New York Used Barclays Center To Help Lure 2014 Super Bowl

but it is obvious that 7 years of litigation would stop construction from starting

The Russian has surely looked at the numbers and is going into this venture with his eyes wide open. He has to see there’s no way he’ll ever make money off the arena, and there’s no demand for the real estate at this point in time. That is important because the real estate portion of this project is the real money maker. Not the arena, as some would have us believe. The arena costs $1 billion, and likely higher. Most North American arena cost in the neighborhood of $175-$400 million. They rarely (if ever) go any higher. The reason is that the debt on these venues becomes such a burden that most of the revenue would go into paying off debt (w/ interest) and less is left to count as profit. Owners usually make most of their money off of sports teams when they sell to the highest bidder. Most teams don’t make very much money via operations (the Yankees being an exception, but then again, they’re the Yankees). New arena with amenities are one of the few ways owners can turn a modest profit between the time they purchase and the time they sell. So if I have the choice of playing in and/or owning a $400 million arena that is already completed – say the Prudential Center – or building a $1 billion arena that has yet to be constructed, which one would I opt for? I also think that’s why Proky is hinting at making the Nets a global team. That would provide new revenue sources for the team that are not currently available.

As for the real estate, given global and national economic concerns, there won’t be a demand for quite awhile. Keep in mind that this project was initially conceived during a time of excess and economic grrowth that was not “real”, for lack of a better term. Financing would have been supported by institutions that were heavy into financial gimmicks (credit-default swaps, derivatives, no money down mortgage loans for purchasers with little or no credit by locking buyers into variable interest rates, etc.). Those options are no longer available, and would financial institutions use them now with all of the anger at Wall Street? They’re crazy and sneaky, but not stupid. Also, I don’t have to remind you of the Financial Reform package being considered in Washington.

I’m not a finance guy, so I don’t have the lexicon to explain as they could. But I can look at Xanadu in the Meadowlands and see a project that is nearly completed, but likely will never open according to plan because of the poor planning and need to make money at any cost. It is a victim of the economic times and so is Barclays.

Ultimately, the death of this project will be blamed on something else (lack of political support, Ratner not pulling his weight, NIMBYs, etc.). The truth will be that it never had a chance in today’s world.

Honestly, I could go on, but that would put you to sleep and I’d end up losing my job. That is why I will write an extensive fanpost on this topic after it’s collapse to explain this in further detail, because the problems with this project are not limited to financing.

Nobody knows everything about anything.