November 16, 2009
Getting money out of Russia: why Prokhorov might want the Nets no matter where they play
Atlantic Yards Report
The proposed purchase of a majority interest in the Nets by Mikhail Prokhorov, Russia's richest man (at a reported $9.5 billion) may seem to be a toy (as per the New York Times) for the oligarch.
After all, it would cost him just $200 million down (all borrowed) plus a willingness to absorb Nets' debts and losses--hundreds of millions of dollars more--to gain 80% of the team and 45% of the arena.
But if Nets majority owner Bruce Ratner is desperate to divest a money-losing asset, maybe Prokhorov is a little desperate in his own way, given the difficulty--and importance--of getting assets out of Russia and into more stable overseas markets not subject to the heavy hand of the Russian state.
A new owner in NJ?
If that's true--and there's some evidence--then Prokhorov should follow the deal whether it takes him to Brooklyn or New Jersey.
Indeed, after ESPN.com's Marc Stein reported that Prokhorov might buy the Nets even if they stay in New Jersey, a minority owner of the team confirmed to the Star-Ledger's Dave D'Alessandro that "it is believed that Prokhorov 'might be inclined to still buy and keep it in Jersey' if the price could be worked out." (In other words, a renegotiation.)
NoLandGrab: Sure, Prokhorov might be interested in the larger Atlantic Yards real estate deal, but we sincerely doubt it. He wants to own an NBA team, not some apartment buildings. So we have a modest proposal for Mr. Prokhorov.
You've seen the Prudential Center. Nice arena, right? Great pre-season crowd. Ready to go on opening day 2010 (if not sooner). As close to Manhattan as Brooklyn is.
Here's the plan: You make a small investment in Develop Don't Destroy Brooklyn, say, $300,000. That's not even a rounding error for you. At the same time, you start making noise about how you think the use of eminent domain is inappropriate (maybe relate it to how the totalitarian Soviet state disrespected private property back in the old days, and how you always resented it as a kid). Then you feign cold feet on the Nets deal. And then you sit back, and wait. It won't take long. With the prospect of his rich Russian oligarch bailing, Ratner's Atlantic Yards deal will be belly-up in a matter of weeks, if not days. And then you ride back in, buy the Nets for 50 cents on the dollar, move them to Newark, and voila: You've got what you want, at a huge, Norilsk Nickel-like discount. You can thank us with a couple courtside seats for Lebron and the Cavs, and maybe one of those $19,000 lunches.
Posted by eric at November 16, 2009 12:07 PM