The Nets and their parent company, BSE Global, are celebrating the 10th anniversary of Barclays Center this month. It was September 28, 2012 that the arena opened with eight nights of Jay-Z which included the introduction of the Nets black-and-white jersey that the Brooklyn rapper had a hand in designing.
But six years earlier, the chances that a new arena would rise at Flatbush and Atlantic was far from a sure thing. Bruce Ratner envisioned the arena, then unnamed, as the centerpiece of a $6.4 billion, 16-building complex rising in part over the Atlantic Yards, the city’s third busiest transit station and the busiest outside of Manhattan.
But money was starting to get tight and the project was the subject of community activism that saw the whole project as too big, too congesting. Ratner and his new CEO, Brett Yormark, needed to find revenue sources that ultimately could be used to woo investors to buy constructions bonds. An arena naming rights deal would be a good start.
So, as Sports Business Journal recounts this week, Yormark made a series of “cold calls” — unsolicited inquiries to prospects — to find a sponsor for the building that at that point would be designed by “starchitect” Frank Gehry. It wasn’t easy as writer David Bourne wrote relying on a 2016 book by author David J. Halberstam:
“Brett Yormark had developed an interesting way to cold call, something that only he as CEO could pull off,” Halberstam wrote. “Yormark deputized his administrative assistant, Jeanette Neary, to call a host of core CEOs and introduce herself to their administrative assistants. When she reached these assistants, she requested meetings of their respective bosses about the move of the Nets to Brooklyn.”
The process targeting blue-chip brands led to a meeting between Yormark and Gerard LaRocca, then chief administrative officer of Barclays Bank in the U.S. LaRocca assumed the meeting had something to do about a suite or hospitality package, Halberstam wrote, but he received much more than a PowerPoint presentation.
One thing led to another and Yormark and his revenue officer Neil Davis were soon in London meeting with Bob Diamond, Barclays American CEO, who greenlighted the idea, a 20-year deal with a total payout of $400 million. It was the first projected revenue Yormark could show prospective investors in the arena For Barclays, then planning retail banking operations in the U.S., a big new and architecturally innovative arena in the city would provide visibility.
The deal, per Bourne, took a number of twists and turns, and Bourne writes and Atlantic Yards critic and chronicler Norm Oder illuminates. Delays driven by community protests and a series of lawsuits and more importantly the financial crisis of 2007-08 resulted in a stasis that wasn’t ended until construction began on a slimmed down arena in 2010. By then, Ratner had agreed to sell 80 percent of the team and 45 percent of the arena to Mikhail Prokhorov, then the world’s richest sports team owner. The delays — and ultimately the loss of Gehry as the overall project’s architect — led to two renegotiations of the naming rights deal, as Oder notes.
The decision to replace Gehry’s complicated design, as Neil Davis told Halberstam, “didn’t sit well with the decision-makers,” which mean the deal had “to be vastly renegotiated.” Also, Davis noted, “Barclays itself was fighting the great recession.” Barclays ultimately abandoned its plans for retail banking in the U.S. and wound up being charged with manipulating the worldwide bank interest rate in a massive financial scandal. Diamond had to step down.
So in the end, the deal wound up at $200 million for 20 years, a good price then, not so much now. In fact, the Nets new uniform sponsorship agreement with WeBull, the online stock broker, is worth $30 million a year, according to CNBC. It too began with a cold call. The WeBull deal has led to speculation that the Nets and Barclays will renegotiate again, this time up, before the end of the contract in 2026.
The Nets and BSE Global would prefer to keep the name, as Joe Tsai tweeted 15 months ago. But Tsai also has big revenue targets he’d like to meet, hopefully going from $341 million in annual revenue last year to $500 million in three years and a billion dollars in seven. Getting a market price for naming rights, whether from Barclays or someone else, would be a big help in meeting that goal.
- Closing Shot: Cashing In On A Cold Call - David Bourne - Sports Business Journal
- AY down the memory hole: recapping the Barclays Center naming rights saga - Norman Oder - Atlantic Yards/Pacific Park Report