Deal Between Legends, Forest City For Nassau Coliseum Redevelopment Falls Apart
Legends Hospitality has withdrawn as an equity partner of Forest City Ratner Companies in the $229M redevelopment of Nassau Coliseum, according to Legends officials. The split comes as the result of an apparent disagreement over whether Legends would take over the food service at Barclays Center, which was developed by Forest City. The Islanders are moving to the Brooklyn venue for the '15-16 season. Legends Chair & CEO Dave Checketts said his firm's decision to withdraw from the Nassau project was due in part to what company officials claim has been a lack of communication on the part of Forest City Ratner on the progress of the Nassau project, which caused Legends to have doubts on the viability of the redevelopment. Legends was part of the original redevelopment team formed by Forest City Ratner that won the bid last September to renovate the 42-year-old Nassau Coliseum. Legends officials said as part of an agreement, the company had committed to investing $6M to help pay for Nassau renovations with the understanding that Legends would have an opportunity to take over Barclays Center’s food operation after Levy Restaurants’ deal expired after the '14-15 season. They said Legends principals have been to Barclays Center on several occasions at the arena’s request to evaluate its food operation and offer feedback. Barclays Center and Nets CEO Brett Yormark confirmed that there were discussions over Legends potentially taking over at Barclays Center, but there was no written contract regarding a potential switch in food vendors.
ORIGIN OF THE BREAKDOWN: The relationship between Legends and Forest City dissolved over the past week after Barclays Center officials informed Legends that they were sticking with Levy in Brooklyn via a three-year extension. Barclays Center's announcement of the extension yesterday also stated that Levy has replaced Legends as the food and beverage partner for the “soon to be re-imagined” Nassau Coliseum. Yormark said the renovations are scheduled to begin next summer with upgrades targeted for completion by late '16. He added the decision to retain Levy and insert the same vendor at Nassau starting in '16 was driven by Forest City’s need to maintain continuity and create synergies between the two arenas, including their food operations. Yormark: “We felt Levy has done a great job at Barclays Center and there was no reason to make a change. Having the same food provider in both buildings made sense.” After Legends was informed of Barclays Center’s decision last Tuesday, Yankees President Randy Levine, whose club co-owns Legends, called Yormark on Friday to notify him Legends had officially withdrawn from the Nassau project. Levine said, "We’re very sorry we had to withdraw. We made it clear (with Forest City) that a big reason why Nassau County chose the Ratner group was because of their involvement with the Yankees and Legends. (But over time) we didn’t feel comfortable with Brett’s leadership for making the same commitment for this project that we’re used to dealing with for our other projects.”
BACK & FORTH: Over the past several months, Checketts said he made several phone calls to Forest City officials to find out updates on the Nassau project, but heard nothing back in return, leading to concern over where the project stood almost a year after the Forest City team was selected in Nassau. Checketts: "These were calls that I placed, asking ‘Where are we going with this? Where are you in the process? And getting nothing in response. We kept saying we need a (final term sheet for Nassau). We have put our complete faith in you.” However, Yormark said, "That’s not true. Forest City Ratner has been very responsive (to Legends) in every aspect of going to market with this project.” Both groups cofirmed Legends' recent takeover of the food operation at Prudential Center was a deal that played a role in Barclays Center retaining Levy. Yormark noted at the time Legends presented its business strategy to Forest City, the concessionaire positioned itself as a premium hospitality company that is selective in the teams and venues with which it partners. But after Legends signed a deal with the Devils earlier this summer, Yormark said it became apparent to him that Legends was more intent on becoming a “volume player” compared with developing long-term strategies exclusively with one team in the N.Y. market. Yormark: "We like being Levy’s only partner in New York outside of the U.S. Open. Legends’ strategy seems to have changed to one that pursues all business very aggressively.” However, Legends officials said their strategy of aligning themselves with first-class teams and facilities, including the Devils and Prudential Center, has not changed.