The conventional wisdom is that the Nets ownership --both Mikhail Prokhorov and Bruce Ratner-- are selling the Nets and Barclays Center. But over the last two days, on the pages of the Financial Times and in the Cleveland boardroom of Forest City Enterprises, Ratner's parent company, things are unclear.
One thing remains certain. As Ellen Pinchuk, Prokhorov's American press spokesperson told the FT, no sale is "imminent," a word the Russian oligarch has used since word broke last year that Guggenheim Partners, owner of the Dodgers, could be interested in a combination of assets. The wording of his interest in selling hasn't changed either: Prokhorov is always open to prospective offers for the Nets.
The FT quotes advisors to prospective bidders as being mystified by a lack of specifics from the Russian side, which owns 80 percent of the team and 45 percent of the arena.
One said: "Am I buying the team? Am I buying the arena? Do I have to buy the team and the arena? Can I buy just the arena or just the team? . . . I don’t know."
It is not optimal in an M&A process for the seller to be unable to answer the fundamental question of what is for sale, said another person.
"The ball, as they say, is in Prokhorov’s court right now. The NBA has made it clear that in an ideal world they think that the best way to maximise value is to sell the assets [team and arena] together," this person said.
The FT also reports that the NBA has yet to play a critical role in talks, that in fact the Nets ownership has not told Adam Silver they're selling. Until then, Silver and the NBA will stay on the sidelines.
Sports Business Journal has reported that NBA has made it clear that the team's lease with the arena, owned 55 percent by Ratner's Nets Sports and Entertainment, would be onerous for a new owner and wants that dealt with before it approves any deal.
Meanwhile, there is confusion as well on the Ratner side of things. In discussing recent quarterly earnings, Forest City executives seemed uncertain as well about what they want, reports Norman Oder, critic and chronicler of the overall Atlantic Yards project.
Officials said they were hoping to sell their 55% majority share of the Barclays Center, and 20% minority share of the Brooklyn Nets, by the end of 2015 in coordination with partner Mikhail Prokhorov's Onexim.
(Forest City CEO David) LaRue acknowledged that nothing was certain. Indeed, last May, (CFO Bob) O'Brien said they hoped to have an agreement on price regarding sale of the Nets by the end of 2014. That didn't happen, and later they decided to sell the arena as well, recognizing it might work better as a package deal.
Were they planning to sell the arena or merely refinance it? LaRue said it was possible to sell a share, as with properties like 8 Spruce Street, the Frank Gehry-designed apartment tower in Lower Manhattan. But the company won't take on additional debt, he said.
So what do we hear? As reported, it's unclear what they really want to do ... and whether there is unanimity even at ONEXIM headquarters in Moscow about a sale. Some inside the organization --and some outside the organization-- have suggested that ownership would rather sell 49 percent of the team, with an option to sell the rest at a set time, than selling the whole thing. Until then, they would maintain operating control of the team. That lack of control would discount the amount the Nets could get in a sale ... and both the Prokhorov and Ratner teams could use the cash..
Still, if you expect a quick sale, that seems increasingly unlikely. As one plugged-in league source told us, "They will be around for a while."
- Doubts on scope of deal cloud Brooklyn Nets sale - James Fontanella-Khan, Roger Blitz, Arash Massoudi and Courtney Weaver - Financial Times
- Forest City: arena income boost still expected by 2016 (?); increased B2 impairment related to delay; arena/team sale now aimed at 2015 - Norman Oder - Atlantic Yards/Pacific Park Report
Forest City Enterprises hopes to unload more real estate on road to REIT conversion - Michelle Jarboe - Cleveland Plain-Dealer