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Old 02-15-2005, 10:30 PM - Thread Starter
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Dolans have Non-VOOM trouble, too
The Dolan Family: Dysfunction Clan Makes A Gutsy Bid
by Matthew Schuerman The New York Observer (observer.com)
Their basketball team had had just about its worst losing streak ever. Their company’s stock price was trailing the Standard and Poor’s index badly. Their family-run satellite-TV venture lost so much money that corporate directors rebuffed the father and sold it to the highest bidder.
And a plan hatched in City Hall to build a giant state-of-the-art stadium and convention center just blocks from their own was taking on an aura of inevitability.
So the owners of Cablevision, Madison Square Garden and the Knicks whipped out a three-page letter last week and did what $10 million of advertising and months of grassroots campaigning had never been able to accomplish: derail Mayor Michael Bloomberg’s drive to put a stadium on the West Side.
And that just a couple weeks before an evaluation team touched down to see whether New York was fit to hold the 2012 Olympics, which was why the Mayor was in such a rush anyway.
On first glance, the three hasty pages were absurd enough to make Ionesco blush. The Madison Square Garden partnership, run by second-generation James, has no substantial experience in real estate, but suddenly it proposed to build a mixed-use development on the exact same site where this Mayor and the Mayor before him had wanted some big-league action. Forget about the 42 blocks around the rail yard that had just been rezoned for apartments and office buildings: The Dolans wanted the rail yard! And they would pay $600 million, twice as much as the Metropolitan Transportation Authority was asking for it.
Looking back on it, the West Side deal was such a complex web of transactions that it’s no wonder it got bollixed as easily as it did. You had a hard-charging administration intent on developing the last inch of waterfront, a transit agency impoverished by its own success, and a scion who wouldn’t give up a fight even when he was losing.
What was supposed to happen, from the Mayor’s perspective, was that the M.T.A. would give the Jets a good deal, and then the city and state would pitch in $600 million to build a platform over the M.T.A.’s rail yards, as well as a retractable roof over the stadium so that it could do double-duty as an extension of the adjoining Jacob K. Javits Convention Center. The state would approve the subsidy, and then the Bloomberg-Jets clan would break ground—or whatever you do over an open rail yard—before the International Olympic Committee voted on the 2012 host city this July. In fact, Mayor Bloomberg insisted that the city’s Olympic ambitions were doomed if a stadium wasn’t underway by July.
All along, West Side residents, City Council members and fiscal watchdogs tried to punch holes in the stadium plan, complaining about the traffic and the public subsidy. That was the thrust of the Dolans’ ad blitz last fall, which they waged to usurp any possible competition for convention and special-events bookings that the Garden now hosted. The city’s Independent Budget Office now reports that the stadium would produce far lower revenues and fewer jobs than the Jets had estimated, and that each new job will cost $163,500 in public subsidies—and then only if the facility does a reasonable amount of business.
Forget the higher math: The way to New Yorkers’ hearts turned out to be through the M.T.A. The M.T.A. owns the land, and the M.T.A. is also the agency that raised bus and subway fares in 2003, and then more recently raised the price of monthly MetroCards because of their unexpected success. Next year, the agency faces a projected deficit of $600 million—funny how this number keeps coming back.
There was that pesky track fire, too. So what if it didn’t take that long to recover? The public now thinks that underneath the new automatic subway cars and fancy stations lies a labyrinth of octogenarian signal rooms populated by homeless people with tindersticks.
"I call this a perfect storm of bad public policy: the underfunding of the M.T.A. capital program coinciding with the flawed transaction with the Jets," said Robert Yaro, the president of the Regional Plan Association, a nonprofit organization that has squarely bashed the stadium idea. "Each one of these by themselves would be of enormous concern to people concerned about the future of the city—but taken together, they have created a situation that cannot be ignored."
Of course, it’s suspiciously coincidental that the Dolans started jonesing for mixed-use development just when a stadium seemed inevitable. No other developer had uttered a word about that lonely rail yard: Who wants to get on the wrong side of two administrations when there is so much to be built at their behest?
Only the Dolans were obnoxious enough to stand in the way.
"It’s like a vendetta they have against the project," said Charles Gargano, chairman of the Empire State Development Corporation, which would usher the stadium plan through the state bureaucracy. "If these folks were serious about submitting a proposal, they would have spent all that money they spent on television ads on coming up with a design. They didn’t."
Bad Timing
Deputy Mayor Daniel Doctoroff, in charge of all things economic and Olympian, has taken to calling the Dolan offer a P.R. move, but even his allies have to admit that it was a rather brilliant one.
The M.T.A. has asked the Garden for more details by Feb. 10, and then it will put the competing proposals before the full board on Feb. 24. That’s what is known in the trade as bad timing. Four days earlier, the Olympic site team will touch down to what was supposed to be a city infected with Olympic mania—or at least one that looked like it was.
The city’s Olympic committee is about to roll out a $15 million ad campaign extolling New York’s diversity. The roofs of 13,000 taxis and the flanks of 4,000 buses will issue messages like "Every country gets home-team advantage," "There will be dancing in the streets" and the incontrovertible "Peace is the dream." Instead, the visitors will find a city clouded by uncertainty and a Mayor with lots to do before July.
The opening the Garden exploited was created last Thursday, when chairman Peter Kalikow admitted that an M.T.A. appraiser had valued the stadium’s portion of the air rights at $300 million—three times as much as the Jets were offering. Suddenly, the M.T.A.—the only government agency that ranks lower than the post office in public esteem—has become everybody’s favorite charity. It is now absolutely essential that the M.T.A. get as much as it can for those air rights—as much as (or even more than) $1 billion, in some people’s estimation.
"The original assumption in developing the financing plan was that the air rights above the rail yard would be available at a low or modest cost," said Kathryn Wylde, the president of the pro-stadium New York City Partnership and Chamber of Commerce. "What became clear more than the year ago when the M.T.A. got into trouble, had to raise the fares and look at every possible way to raise money—suddenly the value of air rights became a central concern. Suddenly the constituency that was concerned about the stadium was not just the folks on the West Side, but it was the entire city and the community of people, employers and commuters who depend on a working subway system."
The Dolans’ offer the next day—and their publicists made sure that reporters knew about it—put the M.T.A. chairman in the unenviable position of having to turn down money that the public knows his agency needs, or else having to muck up the Mayor’s game plan.
"What the Dolans have done by making their bid, even though their bid isn’t serious, is they’ve demonstrated the point that there may be others out there who want to make a bid, and that has to be resolved," Ms. Wylde said. "The Dolan piece is just an easy thing for the media and the public to latch onto: ‘Oh, it’s 600 versus 100.’ It translates what is a very complex issue into something that falsely seems simple to people."
Falsely simple because the Dolan proposal has some problems. It’s not nearly as pretty as the four-color drawings that the Jets show off at their public presentations. There’s no artwork at all, in fact. It is also unclear exactly how much the Dolans would give the M.T.A. up front. The letter states $600 million, minus $250 million or so for a platform over the rail yards, but Mr. Doctoroff said that the Garden’s offer might amount to as little as $60 million in today’s dollars if it’s spread out over 50 years. Since the Dolans were only communicating through press releases, it was hard to pin them down. The Garden issued another press release this week insisting that $600 million meant $600 million, but in the type of language that would make a lawyer cringe.
And yet, in the days since, the Dolan proposal has gained such traction that even the most ardent Olympic boosters say it deserves a look. "We are supportive of the M.T.A. getting as much money as they possibly can in any way they can to meet their financial needs," Mr. Gargano said. "We are supportive of that because we are part of the state as well. Unfortunately, there are many people out there that take advantage of the M.T.A.’s financial needs."
And Mr. Gargano’s outfit now has to wait to get word from the M.T.A. before bringing the stadium deal before state legislators—whose approval used to be the only uncertainty in this whole transaction.
There, too, fresh hells await the Mayor. Five state senators from Long Island—M.T.A. users whose constituents are not likely to be beneficiaries of the stadium scheme, including Deputy Majority Leader Dean Skelos—faxed a letter Tuesday to Mr. Kalikow pressing him to open up the whole process to competitive bidding or a request for proposals. "As additional interested parties may exist, we strongly encourage you to advance such an RFP process," they wrote.
May the best man win!
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