Is Prokhorov Ready to Invest Another $120 Million in Brooklyn?
by Net Income on Apr 23, 2010 6:21 PM EDT
in Brooklyn
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Mikhail Prokhorov has already agreed to invest $200 million for 80% of the Nets and 45% of Barclays Center, pay off $175 million in Nets' debt and eat up to $60 million in team losses while it continues to play in New Jersey. There have also been reports that he's willing to purchase more than $100 million in junk bonds to finance infrastructure improvements around Barclays Center.
Now, it appears his investments won't end there. In a story on how NBA approval will trigger his "strategic partnerships" in Brooklyn, a Russian business daily quotes "a source close to one of the parties to the transaction" as saying Prokhorov is prepared to invest $120 million for a 20% stake in Bruce Ratner's Atlantic Yards. The report adds that Prokhorov plans to "participate in the development". Barclays Center is the first stage of that larger 22-acre Brooklyn development.
As part of his 2009 agreement with Ratner, Prokhorov acquired an option to purchase the 20% stake, but the value of the option has never been publicly discussed. Atlantic Yards, when completed, is expected to encompass 6,430 housing units and more than 750,000 square feet of office, retail and hotel space in 17 towers.
- Prokhorov Ready to Play in NBA - Elena Vinogradova - Vedomosti
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Well, now I know
where the $700 million figure comes from:
—$200 million for 80% of the Nets 45% of the arena
—$175 million in debt
—$60 million in losses while the team remains in NJ
—$100 million in junk bonds for arena infrastructure
—$120 million for piece of Atlantic Yards
That’s $655 million…close enough
For someone renowned as being a shrewd businessman
getting involved in this project is pretty stupid, especially when considering he will never make his money back. $800 million arena in this country aren’t built in this country for a reason – it’s a bad investment. It doesn’t tak a financial wiz to understand that. This project is a joke, and won’t be built.
he understands
that the value of this project TO HIM is more than the cost. If you had seen the 60 Minutes piece, you would understand that.
The construction site has been busy for nearly a year. You should go over there. Very convenient to get to. They have built a lot of the infrastructure, starting with the new subway/LIRR entrance, the relocated rail yard and the improvements to the water and sewer lines needed for such a big project. Excavation for the arena began this week, and once Goldstein has left his condo, which should be in about 10 days, that building will be demolished, permitting much more construction. Also, once the state has vacant possession, the bond monies will be released, also accelerating the process.
By the way, it’s not $800 million. It is closer to a billion dollars.
Still haven't heard how they will demolish the Condo? Goldstein denies they will use dynamite or a wrecking ball.
I want to see Ratner present and at the controls, with a smile on his face.
$800M arenas do get built
you have to understand financing structure – incorporate municipal financing, monies being made on bonds, the job and tax impact it has on brooklyn/nyc, credit being used – it’s not crazy to build this. investors will make their money on ay. crazy revenue from leases, signage, events, etc… these guys wouldn’t develop if they weren’t going to make their money back
Then why not just by a piece of "the Rock" (no pun intended)?
I did watch 60 Minutes. He can accomplish his goal of owning an NBA without throwing away good money in Brooklyn.
Hahaha
Everything Prokhorov touches turns gold. The guy is second wealthiest man in Russia and he knows how to make money. By saying money i mean BIG money. But, hey, if Morph said it’s a bad investment probably it is. LMAO.
by Belarus4life on Apr 23, 2010 8:05 PM EDT up reply actions
He's diversifying
the “City Car”, the Nets, Renaissance Capital, RBC the television and internet company…all within the last year. Getting away from mining.
He may also want to move some money out of Russia. It’s smart business.
The Russian Forbes had him only about 100 million behind the wealthiest man in Russia, just shy of 18 billion.
I trust those figures over the US Forbes. 100 million is well within the uncertainty of the figure and could have changed over the past 2 months since those figures came out.
Morph, I did not realize that you were a real estate developer....
If you had a chance to be on the ground floor in the re-development of Times Square 20 years ago, would you have done it? If your answer is “no” (or “nyet” as the case may be), I guess that says all that needs to be said about your real estate development.
By all accounts, Atlantic Yards is a multi-billion dollar project. Acquiring a 20% stake for $120 million dollars is a shrewd move. And in terms of whether it will get built, let me tell you something about developers (and I’m a lawyer that represents several of them), they develop…whether it takes 5 years, 10 years or 25 years (which is the outside window on this project) they will get it done across various economic cycles. Just look at Metrotech…FCR is still developing there and has been since the early 90’s.
Times Square
The way they changed the image of the surrounding area in less than 10 years, is amazing.
It was inconvenient at first because of all the construction, but it’s all worth it.
Not true
I have state several times here why MTC was not a success but rather an epic fail. That complex when built was supposed to be a major center for business for downtown Brooklyn, but most didn’t want to locate there. Even JP Morgan Chase didn’t occupy a lot of space there. Rather than hiring people from the area, who helped in getting it built, they just relocated their already existing employees instead. Due to the amount of office glut in MTC, there wasn’t any takers in it either. The rest of the space was occupied by government agencies, which shows that he was unable to get what he needed. BTW, the city and state are paying taxes to rent the office space both there and in his malls. If you come to MTC when working hours are over, you will most likely not even find a living soul there or even have the galleries open. The whole place and its name gives more of the feel of an office park where it is totally isolated from everything around it. One other thing, downtown Brooklyn didn’t just lose a number of streets, but also a lot of historical architecture at the same time. Through time a number of long time businesses such as Gage and Tollners, which was around for over a century, closed their doors because they were being priced out. In the end, MTC became an epic fail, and by no surprise Ratner is using the same tactics he is on the Atlantic Yards as did for MTC.
by Tal Barzilai on Apr 24, 2010 12:32 AM EDT up reply actions
your argument is an epic fail
You assume that things will remain the same. It is hardly surprising that early on, government agencies take space in projects like MetroTech and the World Trade Center. It’s called priming the pump. It’s called a public-private partnership. Ratner is a favored developer. Why? Because he put up the first office building in 25 years at One Pierrepont Center and he took risks with MetroTech. Same with the malls. The city needed someone to do that. The nimbys and “elites” find its architecture stultifying. Yeah, so what? It also provides a place to shop where none existed before, and jobs. Brooklyn before Ratner was not an economically thriving base. It was desperate place in terms of economic investment. Historic architecture? Baloney. Gage and Tollners…who cares?
For you guys, economic development can best be encapsulated as “let a thousand nail shoppes bloom”.
PS. You lost.
Apples and oranges
The comparison between MTC and the WTC are not the same thing. The WTC was a public project from the start, so of course it would have offices for government agencies. BTW, Larry Silverstein is the majority lease holder, not the owner, who happens to be the PANYNJ, a bistate government agency. However, MTC is a privately owned complex that shouldn’t even have government agencies in them, who came to bail him out. At least the WTC actually had a retail base and underground concourse that was open most of the time where that was never the case for MTC where after work hours, the plazas were closed off to the public. One other thing, MTC was never meant to be a public-private complex, it was meant to be a private complex originally, but couldn’t fill in all the space, which is why the government located their agencies there. In terms of unemployement, it actually went up for downtown Brooklyn rather than down especially for those living in the nearby Ingresoll Houses that were promised the jobs if they help him fight for getting it built, which shows how much he can’t be trusted. His malls were no different either. The Atlantic Center Mall was nothing but a place for corporations rather than local businesses, which are never welcomed at mall anyway, and only gave people minium wage jobs rather than ones that are decently paying. The same thing with the Atlantic Terminal Mall, which he bought the air rights over on the Atlantic Terminal when building the top for the Bank of NY, which is now part of JP Morgan Chase. Many Ft Greene residents consider these malls as turnning his back on them especially when there is no entrance for them to get in from Hanson Pl as if it was never meant for them in the first place. What makes the Atlantic Yards complex any different? If he lied before about promises, then what makes you think that he is telling the truth right now? As for Gage and Tollner’s, it was a known resturaunt in downtown Brooklyn, espeically when it lasted for over a century. It was even considered Brooklyn’s most prestigous resturaunt. The reason its doors were finally closed in 2004 was because Marty told the owner to do an expensive rennovation because executives from MTC would come over there constantly, but it was never the case because many of them chose to eat in the subsidized cafeterias inside MTC instead that wound up making the owner sell to Applebees because he couldn’t afford to keep it open due to rising property taxes and rents. At least Applebees didn’t destroy the building that Gage and Tollners was in, but I will remember that it was there everytime I pass by it. On a sidenote, I cannot believe how apathetic to what was lost to MTC, but I guess it’s because you weren’t a victim.
PSS: The fight is far from ever, so I haven’t lost yet.
by Tal Barzilai on Apr 24, 2010 7:00 PM EDT up reply actions
thanks corey447
from the real estate community
Prokhorov's true interest revealed
So now we know some more of the price that Ratner paid to get Prokhorov to come to rescue his project. The atlantic yards project is supposed to be worth $4B. 20% of that is $800M. So Prokhorov gets the Nets and 45% of Barclays Arena for free.
by ispartan on Apr 23, 2010 9:30 PM EDT via mobile reply actions
Yes, I don't understand how his 20% stake in AY could only cost $120 million, if it costs $4 billion to build, beyond the cost of the Arena.
And what will be the value of his 45% stake in Barclays?
If say in 2 years from now he decided to keep the Nets (the least profitable part of his investment) but sold his 45% stake in Barclays and his 20% stake in the rest of AY, just what would he gross, since the Arena alone would have cost 1 billion to build?
I don’t see how he can lose.
That's why there's a question mark
this business paper is co-owned by the Wall Street Journal and Financial Times so it has to be considered somewhat reliable. Still, there is only one source.
Proky could end up broke
With the fact that the cost of this project keeps going up, Proky could probably become bankrupt if he has to keep investing. It’s like trying to cover leaks when it’s really just making it worse. I will not be surprised how much this will eat up his business as the Nets are already doing it on Ratner, which is why he got him in the first place. If Proky were smart, he should actually stay away from this especially when it’s found to be a net money loser.
he;s worh 2o billion
i doubt he’s worried about becoming broke
-Say man when I was growing up we wanted a Jacuzzi, we had to fart in the tub.
No, he is not going broke. IMO his plan is to buy low value investments and make them valuable. Even if he loses money over the next several years, a team playing in a brand new arena could bring big money if he decides to flip his investment. It is his MO.
by ispartan on Apr 24, 2010 8:13 AM EDT via mobile up reply actions
I’m not sure I can say this without it being considered a personal attack, but THAT, Tal, is the most moronic post I’ve ever read since ND switched to the SB network.
'The Crossover' - a Nets and Knicks podcast. http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?id=268817312
Well its an improvement over the Tal that wouldn't admit that Barclays and AY will happen.
He’s making progress.
My position hasn't changed
I still don’t think that this project will happen. There are still other things comming up that can stop the project such as Proky’s investigation, a new bill on eminent domain, and a lawsuit that recquires new findings that the ESDC refuses to have. Le’t not forget how the Jets stadium almost got built but was stopped at the last minute as was the LOMEX and Westway. As Rod Steward once said, “Yet, I look to find a reason to believe one more time.”
by Tal Barzilai on Apr 24, 2010 7:06 PM EDT up reply actions
Real insulting
Rusty, if you don’t like what I say, then don’t read it. There is no reason to repsond with a personal attack. Also, nobody is forcing you to answer either. Please apologize for that insult. I never said that your comments were like that. That was real low even for you.
by Tal Barzilai on Apr 24, 2010 7:03 PM EDT up reply actions
I reviewed my above post. I won’t be apologising because it wasn’t a personal attack. I said your post was moronic, and it was. I never said you were or are a moron.
Let’s consider what your post said:
- “Proky could end up broke”…. yes. A man, who by conservative estimates, is worth $10bn U.S. will go broke from a $700m investment. That’s ridiculous enough to fathom as it is, without EVEN CONSIDERING the fact that he’s one of Europe’s savviest businessmen. The guy didn’t win a $10bn lottery and he’s also not the stupidest man on the face of the earth (which he’d have to be to declare bankruptcy).
- “If Proky were smart, he should actually stay away from this”… Giving Mikhail Prokhorov some wise advise are we Tal?
'The Crossover' - a Nets and Knicks podcast. http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?id=268817312
That still doesn’t give you right to say that. Unlike some, I actually look at things long term rather than short term. The claim that he would go broke was believed that it could happen in years to come, but not right now. Overall, I am not a person who wants the bandaid that will cover the pain temporarily, I would rather go for the cure and make it go away. However, he does seem to have some shady business deals and scandals according to a number of articles that was in the media for the past few months and he could land in jail for some of them or even pay huge fines for those stuff, which could cost him dearly.
by Tal Barzilai on Apr 24, 2010 11:00 PM EDT up reply actions
I am right in theory
As the cost becomes more of a boondoggle, Ratner will be asking Proky for more money making him pay more. Righ now, Proky will not be affected, but as time goes on, he will most likely have to give more. In the long run, this can hurt both economically and financially.
by Tal Barzilai on Apr 24, 2010 7:08 PM EDT up reply actions
and you are so sure of this...why?
What you really don’t understand is that Prokhorov basically controls the team and the arena already. The critics never seemed to get that, continuing to go after Ratner personally and viciously even after September 23, when Ratner in effect ceded control of the project to Prokhorov. I never understood that, but I was very happy to see them make that mistake (one of many, by the way).
Yes, Prokhorov owns “only” 45% of the arena but as the lease agreement states he has certain “consent rights” over arena management, not further described in the public documents. And by controlling the “subordinated” bonds he can gain complete control of the arena if the Ratner-controlled arena company defaults on the bonds.
Net money loser
Currently the Nets are losing money. If he has to keep investing money, there is a good chance he will go broke the more it costs him. Keep in mind that capitalism isn’t flawless, but this doesn’t mean that I am supporting communisum either, because all economic systems have their ups and downs. He will have to spend a fortune alone just to help the Nets and these costs have been known to increase dramatically.
by Tal Barzilai on Apr 24, 2010 10:54 PM EDT up reply actions
I read over the All Star break something from Bill Simmons that basically read
Now is a bad time to get in the NBA because of the uncertainty and because the value of teams is low. Clearly that person didn’t understand what Prokhorov was getting with the Nets. (Or what Larry Ellison might get with the Warriors for that matter.)
Mikhail Prokhorov is a lot of things, but stupid ain’t one of them.
EvilCowtownInc: Screwin Suckaz over since 1985......
No mistakes in the tango, Donna. Not like life. Simple. That's what makes the tango so great. If you make a mistake, and get all tangled up, you just tango on.....
1 question I have
Has there been any projections on the type of income the Nets can expect from playing in the Prudential Center?
EvilCowtownInc: Screwin Suckaz over since 1985......
No mistakes in the tango, Donna. Not like life. Simple. That's what makes the tango so great. If you make a mistake, and get all tangled up, you just tango on.....
Do you take Forbes projections at face value?
EvilCowtownInc: Screwin Suckaz over since 1985......
No mistakes in the tango, Donna. Not like life. Simple. That's what makes the tango so great. If you make a mistake, and get all tangled up, you just tango on.....
none that I've seen
but I am sure it’s more than at IZOD. Suite income alone should rise. IZOD has 28 suites, fewest in the NBA. The Rock has 76.
You sure about that?
Arco doesn’t have much suite income as far as I’ve heard. Maybe I’m wrong about that and know a lot less than I think I do. Which is always possible.
EvilCowtownInc: Screwin Suckaz over since 1985......
No mistakes in the tango, Donna. Not like life. Simple. That's what makes the tango so great. If you make a mistake, and get all tangled up, you just tango on.....
Shows you what I know. Thanks for that btw. I wouldn't have guessed there were that many there.
EvilCowtownInc: Screwin Suckaz over since 1985......
No mistakes in the tango, Donna. Not like life. Simple. That's what makes the tango so great. If you make a mistake, and get all tangled up, you just tango on.....
I don’t think Yormark was able to sell the suites he had at Izod this season, they looked about 60% empty. Unless they were sold and the buyers were no shows.
by ispartan on Apr 24, 2010 8:06 AM EDT via mobile up reply actions
in some arenas
it’s the arena that sells the suites…all event licenses, so you can use it for a Bon Jovi concert or a basketball game.
Good point. I did notice that the Nets advertised the availability of a suite on a single game basis which I had not seen in previous years.
by ispartan on Apr 24, 2010 10:03 AM EDT via mobile up reply actions
I think some are kept for those purposes
business meetings, bar mitzvah’s, graduation celebrations, family reunions (small families), etc.
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