooklyn Game reported 10/6/14, What does the new NBA deal mean for the Nets?
With the NBA slated to make an incredible amount of money in the new television deal, owners looking to sell their teams have never had a higher valuation. Enter the Nets, who have reportedly engaged the Guggenheim partners in discussion about a "combination of assets" that would combine Brooklyn Nets ownership with Los Angeles Dodgers ownership.
The details of the combination are unclear, and could change in an instant depending on either side's desires. If Nets owner Mikhail Prokhorov wants to sell his stake in the Nets franchise, his return could be 15 times his original investment of about $200 million. If they merely decide on some sort of partnership with Guggenheim, the proprietors of the Brooklyn Dodgers trademark, there's still an incredible amount of money to be made off that branding alone, and the ability to cross-brand the Nets & Brooklyn Dodgers could drive the price up further.
The deal off, the deal on

Since then, conflicting reports have emerged. The Wall Street Journal reported 10/7/14, Nets GM: Team Isn’t Cutting Costs or Looking for Sale:
The Nets are not cutting costs, they are still competing for a championship, and principal owner Mikhail Prokhorov is not selling the team, general manager Billy King said prior to Tuesday night’s preseason opener against Israel’s Maccabi Tel Aviv.
That still leaves room for other deals.

The New York Post reported 10/9/14 Dodgers-Nets parent companies uniting unlikely:
The parent companies of the LA Dodgers and the Brooklyn Nets will not be getting hitched after all, The Post has learned.
Although the two sides held talks recently, they have broken down and are unlikely to begin again, sources tell The Post.
...Prokhorov still wants to sell some of his 80 percent stake in the Nets — and Ratner wishes to unload his 55 percent Barclays stake, sources said.
The talks about combining assets would have allowed Prokhorov and Ratner to remove some cash from the deal.
If Ratner's selling his share of the arena, that would be a shift, since in May 2013 he described it as a unique investment:
So I realize that and having an arena is a very special thing because I use the word fortress. It's fortress real estate in a way. meaning it is something when you create it that can't be duplicated easily. Look, in almost half a century, this is only the second arena after MSG in an area this large."
NetsDaily reported 10/9/14:
NetsDaily received an email yesterday from a Guggenheim spokesman stating much the same. However, sources tell NetsDaily that things are not so dire, noting that deals like this are often difficult. The Guggenheim entity reportedly involved in the talks, Guggenheim Sports and Entertainment Assets, is different from Guggenheim Baseball Management that owns the Dodgers and that its range of investors could be different from those who have interests in the Dodgers, noted one source.
NetsDaily reported 10/10/14 that Nets CEO Brett Yormark told Reuters:
"Mikhail Prokhorov, our principal owner, is not looking to sell the team and for that matter, he's not necessarily looking for investors. He loves the Brooklyn Nets. He plans to be an owner for a very long period of time and is really focused on how we build the Brooklyn Nets brand as well as the Brooklyn Nets product. And that is what he is most focused on."
Then again, Yormark was the guy who insisted in March 2009 that original architect Frank Gehry was still on the project and still "loves" it, though it later emerged that Forest City had dumped Gehry Gehry's arena in November 2008.

Most recently, the Daily News reported 10/10/14, Nets still reviewing ‘multiple’ proposals from Dodgers parent group: source:
The Nets are currently reviewing “multiple” proposals from the Dodgers parent group about a possible merger of corporate assets, meaning the Dodgers could still be returning to Brooklyn despite repeated claims by the baseball group the deal is dead, a source close to the Nets told the Daily News on Thursday.
...However, because of the amount of media attention paid recently to the business talks and due to the Nets' current trip to China, the discussions have been tabled and are in a holding pattern, the source said, but they have not been terminated.
Walter recently released a statement through a spokesman saying that he has no interest in the Nets, but the source dismissed that claim as nothing more than a negotiation ploy.
Stay tuned.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Atlantic Yards/Pacific Park graphic: what's built/what might be coming + FAQ (post-dated pinned post)

This graphic, posted in February 2018, is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. Note the unbuilt B1 and the proposed--but not yet approved--shift in bulk to the unbuilt Site 5.

The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change. The project is already well behind that tentative timetable.

How many people are expected?

Atlantic Yards/Pacific Park has a projected 6,430 apartments housing 2.1 persons per unit (as per Chapter 4 of the 2006 Final Environmental Impact Statement), which would mean 13,503 new residents, with 1,890 among them in low-income affordable rentals, and 2,835 in moderate- and middle-income affordable rentals.

That leaves 8,778 people in market-rate rentals and condos, though let's call it 8,358 after subtracting 420 who may live in 200 promised below-market condos. So that's 5,145 in below-market units, though many of them won…

The passing of David Sheets, Dean Street renter, former Freddy's bartender, eminent domain plaintiff, and singular personality

David Sheets, longtime Dean Street renter, Freddy's bartender, eminent domain plaintiff, and singular personality, died 1/17/18 in HCA Greenview Hospital in Bowling Green, KY. He was 56.

There are obituary notices in the Bowling Green Daily News and the Wichita Eagle, which state:
He was born in Wichita, KS where he attended public Schools and Wichita State University. He lived for many years in Brooklyn, NY, and was employed as a legal assistant. David's hobby was cartography and had an avid interest in Mass Transit Systems of the world. David was predeceased by his father, Kenneth E. Sheets. He is survived by his mother, Wilma Smith, step-brother, Billy Ray Smith and his wife, Jane all of Bowling Green; step-sister, Ellen Smith Alexander and her husband, Jerry of Bella Vista, AR; several cousins and step-nieces and step-nephews also survive. Memorial Services will be on Monday, January 22, 2018 at 1:00 pm with visitation from 10:00 am to 1:00 pm Monday at Johnson-Vaughn-Phe…

Some skepticism on Belmont hockey deal: lease value seems far below Aqueduct racino; unclear (but large?) cost for LIRR service

As I wrote for The Bridge 12/20/1, The Islanders Say Bye to Brooklyn, But Where Next?, the press conference announcing a new arena at Belmont Park for the New York Islanders was "long on pomp... but short on specifics."

Notably, a lease valued at $40 million "upfront to lease up to 43 acres over 49 years... seems like a good deal on rent for the state-controlled property." Also, the Long Island Rail Road will expand service to Belmont.

That indicates public support for an arena widely described as "privately financed," but how much? We don't know yet, but some more details--or at least questions--have emerged.

An Aqueduct comparable?

Well, we don't know what the other bid was, and there aren't exactly parcels that large offering direct comparables.

But consider: Genting New York LLC in September 2010 was granted a franchise to operate a video lottery terminal under a 30 year lease on 67 acres at Aqueduct Park (as noted by Gov. Andrew Cuomo).

As…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…