Monday, July 25, 2011

An open letter to the New York Times's Public Editor: a false equivalence between Atlantic Yards promoters and "opponents," and the dubious claim of a $400 million arena naming rights deal

Dear Mr. Arthur Brisbane,

I'm sure you're aware that some of us who read the Times closely take issue with the newspaper's coverage of the controversial Atlantic Yards project in Brooklyn. Indeed, last August, I posted a comment regarding Atlantic Yards in response to your debut column.

I don't say that the Times, by virtue of the parent company's partnership with Atlantic Yards developer Forest City Ratner on the Times Tower, is in the developer's pocket. But I do think that business relationship obligates the Times to be exacting in its coverage, and the newspaper regularly falls short.

I write regarding the July 19 article headlined online as Atlantic Yards Arena Takes Shape, but Protests Carry On and in print as "An Arena Rises at Last, But Protests Carry On."

My critiques are collected here, but I want to make one general point, about a false equivalence between Atlantic Yards promoters and "opponents," and one specific one, regarding the Times's credulous acceptance of the claim that Barclays paid a record $400 million for naming rights, despite significant evidence to the contrary.

The false equivalence

The Times reported:
The arena, however, is the only building with a definite debut date. And the fights that have surrounded the $4.9 billion Atlantic Yards project from the beginning are far from over, with the rising colossus (and what is yet unseen) giving opponents fresh reason to complain.
That paragraph suggests a false equivalence between optimistic arena proponents and "complaining" opponents.

First, a good chunk of the people complaining--about rats, illegal parking, dust--haven't been "opponents." They're just citizens who happen to live in Prospect Heights and bear the brunt of the questionable plan to fit an arena in a very tight spot.

Second, the Times has relegated observations about the public interest to opponents:
They are quick to point out that while moderately priced housing and jobs for Brooklyn residents were the hallmarks of the Atlantic Yards promise, the first has not happened, and the second has been slow to come. 
Are those simply  "reason[s] to complain," or do those represent issues of civic importance? The newspaper's language recalls that infamous 11/6/05 Times article headlined Routine Changes, or 'Bait and Switch'?; Fewer Jobs and More Condos, Ratner's Opponents Complain.

Why can't project supporters be asked about this? What about more neutral parties? What about elected officials?

Shouldn't there be an effort, not limited to "opponents," to calculate the impact of unfulfilled promises? Can't we get a preliminary verdict on whether all the government aid, tax breaks, and eminent domain have been worth it for the public?

The naming rights

Of the Barclays Center, the Times reported that "the British bank will pay nearly $400 million to name."

That sum--regularly alluded to by the Times as simply "$400 million"--is reported without attribution or caveat, but major caveats are necessary. At the very least, the Times should have stated something like: "which the British bank will pay nearly $400 million to name, the developer asserts."

But there's much more reason for skepticism. In January 2007, the Times and other news outlets reported that the naming rights would be "nearly $400 million." No document validated that number.

More than four years later, despite significant evidence to the contrary, the Times continued to report that $400 million figure and persists in reporting that the sum is unchanged.

First, there's documented evidence that the naming rights were renegotiated twice.

Given the recession, a smaller arena, and the loss of marquee architect Frank Gehry, as documented in the July 19 Times article, Barclays Capital had leverage to pay somewhat less than the originally announced sum.

And two documents indicate that the sum was cut in half.

The evidence

The documentary evidence emerged in December 2009, regarding the planned sale of tax-exempt bonds for the arena, as I explained (in part) in a comment posted at 4:38 p.m. the day before the July 19 Times article appeared in print, giving ample time for a change--or an after-publication correction. (I also alerted an editor at CityRoom.)

The documents related to the sale of bonds for the Barclays Center arena.

According to the 12/1/09 Barclays Center Project Preliminary Official Statement prepared by Goldman Sachs, a chart (click on graphic to enlarge and clarify) summarizes the allocation of certain revenues expected to be generated from the Arena Project between ArenaCo (the operating company for the arena) and New Jersey Basketball.

As seen above, under ArenaCo, it allocates $10 million annually (over 20 years) in Naming Rights Fees. Under New Jersey Basketball, it allocates only "Certain fees under Naming Rights Agreement."

If the latter sum were worth $10 million a year, wouldn't it be spelled out?

Skeptical reporting

Several news outlets immediately followed up.

The Bergen Record reported 12/3/09 that a Nets official said "that Barclays also would contribute an unspecified amount annually to the franchise itself, while other monies from Barclays are allocated to 'hospitality assets.'" No dollar figure was attached.

The New York Observer similarly reported that the developer wouldn't provide a dollar figure:
According to documents related to the arena’s financing that were released Thursday, Barclays will pay $10 million a year to the arena’s owner for the 20-year deal. Looking solely at this, it would seem to make it a half-off discount, but there are a number of other untold fees paid directly to the Nets as part of the naming rights, according to the documents. Forest City Ratner declined to provide those numbers, and a spokesman for Barclays declined to comment.

“Naming rights agreements always include the arena, team and hospitality assets. Ours are the same,” Joe DePlasco, a Forest City spokesman, said in a statement.

Whatever the fees paid directly to the team, it’s hard to think that they’re twice $10 million a year. After all, a consultant’s study attached to the documents refers repeatedly to the transaction as a $200 million naming rights deal, and uses that number as a basis of comparison for other naming rights deals.
(Emphases added)

[Update 8/3/11: The New York Post on 12/3/09 also reported that no dollar figure was released:
Joe DePlasco, a spokesman for developer Bruce Ratner, indicated the deal would pay the Nets other fees above the $10 million annually, saying “Naming-rights agreements always include the arena, team and hospitality assets. Ours are the same."
But he declined to say how much.
A source close to the deal said it is a far cry from the $20 million a year over 20 years that Barclays was once set to pay.
The Nets will "definitely be getting much closer to $10 million a year than $20 million,” the source said.]

The consultant's study

As I wrote 12/4/09, that report from consultant Conventions Sports & Leisure (CSL)--commissioned by Forest City Ratner itself--suggested that the Barclays Center naming rights deal maybe didn't deserve all the hype. See p. 80 of the CSL study, which is at page 691 of the Preliminary Offering Statement:
The naming rights deal secured for the Barclays Center is considerably larger than any other facility hosting an NBA team. At $200.0 million, the naming rights agreement secured at Barclays Center is greater than the largest naming rights deal secured by an NBA-only facility and comparable to the largest naming rights agreements secured by other NBA/NHL facilities. At a term of 20 years, the Barclays Center naming rights agreement will provide annual revenue to the facility of $10.0 million. Although the naming rights agreement secured at Barclays Center is larger than the amount of the next largest naming rights deal secured by an NBA-only facility, when the amount is analyzed on a per capita value basis, it is below the average of the NBA-only facility naming rights deals... The per capita naming rights value secured at Barclays Center is $0.53, which would rank eleventh among NBA-only facilities and is approximately half of that average for NBA-only facilities..

The credulous Times

Then the project promoters regrouped. The Times reported 1/5/10 that nothing had changed:
The recession and the departure of the star architect Frank Gehry led to the renegotiation of some terms of the Barclays-Nets deal. According to a bond document, the arena naming rights were halved.

The Nets insist that they have given Barclays more for its sponsorship money and that the bank’s total annual payments, including fees for other rights, remain unchanged.
That was rather unskeptical coverage, given the reasons to the think the total was cut, and the failure to produce documentary evidence.

As I wrote 1/6/10, when the original deal was signed in 2007, there was no claim that other rights were worth $10 million a year.

So there's no reason to believe the naming rights agreement is worth "nearly $400 million."

On top of that, keep in mind that, in pursuit of this project, promoters have been willing to push the boundaries of credibility. Take for example the audio statements of Nets CEO Brett Yormark.

All these are reasons for skepticism about the $400 million claim. Don't you agree? Shouldn't there be a correction?

Regards,
Norman Oder
Atlantic Yards Report
Brooklyn, NY

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