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September 23, 2009
Forget the $700 million; Russian tycoon investing $200M to bridge arena financing gap, gain most of team, part of arena; details slim; DDDB slams back
Atlantic Yards Report
Forget all the rumors that Russian billionaire Mikhail Prokhorov would invest $700 million in the Atlantic Yards arena.
Rather, he's putting up $200 million, crucial funding that will help bridge the gap between the cost of the approximately $800 million arena and tax-exempt bonds, and will gain--subject to some still-unclear details-- a controlling part of the team and nearly half of the arena, plus an opportunity to gain 20% of the development as a whole.
Though the official announcement claims that the "partnership will ensure the successful completion of a world-class entertainment venue in Brooklyn, the relocation of the NBA Nets basketball team and the economic and housing benefits of the Atlantic Yards Project," none are a lock.
It makes the completion of the arena and the team's relocation more likely, but there remain legal challenges.
Even more uncertain are the fulfillment of the economic and housing benefits.
Details thin
The key paragraph in the press release below is this:
In accordance with the agreement, entities to be formed by Onexim Group will invest $200 million and make certain contingent funding commitments to acquire 45% of the arena project and 80% of the NBA team, and the right to purchase up to 20% of the Atlantic Yards Development Company, which will develop the non-arena real estate.(Emphasis added)
What those contingent funding commitments are remains unclear. Prokhorov sure can't get 80% of the team and 45% of the arena for $200 million. (Ratner bought the team for $300 million; Forbes said last December it was worth $295 million, though a new arena surely raises its value.)
The Times called it "a tentative $200 million deal" and noted that Prokhorov "would also take on some of the team’s debts, executives said, reducing Ratner’s 23 percent stake as well as that of other investors."
Maybe taking on the team's debt is the contingent funding commitment.
Posted by eric at September 23, 2009 2:38 PM