January 9, 2009 - Barclays Center, Brooklyn NY

Frank Gehry Design Cancelled - June 4, 2009

Developer May Scale Back Plan for Nets' Brooklyn Arena

Developer Bruce Ratner is considering scaling back his ambitious plan for a $1 billion Frank Gehry-designed arena for the New Jersey Nets basketball team in downtown Brooklyn.

Mr. Gehry's design has been one of Mr. Ratner's major selling points as he has battled neighborhood residents and pressed government officials for approvals and subsidies. But now, with the recession and credit crisis in full swing, the Nets and Mr. Ratner are exploring new concepts for the arena that would transform it from an architectural masterpiece into a much less expensive and much more traditional sports venue.

A spokesman for Forest City Ratner Co., Mr. Ratner's development company and the team's controlling owner, said Thursday Mr. Gehry had not been fired. But he acknowledged financial issues had forced Mr. Ratner to consider alternatives.

"We are continuing to speak with many arena experts and working hard to find ways to build a world class venue in an incredibly difficult economic environment," the spokesman said.

The price tag of other recently developed arenas has been much lower than Mr. Gehry's design. For example, The Prudential Center in Newark, New Jersey, home of the National Hockey League's Devils, cost about $400 million. It opened in 2007.

Mr. Gehry, the renowned architect of the Guggenheim Museum in Bilbao, Spain, and other modern masterpieces, did not return phone calls seeking comment.

Mr. Gehry's buildings, known for their curving glass and metal surfaces, involve the kind of unique elements that can greatly increase the price of a structure. The New York headquarters of the InterActive Corp., which resembles a massive sailboat, has more than 1,000 unique pieces of glass.

Mr. Gehry has overseen the design of nearly every element of the planned Brooklyn arena and the proposed surrounding development, from the overall building architecture to the lighting and plumbing fixtures in the luxury suites. A final design has never been approved, but preliminary designs included massive glass atriums, and tilted levels of seats built in the fashion of a butterfly's wings.

The arena is the centerpiece of Mr. Ratner's controversial $4 billion Atlantic Yards endeavor proposed for a site above a rail yard at Flatbush and Atlantic avenues. The plan includes a billowing office tower Mr. Gehry nicknamed "Miss Brooklyn" and thousands of new apartments.

Last year, as the economic downturn set in, Mr. Ratner announced he would pursue only the arena until the market could support more residential and commercial structures. The Nets are losing more than $30 million a year playing in the Izod Center in East Rutherford, New Jersey and desperately need a new arena to increase revenues.

A spokesman for New York's Empire State Development Corp., the site manager for the project, said it had little control over the ultimate design of the arena.

"The aesthetic choices are Forest City Ratner's," said Warner Johnston, the ESDC spokesman.

Original Story - Wall Street Journal

Will the Nets ever play basketball in Brooklyn?

The question is impossible to answer nearly six years since Bruce C. Ratner hatched the idea when he led the successful bid to acquire the Nets for $300 million.

Since then, the Mets, the Yankees and the Devils have moved into new homes — but the Nets still play at the Izod Center in East Rutherford, N.J., where they lose tens of millions of dollars annually as tenants of the state. And Mayor Cory A. Booker of Newark is beckoning them to skip Brooklyn to join the Devils in his city’s $375 million Prudential Center, which opened in 2007.

“We would attend their games in Newark,” said Councilwoman Letitia James, who represents the Prospect Heights neighborhood where the Nets’ arena is to be built as the centerpiece of the $4 billion Atlantic Yards development. “I’ll sponsor the buses to go there.”

Troubled by litigation, Forest City Ratner, Ratner’s real estate development company, has not fully cleared the full 22-acre site where the arena, the Barclays Center, would rise.

No work has been done since the end of last year on land that is a hodgepodge of empty lots and buildings and the Long Island Rail Road’s Vanderbilt Yards. Forest City has neither begun to pay the Metropolitan Transportation Authority the $100 million they agreed to for development rights over the yards — and is, in fact, negotiating the price sharply downward — nor begun to move the tracks to a far end of the site.

And Forest City still faces legal and financial challenges — but it contends they have eased enough to unequivocally predict the arena’s opening for the 2011-12 season.

“It’s done, inevitable, it’s imminent, it’s going to happen this year,” said Brett Yormark, the Nets’ chief executive. After a number of failed predictions for when the Nets would move into the arena, he said: “We’re on schedule. There’s more certainty than there’s ever been.”

His confidence rests on two factors. First, a state appellate court’s May 15 dismissal of a lawsuit organized by an alliance of 21 community groups, Develop Don’t Destroy Brooklyn and filed by nine property owners and tenants. If the expected appeal fails, the state can use eminent domain to seize the remaining properties.

Second, the recession that appeared to level the hope of financing the arena is abating, opening up clogged credit markets to the possibility of selling up to $600 million in bonds.

Gregory B. Carey, a managing director of Goldman Sachs, which is the co-leader of the financing with Barclays Bank, said the improving economy and brightened outlook for municipal bonds pointed to an increasingly likely chance of financing the arena, barring a legal surprise.

“We’re in tough times, but it’s looking good,” said Carey, who engineered the second financing of the new Yankee Stadium this year, including $258.9 million in tax-exempt bonds. But the stadium was nearly done when it sought the additional bonds.

Mike Stanton, publisher of The Bond Buyer, said that if the financing was priced and structured the way the Yankees’ and the Mets’ stadiums were this year, “They should have no trouble getting it done.”

But Forest City must break ground by Dec. 31 to meet the Internal Revenue Service’s deadline to sell tax-exempt bonds. If the developer misses the deadline, financing costs will leap. “Bruce and I have never talked about missing that deadline,” Yormark said.

The same deadline appears to loom for the 20-year, $400 million naming-rights deal between the Nets and Barclays. Barclays extended the sponsorship beyond last year because of construction delays, but a spokesman refused to say if it would do so again.

Daniel Goldstein, a leader and spokesman of Develop Don’t Destroy, said he did not believe Forest City would meet the deadline, not with his group’s appeal of the eminent domain decision and intention to file more lawsuits to delay the project until its death.

“They’re not going to get financing this year or control of the land this year,” Goldstein said during an interview in his condominium on Pacific Street, which would be about midcourt of the proposed arena. He, his wife and baby daughter are the only occupants of the nine-story building, the other 30 unit owners having long ago accepted Ratner’s buyout offers.

“I don’t even think they know what will make them give up,” he said.

Forest City is not surrendering and contends only a restraining order can stop the eminent domain process and construction. But Yormark’s confidence is mixed with testiness that Forest City cannot rid itself of Goldstein or the legal aggressiveness displayed by Develop Don’t Destroy.

“I have no admiration for anyone who puts his personal interests before the people’s interests,” Yormark said.

Goldstein said, “The selfish party is his boss, Bruce Ratner, who wants public land for a song, private property confiscated by eminent domain and the taxpayers to pay hundreds of millions of dollars toward his enrichment.”

(Forest City was the development partner for the Midtown headquarters of The New York Times Company.)

Forest City Ratner would not disclose its legal fees since 2006 to fight the lawsuits filed or financed by Develop Don’t Destroy, but the cost of the arena has soared to at least $950 million, from $637 million. Goldstein said Develop Don’t Destroy had raised $1 million from 4,000 donors to sue Forest City and state agencies, including the Empire State Development Corporation.

If Develop Don’t Destroy’s appeal fails, or isn’t considered, it vows to file more lawsuits in the belief that further litigation will impede Forest City’s financing and force it to face more public hearings and amendments to governmental approvals it has received.

The irony of the legal battle is that Forest City has won all 23 decisions, but the time taken to fight each motion and appeal has caused delay after delay. Ratner once hoped that the Nets, more an asset for his project than a sportsman’s purchase, would be in Brooklyn by 2006.

The postponed move-in dates have prevented Ratner from capitalizing on having an Eastern Division power that lost the N.B.A. finals in 2002 and 2003 and won 49 games as recently as the 2005-6 season. In each of the last two seasons, the Nets have won just 34 games.

The Nets have not averaged more than 16,925 fans — 3,000 short of the Izod Center’s capacity — this decade. The team’s attendance raises questions about its fan base. How many current fans would go to Brooklyn, and how many new fans will have to be developed to fill the arena?

Since acquiring the Nets, Forest City Enterprises, Ratner’s parent company, has sustained pretax losses of $111.9 million, including $76 million in the year ended Jan. 31.

The team’s dozens of investors have sustained $353 million in pretax losses, about half of it from amortization. Forest City became responsible for 54 percent of the team’s losses in the year ended Jan. 31, a larger share than it had ever absorbed. On the positive side, it has future sponsorship commitments for the arena of $500 million, 80 percent of it from Barclays.

The team desperately needs the arena, which was designed by Frank Gehry. But to reduce its cost to $800 million or less, it could lose Gehry, the architect of the Guggenheim Museum in Bilbao, Spain. The arena was to be sheathed in glass and topped with a running track and an ice skating rink. But Forest City has consulted with other architects, including Ellerbe Becket, in Kansas City, Mo., to slash the price and make it easier to finance.

Yormark said that the arena would reflect Gehry’s vision but that the savings would come mainly through cutting square footage, particularly in storage areas. “As of now, Frank is still in,” he said.

Still, Ellerbe Becket, which is known for its design of the Conseco Fieldhouse for the Indiana Pacers, acknowledged last week that it had been assessing Gehry’s design since late last year.

Gehry, who declined to comment through a spokesman, recently cast doubt on the Atlantic Yards, for which he is the master architect, ever coming to fruition. He quickly retracted his statement. But if the shape and look of the arena changes enough to meet economic needs, it may not meet Gehry’s standards.

Meanwhile, Newark awaits the Nets — at least for the two preseason games they will play in the Prudential Center.

“We’d love to have them here,” said Robert G. Sommer, the president of Rock Entertainment Management, an arena subsidiary. “They’d never leave.”

Original Story - New York Times