Monday, October 26, 2009

Number of projected Brooklyn arena events declines to 200, but the state couldn't have adjusted revenue estimates

A 9/16/09 Barclays Center press release about suite sales slipped in some new information:
In addition to NETS Basketball, most suite buyers will receive access to other Barclays Center events, anticipated to include world-class concerts, college sports, the circus, ice shows, and much more. Overall, the arena will host over 200 events annually.
(Emphases added throughout)

That number represents a small but steady decline in Forest City Ratner's official projections and an implicit acknowledgment of a competing arena in Newark.

It also suggests that the economic projections by both Forest City Ratner consultant Andrew Zimbalist and the Empire State Development Corporation (ESDC) were overstated, since they based sales tax assumptions on about 225 events.

And, even though the projection of 200 events obviously can't be confirmed, that number backs up the more conservative estimates made by the New York City Independent Budget Office (IBO).

2004 projections

Zimbalist, in his 5/1/04 report, wrote:
FCRC projects that the arena will not host an NHL team and that it will host 224 events during the year (assuming the eventual closing of CAA [Continental Airlines Arena, now the Izod Center], no new arena in Newark, no NHL and no minor league hockey events at the Atlantic Yards arena.) FCRC projects out three scenarios over time based on aggressive, moderate and conservative assumptions. I use the estimates from their moderate scenario.
As Gustav Peebles and Jung Kim pointed out in their 6/21/04 critical analysis of Zimbalist's report, the number of events, and thus sales taxes, was likely overstated:
The problem with this scenario is that it allows no place for the New Jersey Devils to play ice hockey... His analysis also fails to account for inter-arena competition for non-sports events.
Indeed, the Prudential Center is now open in Newark, and looking to coexist with the Izod Center in the Meadowlands.

2005 projections

From the May 2005 Forest City Ratner bid to the MTA:
The arena is expected to host approximately 250 events a year. The Arena will also be made available for local schools and universities for athletic events, and per the CBA, ten days will be set aside for "community uses" to be programmed with CBA partners.
I read that as indicating that the arena would host 250 events plus local school athletic events and "community uses."

From the 5/26/05 FCR presentation (right) to City Council:
Approximately 235 events per year in the arena.
From Zimbalist's June 2005 report:
Many of the numbers used in this report concerning Nets attendance, ticket prices, construction costs and other items come from projections done by or for the Nets. I have discussed these estimates with the Nets and they seem reasonable to me. The Nets project that the arena will not host an NHL team and that it will host 226 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.) The Nets project out three scenarios over time based on aggressive, moderate and conservative assumptions. I use the estimates from their moderate scenario.
The IBO report

The September 2005 Independent Budget Office Fiscal Brief was a bit more cautious:
In addition to the Nets’ 41 regular season games, preseason games and potential playoff games, FCRC expects that more than 150 other general admission events would be held at the new arena, including 40 concerts, 35 other sports events such as high school basketball games, and about 80 family-style entertainment shows.
That actually adds up to less than 200 events.

Comments to ESDC in 2006

As the Empire State Development Corporation (ESDC) considered the project in 2006 (as I wrote 12/5/06), Brooklyn resident Kate Galassi commented:
The economic benefits from the arena are based on the assumption that the arena will be hosting events 224 days a year. [Economist Andrew] Zimbalist’s report estimates this number assuming the closing of the Continental Airlines Arena and no new arena in Newark. If these assumptions do not hold true, then the estimated benefits of the arena will be substantially reduced.
The ESDC responded:
The analysis reflects the expected programming of the arena. If there were fewer events and lower attendance at the arena, fiscal benefits associated with the arena (sales tax on tickets, parking, and concessions) would be lower than those reported in the EIS. If the number of events and attendees were higher, the fiscal benefits would be higher... Andrew Zimbalist’s report on the economic benefits of the proposed project was not prepared for ESDC and is not included, relied upon, or referenced in the DEIS.
Though the ESDC didn't rely on Zimbalist's conclusions, it surely seemed to project the same number events, almost surely from the same source: Forest City Ratner.

A 12/8/06 ESDC press release announced approval of Atlantic Yards:
The project build out will occur in two phases. The first phase, anticipated to be completed by 2010, will include the new rail yard and the arena and developments on the western portion of the site. At least 30 percent of the housing developed on the arena block in the first phase will be affordable housing. The arena is expected to be in use for approximately 225 events per year (inclusive of 41 home games for the Nets.)
And in 2009

The 6/23/09 ESDC 2009 Modified General Project Project Plan maintained the same numbers:
Based on the current schedule, the Arena would open during the 2011 – 2012 NBA season and is expected to be in use for approximately 225 events per year, including 41 regular season home games for the Nets.
However, less than three months later, and one day before the ESDC approved the plan, the developer said there would be 200-plus events, as noted at top. Maybe that's why the ESDC's 9/17/09 press release did promise any specific number of events.

But it certainly calls into question ESDC Senior Counsel Steve Matlin's assertion in July that the agency's economic analysis was "constantly" being updated.

The IBO, in its September 2009 report, did not specify a number of events, but that number had not changed from 2005. The IBO's George Sweeting explained:
For our 2009 analysis of ticket, food, and concession sales at the arena we did not develop specific estimates of the number of events (Nets or other). Instead, we started from FCRC’s estimates of revenues for those items shown in their 2006 Atlantic Yards Financial Projections, adjusted for inflation. The estimates for non-Nets events were already aggregates which is what we needed for the analysis. Therefore, there was no need to take a step back and calculate the number of events underlying the reported amounts.

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