Forest City Enterprises, Bruce Ratner's parent company and controlling shareholder in Barclays Center, has lowered financial expectations for the arena in its latest quarterly report. In short, the arena has not performed as well financially and thus, the company has had to downsize what he expects in profits from the arena.
Here's what FCE told investors about the arena...
"Results for the Barclays Center arena were down in the first quarter, compared with the same period in 2014, a function of the number and mix of events in the comparable quarters. Based on the ramp-up of the property and its performance to date, we are revising downward our estimate of annual arena NOI (net operating income) at full stabilization to $55 million ($30.3 million at our pro-rata share), from $65 million. While this is disappointing, Barclays Center continues to be a venue leader in ticket sales and revenues in the country, a vital anchor for our Pacific Park Brooklyn project, and an important economic driver for all of Brooklyn."
Forest City is the lead investor in Nets Sports and Entertainment, the Ratner entity that owns 55 percent of Barclays. Mikhail Prokhorov's ONEXIM Sports and Entertainment owns 45 percent. NSE also owns 20 percent of the Nets.
The company also indicated it's still interested in selling its interests in the team and arena.
"As we have indicated previously, some of the assets we are contemplating selling include our interests in the NBA Brooklyn Nets and the Barclays Center arena in Brooklyn."
While quarterly results are often up-and-down for sports and entertainment results, the second sentence in the comment is more telling about the overall financial health of the operation. It suggests annual performance will be nearly one-sixth less than expected --"disappointing"-- in the future, even with the arrival of the Islanders next hockey season.
Nets attendance has dropped a bit since their first year in Brooklyn. They were 20th overall, 14th in percentage of seats sold this past season, with an average gate of 17,037, compared to 2012-13, when they were 12th overall and 10th in percentage of seats sold at 17,187.
While the arena has been one of the top venues in terms of sales and revenues. there has been concern about profits at the Brooklyn venue. There has been some downsizing over the past two years.
- Forest City reports 2015 first-quarter results - Forest City Enterprises
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After Barclays Center quarterly results drop, Forest City again downgrades revenue expectations, to $55M; interest exceeds net operating income - Norman Oder - Atlantic Yards/Pacific Park Report