Monday, June 29, 2009

The Times's "arena glut" story suggests Barclays Center is on the way, marginalizes IBO's analysis as the work of "critics'

An article in today's New York Times, headlined As Arenas Sprout, a Scramble to Keep Them Filled, makes some valuable points, including the money-losing (Newark) Prudential Center's need to attract the Nets and/or have the Izod Center close down, but deserves several footnotes, since it in some places frames the Barclays Center too generously.

The article begins:
In the inaugural season for the new ballparks for the New York Yankees and Mets, the teams have been embarrassed by television shots showing vast areas of premium seats going unsold.

But those who study sporting facilities say empty seats may become even more commonplace here, as New York faces a glut of sports arenas.

Five major complexes — four existing and one planned — will soon be slugging it out within an area 30 miles wide.

At least two of the existing arenas already lose money, and experts say further casualties are almost guaranteed.

“Five arenas is not going to work,” said Mark S. Rosentraub, a professor of sports management at the University of Michigan. “I don’t think four works, even in a market as large as New York. There’s competition in every direction and there aren’t enough events.”

...By the time the arena in Brooklyn, which will be called Barclays Center, is built, there will be a total of nearly 100,000 seats to fill, 365 days a year.

(Emphases added)

The passages highlighted above are conclusory, given that we don't know if the Barclays Center will be built.

The federal role

The Times skates over an important issue:
The competition in the New York area is not just for fans and performers, but also for public subsidies, corporate sponsors and well-heeled tenants for luxury suites.

More importantly, the Times neglects to question whether, given the glut of arenas, federal tax-payers, via tax-exempt bonds, should subsidize a new arena to tune of $100 million-plus.

Overestimating the Brooklyn arena

The Times reports:
No one questions the Garden’s stature as the most venerable and busiest of arenas. It routinely books 275 hockey and basketball games (the Garden is home to the Rangers, Knicks and Liberty), circuses and concerts a year; most operators say arenas need to fill 200 dates to generate an operating surplus.

This would've been a good time to point out a fundamental flaw in the report for Forest City Ratner by sports economist Andrew Zimbalist, who agreed with the developer's projections that it would "host 224 events during the year (assuming the eventual closing of CAA, no new arena in Newark, no NHL and no minor league hockey events at the Atlantic Yards arena.)"

While the CAA (Continental Airlines Arena, now Izod Center) may or may not close, a new arena in Newark opened in 2007. As Jung Kim and Gustav Peebles pointed out in their critique of Zimbalist, his assumption was inherently flawed because it provided no place for the New Jersey Devils to play.

"Critics" claim losses

The Times, which had neglected to report on the Independent Budget Office's (IBO) conclusion that the Brooklyn arena would be a money-loser for city taxpayers, offers this inadequate reference:
Still, Mr. Ratner’s arena would be the most expensive in the country, and his company has already sustained $111.9 million in pretax losses on the Nets. And critics contend that the tax revenues generated at Barclays Center will fall short of the $300 million in cash and tens of millions of dollars in tax breaks the state and the city have pledged to the arena and a related housing development.

It's not critics, it's the IBO. By using the term "critics," the Times downplays the seriousness of the issue.

2 comments:

  1. Also, I don't believe the Times disclosed in the article that they are a FCR business partner.

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  2. It seems to me that the re-design of the proposed Atlantic Yards Arena (which creates an arena that is too small for ice hockey, among other events) makes a bad competitive situation for the would be "new guy on the block" even worse. I believe such an arena would be the only one of the five metropolitan arenas that would be unable to accomodate events requiring a larger floor area than a basketball court!

    I suppose this wouldn't affect rock concerts (which can also play the other arenas too), but I wonder how many of the other 183 events a year that the arena is supposed to attract (224 minus 41 regular season home games) would be affected?

    Should that be the case, I guess the public will be asked for even more subsidies.

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