Nets' Ratner to own Brooklyn arena
EAST RUTHERFORD, N.J. -- It was a big night, even for Russia's richest man.
Mikhail Prokhorov's guest for dinner in Moscow on that July evening was Bruce Ratner, an American real estate developer -- and owner of an NBA team.
Ratner, the principal owner of the New Jersey Nets, needed money to build his $4.9 billion vision dubbed Atlantic Yards, which would include a new $800 million Brooklyn home for the team. Prokhorov, a lover of the game who owns a share of a successful Russian pro team, also had a dream: To own a team in the NBA, home of the world's best basketball.
It would take some of his $9.5 billion fortune to get it done.
The dinner went well.
"We talked for about four hours over dinner and talked about this strategic partnership," Ratner said. "We got along well, and kind of hit it off, and it became exciting for both of us."
A few months later, they had a deal: Prokhorov would buy the team and Ratner would become a minority owner. Ratner would own the arena and related developments, but Prokhorov would be a minority owner.
The blockbuster deal means a project that had seemed uncertain might very well have the pieces it needs to bring a professional sports team to Brooklyn for the first time since 1957, when the Dodgers bolted for Los Angeles.
"I feel very good, actually totally different," Ratner said. "I feel really good."
In an interview Friday with The Associated Press, he said his deal with Prokhorov will eliminate any remaining obstacles to building the new arena.
Ratner sees no problem in selling almost $600 million in tax-exempt bonds by a Dec. 31 deadline, and he does not believe a pending legal challenge to the state's use of eminent domain to assemble land for the arena will succeed.
He predicted ground will be broken on the new Barclays Center by the end of the year, although one opposition group disputed that on Friday.
Months ago, experts doubted whether the cash-strapped Forest City Ratner Cos. and Nets Sports and Entertainment would get the arena and commercial project off the ground with the economic downturn.
Ratner started considering partnerships as early as last year and had Goldman Sachs start to look at potential investors seriously this summer.
Along came Prokhorov.
It's an interesting combination. Ratner is a laid-back 64-year-old who is more studious than athletic. The 44-year-old Prokhorov, who is 6-foot-6, was an avid basketball player in his school days who owns a share of pro team CSKA Moscow. He made his fortune in metals and other commodities and is a fixture in glitzy European resorts, where he's known as a playboy who enjoys a gorgeous entourage.
Ratner has heard the stories.
"Everything that we have done with the NBA and in terms of making whatever partners we have, we have always wanted a person we are proud to be partnered," Ratner said. "We are proud to be partnered with Mr. Prokhorov."
The deal with Prokhorov is the second major move Ratner has made to get the project going.
Aware the economic crisis had made less money available for bonds, Ratner downsized the arena, fired noted architect Frank Gehry and eliminated all office space and other extras in the building.
"Not only did it help, it was critical," Ratner said. "What happened when the world fell apart last year, two things happened: The ability to sell suites at the same prices, and seats at the same prices, all that become a problem, as it did for all sports."
The announcement earlier this week that the Russians were coming -- to help -- was the last building block.
The deal between Prokhorov's Onexim Group and Ratner's companies was announced Wednesday.
According to the agreement, entities formed by Prokhorov's group will invest $200 million and make funding commitments to acquire 80 percent of the NBA team, 45 percent of the arena project and the right to buy up to 20 percent of the Atlantic Yards Development Co., which will develop the non-arena real estate.
When he and Prokhorov met, Ratner said, "It was a vision of more than basketball, it was an American businessman and a Russian businessman doing a joint venture together, increasing the investment of Russia to the United States, as well as the importance of NBA and sports and part of his vision."
There are three obstacles that stand in the way: Completing the tax-exempt bond deal, dealing with the challenge to the use of eminent domain, and getting the sale of the team approved by three-quarters of the NBA's 30 teams, something that seems likely with commissioner David Stern on board.
Ratner is confident about getting the bonds.
"We feel quite good about that because the markets have returned," he said, adding that he is meeting with rate agencies and expects to have everything done within three weeks.
New York's Court of Appeals is to hear an eminent domain challenge to the project next month. Ratner said the project is on solid legal ground.
"You have to have a situation where the court of appeals would have to reverse the eminent domain laws that have been around a very long time and that have been upheld by the U.S. Supreme Court. It's not very likely," he said.
But Daniel Goldstein, spokesman for the opposition group Develop Don't Destroy Brooklyn, said that even if Ratner won the suit that he will not be able to break ground in 2009 because the properties he needs to demolish won't come into his possession until next year.
Goldstein also disputed that the court is being asked to reverse eminent domain laws, noting that the appeals court is being asked to rule upon the meaning of public use as it exists in the New York State Constitution.
The project on the 22-acre site includes residential and commercial real estate development, built over property that includes a rail yard, warehouses and several blocks of homes and businesses.
The arena will be the first building.
Although he will be a minority owner of the team -- but own 55 percent of the arena -- Ratner likes where he is leaving the Nets.
"Doing something that ensures that this team is very well funded and is able to get the very best players makes me very happy, even though somebody else might have the primary decision making," Ratner said. "What is important is the team and not who owns what percentage. I always wanted to see this team do well. I love the Nets."
As for the whether the Nets really are moving to Brooklyn, Ratner said, "No doubt about that."
Copyright 2009 by The Associated Press