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Nets owner takes controlling stake in Coliseum redevelopment company

Brooklyn Nets owner Mikhail Prokhorov on April 8,

Brooklyn Nets owner Mikhail Prokhorov on April 8, 2015, at the Barclays Center in Brooklyn. Credit: Jim McIsaac

Mikhail Prokhorov, owner of the Brooklyn Nets basketball team, has purchased a controlling stake in the company that is redeveloping the Nassau Coliseum and building an adjacent retail and entertainment complex.

Prokhorov's Onexim Sports and Entertainment, based in Moscow, will assume 85 percent ownership of Nassau Events Center, the entity created by Brooklyn developer Bruce Ratner to run the arena, company officials said Friday.

Forest City Ratner executive chairman Bruce Ratner will maintain a 15 percent ownership in NEC and will remain the lead developer on the Coliseum project, along with Barclays Center CEO Brett Yormark, according to company spokeswoman Ashley Cotton. Ratner and Yormark would continue to manage the arena with Onexim after it reopens.

Cotton declined to detail the financial terms of the sale.

Nassau County will continue to own the arena and the 77-acre Hub property. The deal comes as NEC and county officials prepare for an official groundbreaking of work at the arena on Nov. 5.

"By including the Coliseum in our portfolio, we can apply our experience in construction and management of Barclays Center in order to bring first-class entertainment and sporting events to the New York area," Prokhorov said.

Nassau Events' lease agreement with the county calls for it to spend $260.5 million to redevelop and downsize the arena, and construct an adjacent complex with a movie theater, restaurants and stores. Those plans remain unchanged, Cotton said.

"We are excited to finalize the partnership that will bring Long Island the re-imagined entertainment venue it deserves," said Ratner in a statement.

Cotton said Onexim will maintain Ratner's vision for the property and will abide by the terms of the lease agreement with the county. That deal calls for Nassau Events to pay the county more than $500 million in rent and sales taxes over the course of the 34-year lease.

County spokesman Brian Nevin said that since the lease is with Nassau Events Center, it does not require additional legislative approval. He declined additional comment on the deal.

Minority Leader Kevan Abrahams (D-Freeport) said Onexim officials should, "as a matter of good faith," testify before the legislature that they will abide by the terms of the lease agreement.

Experts said it's unclear whether the change of ownership could lead to changes in the project.

Whether new owners can revise development efforts "really varies on a case-by-case basis depending on the legal agreement," said David Bujnicki, vice president of investor relations and corporate communications for Kimco Realty, a New Hyde Park-based real estate investment trust.

Michael DiDonato, president and CEO of Bethpage-based The Navigator Consulting Group Ltd., also said the impact on the Coliseum project was uncertain, though he didn't rule out changes. "I would think that if he [Prokhorov] is putting money in there, he might have a say," DiDonato said.

Cotton also confirmed Friday that NEC had secured $100 million in financing from Chinese investors through a federal program that provides visas in exchange for financing for job-creating projects. The arena renovations are expected to cost about $130 million.

The funds, from the U.S. Citizenship and Immigration Services Immigrant Investor program -- commonly known as EB-5 -- will be used exclusively for the Coliseum work.

Details on how NEC will finance the remaining $130 million to build the retail and entertainment complex have not been disclosed.

The Nets' new D-League team is expected to move to the Coliseum for the 2017-18 season, according to an NBA source. The team would play at Barclays in Brooklyn during the 2016-17 season.

The Nets haven't had a D-League affiliate in two years and have been trying to find a solution since their agreement with the Springfield Armor ended after the team moved to Grand Rapids, Mich., and became the Detroit Pistons' D-League affiliate.

Nassau Events' lease with the county calls for the firm to bring an AHL minor league hockey team to the Coliseum. County NEC officials said those plans remain unchanged. The identity of the AHL team has not been disclosed.

The deal comes as NEC and county officials prepare for an official groundbreaking of work at the arena on Thursday.

Ratner took over the Coliseum on Aug. 1 and has spent the past three months performing "pre-demolition" activities such as environmental tests, disconnecting food service equipment and removing furnishings, Cotton said.

Sources said Thursday's groundbreaking will signal more intense construction of the Coliseum. Work on the arena is expected to be completed by December 2016.

Prokhorov, meanwhile, remains in discussion with Forest City to purchase Ratner's shares in the Barclays Center -- where the Islanders began playing this season -- and in the Nets. Forest City officials said that deal has not been finalized.

Ratner owns 55 percent of the Brooklyn arena and 20 percent of the Nets.

With Roderick Boone, Ken Schachter and Victor Ocasio

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