Bruce Ratner is a man who wears many hats, but lately, many of them are emblazoned with the Brooklyn Nets shield. Ratner is the executive chairman of Forest City Ratner, the development company that dragooned its way into the Atlantic Yard/Pacific Park project, of which the Barclays Center is the crown jewel (and the only completed building). As such, Ratner owns a majority stake in the arena—55 percent, to be exact—a holding he shares with approximately 100 other investors. He also owns a 20 percent share of the Nets. Both holdings are now for sale.
Ratner has reportedly been trying to sell his stake in the Nets for a while, and (well-sourced) rumors have Mikhail Prokhorov, the Nets majority owner, trying to offload his stake as well. The effort makes enormous financial sense: in 2010, Prokhorov bought his 80 percent share of the team and 45 percent share of the arena from Ratner for a reported $200 million, plus an agreement to assume roughly $180 million in franchise debt from Forest City Ratner, and to purchase more than $100 million in bonds needed to finance the arena.
Since then, the value of NBA franchises has skyrocketed. Last year, the Milwaukee Bucks sold for $550 million. A source told ESPN that the “asking price for the Nets franchise would be $1.2 billion for the team and $1.1 billion for the arena.” So both Ratner—and Prokhorov, if he decides to sell—stand to make an enormous profit, if they can find a taker.
So far, Ratner hasn’t been able to. On Monday, the Sports Business Journal, in a paywalled report, broke the news that Ratner is now putting his stake in the Barclays Center on the market. Since Ratner is the majority owner, this essentially means that the arena is for sale. It’s the latest attempt by Ratner to cash out his Nets/Atlantic Yards interests: he’s already sold 70 percent of Atlantic Yards—minus the arena and a stalled apartment tower—to a Chinese company.
As Grantland reported over the summer, the Nets lost $144 million last year, a staggering amount that was $131 million more than any other NBA team’s deficit last season. But that’s mostly due to the overpriced roster and the punitive luxury tax the league levies on any team that goes over the salary cap. The Barclays Center actually makes money, and the Sports Business Journal’s report notes that Ratner is now more interested in selling his stake in the arena stake than in the team.
The story did not report the projected sales price of Ratner’s Barclays stake, but suggested that, based on revenue flow, the arena would be valued at $750 million, according to Nets Daily. That would make Ratner’s share worth a little more than $400 million. That also might be a loss, as Norman Oder points out at the Atlantic Yards Report, “because the arena, the transit connection, and site work cost $934 million, Forest City has said.”
The Sports Business Journal suggested that Prokhorov’s ONEXIM Sports and Entertainment Holdings has the right of first refusal on Ratner’s arena share. Other potential buyers include Jonathan Ledecky and London-based investor Scott Malkin, the new owners of the New York Islanders, who are set to move into the Barclay’s Center in the 2015-16 NHL season.
Follow Phillip Pantuso on Twitter @phillippantuso.