The Sale of the New Jersey Nets and NBA Economics
In a blog entry at Grantland, author Malcolm Gladwell uses the sale of the former New Jersey Nets, now the Brooklyn Nets, to show how basketball is a business. Developer Bruce Ratner sold the team to a wealthy Russian businessman after arranging to move it to Brooklyn, N.Y., so that he could reportedly claim a valuable stake of land. All of this occurred against the backdrop of the NBA lockout.
Bruce Ratner's original plan for the Atlantic Yards site called for 16 separate commercial and residential towers and a basketball arena, all designed by the superstar architect Frank Gehry. The development would be home to roughly 15,000 people, cost in excess of $4 billion, total more than eight million square feet, and make his company -- by some calculations -- as much as $1 billion in profit. To put that in perspective, the original Rockefeller Center -- one of the grandest urban developments in American history -- was seven million square feet. Ratner wanted to out-Rockefeller the Rockefellers.
Ratner knew this would not be easy. The 14 acres he wanted to raze was a perfectly functional neighborhood, inhabited by taxpaying businesses and homeowners. He needed a political halo, and Ratner's genius was in understanding how beautifully the Nets could serve that purpose. The minute basketball was involved, Brooklyn's favorite son -- Jay-Z -- signed up as a part-owner and full-time booster. Brooklyn's borough president began publicly fantasizing about what a professional sports team would mean for his community. The Mayor's office, then actively pursuing an Olympic bid, loved the idea of a new arena in Brooklyn. Early on, another New York developer, Gary Barnett, made a competing play for the railway yard. Barnett's offer was, in many ways, superior to Ratner's. He didn't want the extra 14 acres, so no land would have to be expropriated from private owners. He wasn't going to plunk a small city down in the middle of an already crowded neighborhood. And he tripled the value of Ratner's offer. Barnett lost. He never had a chance. He wanted to build apartments. Ratner was restoring the sporting glory lost when the Dodgers fled for Los Angeles. As Michael Rikon, one of the attorneys who sued to stop the project, ruefully concluded when Ratner's victory was complete: "It is an aphorism in criminal law that a good prosecutor could get a grand jury to indict a ham sandwich. With regards to condemnations in New York, it can fairly be said that in New York a condemnor can condemn a Kasha Knish." Especially if the kasha knish is being eaten to make way for a professional basketball arena.
Read Malcolm Gladwell's complete blog entry at Grantland.