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SBJ/December 15 - 21, 2003/This Weeks Issue
YankeeNets bound for Splitsville
Published December 15, 2003
The YankeeNets partnership is about to disintegrate, but no one is quite sure what will become of its pieces.
The board of YankeeNets LLC voted last week to break up the holding company that owns the New York Yankees, New Jersey Nets and pieces of the YES Network and the New Jersey Devils.
George Steinbrenner and a handful of investors will assume full ownership of the Yankees, while original Nets owners Lewis Katz and Ray Chambers will retain control of the Nets and then sell the club. That much is clear.
From there, several scenarios are possible, said people close to various YankeeNets shareholders and other interested parties.
Bruce Ratner announced plans for a new Nets home in Brooklyn.
Katz may keep a minority stake in the Nets if the team is sold to New York developer Bruce Ratner and moves to Brooklyn.
Ratner's bid of $275 million was the highest of four offers received last month by investment bankers charged with brokering the sale, Goldman Sachs and Lehman Bros., and Ratner unveiled the designs for a $435 million arena last week.
He also announced that Brooklyn-born rapper Jay-Z and New York Mercantile Exchange Chairman Vincent Viola joined his investment group. While Ratner and city officials have been vague about what sort of government help the arena project will receive, New York Mayor Michael Bloomberg appeared with Ratner at a press conference and said the city supports the project.
No matter who buys the Nets or where they go, Chambers will likely divest himself of the team completely, while buying out Katz's stake in the Devils, ending the turbulent partnership between the two New Jersey businessmen.
Still to be determined is exactly how the YankeeNets partnership will be split equitably and how much money will change hands between the parties to make that possible. Katz and Chambers paid $225 million in 1999 to get into YankeeNets, reflecting the difference in value between the Nets and Yankees, after buying the Nets for $150 million the year before.
Putting a valuation on the Nets this time around is easy, as the club is about to be sold. But the sides will have to come to an agreement on what Katz and Chambers' stake in the Yankees is worth.
Meanwhile, the Nets ownership group, Community Youth Organization, named Edwin H. Stier its president and chief executive. He will oversee the sale of the team.
The number of bidders for the Nets was cut to three recently when New York Islanders owner Charles Wang withdrew his $265 million bid. That leaves Ratner; the team of New Jersey developer Charles Kushner and the state's Democratic senator, Jon S. Corzine, who have bid $267.5 million; and little-known financier Stuart Feldman, who offered $257.5 million.
Ratner's proposed arena complex in Brooklyn, scheduled to be completed in 2006, is designed by acclaimed architect Frank Gehry and includes a rooftop ice skating rink, 5,000 apartments and more than 2 million square feet of office space. The arena would seat 19,000 for basketball.