« As foreclosures increase, real blight (unlike AY 'blight') creates "real-estate panic" | Main | Was the Izod Center 61% full last night? »
March 31, 2009
Delayed Arena Development Is Costing Nets
The NY Times
By Richard Sandomir
The long delay in starting to build the Nets’ proposed arena near downtown Brooklyn is helping to cause huge financial losses.
For the fiscal year that ended Jan. 31, Nets Sports and Entertainment, which owns the team and real estate in Brooklyn, had a pre-tax loss of $77.8 million. That brings the three-year total of losses to $228.2 million, according to a 10-K filing by Forest City Enterprises, the parent company of Forest City Ratner.
Forest City Ratner is developing the $4 billion Atlantic Yards project, the site of the arena.
Forest City Enterprises owns 23 percent of the Nets, who play in the Izod Center at the Meadowlands. Because of the way losses are allocated among the partners, and the increased capital that has been advanced to the team by Forest City, its share of the team’s pre-tax losses for the last three years is $76.5 million.
“The team is expected to operate at a loss in 2009 and will require additional capital from its members to fund the operating loss,” the company said in the filing.
NoLandGrab: Forest City is playing a game of chicken. The company's plan is to weather the downturn and sustain the massive losses until they are able to move the team to Brooklyn, at which point they hope that the team will be turning a profit and be worth more than they paid.
Every time Forest City CEO Charles Ratner assures investors that the company is proactively managing debt maturities, he blinks.
Posted by lumi at March 31, 2009 6:01 AM