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September 11, 2009
Can Ratner come up with Nets arena funds?
Brooklyn blogger Gumby Fresh has weighed in on what the new Brooklyn Nets arena design looks like ("the funny helmets the rebels used in the third Star Wars movie"), as well as noting that owner Bruce Ratner is looking to get a private investor to kick in up to $200 million toward arena financing, which could make things dicey for Ratner:
They'll only do it, though, I imagine, if the Nets sign a long and expensive lease on the arena, which would doom his chances of trying to sell the team for a while. Of course, Ratner says that FCE could meet this $200 million from its own resources, but I think a commitment that large would put its return on capital so far in the toilet it might as well go back to building strip malls in Cleveland.
Then there's this issue of issuing the bonds to finance the stadium and then holding them in escrow until the litigation can be resolved. Ratner has told Brown that he can do this. I'm still not sure how that will work. I'm fairly certain the tax consequences for investors of being made whole (paid back early) on these bonds would be horrible. But it might be possible, and FCE, in one final throw of the dice, might be able to put up the premium to prepay the bonds itself. Certainly it would be easier to find that kind of money than $200 million in equity.
And that's assuming that Ratner is allowed to sell $700-million-plus in tax-exempt bonds for the rest of the cost, which the city Independent Budget Office seems to think would be illegal. Like I said, the man's not having a good week.