When Barclays announced its recommitment last month, neither the bank nor Forest City Ratner made clear that deal had been maintained at the same dollar value. I had suggested that Barclays had had some leverage to renegotiate.
New pressure on naming rights
Even with renogitiation, New York, as the country's media capital, offers an especially good platform for naming rights
The AP reported December 15 that the New Orleans Hornets will not have an easy time selling naming rights.
The source was none other than sports economist Andrew Zimbalist (who served as a paid consultant to Forest City Ratner, producing a spurious report on the fiscal impact of AY): "The advertising expenditure is going to have a lower payoff during a time of recession, especially during a time of severe recession."
Also, such naming rights become less of a priority in companies' advertising plans, he said. Marketing executive Tom George told the AP that his company, Octagon, would target "international corporations seeking to make an entry into the United States' market," but noted that the auto or banking industries were no longer on the list.
And Zimbalist, in a nice bit of synergy, cited the Barclays deal as an example of an international company using naming rights to enter the U.S. market.
Construction costs rise, then dip
As for construction of the AY arena, if it goes forward, Forest City Ratner has experienced both bad timing and some amelioration of the damage.
The announced cost projected for the planned Atlantic Yards arena went up 50% since project approval in December 2006. Then again, in the last few months, the number likely has declined from the $950 million figure disclosed in March.
After all, the cost of construction materials has gone down and, with fewer projects going up, subcontractors would be submitting some very competitive bids.
Bad timing on steel
However, it looks like Forest City Ratner may have experienced some unfortunate timing regarding at least some of those construction materials.
In September 2007, Nets CEO Brett Yormark told an interviewer, "We've just ordered steel and we're expecting, hopefully, to break ground, in October-November."
Now, however, the price of steel has fallen some 30 percent.