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December 3, 2009
Did Barclays Get a Discount on Nets Naming Rights?
by Eliot Brown
Are the naming rights for Bruce Ratner's planned Nets arena worth what they used to be?
In January 2007, Mr. Ratner, Nets owner and developer of the planned $4.9 billion Atlantic Yards project in Brooklyn, trumpeted a record-setting naming rights deal for the new $900 million basketball arena that would be the centerpiece of the project.
While Mr. Ratner's firm never released an exact number, it was widely reported that British bank Barclays would pay nearly $400 million over a 20-year deal to slap its name on the venue, which, at the time, was to be designed by stararchitect Frank Gehry. The move was a huge win for Mr. Ratner, a record price that would bring in a big injection of funds with a well-respected name.
But now, after a historic economic crash, lengthy project delays, and the dropping of Mr. Gehry as project architect, there's reason to think the deal is less than it once was.
According to documents related to the arena's financing that were released Thursday, Barclays will pay $10 million a year to the arena's owner for the 20-year deal. Looking solely at this, it would seem to make it a half-off discount, but there are a number of other untold fees paid directly to the Nets as part of the naming rights, according to the documents. Forest City Ratner declined to provide those numbers, and a spokesman for Barclays declined to comment.
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Well, the Barclays Center Project Preliminary Official Statement (see p. 38 and 78-79) indicates that the 20-year Barclays Center Naming Rights Agreement was renegotiated twice and is worth $10 million a year.
(The document was acquired by Eliot Brown of the New York Observer, who quotes Forest City Ratner spokesman Joe DePlasco, spinning as always, as asserting the value is more because it includes "the arena, team and hospitality assets." Sure. But they're not saying $20 million a year.)
Other previous evidence of sweeteners: the addition of Barclays to the bond deal and the naming rights agreement for the Atlantic Avenue/Pacific Street station.
By the way, the New York Times just this week asserted the agreement was for $20 million a year.
NoLandGrab: A pie-in-the-sky estimate for the number of annual arena events. An incredible-shrinking-naming-rights deal. These one-notch-above-junk bonds are looking junkier by the day.
Posted by eric at December 3, 2009 3:02 PM