Skip to main content

Good timing, bad timing on AY naming rights deal, arena subcontractors, and construction materials

The Barclays Center naming rights deal for the Atlantic Yards arena, announced in January 2007, was clearly good timing for the Nets, with a record deal reported at $400 million over 20 years.

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.

Comments

  1. You should rename your blog...Straw Man Review.

    What you do is thoroughly dishonest. You have a history of setting up straw men--a shortage of HUD funds will no doubt hurt financing of the Atlantic Yards housing component, an investigation into tax exempt bonding for sports facilities will eliminate it for the Barclays Center, one of the judges in any given case seems sympathetic to the critics, etc. etc. In almost every case, there is no wiggle room. It is presented as fact...not alternate explanation necessary or in your mind, possible. And so many times, you've been wrong. The IRS DID grandfather the Barclays Center in its ruling. Shaun Donovan WILL revise housing finance rules at HUD to permit more funding for projects like Atlantic Yards.

    The reason for all this false hope is that make grand assumptions based on a little knowledge or no knowledge at all.

    Having pumped up the idea that Barclays' might terminate its naming rights deal, you are now questioning whether the deal is worth the full $400 million, based not on an affirmative notice but on the lack of one. The original details of the $400 million deal, you may recall, was not attributed to the bank or the Nets. (You also fail to note with any regularity that the relationship between Barclays' and the Nets has been enhanced by Barclays' agreement to serve as co-partner in seeking financing.)

    Yet another straw man laid bare.

    Now, the straw man is the purchase of steel at inflated prices. Are you privy to the contract between Ratner and the manufacturer or contractor? How can you be so sure that there isn't some clause that permits either side to adjust the price ON DELIVERY?

    You criticize the mainstream media for not filling their pages with daily, if not hourly, updates on Atlantic Yards, and yet you commit the most egregious error any "reporter" can commit--you assume you know everything. You don't. You can't. It's the arrogance of the internet.

    ReplyDelete
  2. It's funny that Bobbo/NetIncome/Mr. W. is charging "arrogance of the Internet" without looking into the mirror. After all, he's the guy who declared in October that "Construction IS underway."
    http://www.netsdaily.com/?p=6577

    I've cited a shortage of funds for the city and state housing finance agencies, NYC HDC and NYS HFA, as affecting tax-exempt bonding. Could Donovan change the rules? Perhaps not on his own, but, as I described earlier this year, a Democratic administration might make a difference.
    http://atlanticyardsreport.blogspot.com/2008/03/why-atlantic-yards-depends-on.html

    An investigation in tax-exempt bonding for sports facilities is still ongoing. We'll see how that one turns out.

    One of the judges in the EIS appeal case was indeed sympathetic to the critics. His skepticism about AKRF was in marked contrast to the ESDC.

    As for numbers, Mr. W. has a point. We're not certain about the original numbers in the naming rights agreement. And we're not certain about the final numbers.

    But if the relationship has been enhanced by Barclays agreement to serve as co-partner, maybe that means that Barclays gets additional revenue--in other words, a sweetener (for which I said they had leverage) for maintaining the naming rights agreement at a mutually acceptable level.

    Perhaps the steel contract is flexible, as well.

    I'll admit it: I don't know everything. Does my pseudonymous (and not very brave) critic caveat things as well?

    ReplyDelete
  3. This comment has been removed by the author.

    ReplyDelete
  4. Bobbo should sign his name Bob Windrem.

    ReplyDelete

Post a Comment

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Atlantic Yards/Pacific Park graphic: what's built/what might be coming (post-dated pinned post)

This graphic, posted in November 2017, is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. Note the unbuilt B1 and the proposed shift in bulk to the unbuilt Site 5.

The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change. The project is already well behind that tentative timetable.

The previous graphic, from August 2017 (without the ghost B1)

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …