Thursday, November 13, 2008

Did the state try to gain any value from arena naming rights? Apparently not

Yesterday, Gov. David Paterson proposed $5.2 billion in budget cuts over the next 16½ months, with reductions in school aid, increased tuition at city and state universities, and reduced Medicaid reimbursements, among other things.

Perhaps administration officials--many of whom were not in charge at the time, actually--are wondering why exactly their predecessors allowed Forest City Ratner to claim the entire value of naming rights for the Barclays Center arena.

In response to a Freedom of Information Law request, documents received from the Empire State Development Corporation (ESDC) indicated that no effort was made to retain any such value, though at one point, a Forest City Ratner executive indicated anxiety about the developer being "punished" for the naming rights deal.

Why it matters

The arena would be publicly owned, formally at least, and leased to FCR for $1 a year. The main reason for the fig leaf of public ownership is to allow the issuance of tax-exempt bonds.

Still, it's not the developer's property, As author Neil deMause told me earlier this year, "There’s no reason for this [naming rights] to be private money."

But allowing the team owner to retain naming rights was apparently an unspoken component of the Atlantic Yards agreement. As Andrew Alper, then-president of the New York City Economic Development Corporation, told City Council 5/4/04:
So, they came to us, we did not come to them. And it is not really up to us then to go out and try to find a better deal.

(Note that the $400 million deal apparently must be renewed by the end of the month, and renewal--at least at that level--is hardly certain.)

Digging in

In September, I contacted the ESDC, asking:
Under the Freedom of Information Law, I request records regarding any discussion between the Empire State Development Corporation and developer Forest City Ratner (or any of its affiliates) regarding naming rights for the planned Atlantic Yards arena, now expected to be called the Barclays Center.

More specifically, I seek records that describe whether or not the ESDC attempted to ensure that the public received some value for the naming rights. I also seek records that explain the ESDC's rationale in allowing developer Forest City Ratner (or any of its affiliates) to control the naming rights.


The response

There were no real answer to the question about the ESDC's rationale.

In response, I got a six-page file (PDF) of email messages, part of which consisted of a message I myself sent and the ensuing ESDC response. Notably, none of the documents were dated before 2007, meaning that the issue was not discussed before the ESDC board approved the project in December 2006.

I filed a similar request with the New York City Economic Development Corporation, Alper's agency, which also participated in the initial Memorandum of Understanding for the project. I was told there were "no responsive documents."

Redacted documents

Though the documents are scant, in several places they were redacted; the ESDC cited exemptions that allow agencies to deny access to records that are inter-agency or intra-agency materials which are not final agency policy or determinations and instructions to staff that that affect the public, among other things.

The six pages

The documents consist of the following:

Page 1. A 1/16/07 email from ESDC President Avi Schick asking staffers, "In the KPMG analysis, what was the dollar amount assumed that Ratner would received for the arena naming rights?"

(The answers are redacted, but the KPMG report, released during litigation over the AY environmental review, assessed "sponsorship/naming rights" at $31.2 million. The Barclays Center deal announced 1/18/07 is said to be $20 million a year, but Forest City Ratner has since announced numerous other partnerships. KPMG did say that the $31.2 million figure may be on the high side.)

Page 2-4. A 1/22/07 email from me to then-spokeswoman Jessica Copen asking why, if the arena is publicly owned, why the Local Development Corporation (LDC) wasn't selling naming rights

Again, some internal messages were redacted; nor was Copen's answer included in this file. Her answer did not exactly address the issue, given the significant public support for the arena: "Financing for the stadium comes ultimately from the team. The team has the naming rights. It's the same deal as with the Mets - who also sold naming rights to their new stadium."

Anxiety from Stuckey

Page 5. A 1/19/07 email, just after the naming rights announcement, from Jim Stuckey, then Forest City Ratner's point man on the project, expressing some anxiety, perhaps over the notion that the naming rights deal could effect public subsidies.

He wrote to ESDC attorney Steven Matlin, "Steven, our collectivr [sic] naming rights deal helps ensure the financing of this project and should be applauded, not punished. Do you think I should raise this at our meeting with Avi [Schick] and [ESDC Downstate Chairman] Pat Foy tomorrow?"

Stuckey's note had a couple of typos and spelled Foye's name wrong. Then again, the message was sent at 1:42 a.m., at least according to the e-mail time stamp.

Matlin's answer: "Jim, I think everyone took note of the deal--but I would not expect it will be used to reopen the business agreement."

The rest of his answer was redacted. What might it have said?

A final query

Page 6. An email regarding a query from Matthew Schuerman of WNYC asking about the sponsorship of the Urban Room and the Stoop.

The answer is completely redacted.

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