Former Nets/arena CEO Yormark on delayed move to Brooklyn ("I was a little naive") & signing Islanders ("we didn't know some of the dynamics going in")

"The Jon Schultz Podcast unpacks the lessons from industry leaders who refused to quit," so check below as Schultz, Co-Founder at Onyx Equities, Real Estate Investor, CRE Tech Influencer + Investor, interviews Brett Yormark, founding CEO of the Brooklyn Nets/Barclays Center operating company and now leading Roc Nation.

There are a couple of nuggets in there, including Yormark's belated/partial admission of a few misjudgments, but he's not about to go too deep.

   

Moving to Brooklyn

The segment embedded above begins with the host asking Yormark about his biggest challenge.

Yormark: "So my biggest challenge was... and I kind of knew this going in, but maybe wasn't crystal clear, when I took the job as the CEO of the Nets, it was with the caveat that the team was moving to Brooklyn. I didn't know much about real estate, eminent domain, and the challenges and moving the team to Brooklyn. "I just knew that that was the ultimate goal."

"So let’s say I was a little naive," he acknowledged. "What was said to me was that we'll get to Brooklyn in three years, Brett, You’ll be in New Jersey for a couple of years. It ended up being seven."

Did legendary BS-artist Yormark let himself get hornswoggled by Bruce Ratner? Or did he convince himself, as well? (Remember, how he was "absolutely" sure the arena would open in the fall of 2011.)

So it was, as Yormark admitted, "a challenging dynamic" to appeal to legacy Jersey fans while planning the move.

"How do you keep people engaged?" asked the host.

  

"In some respects, we became a lame duck team because fans aren't going to stay vested when they know you're moving across the river," Yormark said. "So that was one of the biggest challenges: maintaining a viable business in New Jersey while trying to at the same time, simultaneously, building your roadmap to Brooklyn."

Indeed, the Nets wound up building a new fanbase rather than holding on to the significant amount of New Jersey fans initially forecast.

New crises

Yormark segued to: "And then in 2008, in the midst of you know balancing that challenge, you hit a financial crisis where: are you gonna get the financing to move to Brooklyn. Are sponsors going to commit? So you're a viable business getting to Brooklyn et cetera et cetera."

Then, another challenge: "And then there was the eminent domain the issue which caused--truly caused the delays in getting to Brooklyn because we were moving the team to an area in Brooklyn where there was housing already there, and we had to displace those homeowners in order to build Barclays Center."

Also, that the financial crisis meant original developer Forest City Ratner had to downsize the arena and jettison plans to build the arena plus four towers at the same time.

"So there was multiple challenges that we were facing, and then when I look back on them now, I just think in life you need to have great conviction," Yormark said. "You got to have great belief in in what you're doing and not that you want to convince yourself it's going to happen, but you got to make sure that on the merits of... this vision and mission that you can get there. And I never never wavered on why we're moving to Brooklyn and why it was a great story and had to be told."

He wasn't wrong that moving to Brooklyn, a place growing into the media spotlight, part of the nation's media capital, and part of a city underserved (at that point) by arenas was an understandable business move. 

It brought new revenues from sponsors and advertisers, but the arena, it turns out, has not been as busy as projected, and hardly as profitable, even before the pandemic.

Opening in Brooklyn, plus hockey

A little later in the podcast, Schultz brought up the "gorgeous" Barclays Center, and the effort to bring the New York Islanders to Brooklyn.

"When I look back on my years in Brooklyn, that was probably our biggest challenge," Yormark acknowledged, and I just think we didn't know some of the dynamics going in."

"We thought bringing another sports franchise to Brooklyn would be ideal. It would fill dates at the Barclays Center. The Islanders at the time--Belmont, which is their home now, really wasn't even on them on the radar screen--they needed to move out of the Coliseum, they needed to move to a state-of-the-art building or who knows where they would have gone, maybe they would have left New York."

"And you know, part of it was helping the Islanders and their future, but at the same time it was also a business decision that we made that we thought was gonna really be very additive to Barclays Center," Yormark said. 

"It ended up being very challenging because the team never became rooted in Brooklyn," he said. "Brooklyn's a very unique community--they they know someone that is all in and someone that's not and you know the dynamic was --the players were living in Long Island, practicing there and just coming to the borough for games and it was a little bit of a disconnect. No one's fault."

Wait a sec. Didn't Yormark alienate fans with changing some of the traditions? Wasn't it unwise to expect suburban families to attend weeknight games?

"And then, you know, the building wasn't ideal for hockey," he acknowledged, "the way it was built and everyone knew that going in. I just I don't know if we we paid enough attention to that, to the overall experience of of having hockey at the Barclays Center, knowing that it wasn't an ideal fit and wasn't built for hockey."

Yeah, like telling people with partial views to watch the game on their phones?

"So there was a lot of moving parts that maybe, had we spent more time considering and evaluating who knows if we would have made the right--the same decision," he said. "But I'm happy that it ended in in a good place for the Islanders where they ultimately moved back to Long Island, they played their games at the Coliseum while their UBS Center was being built. Now they have a state-of-the-art home not only for the team but for the fans and it's worked out really well for them."

Lessons learned

"And listen in life, you make mistakes and you learn from them. And in our zest to have two major franchises in in Brooklyn, you know, maybe we overlooked certain things that we shouldn't have," he said. "And I think that was a lesson for me as a CEO--although a group of us made that decision it was certainly on my shoulders and you know I spend more time doing due diligence now and looking at the data, because maybe we didn't do as much as we should have."

Later, the host asked him about branding.

"Because of the success we had with the transformational brand reset of the Nets," Yormark said, "we felt we could apply a similar strategy to the Islanders. But the Nets move was very different, you know we moved the Nets to Brooklyn we took on the Brooklyn name, we endeared ourselves to the Brooklyn community... we became Brooklyn, we were inspired by Brooklyn and unfortunately we didn't have the latitude to do the same thing with the Islanders because we didn't own the team."

"They were just effectively a tenant in the building. So effectively what worked for the Nets and that model and that blueprint we were not ultimately able to apply that to the Islanders, and I think that was the biggest issue because we all see when you go all in and you galvanize a particular team like we did with the Nets in a community like Brooklyn good things can really happen and we unfortunately didn't have that same leeway and it's okay we made a mistake it ultimately ended fine for the Islanders it was a little bit of a hiccup."

That hiccup cost the arena operating company a lot of money, and it wasn't just branding, it was Yormark's unusual and unwise decision to guarantee payments to the team in exchange for keeping certain revenues.

"And we moved on, but when I do look back on Brooklyn and we did a lot of awful awfully good things for the community, for obviously the brands we built, that was not one of the highlights, but it's okay because it ended fine for the Islanders and their fans," Yormark concluded.

Indeed, the Islanders stayed in the area for the TV contract, kept their fan base, and then got state help to build a new arena at Belmont Park.