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New York Post: Mikhail Prokhorov nears purchase of Nets, Barclays Center at bargain price

By Net Income

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Tim Bontemps and Josh Kosman of the Post report that Mikhail Prokhorov is "nearing a deal to buy all of the Barclays Center and the Brooklyn Nets from Bruce Ratner’s Forest City Enterprises."  And the price for the 20 percent of the Nets and 55 percent of the arena is a bargain.

According to Bontemps and Kosman, the Russian oligarch is poised to pay out as little as $100 million in cash, after  debt payments owed Prokhorov's ONEXIM Sports & Entertainment are subtracted. A league source confirms to NetsDaily that the deal, if it goes through as planned "is another grand slam for Mikhail."

A spokesperson for ONEXIM in Moscow declined comment on the Post report.

The Post does not say when the deal would go down, but the two sides have a September 8 deadline to clear up other financial issues. That deadline has been moved back twice and is unlikely to be moved again. Mitch Abramson of the Daily News reports the deal "won’t be done for perhaps another month."

Here's how it work, reports the Post...

Forest City could end up pocketing less than $100 million on the sale of the team and the arena to Prokhorov, according to one analyst.

The team is valued at an estimated $700 million, according to the analyst who follows Forest City. After subtracting $210 million of debt, the franchise has an equity value of $490 million.

Forest City’s 20 percent would be worth around $100 million, and it shares 38 percent of its Barclays and Nets stake with partners. So, minus its $40 million in team losses, the firm and its partners would realize a gain of just around $60 million.

Prokhorov would also forgive the roughly $40 million Forest City owes him to cover team losses, Bontemps and Kosman note.

The league source confirms that Forest City, Ratner's parent company, has a number of issues that would be cleared up with a quick sale, even with a lower valuation, including a conversion from a publicly traded company to a real estate investment trust. Neither the team nor the arena fit into an REIT, says analysts quoted by the Post.

The small cash outlay would leave many of the Nets smaller investors --there are more than 50, including Jason Kidd -- with lesser returns than they had hoped for.

This of course would be the second time Prokhorov was able to take advantage of a situation where his huge cache of cash helped him with the Nets. In 2009, with the world economy reeling, Prokhorov gained 80 percent of the team and 45 percent of the arena for a mere $200 million.

By owning all of both assets, Prokhorov could more easily sell a piece or all of the team.  One impediment to selling a piece of the team is that a prospective minority owner would have no power in the operation of the team, but would have to pay a share of any financial losses incurred by the team. According to the league source, it's possible the Nets will turn a profit this year, since it won't have to pay any luxury taxes.

The deal would end Ratner's 12-year involvement with the team, the first seven as principal owner and the last five as minority owner of the Nets.   Prokhorov and Ratner are also involved in other investments, according to reports, including the rehab of Nassau Coliseum and Paramount Theater in Brookiyn.

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