Having previously announced his intent to sell his shares in the Brooklyn Nets and Barclays Center, Mikhail Prokhorov acquired Bruce Ratner’s remaining stakes in each last month, causing the Village Voice’s Neil DeMause to write, “it’s a good time to wonder exactly what the hell Ratner and Prokhorov got out of this arena that has turned a large swath of Brooklyn upside down for more than a decade now.”
Two years ago when it was revealed that despite being one of the top-selling arenas in the U.S. in its first year, the Barclays Center was still barely breaking even after paying off its construction debt, thanks to high operating costs and discounts being offered to performers to lure them to Brooklyn instead of one of the New York area’s many other arenas. (This will come as no surprise to professional arena managers, who note that it’s rare in these days of fewer touring acts and venue glut for an arena to turn even an operating profit, let alone pay off near-billion-dollar construction debts.) That seems to be even more the case now, and while the arrival of the Islanders this fall provides more guaranteed booked dates for 2015–’16, that’s not necessarily a good thing for the bottom line: More hockey means fewer nights available that the arena can be rented out for concerts, and the arena’s weird rent deal with the Islanders — the arena pays team owner Charles Wang a flat negative rent but keeps all ticket and other revenues — means that if ticket sales are slow, the arena could end up taking a loss on the NHL.
The purchase price on the last chunk of the arena valued it at slightly less than the construction cost, so while we don’t have access to Ratner’s bank statements, in all likelihood the developer is not quite breaking even on the money he poured into the arena itself. (Yes, he got a pile of public subsidies, but those were in the form of discounted land and tax breaks, so not anything he can actually put in the bank now that he doesn’t own the building.) He also got the development rights to a bunch of land where he can erect apartment towers, but that hasn’t been going all that smoothly, either, though at least a couple of buildings are now close to completion.
Prokhorov, meanwhile, has put in somewhere around $1 billion in order to own a historically awful NBA franchise, plus an arena that might just, if you squint, be able to break even.