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Due to pandemic pause on delivery of sponsor messages, Barclays Center will offer $11M value in "make goods"

The main news from the FY 2020 annual report from the Barclays Center operating company, Brooklyn Events Center, is that revenue fell well short of projections, unable to cover the required annual bond payments. 

Also, as I reported, the company attributed more than 41% of the arena's assets to the ethereal notion of "Goodwill"--a sign that billionaire Joe Tsai overpaid for the operating company--and that Tsai has contributed funds to help the arena pay workers through the end of 2020. 

(Note: the New York Post, which earlier had exaggerated the arena's commitment, characterized the latter pledge as "the latest in a series of philanthropic moves since the start of the COVID-19 outbreak." I'd suggest that, given the belated extension in June that I reported, it's also strategic.)

Well, the pandemic has driven another challenge.

$11 million in "make-goods"

From the report:

Driven by the COVID-19 outbreak and subsequent Arena closure, as of June 30, 2020, the Company has also committed to providing make goods totaling $11,043,996 to its partnering sponsors and suite license-holders. This make good amount is partially recorded within deferred revenue within the balance sheet, reflecting the value received but not yet delivered. The remainder is a commitment of the Company not reflected in the financial statements.

What's a make good? According to Capitol Media Solutions:

Networks, publications, or websites rarely give advertisers refunds; what they instead offer is a make-good. Make-goods are free adjustments or credits given in lieu of an advertising mistake or under-delivery. 

In this case, presumably the value of arena sponsorships and advertising is diminished when the arena doesn't hold events, so arena operators must find a way to make that up, without offering a cash refund.

The extent and the timing of the "make goods" is unclear. For example, it's not implausible that some arena advertising, even without events, could be used to bolster sponsors. The website continues.

But I'd bet that the frequency and prominence of make-good promotions will increase when the arena re-starts operations.