As New York Liberty raise stake at record $450M valuation, a reminder: New York State could ask teams for more rent at state-assisted Barclays Center.

It's a crushing irony, if you see the big picture.

While some believed that Atlantic Yards (later Pacific Park) should be seen as a whole, with the possibility of cross-subsidization of its more successful elements, that hasn't happened, even though it could, as I explain below.

So affordable housing has been delayed, becoming ever more costly, while the value of the Brooklyn Nets, New York Liberty, the Barclays Center operating company, and the overall BSE Global growing dramatically. 

The boost

That was shown last year when BSE Global owners, Joe and Clara Wu Tsai, sold 15% of the company to the Julia Koch family, their fortune based on the late (right-wing funder) David Koch's Koch Industries, at a valuation of $6 billion.

That transaction valued the New York Liberty, which the Tsais acquired for a song and invested in savvily, at $250 million, as the overall WNBA grows with greater public interest and more lucrative sponsorship/TV deals.

The bigger boost

Yesterday The Athletic reported that the Liberty had raised capital "from a group of investors at a record valuation for a professional women’s sports franchise of $450 million," with the percentage in the "mid-teens." The names were unspecified. 

That's the most valuable women's team in sports, and signals a fast track toward Clara Wu Tsai's ten-year goal of the first billion-dollar women's sports franchise.

So 15%, for example, would mean $67.5 million.

So that means the Kochs are already benefiting--even if they can't take money out, funds for expansion, such as the new $80 million Liberty practice facility, can come from the new investors.

The Atlantic noted that the Liberty had seen sponsorship and attendance boom.

A missed opportunity

The Liberty valuation relies not just on the owners and the league, but the opportunity to play in the nation's largest market, in an arena that doesn't pay taxes and relies on various other public benefits, including tax-exempt financing. 

The "base rent" is a nominal $10, while instead of taxes, the arena makes payments in lieu of taxes (PILOTs) to pay off the tax-exempt bonds, which have a lower interest rate.

As I wrote last year for CommonEdge, though few remember, the potential for greater public benefit has been raised before. In 2015, the New York Islanders moved to Brooklyn, with a purportedly “ironclad” 25-year lease (though they left four years later). 

That could’ve triggered a payment. 

After all, if a second professional team arrived at Barclays, according to the February 2005 Memorandum of Understanding (MOU) signed by the city, state, and original developer Forest City, “additional rent and other terms” would be negotiated.

But that document was non-binding, and Empire State Development, the gubernatorially-controlled state authority that oversees/shepherds Atlantic Yards/Pacific Park, ignored that pledge. 

Nor did any elected officials raise the issue when Tsai bought the WNBA’s New York Liberty and moved them to Brooklyn. 

While the Liberty started slowly, they've gained enormously in value.

Now the discrepancy, and opportunity, is more glaring. The Liberty valuation has skied not just because of private business decisions.