The Brooklyn-bound New Jersey Nets need cash.
Nets owner Bruce Ratner is trying to sell a $60-million stake in the team
he laid out $240 million for in 2004 — a move that would help keep
the team afloat while it’s stuck in the Meadowlands pending approvals
for an arena in the proposed Atlantic Yards mega- development, the Star-Ledger
of Newark reported this week.
The Nets lose between $20 and $30 million annually, according to the Star-Ledger.
But the team, which Ratner originally said would move to Brooklyn for
the 2007-08 season, is now expected to remain in its New Jersey moneypit
until the 2009-10 season or longer, judging from a conference call with
investors last week in which Ratner predicted that construction of the
entire Atlantic Yards project could take 15 years, up from his earlier
prediction of a maximum of 12 years.
A spokesperson for Forest City Ratner told the Star-Ledger that the company
was “looking to raise new equity to increase liquidity.”
This latest search for new financial backers comes at a critical time
for the project, just prior to the release of an environmental assessment
that is supposed to detail the project’s impacts and mitigation costs.
In addition, Forest City Ratner is in the midst of the project’s
first — and time-consuming — legal skirmish with project opponents.
Delays in construction of the most-expensive arena ever are something
Ratner desperately wants to avoid.
As The Brooklyn Papers reported last month, the developer has said he
loses $4 million every month that he does not build.
Ratner’s increasing reliance on private investment partners doesn’t
surprise those in the sports world.
“The owner of a franchise is often someone who built an empire on
private investment,” said David Carter of the University of Southern
California Sports Business Institute.
“And if you are building a new venue [in addition to just operating
the team], it means more risk investors will have to take on for a much
If history is any guide, new investors are a money tree that does not
grow in Brooklyn.
Only 16 percent of investors who came on board after Ratner bought the
Nets live or work in the 718 ZIP-code, according to a list obtained by
The Brooklyn Papers.
The most-prominent names on the list are Ratner relatives. In addition,
the project is backed by Brooklyn Museum Chairman Robert Rubin; Brooklyn-born
rapper Jay-Z; Lyor Cohen, head of Warner Music Group; and disgraced Tyco
executive Dennis Kozlowski.
A large number of investors are based in the real-estate industry, which
critics say shows that the Atlantic Yards project is more about development
In his conference call last week, Ratner reassured investors that the
project would prove lucrative.
“I look at as a business challenge [but] one we’re really up
to,” he said, “The arena will be brand new, Frank Gehry [designed].
It will do extremely well.”
Ratner predicted that the final environmental review of Atlantic Yards
would be done by mid-fall. “And we would start construction four
to five months after that.”