Harris Says Newark Arena More Important in Devils Sale Than TeamEben Novy-Williams and Cristina Alesci
Apollo Global Management LLC co-founder Josh Harris said Newark’s Prudential Center was a more important financial piece in his purchase of the New Jersey Devils than the hockey team itself.
Harris and David Blitzer, a New Jersey native and senior managing director of Blackstone Group LP, purchased the National Hockey League franchise last month in an agreement that also gave the partnership control of the Prudential Center.
Located three blocks from Newark’s main transportation hub, the $385 million Prudential Center was opened in 2007. Harris called it “one of the most modern arenas in the country.”
“And we think that with the new capital structure and the new ownership group and the new management that we put in, that we’ll be able to make this arena really realize its potential financially,” Harris said in a Bloomberg Television interview.
Harris, who bought the National Basketball Association’s Philadelphia 76ers in 2011, acquired the NHL team in a deal valued at about $300 million.
Harris has already made changes to the Devils’ business personnel, hiring Scott O’Neil as chief executive officer. The former president of Madison Square Garden Sports, O’Neil is also the chief executive of the 76ers.
Harris said he viewed the Prudential Center as complementary to New York City’s two main arenas, Madison Square Garden in Manhattan and the Barclays Center in Brooklyn. The home of the NBA’s New York Knicks and NHL’s New York Rangers, the Garden is completing a $1 billion private renovation. The $1 billion Barclays Center, home of the NBA’s Brooklyn Nets, opened last year.
“If you’re a big concert event and you stop in New York, you’re probably going to play one of MSG and Barclays, and this arena,” Harris said of the Devils’ home.
O’Neil said in another Bloomberg Television interview last week that the Prudential Center was the fourth-highest grossing arena in the nation, behind Barclays, the Garden and Staples Center in Los Angeles. He didn’t offer specific figures or the source of his information.
Located about 11 miles (18 kilometers) from New York City, the Prudential Center has been a one-tenant building since the Nets moved to Brooklyn prior to the 2012-13 season. Harris said the venue’s concerts and special events would be enough to sustain the building without a second professional team.
“Having a basketball team, an NBA team, in this arena is not in the business plan right now,” Harris said. “We don’t think it’s necessary.”
The city of Newark sold about $200 million in bonds in 2004, backed by airport and marine-terminal revenue, to pay for the arena, with the Devils saying they put in about $185 million. The Devils relocated to the Prudential Center from the Izod Center in East Rutherford, New Jersey, in 2007.
Winners of three Stanley Cup titles, the most recent following the 2002-03 season, the Devils have missed the playoffs in two of the past three seasons. That followed a 21-year stretch in which the team missed the postseason just once.
The Devils struggled financially under the ownership of former Lehman Brothers Holdings Inc. executive Jeff Vanderbeek. Forbes estimated in November that the Devils were worth $205 million, 19th among the NHL’s 30 teams, with $122 million in revenue.
Harris holds a bachelor’s degree from the University of Pennsylvania’s Wharton School of Business and a master’s degree from the Harvard Business School. At Apollo, he profited by focusing on ailing companies. In 2008, he led a $2 billion investment in LyondellBasell Industries NV, a failing Dutch chemicals maker, on which Apollo eventually made a $9.6 billion profit.
Harris said he isn’t expecting returns from the Devils’ purchase to be as significant or as quick as his private-equity investments. He said he’d like to see returns from 1 percent to 20 percent, without getting more specific.
“These are the kinds of things that appreciate over a long, long period of time -- generations,” he said. “I get to have fun, earn a decent return and hopefully make some money in the process and help the community as well.”