Skip to main content

As TV deals bolster value of Nets, Prokhorov said to have pressure to sell; Blackstone Group helps team (and maybe arena) with financing

Depending on what you read, the Brooklyn Nets's valuation has risen thanks to a new TV deal, Mikhail Prokhorov is struggling to sell the team, and a refinancing means better terms for the team and possibly the arena.

In Team valuations reflect hot market, Sports Business Journal reported 10/27/14 that the Atlanta Hawks should sell for $750 million, which suggests the Brooklyn Nets would be worth much more.

As one SBJ source noted, "you are not just buying that team but buying a one-thirtieth interest in the NBA, which has proved to be a very solid and sustainable investment, and it’s obviously a league poised for global growth.”

Not only did the NBA nearly triple the value of its TV deal, the Nets will be able to renegotiate their local deal for far more. (Currently, the $25 million a year is dwarfed by the $35 million a year deal signed in the backwater market of Sacramento.)

Still, Bruce Ratner has had trouble selling his 20% of the Nets, aiming for a price based on an overall valuation of $1 billion, apparently because Mikhail Prokhorov, who owns 80% of the team, is operating at steady losses, based on a very high payroll.

NetsDaily added:
According to someone familiar with the negotiations, that [local TV] number is actually closer to $23 million and the Nets would like to see it considerably higher. The source noted that the Nets could potentially add more revenue from an increase in a renegotiated local TV rights deal than it will from an increase in the national TV package set to go into effect in 2016-17. In the national deal, each team will get $89 million annually. That's up from $31 million in the current deal.
Is Prokhorov selling, and why

Moscow-based independent journalist John Helmer, who covers oligarchs with a gimlet eye, wrote Here Are Some Reasons Why Mikhail Prokhorov Is Trying To Sell The Brooklyn Nets, published both on Business Insider and his Dances with Bears blog:
Mikhail Prokhorov thinks that his American basketball franchise, the Brooklyn Nets has grown eightfold in value in the five years since he acquired it for $223 million.
For the time being, though, no one agrees with him. That’s to say there is no buyer at Prokhorov’s asking price of $1.7 billion. If Prokhorov drops his price to $1.2 billion, as some sports media reporters claim, there is still no buyer.
NetsDaily notes that the $1.2 billion price was noted by ESPN earlier in the month. Helmer adds:
Today, if he’s obliged to accept a deal at the current industry valuation of $780 million for the team, Prokhorov must count that he has spent an additional amount of more than $600 million in player purchases, loss cover, debt service, and luxury taxes, ending up with no profit at all. If up was power in 2010, is down impotence today?
That looks like a loss, if not closer to a wash. (Prokhorov has also made money on arena financing, at least, given his loans to Forest City Ratner, while his share of arena revenues count as a small gain, I believe. And the value of the arena for selling purposes is $1.1 billion, according to ESPN.

Helmer suggests there's a pattern to Prokhorov's investments, in which hype exceeds performance:
On Prokhorov’s profit-loss record and his score for delivering on his promises, Bloomberg and the New York sports media have been mesmerized by Prokhorov’s How-to-spend-it advertising. The Russian media have investigated his corporate performance more carefully to discover that what Prokhorov advertises in asset value, he often fails to realize or deliver. Here is the loss making record at Polyus Gold, Uralkali, Rusal, and Renaissance Capital.
Though talk of Prokhorov's potential sale has slowed in the U.S., Helmer suggests that Russians believe Prokhorov is selling, trying to steer clear of the United States government's imposition of sanctions aimed against President Vladimir Putin.

Prokhorov sister, Irina Prokhorova, in July resigned from Civic Platform, Prokhorov’s political party, because "she opposes Russian policy in Ukraine, particularly the accession of Crimea," a dicey position from which her brother has steered clear.

The Blackstone Group steps in

The New York Post's Josh Kosman reported 10/29/14, Blackstone Group is the Barclays Center’s white knight that Stephen Schwarzman's Blackstone Group is very involved with the Brooklyn’s Barclays Center and the Nets:
Meanwhile, Blackstone in recent weeks through its GSO arm refinanced $60 million of Brooklyn Nets debt. That piece of the team’s $210 million loan was coming due, and Blackstone had the most enticing offer, sources said.
The Nets — likely worth nearly $2 billion but posting $144 million in losses last year — are likely paying about 7.5 percent, a source said.
Blackstone, too, has lent the Brooklyn Nets new Sunset Park practice facility $50 million, a source said.
Schwarzman also may help the Barclays Center get a better interest rate on the $511 million in state-authorized bonds that enable the arena developers to get a tax-exempt rate, via payments in lieu of taxes (PILOTs).

The Post noted that Blackstone Real Estate Debt Strategies principal Robert Tarulli formerly worked for Forest City Ratner, and worked on financing for Atlantic Yards


  1. Interesting that while Stephen A. Schwarzman’s Blackstone is getting involved representing oligarch Prokhorov in his sale of the Nets (where he may take a loss), Evercore, that David Offensend was involved with spinning off from Blackstone, is representing Bruce Ratner in connection with his sale of his 55% share of the arena itself (where he may take a loss).

    See earlier AY Report article: Tuesday, October 21, 2014, Current management seen as continuing at Barclays Center (operating company), though not clear how long; why is Ratner selling for seeming low price?

    To read more about Schwarzman of Backstone and Offensend of Evercore and the way they have both been involved in the sale and shrinkage of NYC libraries and a lot about our elected officials in connections therewith, see: Friday, October 31, 2014, Plutocratic Class Warrior Stephen A. Schwarzman: Public Impoverishment When Such An Individual Gains The Economic and Political Upper Hand?


Post a Comment

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 (post-dated pinned post)

This graphic, posted in November 2017, 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 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.

The previous graphic, from August 2017 (without the ghost B1)

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 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…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …