A $17 billion man is
...Mr. Ratner's employees speak of how he was always optimistic
about his project, through six years of litigation and a global financial
crisis, when, in basketball parlance, he learned to rebound. Mr. Ratner always
promised his troops they would figure out a way to keep alive his dream of
moving the basketball team into a gleaming arena in Brooklyn. He didn't tell
anyone what he really thought—that the project was dead.
"Back then, no one knew if anything would succeed," said Mr. Ratner,
65 years old. "And we were running out of time."
By fall 2008, Mr. Ratner and his family's parent company, Forest City
Enterprises, had shouldered more than $100 million in losses. His project
was mired in litigation. And he faced the prospect of losing the rights
to develop the property if he didn't complete a $1 billion financing package
in 15 months.
"I would bet if you started back in '03 and somebody told him how long
this would be and how expensive the fight would be, his stockholders,
partners, whatever they are, and even probably him would say, 'you know,
if you really costed it all out, you won't make money and you shouldn't
do it,' " New York Mayor Michael Bloomberg said in a recent interview.
"He's had some very difficult times. He's had to invest an awful lot more
at less desirable terms than what the original business model said."
The biggest hit came when the global economy collapsed. Financial advisers
told Mr. Ratner to forget about issuing $1 billion in bonds to finance
construction of a fancy Frank Gehry-designed arena. He'd be lucky to get
$600 million, they said.
"I operate on the theory of the black swan," Mr. Ratner said, referring
to the idea made famous in the 2007 book that argued high-impact, hard-to-predict
and challenging events are inevitable. "There will be chaos. So you have
to be flexible in thinking about your problems."
Sitting in his Upper East Side apartment on a November weekend, Mr. Ratner
started to play around with his project's numbers on an Excel spreadsheet
and compare them with other arenas in the country. Within hours, Mr. Ratner
had decided to ditch the Gehry-designed building that would cost more
than $600 million, not including the land development and infrastructure
fees that would have pushed the price to more than $1 billion.
He also knew he'd have to delay construction of his commercial and residential
buildings and negotiate a new deal with the state's Metropolitan Transit
Authority. In the previous deal, he'd agreed to pay $100 million for the
site where the project, known as Atlantic Yards, will be built. But now
he would have to replace that lump sum with a series of staggered payments.
Even with those changes, he was still $300 million short, leaving him
with a task akin to sinking a full-court three-point shot with time running
out—he had to find a buyer at the worst possible time for selling
an expensive, illiquid asset with limited revenue and huge annual expenses.
His search for a buyer landed him in the home of former Russian nickel
magnate Mikhail Prokhorov for a four-hour dinner in July.
Mr. Prokhorov was hardly the textbook candidate. He was a colorful billionaire
who had built a fortune during the early years of Russian democracy. He
also had been arrested in Courchevel, France, in 2007 on suspicions of
transporting prostitutes—although he was never charged and said
he did nothing wrong.
Mr. Ratner quickly concluded that Mr. Prokhorov was the best partner for
the Nets and Atlantic Yards. The Russian loved basketball and New York and,
thanks to a fortune estimated at $17 billion, he wasn't afraid of risk...