Russia’s richest man — a former amateur basketball player who made billions in metals — has agreed to purchase the New Jersey Nets in exchange for funding the team’s troubled plans to build an arena in Brooklyn.
Mikhail Prokhorov, 44, announced the deal with Forest City Ratner Companies and Nets Sports and Entertainment.
“We are delighted to join in this exciting project and to participate in the landmark development of global sports in this entertainment arena in the heart of New York City,” said Prokhorov, who heads the Onexim group.
“I have a long-standing passion for basketball and pursuing interests that forward the development of the sport in Russia. I look forward to becoming a member of the NBA and working with Bruce and his talented team to bring the Nets to Brooklyn.”
The parties said they have signed a letter of intent to create a strategic partnership for the development of the Atlantic Yards Project in Prospect Heights.
In a statement, Ratner said, “Mikhail and Onexim will be great partners for this project. I am thrilled that smart global investors appreciate the exciting economic potential of Brooklyn. We are one step closer to achieving our goals of creating much needed jobs and economic development for Brooklyn and the city.”
Prokhorov will invest $200 million in a team that is already in severe debt. He would also make other funding commitments to acquire 45 percent of the planned Barclays Center arena project and 80 percent of the NBA team.
He would also have the right to purchase up to 20 percent of the non-arena part of the Atlantic Yards project, according to the deal.
Ratner is in a race against the clock to salvage a scaled-down version of a project he first proposed in Dec. 2003. He has to break ground on the arena by the end of the year to secure $700 million in tax-free financing for the arena; otherwise the cost could rise by hundreds of millions of dollars.
The deal would have to be approved by the NBA’s board of governors — but had the blessing of NBA Commissioner David Stern.
“We are looking forward to the Nets’ move to a state-of-the-art facility in Brooklyn, with its rich sports heritage,” he said. “Interest in basketball and the NBA is growing rapidly on a global basis and we are especially encouraged by Mr. Prokhorov’s commitment to the Nets and the opportunity it presents to continue the growth of basketball in Russia.”
The Atlantic Yards opposition group Develop Don’t Destroy Brooklyn said this appears to be yet “one more deception from the untrustworthy developer,” who for years, and as recently as earlier this month, said the team was not for sale.
“The only reason Ratner would make this deal is because he is in dire financial trouble. If Ratner has to go overseas to get major funding for the arena, how on earth is he going to finance the rest of the project,” said Develop Don’t’ Destroy Brooklyn spokesman Daniel Goldstein.
“Eminent domain abuse and massive taxpayer subsidies to enrich a Russian oligarch and modernize the Russian basketball system—is that what Bloomberg, Paterson, Schumer and Markowitz are all about? They’ve got to be kidding. And now that Prokohorov has a big foot in the door, who will really be running the beleaguered Atlantic Yards project show?”
But Mayor Bloomberg hailed the deal.
“It goes to show you how much confidence there is in how New York City is being positioned to come through the downturn stronger than ever, and in the future of Brooklyn,” he said.
“Most of us remember when Brooklyn garnering this kind of international investment would have been hard to imagine. Today, it’s not so surprising, and it will help ensure the project – enormously important for Brooklyn and the City – moves forward.”
Prokhorov, who currently owns a share in the Russian basketball team CSKA, was ranked as the country’s richest man in the Russian edition of Forbes, with an estimated fortune of $9.5 billion. He has weathered the global economic crisis better than many of his wealthy compatriots by cashing out of some lucrative assets before the downturn battered commodity markets last year.
Prokhorov’s interest in basketball isn’t only as a spectator. He was once an avid player in his high school and college days.
In 1993, the Onexim bank that he headed acquired Norilsk Nickel, one of the country’s largest industrial conglomerates.
With AP