Atlantic Yards and the Culture of Cheating (links)

I offer a framework to analyze and evaluate Atlantic Yards and the Barclays Center: Atlantic Yards and the Culture of Cheating.

Note: this post is post-dated to remain at the top of the page.

What happened to community use of the arena? Program for ten events will wait until second year of operations

Among the arena-related programs promised in the Atlantic Yards Community Benefits Agreement (CBA), tickets have been distributed regularly to community organizations, but another element in that section of CBA remains on hold:

The Arena will be available to community groups for at least ten (10) events per year, at a reasonable rate, with net proceeds from such events to be used to support non-profit community organizations.

The arena opened 9/28/13, but Downtown Brooklyn Neighborhood Alliance (DBNA) is still working on the events. DBNA executive director Sharon Daughtry, as I reported 11/17/12, said arena developer Forest City Ratner had provided ten open dates available for potential community use. Such events could fill the arena, or a smaller portion, or even just the 40/40 Club or practice court.

I checked back recently. "We are in the planning stages now and we're working out the details with Barclays and FCRC before making a formal public presentation," she said.

Not until second year

Daughtry said the program likely won't get off the ground until the second year of operations, which begins 9/28/13.

"At this point, we haven't definitively put any event on the calendar because the program in still being formulated," she said. "In fact, we haven't made a public announcement regarding guidelines and rules for participation yet. We want to make sure that this process is fair and transparent to all, so we are taking our time, crossing our 't' s and dotting our 'i'. I feel safe in saying that the events booked with our program should take place during the following year."

Daughtry said some proposals have been submitted, but have done so "simply because they heard about it" rather than responding to a call for submissions.

Graduations, fundraiser don't count

I asked Daughtry if any of the arena events already scheduled or held for nonprofit organizations--the Long Island University commencement last week, the NYU-POLY commencement today, and the fundraising event next month for the Brooklyn Hospital Foundation--qualify as among the ten community uses.

No, she said, as none of the events were scheduled via the DBNA.

Synergy! On June 12, FCR's Gilmartin to be honored at Brooklyn Hospital Foundation Founders Ball, held at arena

Atlantic Yards/Barclays Center developer Forest City Ratner has become the 800-pound gorilla of local philanthropy, offering not just relatively deep pockets but also an event space for certain groups.

The Brooklyn Hospital Center is a corporate partner of the arena, the latter presumably involving payments from the former in exchange for promotion. Now the hospital on June 12 will hold its 2013 Founders Ball at the arena.

Patch reported 5/15/13 that more than $1.3 million from the event will help modernize the hospital's emergency room, with all 840 tickets sold. (The event last year, held at Steiner Studios, raised $908,000.)

Gilmartin honored

The lead honoree? Forest City's new CEO MaryAnne Gilmartin, who'll receive the 2013 Founders Medal for "Voluntarism, Philanthropy, and Service to the Community."

A co-chair of the event is Brett Yormark, CEO Barclays Center & Brooklyn Nets, and surely the arena, team, and company will be making significant contributions to honor Gilmartin. It is not unlike the commencement activities held by Long Island University (an arena corporate partner) held at the Barclays Center, with Forest City Chairman Bruce Ratner getting an honorary degree.

Alternatively, Gilmartin also deserves credit for savvy business and rather bare-knuckled tactics.

As I reported last October, she spoke at an investor update 10/22/12, and revealed that, rather than build a platform over the blighted Vanderbilt Yard as plans long indicated, Forest City would first build four towers over the southeast block, now site of the arena parking lot.

Forest City's generosity & the media halo

Forest City's seeming generosity has strategic aspects. An award to Gilmartin helps establish the company's newly-elevated CEO as a significant player in Brooklyn, to which she has just moved from Westchester.

The money of course comes easier when the developer saves all kinds of money on free or discounted public land, from the city and the MTA.

And such events have already generated a media halo for those involved, while the press tends to ignore less flattering news, like the arena's leaking bass.

As New York Times columnist Michael Powell wrote yesterday, regarding Maurice R. Greenberg, the former C.E.O. of American International Group:

Mr. Greenberg has also trumpeted his good works. He has long spread money like seed corn to local charities. It’s a practiced turn; Mayor Michael R. Bloomberg uses his charitable giving as a sort of political force multiplier.
“New York,” a business leader notes, “tends to appreciate charitable giving no matter its source.”
TWO weeks ago, the Community Service Society, one of the city’s best-known left-liberal groups, put on a grand party in honor of Mr. Greenberg and that trusty lawyer, Mr. Boies. As the crowd showered the philanthropist with applause, they perhaps pushed out of their consciousness that Mr. Greenberg had supported the conservative Gov. Rick Perry of Texas for president and given heavily to efforts to beat back tighter financial regulation.

A tip-off event at arena

As seen in the screenshot below, the Brooklyn Hospital Foundation held a tip-off event at the arena, featuring "basketball legend" Darryl Dawkins, who's always handy to lend some giant authenticity and fun to a Nets event.

Barclays Center racks up awards; judge says "no one wanted to touch" scale issue of housing "because it's not built yet"

The Daily News (which sponsors the arena plaza) reports Barclays Center among Brooklyn's newest architectural standouts honored by Chamber of Commerce: The arena, home to the NBA's Nets, wins "Building Brooklyn" award for economic development. Other winners include Williamsburg's Wythe Hotel and the Botanic Garden's Vistor Center:

The Barclays Center — reviled by many during development, championed by many more, and filled by hundreds of thousands of screaming fans during its debut season — has won top honors for economic development in the Brooklyn Chamber of Commerce’s annual “Building Brooklyn” awards to be announced Tuesday, the Daily News has learned.
“There isn’t a city in the world that wouldn’t beg for Barclays Center,” Chamber President Carlo Scisurra said. “It’s in the hundreds of millions of dollars what that means to the borough annually.”

I think it's hundreds of millions of dollars for the operators, not the borough.

What about the scale?

The newspaper reports:

“The impact of architecture on society and its impact is either ignored, not known, or a very subconscious thing,” said Brooklyn architect Walter Maffei, a jury member. “The discussions became heated when we got into how exactly these buildings affect their surroundings. Everyone has an opinion on that.”
And the Barclays decision?
“All the judges agreed overwhelmingly that Barclays Center is a world-class building and economic engine,” Maffei said. “The idea that the housing aspect was out of scale was ignored. No one wanted to touch it at this time because it’s not built yet.”

But aren't there models? And don't the jurors know that the plaza view of the arena was never planned, because a tower over 510 feet is supposed to be built, and the jobs inside were crucial to the cost-benefit analysis?

An award from Architizer

Architizer, an online architecture database, reported 5/17/13, Go Brooklyn: SHoP Architects’ Barclays Center Wins Architizer A+ Building Of the Year Award:

Having garnered the most Popular Choice votes among all of the Architizer A+ awards entries, SHoP Architects was presented the Building of the Year award by Barclays Center and Brooklyn Nets CEO Bret Yormak at Thursday evening’s Architizer A+ Awards Gala.
“It’s impossible to describe the thrill of seeing a building you drew sitting in the heart of Brooklyn and filled with 18,000 screaming fans,” said SHoP Architects’ Chris Sharples & Jonathan L. Mallie. “Brett and Forest City Ratner are special. Clients with vision and a belief in the power of architecture. No good building gets built without that kind of support.”
“That’s why this award that celebrates breaking architecture out of the echo chamber is such an honor to win. This building is designed for every sports fan, every concert goer, every commuter that passes by the Center every day,” said the designers. Indeed, SHoP Architects are living their Multifesto: “Redefine Design Practice.”

Bruce Ratner: arena = "fortress real estate" because it can't be duplicated easily, has REIT-like qualities

There are a couple of interesting nuggets in the 3/15/13 CNBC Squawk Box interview with Forest City Ratner Chairman Bruce Ratner, focusing on Nassau Coliseum Getting a Facelift.

"It's more exciting than I thought it would be," Ratner said of the Barclays Center. "I knew it would be great, never thought it would be this great. It's become an icon almost overnight, in eight months. It's amazing. It has to do with everything: it has to do with the team, the architecture, Brooklyn, it all really did come together in the kind of way that I think was almost unexpected by most people. I knew it would be special, this special I didn't expect."

It has to do with the team, or the rebranding?



The need for competition

One host, mentioning how Madison Square Garden's exterior hasn't changed--actually, the interior makeover approaches $1 billion--asked, "isn't it important to weave competition in this market for big events in New York City?"

"This is an area that's 16 million people, the tri-state area. you have to have competition," Ratner responded. "And if you think about it, having basically one arena can't serve everybody... and that's what this created. and, of course, the brand is critical. The Brooklyn brand, the idea of an arena, which is iconic looking, that's important too. Everything is really new and up to date on our arena and that's what really makes a difference."

You have to have competition. That's a huge irony, given the story of the Atlantic Yards project--in which the city and state agreed to back Ratner's plan from the start.

Arena = "fortress real estate"

One host asked, "Are you surprised by the fact that live sporting events and concerts continue to draw such premium prices?"

"No, I'm not at all surprised. and I realized that for a long time," Ratner responded. "It is all about content. Content, content, content. Whether it's sports or content or concerts and live is critical. So I realize that and having an arena is a very special thing because I use the word fortress. It's fortress real estate in a way. meaning it is something when you create it that can't be duplicated easily. Look, in almost half a century, this is only the second arena after MSG in an area this large."

That's why a non-competitive process seems more glaring.

Arena like a REIT?

Ratner added, "I will say arenas today because they are in some sense franchises and they are live content, my guess is that they sell in the REIT [real estate investment trust] category. They're like REITs almost. That's the kind of multiple, I think."

What are the attributes of REITs? According to REIT.com:

REITs are required to distribute at least 90 percent of their taxable income to shareholders annually in the form of dividends. Significantly higher on average than other equities, the industry's dividend yields historically have produced a steady stream of income through a variety of market conditions.
In addition to the investment performance and portfolio diversification benefits available from investing in REITs, REITs offer several advantages not found in companies across other industries. These benefits are part of the reason that REITs have become increasingly popular with investors over the past several decades.
REITs' reliable income is derived from rents paid to the owners of commercial properties whose tenants often sign leases for long periods of time, or from interest payments from the financing of those properties.
Most REITs operate along a straightforward and easily understandable business model: By increasing property occupancy rates and rents over time, higher levels of income may be produced. When reporting financial results, REITs, like other public companies, must report earnings per share based on net income as defined by generally accepted accounting principles (GAAP).
In short, REITs over time have demonstrated a historical track record providing a high level of current income combined with long-term share price appreciation, inflation protection, and prudent diversification for investors across the age and investment style spectrums.

Today's big story: the Barclays Center's "signature scent"

Apparently the Barclays Center, like some other sports venues, mists a "signature scent" (citrus-y, clean, depending on whom you asked)  to enhance the visitor experience, as DNAinfo reports in a story that got picked up widely, including by Deadspin, The Atlantic Wire, and Racked (where a commenter says it gets pumped outside the Calvin Klein VIP entrance).

While Leslie Albrecht's article quotes a sports reporter at SNYNets as saying, "It's a brand-new building. They've spent over a billion dollars. [The scent] kind of goes along with the whole over-the-top nature of the building," Ball Don't Lie's Kelly Dwyer is more skeptical:

The Nets have declined comment on the fragrance, and for good reason – even the best of press release mavens would have a hard time accurately describing why, exactly, one would decide to pay to have scented air pumped into Barclays Center, much less describing the scent in un-mockable terms and explaining why it’s fit for the team’s arena.
...No, the Barclays Center should naturally smell like the high end artisanal pretzel rolls and craft brews it offers its patrons, and not some imperceptible, “citrus” (which is a descriptive word all of us go for when we have no idea what a certain wine, cigar, or perfume smells like) odor that the Nets are paying for on top of the four years and $89 million they’ll pay Joe Johnson between last summer and 2016.
It’s their arena, their money, and their ventilation options. We’re just wondering why this ownership group even bothers, for just a first round team.

Well, that's likely because the arena has many more events than Nets games.

Neil deMause of Field of Schemes writes:

It’s only fitting that the Nets are resorting to this, given that they were among the first franchises [in 1997]  to pipe in fake crowd noise to make it sound like fans were actually cheering.

We'll see if any other story about the Barclays Center--like its "signature noise leakage" and consequent fine--gets such play.

Barclays Center reneges on promise to line up general admission patrons toward the plaza, not Sixth Avenue

Fans wait outside Atlantic Ave.
entrance for tickets for The Killers

So, here's how Barclays Center officials made a promise, and completely failed to honor it.

In April, general admission patrons for the April Green Day concert formed queues going east of the Atlantic Avenue entrance, clogging a narrow sidewalk, wrapping around to Sixth Avenue, and blocking and endangering ordinary pedestrians.

Arena officials seemed concerned. As I reported 5/8/13, Barclays Center Community Affairs Manager Terence Kelly said at a community meeting that, going forward, people would line up east to west stretching toward the arena plaza.

That's not what happened this past Saturday, as would-be general admission patrons for The Killers began lining up at 7 am, and were again directed west to east, stretching around Sixth Avenue.

But why?

I haven't heard an explanation. Maybe this configuration helps the two businesses, MetroPCS and Elbow Room, that are open along the Atlantic Avenue facade.

But it sure won't be workable if and when a residential tower, with ground-level retail, opens at the northeast corner of the arena block (which is the southwest corner of Atlantic and Sixth avenues). Then again, that's the third residential tower planned, some years off.



Any explanation?

Given that Kelly typically does not respond to my queries (nor does the arena spokesman), I contacted him via Twitter yesterday morning to raise the issue. No response.

@heyitsterence Didn't you promise #BarclaysCenter patrons wuld line up from plaza, not 6th Ave? atlanticyardsreport.blogspot.com/2013/05/at-com… @ayinfonyc found diff
— Norman Oder (@AYReport) May 19, 2013

Nets to open boutique in Coney Island, as Thor Equities' Sitt finally fills some space

Daily News photo

It's sure nice when you have a newspaper on your side.

On Saturday, 5/18/13, the New York Daily News, the sponsor of the Barclays Center plaza, broke the news, complete with (at least online) four large photos of Brooklynettes cheerleaders in bikinis.

The headline and subhed: Brooklyn Nets boutique to open in Coney Island on Thursday: The Nets Shop by Adidas will feature beach balls, flip-flops, visors and the usual Nets gear, but the black-and-white bikinis for the ladies may be the biggest draw.

The article was attributed to Jason Sheftell, real estate correspondent, noted sycophant:

Nets bikinis and other fun summer merchandise will be available on the Coney Island beachfront this season in the basketball team’s signature black and white.
“After one year, we’re fourth in the NBA in apparel,” said Nets and Barclays Center CEO Brett Yormark. “But this isn’t about sports. The Brooklyn Nets are an international lifestyle brand. Our colors have become synonymous with the borough.”
The Coney Island store will feature beach balls, flip-flops, visors, the usual Nets gear, and of course shiny new two-piece bathing suits for about $80.

There's a "towel cutting" this Thursday, May 24.

Who's the landlord?

“We want to do everything we can to constantly better the Coney Island experience,” claimed Thor Equities CEO Joe Sitt, the store's landlord. “Right away, this adds to the quality of the retail.”

Here's Tricia Vita of Amusing the Zillion, writing 6/14/11 (plus more on Sitt and Thor Equities):

Joe Sitt is infamous for evicting amusement rides from his Coney Island properties. In 2007, the real estate speculator evicted the Zipper from 12th Street. He also evicted Norman Kaufman’s Go Karts, Bumper Boats and Batting Cages from Stillwell Avenue to “allow the new development to proceed in a timely manner,” but has built NOTHING there except a failed flea market in 2009 and another flea market this summer. (“Thor’s Coney Island: What Stillwell Looked Like Before Joe Sitt,” ATZ, March 3, 2010)
It’s bad enough that the City has let Joe Sitt continue to get away with blighting the amusement area. Why do the New York Times and other mainstream media continue to enable Sitt’s bad behavior with clueless coverage referring to him as a developer? Read the graffiti scrawled on his so-called construction fence: It says“Blight for Spite.”

Back in Coney

Meanwhile, the annual Mermaid Parade, its income sources devastated by Sandy, is raising money via Kickstarter, with two weeks to go.

So, is Atlantic Yards a wise example of cost-cutting (as per Observer)? Not exactly, since new arena cost not much off Gehry-era projections

The 5/14/13 New York Observer's article, PATH/Fail: The Story of the World’s Most Expensive Train Station, addresses the endless cost overruns in the Lower Manhattan project and presents a purported counterpoint:

In the private sector, these things often turn out differently. Atlantic Yards in Brooklyn is one example. Despite Bruce Ratner’s “man crush” on Frank Gehry, in the words of one of his employees, and the nearly $100 million in fees that he paid for the design of the undulating apartment towers and stadium, Mr. Ratner didn’t hesitate to drop the starchitect from Atlantic Yards when the costs got too high—costs that were partly the result of Mr. Gehry’s insistence on designing the interior elements down to minute details like the stadium seats, something that should sound familiar to the Port Authority.

While it's quite possible Ratner would have paid Gehry $100 million for the entire project, I highly doubt Gehry took in $100 million.

Looking more closely

More importantly, Gehry was not dropped mainly because of his fees, or because of his desire to design interiors. The arena was once supposed to be 850,000 square feet, and could've accommodated hockey and basketball equally. It was downsized to 675,000 square feet, and focused on basketball.

Yes, the arena got smaller and thus less expensive. But also significant was Ratner's need to decouple the arena from the four towers planned around it. Once Ratner recognized he couldn't finance and build those towers simultaneously as originally planned, there was no need for all the buildings to share mechanicals with the arena.

Also, the growth in cost of the arena was attributable in part--though not in whole--to the overall growth in construction costs. The entire project went from $2.5 billion to a projected $4.9 billion.

A "billion-dollar arena"?

Gehry's arena was initially $435 million in 2003, then $637.2 million at approval in 2006, and then $950 million in 2008. One factor: the cost of glass needed for security.

So, they shrunk the arena and what do they have? A "billion-dollar arena." Forest City executives call it a $934 million project, which "covers the cost of this building, the transit connection, the site work, etc." Construction of the arena itself cost

As I've written, documents cite $617.3 million in hard costs for arena and transit connection construction, and $192.85 million for soft costs, plus $34.7 million in additional costs. That's nearly $845 million.

How do they get to $934 million? Unclear.

Moving on: Margolin, Barclays Center head of food and beverage services, leaves for Anaheim arena

From the Anaheim Blog, 5/15/13, Honda Center Hiring 500 Employees for New Food and Beverage Co.; Julie Margolin Named Director of Food & Beverage Services:

ANAHEIM, Calif. (May 14, 2013) – The Honda Center announced today its plan for hiring more than 500 workers to become part of an industry-leading sports and entertainment organization. Interested parties are urged to go online to www.hondacenter.com to apply for a position and schedule an interview. Thousands of applicants are anticipated and appointments will be confirmed on a first-come, first-served basis beginning immediately.
...Leading the new food and beverage operation will be Julie Margolin, the venue’s new director of food and beverage services. Margolin most recently worked for Levy Restaurants at Barclays Center in Brooklyn. There she was part of the opening team, oversaw the food and beverage service for that facility and launched a number of unique programs which saw unprecedented success during their first year. Prior to that time, Margolin was an integral part of the food and beverage operations at STAPLES Center and Nokia Theatre at L.A. Live, Royal Caribbean Cruise Lines and Universal CityWalk.

I doubt Margolin has quite the array of local vendors--from newfangled to classic to ethnic--to work with in Anaheim as she did in Brooklyn, though there are certainly a substantial number.

But her departure hints that others who manage the Barclays Center may be recruited by other arena operators. Just not the person responsible for sound insulation.

Ratner, according to ESPN, can't promise Islanders games at new Nassau Coliseum, but developer remains confident

ESPNNewYork.com reported 5/15/13 Sources: Battle over Isles brewing:

There's a potential battle brewing involving the New York Islanders and New York Rangers, and it isn't even on the ice.

A major selling point of Bruce Ratner's pitch to win the renovation rights to Nassau Coliseum is the promise to bring the Islanders back to the arena for a six-game slate after they move to Brooklyn's Barclays Center.

And while that would appear to be enticing to the Nassau County executives who are currently deciding among four bidders, it's not a promise Ratner necessarily can deliver.

According to multiple sources, both Madison Square Garden and the NHL would have to sign off on that scenario, and that is not guaranteed to happen.

Madison Square Garden, which owns the Rangers, is also among the four bidders.

While it's clear why MSG might disagree, why would the league? Because the Coliseum would hold only about 13,000 fans after renovations,rather than the current 17,686, and the Barclays Center would be the smallest arena, at 14,500 for hockey.

Then again, couldn't they just charge premium prices in Nassau?

The irony

Ratner's proposed deal is a bit strange, as a commenter on this blog observed:

Politics at its finest. While the team that put Long Island on the map is forced to move to Brooklyn, the very same developer is now vying to rebuild the coliseum. The Islanders will move to an undersized arena with unknown sight lines in Brooklyn and have their former home reduced in capacity by the same developer. Does any of this make sense? How about building a true home for the Islanders and let them stay where they belong. 

 Too late for that.

Ratner's response

As reported yesterday on IslandersPoint Blank,  Ratner, in a radio interview, expressed confidence the plan would work:

“The NHL has to approve it,” Ratner replied, dodging MSG’s possible involvement in the process. “Given the fact that the team has been there before, the fans are gonna want it, I’m sure [the NHL will] approve it.”

Previous to that, the Executive Chairman of Forest City Ratner also fielded a question about ‘stealing’ the Islanders. Host Tom Keene said a few Long Islanders had expressed to him a sentiment that Ratner and his group, now attempting to develop the Coliseum, were ‘stealing’ the Islanders by taking them to the Barclays Center and ‘abandoning’ Long Island.
“The opposite!” Ratner exclaimed in response. “Basically what you have is the Islanders would have left this state. Charles Wang is really a hero here in the sense that he got offers to buy that team and move them out of state. What we really did together is save them, here, for New York State and we’re only a Long Island Railroad ride away. It’s very easy to get to. On top of that we’re going to play six games in Nassau if we wind up doing the Coliseum.”

Why arenas? Entertainment, not sports

Also worth noting:

He also said that the main reason he and his group are getting into the arena business is because in the digital world, the future is live entertainment and live content.

So it's not about bringing sports to the people?

Among the comments;

"On the show, Ratner said that his group is “going to do the kind of architecture that we did at Barclays,” with the Coliseum. He also said that he felt the arena “is in a great location and it’s actually a pretty good arena in terms of sightlines, but it’s old.”
He's kidding right, the architecture they did in bklyn created a arena that has terrible sight lines for hockey compared to the Coliseum which isn't just "pretty good" it's probably among the best in the whole NHL, please mr ratner don't turn the Coliseum into a basketball gym like you have in bklyn.

Ratner of course meant exterior architecture, but his point is vulnerable to such criticism.

Another comment:

This is all a ploy so Wang can get out of the NVMC lease a year sooner. He plays nice with the politicians by getting on board with Ratner's refurbishing plan and promises to return to the NVMC to play 6 games, and in return he blows out of town a year earlier. I just wonder if Ratner's proposal is not accepted will Wang still get to leave after next season?, and would he still come back to the old barn to play 6 games anyway? I think as long as Wang gets to break the lease he doesn't care what happens to the NVMC. Hopefully he is prepping this team for sale so we can be done with him...

I think it's a safe bet that the Islanders will leave early.

Do Nets really have the NBA's worst home fans, as study claims? Nah.

As noted in The Brooklyn Game, Study Concludes Nets Have NBA’s Worst Home Fans, Knicks Have Best. But is the NBA Fan Equity Study really solid?

I don't think so. Sure, many observers have noted that Nets fans are not as passionate as Knicks fans, or other teams with more established fan bases. But the Nets filled 94.9% of their arena, while the Knicks sold 96.3%. And the Nets, of course, sold a lot of gear, fourth in the NBA.

The authors of the study, at Emory University, finally put up some backing data (at my and others' request):

I don't think that helps much. The Knicks' attendance edge is magnified by an arena with greater capacity, and the willingness of Knicks fans to pay more has less to do with passion than a longstanding monopoly position in a large market.