Skip to main content

Now we get it: Bloomberg thinks poaching companies over state lines is bad, but poaching teams is not so bad

When Smith College sports economist Andrew Zimbalist, Forest City Ratner's paid consultant, calculated (report in PDF) expected tax revenues from the planned Atlantic Yards arena, one key element was what Zimbalist called the "recapture of tax revenues presently generated in New Jersey," current home of the Nets basketball team.

And, as I've pointed out, both the Governor's office and the Empire State Development Corporation issued 3/4/05 press releases relying on Zimbalist's findings.

The city's press release cited a then-unreleased study by the NYC Economic Development Corporation, perhaps because of wariness about appearing to endorse a partisan study. But that study (PDF) also said new revenues would rely on "recaptured spending in New York City."

The new game in town

Guess what: the same people who boosted AY now warn that recapture of tax revenues across state lines is a bad idea. Consider an article in Monday's New York Times, headlined New York Vulnerable to Poaching in Recession, which noted how New Jersey was offering incentives to companies to move there.

The Times reported:
Those discussions have infuriated Mayor Michael R. Bloomberg, who complained publicly about New Jersey’s efforts in a news conference last month. And they have been sharply criticized by some economists, who assert that such incentives mainly benefit established companies with lobbying clout and are not very effective in creating new jobs.

“Propping up the big guys and helping them stay big doesn’t really promote economic growth,” said Kevin C. Gillen, an economist at the Wharton School of the University of Pennsylvania. He said much job growth comes from small businesses and fledgling companies.

Multiyear tax-abatement programs are often ineffective, Mr. Gillen said, because “they tend to work a lot better in the short term than the long term and often wind up being used to retain employers rather than to attract new firms.”

(Emphasis added)

The article focused on attempts to retain Pepsi, which was angered by a proposed New York State obesity tax on soft drinks. Assemblyman Richard Brodsky, who has been a foe of sports facility subsidy deals (at least those involving the New York Yankees and New York Mets), commented, “It’s never effective or helpful when companies play a locational card, and we’re working cooperatively with the governor and with Pepsi to make sure the right thing happens.”

Whatever that means.

Bloomberg and the "free market"

During a 1/23/04 appearance with WABC radio's John Gambling, Bloomberg defended such poaching.

Caller: When you’re talking about taking Jets and Nets from New Jersey, how are you not hurting anybody?

MB: Well, I suppose that--nobody wants to lose a team, everybody wants to gain a team. The Jets used to play at Shea Stadium, moved to New Jersey, New York got hurt, now they want to come back. The Nets--these teams want to go where the audience will support them.

JG: It’s a free market.

Bloomberg seconded Gambling, apparently unmindful of how team owners seek new facilities to maximize luxury boxes and marketing opportunities.

MB: It’s a free market; they’re privately owned. The Nets have not done well in New Jersey; their parking lot’s half full. Y’know, they’ve not sold out in a long time. The Jets don’t like sharing a stadium. But these are private ventures. The city likes to have economic activity. But the city’s not in the sports business, and shouldn’t be. I’d love to have it come here… In Brooklyn, they’ve never forgiven Walter O’Malley.

JG: And it looks as though that this is going to impact, obviously, the plans that they had for the Nets and Devils over there in Newark, but again, it’s a free market, and that’s the way this one works.

If it were a free market, then, what about the direct subsidies for Atlantic Yards (now up to $205 million from the city, plus $100 million from the state) and the special benefits cited by the Independent Budget Office?

Comments

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…