Ric Bucher, reporting for Bleacher Report, said Tuesday night that the Nets principal owner, Mikhail Prokhorov, owner of 80 percent of the Nets and 45 percent of Barclays Center. wants to go "all-in" and buy out stakes in both from Bruce Ratner. Bucher said an announcement could come on the plan within two weeks.
A spokesperson for ONEXIM, Prokhorov''s holding company, tells NetsDaily. that debt owed by Ratner and his associated entities -- at least $50 million, according to public records -- is at the heart of such discussions. The spokesperson stated...
We can confirm that Onexim Sports and Entertainment is looking at various ways to restructure debt owed to the company in connection with its US assets. One possibility is the conversion of such debt into equity and consolidation of shares, but there are other scenarios also under consideration by Onexim and its partners, and no decision has yet been made.
Ratner, who was principal owner from 2004 through Prokhorov's purchase of the team in 2010, has been trying to sell his stakes in both properties, but has thus far failed.
Bucher in a video report, stated...
I'm hearing that Prokhorov ... There's been a lot of talk about him selling the franchise ... and now the latest is that in the next two weeks we could hear an announcement that he's actually buying 100 percent of the franchise, buying the Barclays Center, going all in.
Sources who told me this also told me there is still the possibility that he gets completely out if he has that opportunity, but the indications are much more strong that he would go the other way and buy all the way in.
Bucher also said the Nets have taken Johnson off the market and that would suggest that Prokhorov is all in because he wants a competitive team but one that is more financially responsible than the one that they had.
So by getting rid of Deron Williams and a couple of other moves they get below the tax threshold but at the same time you still have Joe Johnson, you're still competitive, you still have a chance to compete for a playoff spot.
In fact, Ratner's parent company, Forest City Enterprises, noted in its annual report that it has a July deadline to clear up debt issues with the "MP Entities," that is, Mikhail Prokhorov. Since then, the deadline has been extended until next month but the issues remain. Here's the operative paragraph in the annual report.
If we are unable to sell our ownership interest in the Nets by the time we are required to repay the MP Entities the amounts owed to them by July 2015 or make payment on any future capital calls and if we decide we are unable or unwilling to fund any of such payments, then our interest may be diluted and could result in up to a total loss of our investment in the Nets.
Capital calls are what stakeholders in a partnership are required to make to cover losses. Normally, if a stakeholder doesn't make the calls, their holdings are put at some risk. In other documents filed by FCE, the company notes that it did not fund the capital calls for the Nets in 2013 and 2014 when the team lost an enormous amount of money ... and that it took loans from Prokhorov to cover those losses.
Mitch Abramson also confirmed the Bucher report...
I can confirm Rick Bucher report that Mikhail Prokhorov is looking to buy out remaining Bruce Ratner shares in Nets, Barclays, but...
— Mitchell Abramson (@nydnmabramson) July 15, 2015
Source said a lot of moving parts and is just one option on the table at moment.
— Mitchell Abramson (@nydnmabramson) July 15, 2015
In theory, a purchase of the remaining pieces of the team and arena could also facilitate a sale of the team. Sports Business Journal reported in February that the NBA has told the team's owners that it would have difficulty approving a sale because of the one-sided lease the team has with the arena.
Under the current arrangement, the lease is not an issue since the same people control both entities. However, if the team was sold to a new entity, the one-sided nature of the lease would be "onerous for the team and a significant element of the team’s expenses" hurting the team's finances in the future, SBJ reported. Controlling both would solve that issue.
Ratner and Forest City Enterprises, his corporate parent, have sustained years of substantial losses on both. FCE is also in the process of converting its holdings from a publicly traded company to a real estate investment trust and may be trying to rid itself of certain non-essential properties..
Ratner's investment vehicle for the Nets and the arena, Nets Sports & Entertainment, includes a number of investors large and small, some going back to the team's days in New Jersey. Among those investors are Marc Lasry, the current owner of the Bucks, who reportedly holds his small stake in trust, and Lasry's coach, Jason Kidd who bought a tiny stake from Jay-Z.
- Insider Buzz: Joe Johnson off Trade Block, Prokhorov Could Go 'All-In' with Nets - Ric Bucher - Bleacher Report
- Mikhail Prokhorov looking to own 100 percent of Nets - Josh Kosman & Tim Bontemps - New York Post
- Prokhorov seeking sole ownership of Nets, Barclays Center - Mitch Abramson - New York Daily News
- Mikhail Prokhorov mulls buyout of Bruce Ratner's stake in Brooklyn Nets and Barclays Center - Mike Mazzeo - ESPN New York
- Prokhorov seeking total Nets ownership - Andy Vasquez - The Record
Nets owner Mikhail Prokhorov considering buyout of Bruce Ratner's minority stake - Rod Boone - Newsday