As part of his agreement to buy the Nets, Mikhail Prokhorov agreed to fund team losses in New Jersey for up to two years and up to $60 million. Forest City Enterprises, Bruce Ratner's parent company, said Monday losses continue and exceed Prokhorov's guarantee. So, FCE will have to fund them as it did in the past.
FCE's new CEO David LaRue said "entities controlled by Mikhail Prokhorov committed to fund up to $60 million of the team's losses from acquisition to the completion of the arena. We now anticipate that $60 million cap will be reached sometime in the second [current] quarter of the year, at which point Nets Sports and Entertainment, the ownership group of which we are the managing member, will need to fund the overage."
Nets Sports and Entertainment is the Ratner-led group that owned the Nets prior to the team's sale in May 2010. It continues to own 20% of the team.
Quoting LaRue, Atlantic Yards critic and chronicler Norman Oder writes that allocated team losses for 2011 and about the first half of 2012 "will be in in line with losses" experienced prior to Prokhorov's acquisition. "We previously thought we were done with these levels of losses but it now it appears that the cap will be reached sooner than originally anticipated." How this will affect Nets' operations was not addressed.
- Forest City Enterprises reports earnings rise for first quarter 2011, claims Brooklyn office vacancies being addressed, must absorb Nets losses Norman Oder - Atlantic Yards Report