It''s finally official. Mikhail Prokhorov and Bruce Ratner have concluded their long negotiations and Prokhorov's ONEXIM has bought out Ratner's Forest City Enterprises and other investors. Prokhorov had now secured full ownership of the Nets and Barclays Center. The valuation of the two are a combined $1.7 billion -- $875 million for the team, $825 million for the arena, according to a press release from the two companies.
The transaction will be completed following the transfer of $285 million in cash and notes from ONEXIM to Nets Sports and Entertainment, the FCE-dominated partnership. Only a quarter of the $285 million --about $75 million-- will be in cash.
Bloomberg had reported last week that the NBA had approved the deal with a slightly higher valuation of $1.9 billion.
Here's the press release:
CLEVELAND and BROOKLYN, N.Y., Dec. 22, 2015 /PRNewswire/ -- Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) announced today that its subsidiary, Nets Sports and Entertainment (NS&E), has executed a purchase and sale agreement with Onexim Sports and Entertainment under which Onexim will become the 100 percent equity owner of the Barclays Center arena and the Brooklyn Nets basketball team. The NBA's Board of Governors unanimously approved the transaction earlier this month.
The transaction values the team at approximately $875 million and the arena at $825 million, inclusive of debt for each asset. NS&E currently owns a non-controlling 20 percent equity interest in the team and a 55 percent equity interest in the arena. Forest City owns approximately 62 percent of NS&E. NS&E expects to receive proceeds from the transaction in a combination of cash and notes receivable of approximately $285 million at closing. The notes receivable are expected to approximate 75 percent of the total proceeds, bear annual interest at 4.5 percent, and be payable in three to five-and-one-half years from the date of closing.
"As we continue to focus our portfolio on core retail, office and apartment assets in strong urban markets, and transition to REIT status, this transaction is a significant milestone," said David J. LaRue, Forest City president and chief executive officer. "I want to thank the NBA for their support and I salute our New York team, led by Bruce Ratner, MaryAnne Gilmartin and David Berliner, as well as our partner and our associates and advisors involved in making this deal a reality."
Bruce Ratner, executive chairman of the company's New York subsidiary, Forest City Ratner Companies, added, "The development of Barclays Center enabled the return of major league professional sports and world-class entertainment to Brooklyn, and in just over three years of operations, it has become one of the top-grossing arenas in the country. As an anchor for the continued development of Pacific Park Brooklyn, Barclays Center stands as an iconic landmark for the borough."
The parties expect to complete the transaction late this year or early in 2016. Evercore ISI advised Forest City and NS&E on the transaction and provided a fairness opinion.
Brooklyn Sports and Entertainment, the Brett Yormark-run entity, will now manage and control the Nets, Barclays Center and the New York Islanders business operations. It is currently overseeing the redevelopment of Nassau Coliseum, and will also manage the Coliseum’s future operations upon its opening in December 2016. Prokhorov bought out 85 percent of Ratner's interest in the coliseum last month, and reportedly has an option to buy out the remaining 15 percent.
Tuesday's deal will permit Prokhorov to sell a minority stake, as much as 49 percent, in the team and/or arena. As NetsDaily noted Monday, Prokhorov has been in a buying mode for months. Prokhorov bought his 80 percent stake in the Nets and 45 percent of Barclays Center in May 2010 for $223 million, the assumption of $160 million in team debt and $60 million to cover operating expenses the last two years in New Jersey. He's also lost hundreds of millions since purchasing the team. But if the valuation is accurate, that deal was as good as any he's made since.
As David Aldridge of TNT wrote this week, Prokhorov's wealth still matters... even if his first attempt at throwing money at the roster failed..
While the incoming TV money may be fueling the luxury tax team spike this year, smaller revenue teams are still wigged out that a team like Brooklyn could pay more than $90 million in taxes in 2014. It didn't work for the Nets, of course, but that's not the point; a billionaire like Mikhail Prokhorov still has advantages over other teams that are owned by really rich guys, too.
Tuesday's agreement also marks the end of Ratner's involvement with the Nets, after 11 years first as principal owner, then as minority owner, the Brooklyn real estate mogul will have no role in the team or arena.
- ONEXIM SPORTS AND ENTERTAINMENT SIGNS AGREEMENT WITH FOREST CITY FOR FULL OWNERSHIP OF BARCLAYS CENTER AND THE BROOKLYN NETS - Brooklyn Nets
- Mikhail Prokhorov gains full control of Brooklyn Nets, Barclays Center - Mike Mazzeo - ESPN New York
- Prokhorov buys rest of the Nets, Barclays Center - Financial Times
- Mikhail Prokhorov’s Onexim buys 100% of Nets, Barclays Center - Kenny Ducey - Sports Illustrated
- Prokhorov’s Onexim Acquires Full Stake in Nets - Eliot Brown - Wall Street Journal
- Prokhorov Buys Brooklyn Nets And Arena From Ratner For $1.7 Billion - Mike Ozanian - Forbes
- Mikhail Prokhorov Completes Acquisition of Nets, Barclays Center - Scott Soshnik - Bloomberg Business
- Prokhorov's company set to be sole owner of Nets, Barclays - Michael O'Keefee - New York Daily News
- Brooklyn Nets Chief Gets Full Control of Team, Arena - Fortune
- Forest City will sell stake in Brooklyn Nets, Barclays Center to Prokhorov - Michelle Jarboe - Cleveland Plain-Dealer
- Forest City sells its stake in Brooklyn Nets, Barclays Center to Russian tycoon Prokhorov - Crain's Cleveland Business
- Mikhail Prokhorov’s group buys 100% of Nets, Barclays Center - Kurt Helin - NBC Sports
- Deal for Nets/Barclays completed, now valued at $1.7B; arena seemingly a loss; Moody's reveals dangerously low debt coverage; Prokhorov pledges community continuity - Norman Oder - Atlantic Yards/Pacific Park Report:
- It’s Official: Prokhorov buys out Ratner - John Torenli - Brooklyn Daily Eagle