When Bruce Met Mikhail: The Backstory on the Nets-Atlantic Yards Deal
Eliot Brown Oct. 1, 2009, 4:21 p.m.
By Bruce Ratner’s telling, his deal to sell the Nets to Mikhail Prokhorov began in earnest this summer over dinner at the Russian billionaire’s home.
Mr. Ratner, on a tour Wednesday of his Frank Gehry-designed Beekman apartment tower under construction in Lower Manhattan, shared a few details about the recently announced deal, which is key to his efforts to get the giant Atlantic Yards development—starting off with a new Nets arena—moving forward.
His sit-down with Mr. Prokhorov came in mid-July, Mr. Ratner said, during the one time he flew out to Russia to meet with him. “We hired Goldman Sachs,” to search for investors in the team, Mr. Ratner said. Mr. Prokhorov “was in the newspapers, he was someone who was interested in buying a team. So Joe Ravitch at Goldman approached him, and then I flew over there and spent three or four hours over dinner with him, at his house.”
Mr. Ratner said the two “got along very well,” and, after talking with other investors, ultimately went with Mr. Prokhorov, and finished the deal in New York.
Mr. Ratner and Mr. Prokhorov have announced the basic terms of a deal: Mr. Prokhorov’s investment group Onexim has agreed to pay $200 million for an 80 percent stake in the Nets, a 45 percent stake in the arena, and an option on 20 percent of the rest of the $4.9 billion Atlantic Yards project. He declined to say much more in detail, though when asked if the deal was as good as it seems for Mr. Prokhorov—he gets a major stake in the arena development and the value of the team was $300 million in 2004—he pointed out that Onexim would also be assuming its share of the Nets’ debt, about $200 million.
Asked whether he would miss owning an NBA team, Mr. Ratner hardly displayed remorse. He suggested that with an owner that has substantial resources (Forest City Ratner and its parent have been struggling in the recession) might be a better caretaker for the team than he.
“Honestly, from my point of view, to see the Nets have an opportunity to do extremely well with an owner that is quite wealthy is very important,” he said. “I think we’re very well-poised—extremely well-poised for the ’10-’11 season, and we now have a partner who I think will really take advantage of that.
“It was important to go to Brooklyn, and we’re going to Brooklyn, and it’s important that we have a really good team in Brooklyn,” he continued, “and he’s going to make that more possible than I think we could, economically.”
The Nets arena has a few more hurdles to clear.
Opponents of the project, and one congressman, have sought to raise concerns about questionable business deals in Mr. Prokhorov’s past. The $200 million deal is contingent on approval from the NBA’s board of governors.
The state’s top court on Oct. 14 is hearing arguments in a key eminent domain lawsuit regarding Atlantic Yards, and while Mr. Ratner has been victorious in the courts thus far, a loss would surely kill the project. On the financing side, Mr. Ratner plans to start selling $700 million in tax-free bonds in coming weeks, which must be sold before a Dec. 31 Internal Revenue Service deadline.
“I think the ratings agencies will probably have ratings in about two weeks,” Mr. Ratner said. “And then we’ll start selling ’em.”