The New York Post is reporting that the arena-management giant AEG (still owned by Philip Anschutz, contrary to what he suggested two years ago) may be looking to buy the Brooklyn Nets‘ arena, according to those ever-popular “sources.” Also, that he doesn’t want to pay what arena majority owner/Nets minority owner Bruce Ratner of Forest City Ratner wants to get for the building:
AEG is said to be willing to spend up to $500 million on the 19,000-seat concert and sports arena, or slightly more than 12 times Barclays’ roughly $40 million in expected 2014 operating profits, sources said.
However, Forest City, which last month forecast that profit number would soar 63 percent to $65 million in 2016, is said to be seeking a lot more than $500 million.
Those projections sound awfully optimistic, given that the Barclays Center only took in $30 million in its first year of operations, barely enough to pay off its $29 million a year in construction debt. AEG would undoubtedly love to have its own concert facility in New York City — though given that right now the company gets to play the Brooklyn arena and Madison Square Garden off against each other when bidding for events, it can’t be too unhappy with the status quo, either. Though maybe with the Islanders due to arrive next fall, they might be worried about not having enough open dates at both arenas to keep the bidding wars going, maybe?
And speaking of the Islanders, buried way at the bottom of the Post article is this:
AEG believes Yormark is paying too much to keep the arena booked, sources said. It was Yormark who guaranteed $50 million a year to the New York Islanders once they move to Barclays next season.
“AEG sees the Islanders deal as too risky,” the source said.
After roughly five years, Barclays can get out of the Islanders contract, sources said.
This is the first I can recall hearing about a $50 million revenue guarantee for the Islanders — the highest number I’d seen previously was $10 million in annual payments from the arena to the team, while the arena kept most hockey revenues — and definitely the first I’ve heard about the Islanders having a five-year out clause. (And the first Islander fans have heard of it, too, apparently.) That would make the decision to move the Islanders to Brooklyn make a bit more sense — if there’s an out clause, both Ratner and Isles owner Charles Wang get to effectively conduct a trial run in Brooklyn. And if it turns out no one wants to go see hockey in a basketball arena 20 miles from their traditional home base, the Islanders can conceivably move back to a renovated Nassau Coliseum, currently set to be downsized to 13,000 seats (but at least 13,000 seats placed properly for hockey) by … Bruce Ratner.
All of this is a hell of a lot of speculation based solely on a report based on unnamed sources in a newspaper that doesn’t have a great track record with its “exclusives.” Take it all with a grain of salt for now, though if you want to jump to conclusions of the “almost brand-new arena can’t even sell for more than half what it cost to build” variety, don’t let me stop you.