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Oder: Barclays Center still not profitable

The Nets valuation, including Barclays Center, keeps rising, going up to nearly $4 billion. But the effect of the pandemic still lingers.

Working with public records, Norman Oder of the Atlantic Yards/Pacific Park Report reports that despite the rise in NBA valuations, including the Nets, Barclays Center is not yet profitable.

Specifically, Oder reports the records show that while arena operations makes a small profit, it is not enough to cover debts owed on arena construction bonds. In the past, Oder notes, Joe Tsai has personally covered the losses since taking over Barclays as part of his $3.2 billion purchase of the team and arena in 2019. Tsai owns the two through a family trust.

According to the latest financial disclosures to bondholders from the Barclays Center operating company, the arena company still isn’t earning enough profit to cover construction bonds—but a significant uptick in ticket sales may point to a better future.

The arena company made an $12.5 million profit, according to unaudited (and thus unofficial) statements, in the first six months of calendar year 2023, according to financial documents recently disclosed to bondholders.

That first-half result, coupled with nearly $4 million in profit (see below left) in the first half of the 2023 fiscal year, won’t be enough to cover the arena’s construction debt in FY 2023, which ended June 30.

Oder notes that post-pandemic, ticket sales have risen at the arena, basketball and non-basketball. alike. According to the records, parts of which Oder published, ticket sales were way up, to $113.8 million in the fiscal year ending June 30 vs. $67.4 million the previous fiscal year. In the fiscal year ending June 30, 2021, ticket sales had dropped to $14.4 million due to COVID-19 restrictions on big events, including Nets games.

In a statement to NetsDaily, BSE Global, the parent company of the Nets and Barclays, expressed optimism that the arena — and the organization — is “stongly positioned” to grow.

“BSE Global and Barclays Center is strongly positioned for continued growth and to further deepen our unique position as a world class sports and entertainment organization in the heart of New York City. We’re excited about our future, and we have the right people and leadership in place to continue delivering unforgettable experiences in Brooklyn.”

Oden, who has spent nearly 20 years covering the development of Barclays and the Atlantic Yards project, speculated that with the loss of Nets superstars, ticket sales may not be what they have been. In this case, he didn’t cite any data.

None of the public records Oder disclosed relate to the financial condition of the Nets. Since they are owned by a private company, their profit and loss statements are not public, unlike the arena.

However in an interview with NetsDaily two years ago, Tsai said that the Nets are profitable without the luxury tax, that he looks at two sets of balance sheets.

“When you look at an NBA team, the cost is the cost, right? It’s the players salaries,” he said. “You have have a set of P&L (profit and loss) that’s before you pay the tax and a set of P&L that’s post luxury tax. At least on a pre-luxury tax basis, we’re making money.”

He also called the luxury tax payments an investment rather than a loss.

“The luxury tax is important in that I see it as an investment for the future. That goes to the value of the team and just how people think about the team.”

Assuming pundits were right in their estimate of what the Nets paid in luxury tax last month — reportedly $14.5 million, down from $100 million — the Nets may be close to making money.

In 2022, Forbes estimated that the bottom line for the Nets was a $34 million loss, the only NBA team not to make a profit. Still, despite all the issues, the Nets valuation is approaching $4 billion, per Sportico.