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September 11, 2008

Karma Burns

Gumby Fresh

The one blogger who has insight to bond financing and the like gives his personal assessment of the news from yesterday's NY Times article. Below are a few excerpts, but if you're interested, you may want to check out the entire post.

"Freshie" on the Barclays naming-rights deal:

It certainly explains why FCR and its underwriter are insisting the deal goes down in November. Because, according to the Times' Mr. Bagli, the arena's sponsor, Barclays, can walk if the arena doesn't reach financial close in November.

Barclays must be thinking they dodged a bullet on this one. Let's assume they really thought a speculative move by a basketball team was a good way to market exchange-traded funds. The advantages right now of trying to build a retail brokerage presence in the US are pretty limited.

And while Barclays hasn't had the poor run of form of its peers, but its balance sheet is still in need of a little TLC. $20 million is the amount that Barclays could earn from a single rights issue that isn't a massive cock-up, but it's still probably mutliples of the amount that it squanders on the entire New York financial publishing industry in a year.

...on the bond financing:

And then there's the financing. I reckon, leaving the litigation to one side, that FCR could get the financing done right now. Goldman Sachs closed a pretty solid, if somewhat subsidy-larded financing for the Louisville Arena the other day. The bond insurers seem to have stablised, and right now its easier to persuade bondholders of the utility of a new basketball arena in Kentucky than of the US housing system.

...on the death knell of Atlantic Yards:

No, the Atlantic Yards project won't ever get the decisive stake to the heart. There will be a dozen cuts instead, not least among them higher financing costs, discounted naming rights, restrictions on tax-exemption, Brooklyn pols refusing to chuck any more subsidies at it, and mounting losses at the Nets. At some point, FCR's stock analysts are going to start suggesting that it goes back to nickel-and-diming government agencies on a smaller scale than through gargantuan sports-related boondoggles.

Atlantic Yards Report, The picture clouds for FCR; what might the spreadsheet say?

Norman Oder responds to Gumby Fresh's assessment of how Atlantic Yards might finally bleed to death:

You have to believe that the spreadsheet folks inside Forest City Enterprises and Forest City Ratner have done the numbers, and that the developer can incur Nets losses and the carrying costs of the land as long as the upside--including tax-exempt bonds and naming rights--is available.

If that upside changes--and there's no proof that it will, just the possibility--then the numbers change and the deal changes. Then things might get even more interesting.

Posted by lumi at September 11, 2008 5:48 AM