Atlantic Yards/Pacific Park Report

The Barclays Center recently circulated its June 2024 event calendar, with 13 announced ticketed events, including five New York Liberty games and and seven concerts, plus the NBA Draft. That's three more concerts than in June 2023. Also, while the June 2023 calendar also listed four graduation ceremonies, none are listed in the Community Notice below. However. as I wrote a month ago, there were already two graduation ceremonies scheduled, according to other sources, and I've found another. Maybe there are more. They include: June 4, Hunter College , 3 pm ceremony but graduates arrive at Dean Street starting at 1 pm June 5: Borough of Manhattan Community College , graduates must arrive by 7:30 a.m. and enter at Dean Street June 5: New York City College of Technology (aka City Tech), line up at 2 pm and procession at 4 pm It's helpful to community members, especially those nearby, to know when there might be large crowds near the arena. June 2023 The June 2023 event calend...

As announced in an Oct. 13, 2023 press release,  MAXSIP BECOMES PROUD COMMUNITY PARTNER OF BROOKLYN NETS : Maxsip Telecom, a New York based telecommunications company that provides affordable and accessible communications services, has been named an official partner of the Brooklyn Nets. Maxsip Telecom offers mobile and broadband internet access to families on government assistance covered by the Affordable Connectivity Program (ACP). By joining with the Nets, Maxsip will be able to reach even more qualified recipients through the team's numerous community engagement programs. "We are thrilled to welcome Maxsip to the Brooklyn Nets family," said Catherine Carlson, executive vice president of global partnerships at BSE Global, parent company of the Brooklyn Nets, New York Liberty and Barclays Center. "Maxsip's commitment to bridge the digital divide through free and low-cost internet services aligns with our commitment to better the lives of those in our surroundi...

After several very lean years, the Barclays Center appears to be on a track for a modestly profitable fiscal year, thanks to a significant increase in ticket sales, surely for concerts and other events. That could obviate the need for billionaire Joe Tsai, who owns the arena operating company, to keep putting money in to backstop the operation. The arena has been struggling. As I reported in October, the arena company in Fiscal Year 2023, which ended June 30, reported $16.1 million in net operating income (NOI), or revenue over expenses. It had to put up $21.1 million to pay off construction debt, leading to a loss of $5.1 million, as I've re-interpreted, and simplified, the calculations. (On paper, thanks to factors including depreciation and amortization, ArenaCo lost far more money.)  Tsai put up $18 million to bolster the arena's finances, less than the $38 million he contributed in FY 2022 and the $52 million he contributed in the COVID-challenged previous fiscal year. ...

A new federal lawsuit against Ticketmaster and concert promoter Live Nation could lead to lowered ticket costs for fans at venues like the Barclays Center, as well as increased revenues for those venues. Let's back up. In early 2023, the New York Times broke the news ( link ) that Barclays, barely 15 months into a 7-year contract with ticketing partner SeatGeek, the Barclays Center would return to its original one, Ticketmaster, the industry leader. Less than two weeks later, a Senate hearing  focused on the reputed ill effects of Ticketmaster's huge market share, given its shared ownership with the concert promoter Live Nation. At the hearing, SeatGeek CEO Jack Groetzinger revealed that Barclays had sought to keep SeatGeek--an upstart company that prides itself on innovations like 3-D views from seats and a mobile-first approach--to ticket Brooklyn Nets games while returning to Ticketmaster for concerts, a strong suggestion that they believed restoring the connection was neede...

Weekly Digest: How Might Gov. Hochul "Nudge Forward" Atlantic Yards? ( link ) Also: will the New York Liberty become a billion-dollar asset before the IRS cracks down on sports team owner tax write-offs?

Well, heralded rookie Caitlin Clark and the WNBA's Indiana Fever have already sold out the Barclays Center when they played the New York Liberty Saturday, May 18, and it's possible that will happen again, when the Fever return June 2. If so, those may be the only two regular-season sellouts, because, at least as of now, the Liberty isn't selling all 28 Upper Deck sections for any other games. Screenshot from NY Liberty/Ticketmaster However, due to perceived demand, the Liberty is making some Upper Deck sections available for some games. That means lower prices, commensurate with more distant views. Either way, it looks like Liberty management is trying harder to maximize ticket revenue, all on the way to a hoped-for eventual billion-dollar valuation . The record so far So far, the Liberty sold out the home opener against the Fever, with 17,735 tickets distributed. (That doesn't necessarily reflect gate count, or paid attendance.)  On Monday, May 20, they drew 9,381 to...

Sports Team Owners Face New Scrutiny From IRS Over Tax Avoidance , ProPublica reported May 2, citing a new Internal Revenue Service effort generated by a previous ProPublica investigation of how sports such owners could generate tax losses from their properties, despite their growing value. (See: the amortization bonus  and ProPublica's previous coverage of  depreciation write-offs .) From ProPublica: The effort will focus on sports industry entities that are reporting “significant tax losses” to “determine if the income and deductions driving the losses” are lawful, according to the IRS announcement earlier this year. That announcement, which consisted of one sentence on a webpage devoted to compliance campaigns by the IRS division that focuses on large businesses, did not specify what kinds of abuses the agency will be looking for. ProPublica's earlier report relied on leaked tax documents, such as that of Steve Ballmer, owner of the Los Angeles Clippers, who reported ...

It's interesting to see Andrew Zimbalist, the country's most famous--if not most respected--sports economist, wear the white hat, as the prime source in  HOW AMERICAN TAXPAYERS SUPPORT SPORTS TEAMS AND ATHLETES , as Sportico's Brendan Coffey reported on April 17, Atlantic Yards watchers would recall that Zimbalist, on contract for original developer Forest City Ratner, produced a "study" in 2004, later updated, that predicted that Atlantic Yards would be an economic engine and deliver significant city and state tax revenues. There was much wrong with his analysis. In 2006, I called it the "$6 billion lie." Today, with the project delayed and stalled, it's clear it was even more irresponsible, since it assumed a buildout as scheduled. Today, though, if you follow Zimbalist's current take on amortization, that should lead to the recognition that the rise in the Brooklyn Nets' value is not completely deserved. Some "reasonable" subsid...

How much profit did Russian oligarch Mikhail Prokhorov make in selling the Brooklyn Nets and Barclays Center operating company to Alibaba billionaire Joe Tsai, in two phases, starting in 2017 and ending in 2019? Well, we've never had firm numbers, especially since there were multiple components to the bottom line, including team and arena operations and payrolls, debt, and investment in a new training center. Slate estimated the profit at $2 billion. So did a contributor to Forbes Russia. At various points, NetsDaily estimated $1 billion  as well as $2 billion . I noted reports between $1 billion and $2 billion, but also pointed out an otherwise disregarded element of the deal, which involved Prokhorov immediately giving up $345 million, which later translated into a Tsai rebate of about $300 million. That should've diminished the total paid, variously reported as between $3 billion and $3.3 billion. Just $600 million? Over time, more details seep out, and now there's ev...

The  WNBA's New York Liberty, which until last year's playoffs were selling tickets to the Barclays Center's lower bowl, sold out  (17,735) the entire arena Saturday for their home opener, which featured the Indiana Fever and the star rookie Caitlin Clark.  (The Fever still are weak, and the Liberty won easily.) And, as NetsDaily recently reported , Clara Wu Tsai, who owns the team along with her husband Joe Tsai (and serves as its front person), recently told Harvard Business School’s New York alumni club that, as TV viewership grows, team valuations will rise over a decade, and the Liberty could become “the first billion dollar women’s sports franchise." That would be quite a leap, but consider how the valuation of the New Jersey Nets, once $300 million upon the purchase by Bruce Ratner (and others) in 2004, inflated to more than $3 billion (with the arena company) by 2017, and now could be worth far more. As NetsDaily reported, the Liberty purchase, from New York ...

Nudge forward Atlantic Yards: Brooklyn housing plan must be completed , the New York Daily News editorial board wrote yesterday, offering vague support for an implied compromise, including, perhaps, a waiver of the $2,000/month fines for each of the 876 affordable housing units not completed by May 2025. In other words, the editorial--which generally praises the project while describing it misleadingly--is a not-so-incisive look at a process that's so far been a black box. Then again, at least someone's trying to discuss a complicated issue that's mostly been buried. (Here's my recent Atlantic Yards overview , for Urban Omnibus.) Should state pay? In response to the editorial, as noted below, an influential advocate, Gib Veconi, suggested that the state should pay for the platform and, implicitly, waive pending fines.  My take is such a public contribution--the platform, as of 2019, was estimated to cost $240+ million and probably now more than $300 million--must invol...

Weekly Digest: Rising AMI Means Higher "Affordable" Rents (from Substack, link ). NYC officials add a caveat: allowable rents may not be realistic.

A May 2 article from The Real Deal comparing the new 485-x tax break with its predecessor, 421-a, contained this line: "Not only that, but 485x’s affordable units remain income-restricted forever, while 421a’s become market-rate when their tax break ends." That was new to me. Surely that 35-year horizon--see Option C here --option is part of the long-term calculation for the builders of the four Atlantic Yards/Pacific Park buildings taking advantage of 421-a. And it's surely part of the calculation for potential sellers, or buyers. The buildings contain a total of 592 income-linked "affordable" units: B15 (662 Pacific St., aka Plank Road), B3 (18 Sixth Ave., aka Brooklyn Crossing), and B12/B13 (595 Dean St.). All those apartments were made available to households earning up to 130% of Area Median Income (AMI), and while the rents are hardly aimed at the neediest, they represent bargains compared to the market-rate units in the building. Some will see stability...

So, does anyone care that the Pacific Park Conservancy, the nonprofit funded to manage the three acres of open space, is essentially a phantom, its phone and email nonfunctional, its officers unavailable? That's relevant because, as I reported recently , the Conservancy is supposedly in charge of responding to complaints about noise from the dog run between 535 Carlton and the West Tower of 595 Dean. There should be a venue to air such concerns. However, as I  wrote  last October, the most recent  Quality of Life meeting , for years a bi-monthly opportunity to hear updates and ask questions, was last held Feb. 7, 2023, itself more than four months after the previous meeting. Yes, since then there have been three meetings-- January , March , and April  (the latter a do-over)--of the Atlantic Yards Community Development Corporation (AY CDC), set up to advise the parent Empire State Development (ESD) and monitor project commitments.  But the AY CDC, which has made ...

Last month, I wrote ( link ) about how the updated 2024 New York City Area Median Income (AMI) figures, surfacing on the website of the city Department of Housing Preservation and Development (HPD), showed an astounding rise of nearly 10% over 2023. That meant 100% of AMI for a four-person household is now $155,300, up from $141,200 in 2023 . At the time, HPD had not yet updated the website with the commensurate rents for various income "bands," from low-income to middle-income. Now it has, as ever-rising AMI generates  ever-rising rents. A one-bedroom apartment at 80% of AMI, technically "low-income," could rent for up to $2,330, while a moderate-income one at 100% of AMI could cost up to $2,912. (That's up from $2,119 and $2,648 under the 2023 guidelines.) At 130% of AMI, allowable for buildings that gain the 421-a tax break, a one-bedroom could rent for $3,786. Better to call these apartment "income-targeted" or "income restricted," rather...

From an April 24 article in the Real Deal about the new 485-x tax break, a successor to 421-a,  Developers have a new tax break. Now they must figure it out : The new one provides property tax exemptions for up to 40 years, and eliminates the highest income band permitted for “affordable” units under the previous program: 130 percent of the area median income. “We knew that 130 percent AMI was going out the window,” said Alvin Schein, a founding partner at Seiden & Schein. Some landlords actually had a difficult time renting out those units . The 130 percent AMI units forced owners and prospective tenants to navigate city bureaucracy and were a punching bag for critics, who ridiculed their “affordable” label. “I think 130 was a mistake,” Schein said. “It helped give 421a a bad name.” Indeed, "affordable" merely means rents targeted to 30% of household income, so the baseline matters--and the term "income-linked" or "income-targeted" are more accurate. ...

What Affordable Housing Graphics Conceal--or Reveal ( link ) A New York State chart on Atlantic Yards affordability only tracks categories; a new graphic shows the rising costs.

There wasn't much new in the Daily News article yesterday,  With the Atlantic Yards project stalled, Gov. Hochul offers scant details about a path forward : “Any way that the influence of the state will result in the building of more housing, I’m all in,” Hochul said at a press conference Thursday, when asked about the status of Atlantic Yards. That could mean anything.  What next? In 2014, the state, under pressure from the coalition BrooklynSpeaks regarding a threatened fair-housing lawsuit, agreed to a new 2025 deadline for the 2,250 below-market, "affordable" units, with $2,000/month fines for each missing apartment. There are 876 left to build, and the deadline won't be met. Developer Greenland USA faces a thrice-postponed foreclosure auction of its development rights to build six towers over the Vanderbilt Yard, but a new developer must factor in the fines as well as the cost of the platform that precedes vertical construction.  From the article: “The practical ...