February 11, 2005
MSG: We'll pay $600M, taxes too
Cablevision's bid for the erstwhile New York Jets stadium site just rolled across my e-mail transom (you can read the press release here and the full letter here), and it contains some fascinating tidbits about how just much the Madison Square Garden owners are willing to pay. For example:
- As previously reported, the MSG offer is for $600 million (including $250 million to deck over the rail yards). And while the New York Sun reported earlier this week that the $600 million would be paid off over time, giving it "a present value of as little as $60 million," MSG's bid letter to the Metropolitan Transportation Authority makes clear that "the net present value of these payments ... is anticipated to be $600M." In other words, if MSG delays any payments, they'll include interest.
- While the Jets are insisting on not making payments in lieu of property taxes (or more specifically, intend to pay PILOTs to themselves to fund their own stadium costs), MSG is offering its bid "on the assumption that the development would generally be subject to real property taxes or to equivalent payments in lieu of taxes." The rail yards site has been previously determined (by both the Jets and the Regional Plan Association) to be worth about $400 million in present-value PILOTs.
- MSG "will work with MTA" to determine how much of the site's development rights would be used by the apartment buildings it hopes to build there. (Part of the Jets' bid involves leaving about two-thirds of the development rights as unused "air rights" that the MTA could then resell, though there's some question about what market would exist for them.
- The MSG bid "is not contingent on the No. 7 [subway] train extension."
In short, then, the MTA has two bids on the table: One from the Jets worth $100 million, with the city responsible for building a $375 million platform and getting no property tax revenue from the site; or one from MSG worth $350 million, with MSG paying for the platform, and $400 million worth of PILOTs flowing into city coffers. Even with the chance to sell surplus air rights as a sweetener to the Jets deal, it's going to be awfully hard for MTA chair Peter cash up front" Kalikow to reject this offer out of hand. Mayor Michael Bloomberg may have called the MSG bid "a joke" earlier this week, but I doubt he's laughing now.
