Wednesday, November 19, 2008

Nets CEO Yormark continues to spin: "We're on target" for Brooklyn groundbreaking

In an interview Monday (video) with Alexis Glick of Fox Business News, New Jersey Nets CEO Brett Yormark maintained near-complete confidence as he moved back the Brooklyn arena timetable yet another time, but the video's worth watching for the moment where it seems like Yormark doesn't quite believe himself.

It's also worth watching for the moment when Yormark declares that "it's no longer about access to the paying customer."

Barclays re-ups

The interview began with Glick noting that some people thought the Barclays naming rights deal might fall apart, but Barclays has reaffirmed its commitment. Barclays, Yormark declared, has never wavered.

Glick, not exactly the most curious interviewer, didn't think to ask if the reaffirmation was on the same terms.

"Things are going according to plan"

Glick then served up a nice leading question: When you look at the current climate, I’m sure hindsight is 20/20, but a lot of big team owners and executives may not have made the plans that they have made. And yet, for the most part, from what I can understand, things are going according to plan. Walk me through some of the litigation issues that still remain in Brooklyn and the Atlantic Yards, and the time frame in terms of getting this project done and completed as soon as you’d like.

Yormark's answer deserves a close look. Listen to his tone, at about 1:02, when he declares "We're on target" and tilts his head (right). Does the uptick in his voice betray that he's not really sure?

BY: Would love to. We’re on target. We are going to, hopefully, get through litigation, some time in March, and shortly thereafter break ground. I look at groundbreaking some time in the first half of ‘09. Obviously, with Barclays and all of our founding partners, our suiteholders—everyone’s excited about it. I’ve spent a lot of time, Alexis, in Brooklyn, meeting with kids, throughout the borough, every day. And there is so much support for this project. And when you look at the project, the affordable housing, job creation, and most importantly, bringing the team and sports entertainment back to the borough. It’s going to be a huge moment. We’re just thankful that things are moving in the right direction.

Litigation done in March?

If Yormark thinks litigation would be over in March, he's about as accurate as he was when, in September 2007, he said groundbreaking would be that fall and asserted, unequivocally, "We'll be in Brooklyn for the 09-10 season."

Well, if the timetable I described six weeks ago still holds, the last briefs would be due at the end of February 2009. Oral argument and a decision likely would take longer than a month.

[Clarification: Yormark's timetable is possible, since the case has been speeded up, and will be heard in January. But the decision will be inevitably appealed.]

How much support?

Well, last night the Nets hosted the Cleveland Cavaliers, whose superstar LeBron James, is coveted by the Nets when he becomes a free agent in 2010. Still, as the New York Times reported:
Even James’s presence did not fill the Izod Center. Swaths of empty seats remained, and the announced attendance of 16,911 fell well short of the capacity of 19,990.

We know that announced attendance usually exceeds actual attendance by no small factor.

As for support in Brooklyn, last night I visited my favorite place to watch hoops on the big screen, Buffalo Wild Wings in Forest City Ratner's Atlantic Terminal mall.

Yes, they had the Nets game on, but it was relegated to some of the small televisions, without audio. The big screens, and the room, belonged to the game between the New York Knicks and the Boston Celtics.

Costs decline, but so does spending

Glick raised the possibility that the arena might cost less to build.

AG: I imagine there are two different scenarios going on right now. One is, I imagine, that building costs will decline… On the other hand, you also have tons of branding opportunities, you talk about suites and the importance of suites, and we’re hearing from a lot of owners that is pretty difficult to come by in this climate, because any excess capital is being cut. How do you weigh those two equations?

BY: We’re fortunate that we’ve got a little time on our hands. We’ll be in Brooklyn for the 11-12 NBA season. We’ll probably be in Brooklyn actively in the summer of 2011. So give us a little time to gain some traction. We’ve presold our suites to the tune of about 30 percent. And we’re meeting with a lot of prospective buyers right now, a lot of CEOs. All the CEOs we’re meeting with understand it’s very cyclical, what’s happening in the economy…. But it’s going to come back.

He's right that things can be cyclical. But couldn't Glick have checked some reports--not just mine--that say 2012-13 is a more realistic scenario.

Helping unemployed fans

AG: One of the things you guys have had is this tremendous relationship with the stakeholders in New Jersey…, and you’ve been doing some really terrific things to help those losing their jobs or are on the cusp of unemployment.

Yormark sounded like a social worker--up to a point.

BY: We launched an unemployment program last week. Our philosophy for years has been about providing access, but it’s no longer about access to the paying customer, it’s now about access to the people who need us most, and those are the unemployed. We did an outreach program last week where we identified five games in November and December, where if you sent us your resume, we put aside 300 tickets for each of those games for people who are unemployed. Everyone needs a night out and we want to extend ourselves to the extent that we can. The response has been overwhelming. We’ve received to date over 3000 resumes. The tickets, obviously have been spoken for. But we’re still acting as a job bank [jobbank(at)njnets.com], in trying to facilitate introductions between our season ticket holders, our sponsors, and those who are unemployed.
(Emphases added)

The job bank surely might help. But unless the Nets were giving away freebies at the concession stand, it was essentially cost-free to distribute 300 tickets for an arena with lots of empty seats.

Note that Fox continually flashed the factoid that Atlantic Yards would create 18,000 jobs, a claim that appears on the official web site. For the umpteenth time, 15,000 construction jobs means 15,000 job-years, or 1500 jobs a year for a decade.

Creating value

Glick expressed some apparent concern.

AG: The amount of jobs are so few and far between--how do you keep people up psychologically?

BY: The NBA across the country is doing a terrific job of reaching out to communities…. I think right now it’s about creating value for those key stakeholders… And that’s about the experience…. It’s not just the game, it’s the overall experience.

An affordable experience?

AG: You talk about the experience…. Look, the cost to take a family to a sporting event… it used to be affordable… and now it’s so unaffordable. How do you bring that back? How do you bring that experience back so we can take all of our kids to a game again?

BY: Well, the NBA has been very proactive in providing opportunities for anyone to come see an NBA game. There are teams out there that have tickets priced at 5, 10, and 15 dollars. There are opportunities to go to the concession stand and buy a hot dog for a dollar now. And all that is an opportunity to bring in as many people as possible.

The $3.75 hot dog

Maybe you can get a hot dog for a buck somewhere in the NBA, but not at the Izod Center. According to the November 2007 Team Marketing Report, the Nets were #7 in the NBA in Fan Cost Index (FCI).

A hot dog was $3.75.

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