Brooklyn Boro

OPINION: The real story of the Brooklyn Nets is a plutocrat relay race

August 27, 2019 Ravi Gupta

Last week, Russian oligarch Mikhail Prokhorov announced that he sold the Brooklyn Nets for a record $2.35 billion to Joseph Tsai, co-founder of Alibaba Group. Prokhorov originally purchased the team in 2010 for $223 million plus the team’s debt.

If elected officials want to understand the roots of growing grassroots distrust and opposition to major developments like the failed Amazon Long Island City project, it’s worth revisiting what made Prokhorov’s windfall possible: the forced removal of city residents for private gain, massive government subsidies and a litany of broken promises to the community.

In 2003, when developer Bruce Ratner announced his intention to move the New Jersey Nets to a site above the Long Island Rail Road lines on Atlantic Avenue in Brooklyn, he said the project would be “almost exclusively privately financed.”

At the very moment he was making that claim, he was asking for — and eventually received — commitments from the city and state to each contribute $100 million for site preparation, environmental work, and new streets and utilities.

DAILY TOP BROOKLYN NEWS
News for those who live, work and play in Brooklyn and beyond

And since the MTA was a major landholder in the Atlantic Yards site, he needed the MTA to sell him the land. He secured that approval in 2005, even though at least one other company bid higher and despite the fact that the state internally valued the land at $214 million.

Ratner also had to figure out how to dispatch with private property owners, who inhabited or operated over half of the proposed site. After years of using the threat of eminent domain to bully many to sell, he was still faced with one obstinate city block that housed approximately 100 residents. He would need the state to condemn that area and justify it as a “public use.”

Mikhail Prokhorov. AP Photo/Seth Wenig, File

These and other obstacles almost killed the project. In an attempt to neutralize opposition, Ratner cut a “Community Benefits Agreement” with some local and national grassroots organizations, that included a promise to include low-income housing, hire minority contractors, local job training, and allow community use of the arena and facilities. Many elected officials, including our current mayor, used that agreement as justification for their support of the project.

But in the years ahead, Ratner faced major cash flow challenges as he became bogged down in community opposition, political blowback and legal troubles. Many doubted whether the project would survive. Enter Mikhail Prokhorov, who stepped up in 2009 to purchase 45 percent of the arena project and a majority of the team. The agreement also gave Prokhorov the ability to purchase up to 20 percent of the Atlantic Yards Development Company, which would develop the real estate around the arena.


In the same year that Prokhorov bought the team, New York’s highest court ruled on the eminent domain case involving the forcible removal of the roughly 100 residents living on the site. The law required an eminent domain seizure to both be for “public use/benefit” and that the properties acquired be “blighted.” The court ruled in favor of removal, even though this was an almost exclusively private development that was projected to cost $40 million more in lost revenue than it would generate.

And even though there was considerable evidence that the site in question did not meet an objective definition of “blight,” the court sided with the government and developers. In doing so, the court admitted that “it may be that the bar has now been set too low [on] — that what will now pass as ‘blight'” and called out “political appointees to public corporations relying upon studies paid for by developers.”

The court acknowledged they may have been relying on a rigged determination of “blight” to take property from the city’s residents and hand them over to a private corporation — which, by year’s end, would be controlled by a Russian oligarch. That transaction would then fuel a major appreciation of the underlying assets — because a franchise in a new stadium in a massive mixed use development in Brooklyn was considerably more valuable than one in New Jersey.

A few years later, that Russian oligarch sold that property and its related assets to the co-founder of a Chinese internet conglomerate.

Joe Tsai is paying about $2.35 billion for the Nets — a record for a U.S. pro sports franchise — and nearly $1 billion in a separate transaction for the arena. AP Photo/Mary Altaffer, File

Displacing residents and forcibly selling their property to corporations is bad enough. But transferring those assets to companies who thrive under the protection of autocratic regimes is even worse.

And what came of that Community Benefits Agreement? In 2012, after facing well-founded accusations that the project reneged on most of the promises to create jobs and training for local residents, a spokesperson blamed the litigation and the recession for their inability to live up to their end of the agreement.

As the Nets enter a new era of ownership with two big superstar player acquisitions, New Yorkers should remember that the team isn’t a city institution. Rather, it’s a shameful representation of the marriage of private greed and public corruption that has come to define too many of this city’s major real estate developments. And next time elected officials act baffled as to why a development like Amazon is so forcefully opposed — it’s because we’ve seen this movie before.

Ravi Gupta is the co-founder of Arena, a national organization that convenes, trains, and supports the next generation of candidates and campaign staff.


Leave a Comment


Leave a Comment

1 Comment

  1. KrimzonStriker

    I want a good basketball team in this city, period. And I don’t care to hear this comparison to the Amazon project, nobody cares or has a vested interest in where Amazon files its paperwork. But what they do see and care about are sports and its ability to alleviate some of the weight in their lives. There is both a clear demand and product to be supplied which the Nets are finally doing for this city and its basketball relevancy so don’t just count money while ignoring the emotional fulfillment fans feel during every championship parade in their cities. While I agree much could have been done to incur more tangible benefits and stakes for the local community I’m not going to take the easy way out and scape goat the foreign owners who invested and payed all the expensive bills in the meantime for this team and their state of the art facilities, which made it so attractive to free agents in the first place (while it has barely if ever generated a profit in its own for them during their tenure in Brooklyn BTW) or criticize a private TAIWANESE citizen because of the government in China’s policies. No one else would have been willing or able to prop up the team like that (look only at the Phoenix Suns and how their penny pinching owner runs them), and Kevin Durant and Kyrie Irving were not going come to the New Jersey Nets in Newark, period. You want to take to task the city officials and the terms they negotiated fine, but turning your ire on the Nets franchise and acting like we shouldn’t even want it here ala Amazon after all its been through (having no basketball assets for 5 long years only recently) and is only now turning a page that could deliver this city its first basketball championship in nearly 50 years is just irresponsible bias and an unwillingness to look at all perspectives, like that of long suffering NYC basketball fans starving for relevancy again.