Q. Why aren’t naming rights counted as subsidies or, value? Forest City Ratner's deal with Barclays is worth a reported $400 million over 20 years. [Update: It was later adjusted to $200 million+.]
(Imagine a mocking tone to the first sentence of his response.)
A. Because it’s industry standard, don’t you understand? That’s the only answer--the teams always said: we always get the money for this, so therefore it’s private money. There’s no reason for this to be private money. If the public is building the stadium, if the public is owning the stadium, why should the team get to slap a name and get the money from it, or consider the money from it that pays off the stadium as paying off their share?
Y’know, I rent; if I decide to put a giant billboard on the roof of my house here--if my landlord lets me do it, I really don’t think he could let me keep all the money from it. If I say, I’d like to move into your apartment, but in order to pay my rent, I have to put a big billboard outside, he’s going to look at me as if I had two heads.
I think what happened was, originally it was not very much money and the teams said, we can sell naming rights and we use that to help raise money and the city says fine. Now, in many cases, especially the Nets, it’s a huge amount of money… The arena will be owned by the state in order for them to use this PILOT dodge and be exempt from property taxes… It’s very odd that the state will own everything about the arena except the part that makes money.
Subsidy list doesn't quantify naming rights
Q. One of the things that struck me: even the IBO [Independent Budget Office] report on AY didn’t try to quantify the value of naming rights.
A. Yeah. I think it’s just something people stay away from, because they don’t want to get into an argument: is this private or public money? But it’s absolutely a gift. There’s no reason that the state could not have said: OK, we’re selling the naming rights.
What would Ratner have done? There’s no reason the state couldn’t have said: Fine, you’re paying PILOTs, but we want you to pay rent. There’s all kinds of things the state could have done. The MTA could’ve said: We want you to pay more for the property. The problem was it wasn’t trying to negotiate an equitable deal, it was about trying to get a deal done.
Once that’s your goal--how do we get a deal done--then you’ve lost the game, because the developers can basically say: well, I’m not going to do this unless you give me X, Y, and Z.