Forbes’ Mike Ozanian reports that the NBA Finance Committee has approved a request from Mikhail Prokhorov to split the Nets from Barclays Center, a move needed before the league would approve the sale of a minority interest in the team.
After buying out Bruce Ratner a year and a half ago, Prokhorov controls both the team and arena. Last November, he retained Allen & Co, a leading investment banking firm, to sell up to 49 percent of the Nets. He would prefer retaining 100 percent of Barclays. The league balked at the idea of selling one but not the other and team officials have trying to resolve the issue for more than a year.
The team and arena together have been valued at $1.7 billion.
“The reason the NBA must approve the financial arrangement between the ‘landlord’ and the ‘tenant’ is that it does not want the new owner of the basketball team to be saddled with unfavorable economics,” Ozanian writes.
It’s presumed that any sale of a minority stake in the team would include a “right of first refusal” agreement. Under such an agreement, the investor would have the exclusive right to buy out Prokhorov should he decide to sell his remaining shares.
The NBA has also been trying to get the lease between the Nets and Barclays rewritten, say league sources. The original lease was seen as favorable to the arena owners. Prior to the buyout, Ratner controlled the arena. It’s not known if the lease has been rewritten as part of the finance committee approval.
The NBA board of governors still must approve the split, Ozanian reports.
Prokhorov agreed to buy 80 percent of the Nets and 45 percent of Barclays in September 2009, taking over in May 2010. Prokhorov purchased the interests for a little more than $360 million in cash and assumption of team debt.
- NBA Committee Approves Prokhorov's Plan To Split Brooklyn Nets From Barclays Center - Mike Ozanian - Forbes
- Prokhorov gets NBA committee approval to split Nets, Barclays Center - Brian Lewis - New York Post