« NY Times City Council Endorsements (Or Lack Thereof) In Districts Most Affected by Atlantic Yards | Main | Forest City In the News »
September 6, 2009
NetsDaily, quoting many "insiders," says sale of team, bond issuance face tight deadline; can financing and sale be bundled?
Atlantic Yards Report
Norman Oder digests claims from the NetsDaily blog on possible futures for the New Jersey Nets. The full analysis is well worth the read. Below are some highlights.
The pseudonymous NetIncome (aka Bobbo), the ill-tempered and amply-but-anonymously-sourced Nets superfan behind much of the NetsDaily blog, has posted The Nets’ Future-An FAQ, which is worth a close look.
It's very interesting stuff, though the lack of clear sourcing should be taken with a grain of salt. I've provided some excerpts, plus some commentary of my own and, notably, from blogger Gari N. Corp, who questions the bundling of both the team sale and arena financing, observing on his Gumby Fresh blog:
This is a tremendously over-leveraged developer trying to pitch a tremendously over-leveraged project to the market.
Ratner trying to line up a buyer for the Nets who would subsequently pay pay rent to Ratner for the proposed arena.
NetIncome sees Newark as impossible, but Oder isn't so sure:
NetIncome writes:
Ray Chambers, one of the former owners, is still pitching Newark. A second insider hinted that Mayor Cory Booker had spoken to some of the owners a while back at Chambers’ request. “If you talk to Ray Chambers and Cory Booker, they’ll tell you how good Newark would be”, said the insider, but he reiterated that Brooklyn is the better deal because of the arena.Later, he comments more dyspeptically, saying that the Newark investors are illusory--well, the sources are anonymous, as are so many of his--adding:
Again, for about the 1,000th time, there is NO WAY for the Nets to make money in Newark. NONE. Vanderbeek can’t make money on the Devils, for God sake, or the arena, even with all those open dates.I think it's more complicated. For the Prudential Center, at least, the scenario would change if the Izod Center closes and no longer competes for lucrative concerts.
While it would obviously be more difficult for the Nets to make money in Newark, attendance--the lack thereof which has caused financial woes--almost surely would increase. Here is some insight under the heading of "Timing issues and bonds".
Insiders tell NI that ownership would have to be settled by November, a schedule complicated by a state Court of Appeals decision not expected until mid- to late-November (and, I'd add, potential other court cases). Bond rating agencies must approve the deal.
To build the $772 million Barclays Center (the FAQ says $774M), with $650 million in tax-exempt bonds, according to NI, the team owner must put up $200 million in cash and prove the availability of revenue streams, such as the lease and naming rights.
And here's an indication that Ratner must find a way to end his losses from owning the Nets:
While the Nets have lost $70+ million over the past two years, parent Forest City Enterprises, which has increasingly absorbed team losses "reportedly has told Ratner after this year 'we’re done,'” according to NI.
Oder brings in comment from the blog Gumby Fresh that indicates that some tricky maneuvering would be necessary to line up financing for an arena:
Ratner wants to sell the team, and use the proceeds to fund the stadium. But buyers - with the NBA's support, apparently - do not want to be locked into an above-market lease for a Brooklyn arena. They want to own the arena, but probably don't have the resources to convince the agencies to follow through.
The Nets losses then, are only part of the reason Ratner needs to sell. But Ratner might not be able to sell the team until the financing is in place, but needs to sell the team to conclude the financing. Can he bundle both into a single instantaneous transaction? Watch this space. (Emphasis added)
NoLandGrab: It's interesting and useful how comments on one blog cause analysis by other bloggers. But wouldn't it be nice if the Empire State Development Corporation, tool of developer Bruce Ratner, saw fit to let the public know directly the state of the proposed Atlantic Yards development?
Posted by steve at September 6, 2009 5:37 AM