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May 1, 2008

NJ group explores bringing Nets to Newark

The Star-Ledger
By Ian T. Shearn

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The owner of the Devils hockey team and Newark Mayor Cory Booker are seeking to assemble a group of investors to buy the Nets and move the basketball team to Newark, according to people familiar with the effort.

In recent weeks, Devils owner Jeffrey Vanderbeek has met with Nets owner Bruce Ratner, while Booker has spoken to an official at Ratner's development company, Forest City Ratner Cos., according to three sources with direct knowledge of the discussions. The outcome of each talk was characterized as "open-ended." The parties spoke on the condition they not be identified.

Meanwhile, Ratner is going outside his usual group of spinmeisters, engaging the pr services of Howard Rubenstein, in order to downplay the talks:

"The team is absolutely not for sale," Ratner said through his spokesman, Howard Rubenstein. "We're inches away from completing the deal in Brooklyn."

NoLandGrab: First "Atlantic Yards" was a "done deal," but now they're "inches away" from sealing the deal?

One official explains Ratner's predicament plainly:

Carl Goldberg, chairman of the New Jersey Sports and Exposition Authority, said he believes the Nets could remain where they are.

"The likelihood of the Nets actually building a new facility in Brooklyn and leaving our facility at the Izod Center is diminishing by the moment," Goldberg told a group of Star-Ledger editors in February. "The cost of steel and concrete and the challenges of building a facility of that nature over the railyards are becoming more difficult."

The article cites one of Forest City Ratner's affadavits recently filed in court, an affadavit that the development company says is no longer accurate (maybe they mean "convenient"?), and another expert notes that, though banks may still be underwriting deals for sports facilities, the cost of the financing has ballooned in recent months.

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Atlantic Yards Report, Nets to Newark? The Star-Ledger smells some smoke

Norman Oder also noticed that developer Bruce Ratner brought out the heavy artillery to try to quash the gossip that the Nets may stay in Newark.

The latest time p.r. guru Howard Rubenstein spoke on behalf of Forest City Ratner was last June, delivering the news, papering over any whiff of the untoward, that executive Jim Stuckey had left to "pursue new challenges."

So if the Newark Star-Ledger adds more to the Nets-to-Newark rumors, in an article headlined Nets eyed for Newark: Plan is afoot by N.J. group, well, Rubenstein is there to douse the flames....

The article assembles evidence for and against a sale, and I add a little more context.

Oder reads the tea leaves, adding:

[Newark Mayor Cory] Booker has apparently tried to entice Bruce Ratner by offering him development possibilities in Newark, a city with numerous potential development parcels. (Then again, he can't exactly present single-source, no-bid deal, can he?)
...
The Nets are losing $40 million a year; the team's value has risen less than $40 million since Ratner and fellow investors bought the team, the Star-Ledger suggested.

George Zoffinger, former chief executive of the New Jersey Sports Authority, asserted that Forest City Ratner couldn't make a profit on a billion-dollar arena. Nets CEO Brett Yormark, however, cited "incredible interest" from ten potential Barclays Center "founding partners" he met with in Europe.

Indeed, the potential revenue from partnerships and sponsorships, luxury suites, and television deals might make even a billion-dollar arena economically viable, especially since the developer needs not to pay taxes but rather bond payments in lieu of taxes.

So the upside in a Brooklyn arena remains significant. But Forest City Ratner's numbers people must have a spreadsheet that factors in the costs of delay, including those annual $40 million losses.

NoLandGrab: Bruce Ratner is downplaying the behind-the-scene chatter because he doesn't want to spook potential investors and NY politicians. However, with the Nets posting losses around $40 million per year, he'd be crazy not to consider a sale.

Posted by lumi at May 1, 2008 5:14 AM