Atlantic Yards/Pacific Park Report

An Aug. 1 American Prospect article,  Neighborhoods Play Hardball , has the subheading, "For decades, wealthy owners and financiers have gotten cities to pay for their sports stadiums. It’s not so easy anymore." Indeed, as exemplified by the pushback in Philadelphia and Arlington, Va, toward new arenas, it can be tougher. (Then again, the Buffalo Bills .) But one paragraph in Gabrielle Gurley's otherwise laudable article prompted a spit-take: A decision to proceed or pull back hinges on the results of long-delayed city impact reports that have been paid for by the Sixers. Many economists take a dim view of these types of studies. [Andrew] Zimbalist of Smith College says this research is done by consulting firms that cater to their clients’ interests: “Those are called economic impact reports, but really what they are is elaborate press releases based upon inappropriate methodology and unrealistic assumptions.” Ya think? Zimbalist, from his academic perch, can sound like ...

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...

Remember Andrew Zimbalist, the sports economist who, boosting his clients, unwisely predicted Atlantic Yards would be a gold mine for the city and state? Not only were his methods non-credible, he assumed a full buildout on the most optimistic schedule--which, of course, didn't happen. Well, he's back, working for a city helping recruit a team, rather than warning--as he has for most (but not all) of his career--that such deals are dangers. Stadium deal watchdog Neil deMause has been keeping track of the effort by Worcester, MA, to draw the Pawtucket (RI) Red Sox, a Triple A team. As he wrote 11/7/17, Zimbalist was actually working for both Worcester and the state of Rhode Island at the time. deMause, noting a similar episode, pointed out a January 2013 post  that Zimbalist was working as a consultant for Major League Baseball while supporting a new stadium for the Tampa Bay Rays, while omitting that client when talking to the Tampa Bay Times. Fast forward to last wee...

So Toronto's Metro tabloid offers a short 4/10/17 article,  It rarely pays to play when sports teams call for cash: Expert : Does it ever make sense to subsidize sports? We asked economist Andrew Zimbalist, author of Circus Maximus and No Boston Olympics. He says the numbers often don’t add up.  ...Zimbalist says emotional arguments to subsidize the team can be made, but don’t substitute for a business case. “If you’re concerned at a social or cultural level, then I would say you have to think about subsidies. But don’t think about subsidies because of an economic impact.” And here's the key paragraph: Zimbalist doesn’t oppose all sports subsidies. He says stadiums as redevelopment catalysts can make sense, pointing to San Diego, Calif., and Brooklyn, N.Y. But those are the minority, and “the devil is in the details.” He warns against subsidies by another name, like waiving property taxes, interest-free loans or introducing a special tax or fee to support the team. T...

FCR 2005 bid to MTA: 250 events How many events were there annually at the Barclays Center, starting in 9/28/12 and until the New York Islanders arrived three years later? Only 180 to 200 a year, which is fewer than predicted many times by arena developer Forest City Ratner, governmental allies, ratings agencies, and consultants, we now know. The lesson, yet again, is to take self-serving predictions with a large grain of salt. (Note that, as detailed below, the New York City Economic Development Corporation and the New York City Independent Budget Office more accurately predicted numbers under 200. ) August 2016 to potential bond buyers: 180-200 events in first three years The new information comes in a consultant's report in the August 2016 Official Statement sent to potential buyers of the refinanced arena bonds. (See screenshot at left.) The arrival of the New York Islanders hockey team means the Barclays Center did finally host 240 events in the fourth year o...

It was rather entertaining to read this 9/5/16 Newsday article, by Jim Baumbach, headlined  Islanders’ pact gives team a Barclays opt-out after 3 seasons . Not only is it a good analysis of the potential to dissolve the deal between the team and the arena, it contains these paragraphs: This type of setup is unusual for a professional sports team, experts said. Multiple sports executives and sports business experts said they know of no other sports team among the four major sports that has a deal similar to the Islanders’ in which the arena, acting as the landlord, has control over items such as ticket prices, marketing and even the team’s website. The deal was designed to provide the Islanders short-term financial stability with the $53.5 million annual fee that didn’t exist at Nassau Coliseum but also give the team an exit strategy. “Charles Wang wanted to keep his options open, but at the same time he wanted to have the best short-term plan that he could, and Bruce Ratner want...

3/2/17: Updated and corrected to $5-6 million, not $9 million. I erroneously failed to include the $3 million that--while not indicated directly in the graphic below--is funneled back from Payments in Lieu of Taxes (PILOTs) to the arena operators to use on Operations & Maintenance (O&M). Also, the document in different places indicates a $1 million difference in interest expense. 1/6/16: Forest City Ratner takes issue with my conclusions. Here's my response , which I updated and corrected 3/2/17. The Barclays Center had a terrible year financially in the fiscal year ending June 2015. Net revenues plummeted, to less than half the total once projected, and the arena lost $5-$6 million [ corrected from $9 million ] in what was (roughly) its third year in operation. A hint of the news emerged in a bond rating document released upon the arena sale Dec. 22, then was detailed in a financial statement-- Consolidated Statement of Operations for Brooklyn Arena LLC-- released a...

From Boston.com, 7/23/15, Olympic revenue numbers are ‘drunken optimism,’ critic says : Smith College economics professor Andrew Zimbalist sat quietly for the first 15 minutes of the Olympics debate on Thursday night. When Zimbalist did finally open his mouth, he used a unique description of Boston 2024’s revenue estimates. “Most of the numbers I see reflect drunken optimism,” he said. Zimbalist said the bid’s expected ticket sale revenues for Olympic basketball games were unlikely to be reached. ...In any case, the creative phrase inspired the #DrunkenOptimism hashtag on Twitter. ...Zimbalist, a consistent critic of Boston 2024, is not shy of referring to the bid in metaphoric language. Speaking broadly about the bidding plans to Boston.com earlier this week, he called them “a lot of baloney.” Academic Zimbalist in this case may well be right. But isn't Consultant Zimbalist responsible for the $6 billion lie  regarding Atlantic Yards? An exchange on integrity The Bost...

As I  wrote , Brooklyn Community Board 8 will hold a public hearing tonight at 7 pm on the New York City School Construction Authority's (SCA) plans to create a primary and intermediate school within District 13. The location: CNR-Center Light Health Care Center, 727 Classon Avenue (corner of Park Place) . Public comments will be accepted until 6/29/15. The school is to be housed in B15, the a 27-story tower with more than 300 market-rate apartments, part of the Atlantic Yards/Pacific Park project, just east of Sixth Avenue between Dean and Pacific streets. The previous plan  (see graphic above) was to put the school in B5, a building over the railyard, with more open space adjacent to it. Notably, as discussed below, the school may be framed by the developer and even some community groups as a project benefit, but it's more accurately seen as a required mitigation of project impacts. (Somewhat similarly, the project "open space" is less a gift to the comm...

In response to that tough March 5 New York Times lead story about tax-exempt bonds for private projects like the Barclays Center, Toby Rittner, President & CEO, Council of Development Finance Agencies (CDFA) has issued a statement titled  New York Times Rebuttal: Private Activity Bonds Support Job Creation & Economic Development--Flawed, Inaccurate New York Times Article Debunked : The New York Times article, A Stealth Tax Subsidy for Business Faces New Scrutiny , is riddled with inaccuracies and misinterpretations of one of the nation’s most important economic development tools: qualified private activity bonds (PABs). The story, sensational and misleading throughout, highlights perceived misuses and infers abuses of the U.S. tax code, all the while ignoring the essential public purpose that these bonds serve. PABs are exactly as they sound, a bond instrument, supported and endorsed by the United States Congress since 1914, that catalyze private investment in projects a...

I didn't start writing about Atlantic Yards until late 2005, so I'll apply some retrospective "Truth Vigilante" treatment to Stadium Games: Give and Take And Speculation; What the Teams Want And What the City Gets , a 1/16/05 New York Times articles about the proposals then in play: Nonetheless, the mayor and Gov. George E. Pataki are on the verge of approving three new sports sites -- a football stadium for the Jets, a baseball stadium for the Yankees and a basketball arena for the Nets -- that will require a combined public investment of at least $1.1 billion. It is not easy to assess precisely what the taxpayers will get out of their investment, which is equivalent in cost to a major Manhattan skyscraper or 25 schools with 600 seats each. In part, that is because the economic benefits are based on studies commissioned by the teams themselves, and promoted by the government sponsors of the projects. What about AY? So, what did it say about Atlantic Yards? ...

Connie Bruck's New Yorker profile of Philip Anschutz and the Anschutz Entertainment Group, The Man Who Owns L.A.: A secretive mogul’s entertainment kingdom. , is subscribers-only, but it's well worth reading, especially for the machinations behind plans for a new football stadium in Los Angeles. [Graphic by Mark Ulriksen for the New Yorker] Anschutz owns the Staples Center and L.A. Live, and via key lieutenant Tim Leiweke, has proven quite adept at getting city and state legislators on their side. Getting going Bruck writes: For the nation's second-largest city, L.A.'s downtown was shockingly underdeveloped. By the late nineties, many of its biggest firms... had been bought by other companies and their headquarters moved elsewhere. It was the perfect place for Anschutz, a confirmed bottom-fisher, to buy low and build a new empire. Of course, L.A. is a more sprawling, West Coast city, and it had a large downtown, not a small piece of land, as in Brooklyn, design...