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Prokhorov decides to shutter Nassau Coliseum, leaves Islanders in limbo (back to Brooklyn next season?)

Upending the future of the New York Islanders (and Long Island Nets), the Nassau Coliseum, already mothballed because of the coronavirus pandemic, will close indefinitely as arena operator Onexim Sports and Entertainment, which leases the building from Nassau County, has decided to get out of the business.

Onexim--owned by Russian billionaire Mikhail Prokhorov, who formerly owned the Brooklyn Nets and the Barclays Center operating company--is seeking new investors to operate the arena and assume the $100 million debt left over from the $180 million (or $165 million) renovation launched by Barclays developer Bruce Ratner and Prokhorov.

The EB-5 promotion
Note that $100 million in debt [update: originally reported as $90 million] is owed to EB-5 investors, who offered low-interest loans in exchange for green cards, and that total investment was once said to cost $260 million.

Note that there's often a five-year term before repayment is required, and no announcement of such repayment has been announced.

 If Prokhorov loses the lease to his investors, would the special-purpose entity holding the EB-5 debt control the building? I doubt they're first on the capital stack, assuming other bank loans remain.

The news of Prokhorov's move was first reported by Patrick Clark of Bloomberg.

The Coliseum, longtime home of the Islanders, was downsized for a renovation that began in 2015, reopening in 2017 with a capacity of 13,000 for hockey.

But the Barclays Center, despite a larger capacity, proved a problematic interim home for the Islanders, and the new owners, in association with Gov. Andrew Cuomo, got permission to build a new arena at Belmont Park, not far from the Coliseum.

What's next?

In the meantime, the Islanders began splitting their season between Brooklyn and the Coliseum, with higher attendance at the latter. For the 2020-21 season, they were supposed to play all their games at the Coliseum. (The Belmont arena is supposed to open in 2021.)

The rest of the season, assuming it resumes, would be played at a "bubble" city outside of New York.

While no one's making a definitive prediction, the Islanders could move back to the Barclays Center full-time for the 2020-21 season, since they have a lease. (If so, season ticket holders deserve a refund, argues Eye on Isles.)

It's by no means clear, though, whether those would be games for television or whether spectators would be allowed and, if so, what social distancing measures would be required.

In The Athletic, Arthur Staple suggested that the Isles could stay at a reopened Coliseum, play at another venue such as Madison Square Garden, and even--especially if the games were made for broadcast--play at their practice facility.

A death foreordained?

In a January 2019 essay for the New York Daily News, The billion-dollar Belmont bad bet: A new arena will compete with Nassau's county-owned Coliseum, I suggested that it was unwise for state documents to claim the two arenas would happily coexist, since they'd compete for similar events, like concerts and family shows.

"A new arena indeed might serve Long Island hockey fans, the business interests of the Islanders’ owners and Cuomo’s craving for megaprojects," I wrote. "But there’s a good chance the older arena would wind up being a white elephant."

Indeed, Nassau County Republican Majority Leader Richard Nicolello told Newsday, "Realistically, this day was inevitable when the state decided to build a new arena at Belmont; the pandemic simply made the end arrive sooner than expected. Long Island would never have been able to support two arenas within 15 miles of each other. "

By contrast, Kevin Law, president of the Long Island Association, told Newsday he thought the older arena would revive: “Now they just need a new operator for the Coliseum and I’m sure they’ll find one."

Promises, and disdain

Prokhorov's Nassau Events Center has a 49-year lease to operate the Coliseum, with the county promised at least $4.4 million in annual rent--which seems in question now.

Newsday quoted Nassau County spokeswoman Christine Geed as saying rent and utilities were paid only through January, which suggests Prokhorov's finances were suffering even before the pandemic hit in mid-March.

Some fans thought it was inevitable.

A land deal

Newsday noted that the Coliseum is part of a larger project, the $1.5 billion Nassau Hub development, and Prokhorov spokeswoman Ellen Pinchuk said, "However, we remain confident that the Coliseum and the proposed development project represent valuable investment opportunities, committed to the effort to find the right solution to the problems confronting the Coliseum, and hopeful that these efforts will bear fruit."

Marshall noted that, whoever takes the Coliseum lease gets value from the surrounding development and likely would let RXR Realty take the lead.