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May 10, 2010

Bruce Ratner's NBA Waterloo

The Developer Looks Back on His Ill-Fated Nets Purchase; My Four-Hour Dinner With Prokhorov

The Wall Street Journal
by Matthew Futterman

With the formal handover of the New Jersey Nets to Russian tycoon Mikhail Prokhorov just days away, Bruce Ratner can go back to what he's good at, things like building big buildings in Brooklyn and making a lot of money in the process.

"I was never one to puff my chest out with some big ego about being the owner of a basketball team," Mr. Ratner said during a rare interview.

History will show that from the fall of 2004 until this week, Mr. Ratner owned the Nets and, unlike nearly all of his other professional endeavors, he wasn't very good at it.

Before he bought the team for $300 million, Mr. Ratner admittedly wasn't a basketball fan. The only reason he made the deal was so he could build an arena and a massive development in downtown Brooklyn across the street from two very profitable shopping centers he began building there a decade ago. He subsequently lost $25 million to $30 million each season, he estimates, as the franchise declined from one of the league's best to its worst, winning just 12 games last season.
...

But a championship team was never the point.

"He had a vision for a team that was for sale and didn't have many takers," NBA commissioner David Stern said of Mr. Ratner. "He had a vision of using it for an anchor for a spectacular new building and a new real-estate development, and that's what he's going to do."

Mr. Ratner's employees speak of how he was always optimistic about his project, through six years of litigation and a global financial crisis, when, in basketball parlance, he learned to rebound. Mr. Ratner always promised his troops they would figure out a way to keep alive his dream of moving the basketball team into a gleaming arena in Brooklyn. He didn't tell anyone what he really thought—that the project was dead.

"Back then, no one knew if anything would succeed," said Mr. Ratner, 65 years old. "And we were running out of time."

article

NoLandGrab: Wait — we thought it was "100% about basketball."

Related coverage...

Atlantic Yards Report, Wall Street Journal reports Ratner had decided to ditch Gehry by November 2008, portrays sale to Prokhorov as a coup

In anticipation of the expected transfer of the New Jersey Nets to Russian billionaire Mikhail Prokhorov, developer Bruce Ratner granted what the Wall Street Journal described as a "rare interview" and was rewarded with an article that, while portraying him as bruised by the experience of ownership, delves neither into questions about Prokhorov nor the propriety of the latter's benefiting from significant public subsidies and eminent domain.
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Ditching Gehry

The WSJ's Matthew Futterman pinpoints November 2008 as the moment when Ratner ran the numbers and, "[w]ithin hours," decided to ditch Frank Gehry as the arena designer.

Oh. That's not what they told us.

New Jersey Nets CEO Brett Yormark, in March 2009, told WFAN:

"Frank Gehry is still the architect of this project. And he loves it. It’s very dear to his heart, no different than it is to all of us – Bruce Ratner, our investors and myself."

The New York Daily News reported in May 2009:

Ratner spokesman Joe DePlasco said a reevaluation of Gehry's design would be completed by July, at which point Ratner will determine whether the world-famous architect would remain on the project.

Revising the deal

The Journal reports:

He also knew he'd have to delay construction of his commercial and residential buildings and negotiate a new deal with the state's Metropolitan Transit Authority. In the previous deal, he'd agreed to pay $100 million for the 22-acre site where the project, known as Atlantic Yards, will be built. But now he would have to replace that lump sum with a series of staggered payments.

Oh, he would, would he? (If only he'd have to pay $100 million for the entire site, rather than for the 8.5-acre railyard.)

The framing here suggests, not without foundation, that Ratner is fully capable of getting public agencies to renegotiate. Whether that's a good thing or not goes by the wayside.

Posted by eric at May 10, 2010 11:28 PM