Bruce Ratner, the developer who spent ten years buying the New Jersey Nets and then fighting a bitter court battle to tear down houses in Brooklyn to make way for a new arena and brought in a Russian billionaire partner to help pay the bills, is celebrating his ultimate victory the only way he knows how: by putting the arena up for sale.
Developer Forest City Ratner is marketing its majority interest in the Brooklyn arena that is home to the NBA’s Brooklyn Nets, seeking a buyer for some or all of its 55% stake in the building, according to people familiar with the matter.
An arena spokesman declined to offer details, but said in an email that “Our goal is to identify a strategic partner as we continue to capitalize on the great performance of Barclays Center.”
“Great performance” sounds nice when shopping the place around to buyers, but the fact of the matter is that the Barclays Center hasn’t done great in terms of its bottom line: It just about barely broke even in its first full year of operations, 2013, despite record-setting ticket sales. (The Wall Street Journal’s Eliot Brown, who earlier reported that the arena turned a tiny profit, now says that the arena reported a small loss in 2013.) And while arena revenues were up in the first half of 2014, they’re still well below projections, and not likely to improve significantly as the Nets honeymoon wears off and a trade war for concerts heats up with the newly renovated Madison Square Garden. (Yes, the Islanders arrive in 2015, but as we’ve seen elsewhere, sports teams often cost as much in lost concert revenue as they pay in rent.)
The reason for all this red ink? The $29 million a year in debt that Ratner saddled himself with, while turning over majority ownership of the arena’s biggest money-maker, the Nets, to Mikhail Prokhorov in exchange for more cash to feed the arena’s $1 billion construction budget maw. Even the most successful arenas don’t churn out that kind of profit margin year after year, which is no doubt one reason why Ratner is looking to cash out, though it’ll be extremely interesting to see what price he gets for a building saddled with $500 million in debt, not to mention Brook Lopez’s tender feet.
There’s much more, as you’d expect, at Atlantic Yards Report, including the observation that Ratner is really only selling operating rights to the arena, since it technically belongs to the state of New York in a complicated tax-dodge arrangement.
The big question remains, however: Why on earth did Ratner care so much about this project that he moved heaven and earth (and Daniel Goldstein), plus assumed half a billion dollars in debt, to make it happen? The man has never shown any interest in basketball, and ditched control of the team as soon as possible after the project was approved. There was the theory that the arena was a loss leader for getting hold of valuable Brooklyn land to develop with housing, but Ratner’s planned housing towers are doing even worse than the arena, though he’s still shopping around in China for investors. That leaves … wanting to drum up foot traffic for his mall across the street? Wanting to make even more of a name for himself in Brooklyn real estate, even if it’s not an especially positive one? Presumably he had something in mind all along — or maybe it’s just Hanlon’s Razor.
But… But… Arenas are cash cows! I guess Ratner isn’t thinking big enough!
All he has to do is wait, and hundreds of businesses will be clamoring for dozens of storefronts! You’ll see!
I’m so tired of hearing about cities giving into sports team owners and/or developers. All you hear in the beginning is all good until the state, city and tax payers get screwed (excuse the language). What they should have made him do (and other cities should take notice) is have him build the housing and mall first then the arena.
There are too many arenas not to mention baseball and football stadiums to host concerts.
NJ – MetLife Stadium, Izod Center and The Prudential Center.
NY – MSG, Barclays Center, Colosium, Citi Field and Yankee stadium.
That’s way too much competition for concerts, etc.
Time to stop building or renovating these stadiums and arenas because the owners say they need to be upgraded. If they use my tax dollars why can’t I go for free? Yeah righ
Hanlon’s Razor definitely. He probably figured that once he wheedled the land, tax breaks, and public financing, he could make a mint off of flipping the Nets and cashing in on the real estate. Then things went wrong and he was too far along to back out.
Oh, an opportunity for Jay Z to buy as large a share as the media seems to believe he has.
NJ BeachBumm: I don’t know why the parties that oppose these things don’t repeatedly bring up Orlando, Indianapolis, Hamilton County, Glendale and any number of other examples of how these things just don’t work from a financial standpoint.
I’d much rather hear “These things are fun, but don’t make money” than “Wow! We’re gonna get rich!”. I know which of these two is far more likely to be the truth.
MikeM
Opposing parties do point out that stadiums are money losers, but the ignorant masses are bombarded by the pro-stadium crowd. Look at the spending on these “elections”. The only hope are the “no on everything” voters.
Mike I agree. But it’s politics. We here all the I will change this and I will lower that until they get in office and don’t do one thing they promised.
I hate when sports teams owner (AKA the billionaire) threaten to move in order to get things done.
In the in the NFL they don’t want owners putting a percentage of their own money into stadiums. Why don’t they all do what Miami Dolphin owner did back in the 80/90’s when he had their stadium built. He had all private money raised to build it, not the city.
I’m just tired of it all. How long will it be when MetLife stadium the most expensive stadium in the world is outdated? Yo this day you hear Giant and Jet fans say there was no reason to replace Giants Stadium. What a waste of money.
Kind of makes me wonder if Nassau should go through with the Coliseum rerenovation or just move on and do something else with Mitchell Field.
It’s absolutely true that ordinary citizens complain about these sorts of shady deals, that citizens often lobby and sometimes file legal action against them…
Yet, as with the billionaire bankers fraud club, the elected officials simply ignore those who vote for them and do the bidding of the interests that have purchased their fealty.
If you are wondering what ever happened to “No taxation without representation”, you are not alone friends.