Sunday, July 31, 2011

Public vote (!) tomorrow to replace Nassau Coliseum; demise would boost Barclays Center; Daily News, Post, slam (!) public arena funding; economist warns of "corporate welfare to pro sports team owners"

There's a referendum Monday in tax-strapped Nassau County on a $400 million plan to replace the Nassau Coliseum (and build a minor league ballpark), and you can bet that Barclays Center backers are hoping the whole thing blows up, thus sending events--no, not the main tenant, the hockey Islanders, but concerts and shows--to that new arena rising near the Long Island Rail Road terminal in Brooklyn.

There's reason for question the plan, as I'll describe below, but it's notable how the New York Daily News and New York Post editorial pages, steady backers of Atlantic Yards, have discovered their inner Daniel Goldstein, fervently denouncing the "scheme."

(It's also notable that the public gets a voice decide--though it should be pointed out that a Monday in August is not exactly designed for mass turnout. Neither the public nor local elected officials voted on support for Atlantic Yards. Note that the Nassau County Legislature and then the Nassau Interim Finance Authority would then decide.)

Were the editorial pages just bamboozled by "Jobs, Housing, and Hoops"? Is this "good government" week? Or did someone (Rupert, Mort?) make the call?

Meanwhile, "thousands of union workers, Nassau County officials, hockey fans and Islanders players" held a rally this week, the business community is opposed, the rival teams Devils and Rangers registered their support, and Governor Andrew Cuomo stayed studiously neutral (in contrast with his office's unyielding support for Atlantic Yards, a state project).

Here's some audio on the debate.

Some contrasts

It's not at all the same funding mechanism as that for the two baseball stadiums in New York City and the Atlantic Yards arena--the questionable but legal use of tax-exempt bonds as PILOTs (payments in lieu of taxes), a magic trick that requires tax-exempt land and diverted phantom taxes.

Nor is the $400 million sought from voters to be used for land purchase and infrastructure, as the nearly $300 million in direct funding (plus much, much more in indirect support) for Atlantic Yards.

Rather, Nassau Coliseum backers want voters to pay for construction--but, unlike with Atlantic Yards and the two stadiums, at least the government would get a percentage of rent.

Not a simple call, but reasons for skepticism

The Long Island Press, in a 7/28/11 article headlined A Hard Look at Ed Mangano and Charles Wang’s Plan to Rebuild Nassau Coliseum, concluded:
An analysis by the Press—consisting of dozens of interviews, from residents and business owners to lawmakers, Isles fans, county officials and members of LI’s building and business sectors, including [owner] Wang and [county executive] Mangano themselves and a review of all published assessments of the proposal outlining its positives and consequences, should there be inaction—reveals strong arguments on both sides of the heated debate. By its designers’ own admissions, there are still additional documents yet to come (including a much-touted non-relocation agreement that would theoretically bind the team to the Coliseum), along with further details to be explained. Yet, simply put, the upcoming much-hyped referendum raises more questions than proponents have answers.

Nassau voters are being asked to evaluate an incomplete proposal on a building with no architectural rendering, differing projections from varying county departments and a loosely defined financial guarantee from the team the arena is supposed to house.
Well, we know the value of architectural renderings--not much, since they can always be replaced, as with Frank Gehry's Atlantic Yards plan.

And it's interesting to see the press latch on to differing economic projections--an ongoing issue with Atlantic Yards.

The article, by the way, points out how the establishment does not support the plan. Association for a Better Long Island (ABLI), which represents some of the largest developers and real estate professionals on Long Island, thinks the county has much more pressing needs:
“This has nothing to do with the Islanders,” says [ABLI's Desmond] Ryan. “He [Wang] bought the team. It’s costing him money. He made a bad deal now he wants the taxpayers to bail him out.”
Hence the value, in the case of Atlantic Yards, in spreading the costs/tax breaks among larger entities: city, state, and federal government. Were "Brooklyn" independent--the way AY proponents and naming rights sponsor talk about presenting the arena "to Brooklyn"--we'd have to pay for it, and maybe think harder.

deMause's take

Not dissimilarly, sports facility skeptic Neil deMause, writer of the Field of Schemes blog and book, is critical, but says it's not a simple call:
Oh, it's way less swindleous than the Yankees deal, surely. But it's still the public putting up 100% of the cost and getting back 11.5% of the revenues, and likely ending up with a loss of at least a few million dollars a year. That might or might not be a cheap enough price to be worth holding your nose and voting for if you're an Islanders fan (or just want this whole soap opera to be over with), but it's hardly a gift to Nassau County.
On his blog, deMause added:
If the Islanders were to leave — and I'm not so sure they'd bolt immediately if they lost next Monday, if only because there are so few other options to move to — then having a bunch of county-owned land as an asset wouldn't be the worst thing in the world, especially in a land-hungry market like greater NYC. You'd RFP it out, and see what you come up with.

As I've said repeatedly, I don't think the Wang proposal is the worst deal in the world. But as it looks like the county would end up taking a loss, even if not a huge loss, it's certainly worth exploring what the alternatives would be — whether involving the Islanders or not. Otherwise you're just bidding against yourself.

...If anything, this is a good example of how hard it is to fashion a stadium/arena deal that's fair to taxpayers: Here you have a proposal where the team would be paying significant rent, and where the governing body has a legit worry about losing economic activity to neighboring areas (unlike, say, Minnesota, which is just surrounded by more Minnesota), and it's *still* tough to make the numbers pencil out on the public side. People really need to get over thinking of sports facilities as cash cows and realize that, once you factor in construction costs, they're money pits — going halfsies on a money pit might well be preferable than taking on the full load, but it's still nothing to get excited about.
The Daily News

The Daily News editorial, headlined Nassau County Exec Edward Mangano's $400 mil gift to billionaire Charles Wang is bad for taxpayers, makes some reasonable points:
Why should the voters of Nassau reject County Executive Edward Mangano's plan to borrow $400 million to build a new arena for the National Hockey League's Islanders?

Because, according to the Islanders' own figures, the deal would be a bonanza for team owner Charles Wang while saddling taxpayers with huge risks.

Why else should voters reject Mangano's scheme at the polls Aug. 1?

Because, according to the county's Office of Legislative Budget Review, a new Nassau Coliseum would produce too little revenue to spare taxpayers from having to subsidize Wang's profits.

As with so much of Mangano's pig-in-a-poke proposal, the financial projections are as squishy as they come - one more reason for voters to be wary.
Funny, but skeptical analyses of the Atlantic Yards arena by the New York City Independent Budget Office didn't provoke similar editorials.

In the Post

The New York Post, in an editorial headlined Vote 'no' on Nassau boondoggle, opined:
Yes, the Nassau Coliseum, where the team now plays, is obsolete and needs to be replaced. But Nassau is a fiscal train wreck, even beyond its killer taxes -- with a projected budget deficit of $225 million and a $4 billion debt load.

Voters would have to be fiscal masochists to want to borrow and spend just under half a billion dollars more on a risky, private-sector venture.
Hmm, isn't Forest City Ratner getting a lot more than half a billion dollars in (direct and indirect) benefits? Sure, but the costs are spread out.

Jobs

The Post writes:
Meantime, there's scant evidence to back the claim that the project, about the size of the current coliseum, would create 3,000 jobs.
Well, there's scant evidence to back claims of Atlantic Yards jobs, too.

A columnist's warning

Raymond J. Keating, an economist and conservative columnist, wrote a 7/28/11 op-ed in the Post headlined Madness in Nassau: Nix giveaway to Islanders:
When they dole out corporate welfare to pro sports team owners, politicians always promise huge economic benefits, which never materialize, while ignoring or playing down costs to taxpayers -- or simply wishing them away.
And sometimes they muddy the water with outlandish projections about benefits for an entire mixed-use complex, right?

In the Times

The New York Times editorial page hasn't weighed in, but Times Sports columnist George Vecsey today writes, in Where Many Things Besides the Islanders Need Fixing:
Questions about priorities are always worth asking before the public agrees to build new facilities for team owners. The questions seem particularly vital as Nassau County holds a bond referendum on Monday that seems jiggered to produce a new arena for the Islanders.

Hard-core fans with long memories and hard-hat construction workers with short hopes for work may find their way to vote Monday. Polls suggest a broader swath of the population does not want to subsidize a new arena but may not make it to the booths for a craftily timed Monday vote on the first day of steamy August.
He adds:
Normally, I am on the side of public projects. I’m all for high-speed railroads and repairing the infrastructure, but not so sure about an arena for a hockey team.

This proposal reminds me of how New York City lobbied to host the 2012 Summer Olympics based on building an all-purpose stadium on the West Side of Manhattan. The Olympic powers rejected it, rightfully so. All the evidence tells me that big-box arenas and stadiums are often a mom-and-pop proposition for jobs and create dead spaces, just like Nassau Coliseum.
He's been a little less exercised about Atlantic Yards.

Would the Islanders move (and to Brooklyn)?

Some wonder whether the Islanders would move from their antiquated arena, or whether owner Charles Wang would pony up himself for a new building.

Forbes's Tom Van Riper points out that, while there's a new arena waiting for a tenant in Kansas City, the New York cable TV market is far more attractive.

Similarly, adds deMause, Kansas City is "unlikely to give the Islanders the sweetheart lease they require" and Quebec officials "want way more than 11.5% of revenues - they're looking to go halfsies."

Van Riper thinks Wang might fund a new arena himself, or that the Barclays Center might be modified to house the Islanders. A letter-writer to the Post also suggested the Barclays Center option.

The latter is impossible--the arena's too small for major league hockey.

However, in my admittedly incomplete search, I've seen no discussion of the likely outcome of the closing of the Coliseum: a significant boost in events such as concerts and shows in Brooklyn.

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