This is an archived version of a Field of Schemes article. Comments on this page are closed. To find the current version of the article with updated comments, click here.
October 01, 2008
Wall Street crash to say nyet to Nets?
With the economy in freefall a wee pickle and bank credit nearly impossible to get, people are starting to consider what this will mean for the sports-stadium biz. On the hot seat today: the New Jersey Nets' planned Atlantic Yards arena project in Brooklyn, for which Goldman Sachs had promised that $950 million in financing would be in place by today. Yesterday, asked by the Newark Star-Ledger about the status of the Nets financing, the former investment bank issued a terse "no comment."
Even if the credit crunch eases, though, and Nets owner Bruce Ratner gets his loan, the project could be facing other problems. A recent court ruling in one of the many lawsuits against the project is likely to delay groundbreaking until 2009, which could open the door for Barclays Bank to back out of its $20 million a year naming-rights deal. (Barclays so far says it plans to remain on board.) Meanwhile, the disintegration of Lehman Brothers and other major New York firms is expected to flood the commercial real estate market with vacant space, casting into even more doubt the likelihood that Ratner can build his not-Miss-Brooklyn-anymore office tower - without which Ratner almost certainly wouldn't have enough money to pay off a nearly $1 billion arena, Barclays or no Barclays.
It's things like this that are more likely to have a lasting impact on stadium and arena projects: Banks will start lending money again eventually, but the lousy economy is likely to last for years. If there's less spending money out there for everything from club seats to ad boards, that means less revenue for team owners - which both reduces the amount of money they have to help pay for new buildings, and cuts into their incentive for demanding them. If everybody's broke, suddenly spending half a billion dollars to build more luxurious luxury suites suddenly looks like less of a good gamble.
ESPN.com's Tom Keown even goes so far as to suggest that the economic crisis could spell the beginning of the end of stadium blackmail:
Maybe one of the positive outcomes of the current financial crisis -- someone has to be positive, right? -- could be the unlikely awakening of the taxpayer when it comes to subsidizing the mega-wealthy who own professional sports franchises.
That, frankly, seems like a reach - the start of this stadium boom, after all, took place during the down economic times of the early '90s, when empty municipal treasuries were no obstacle to finding funding for sports facilities. And for that matter, "the taxpayer" is already pretty darned awakened, which is why most sports projects try to evade any public referenda. But I guess it's nice to have something to look forward to other than working until you're 80.
This arena will get built. Ratner will just have to kiss butt alittle bit more.
Posted by dan on October 2, 2008 03:53 PM
As Lloyd Lindsay Young might have said on WWOR years ago, HELLLLLO NEWARK! The Prudential Center awaits you!
Posted by LeftWingCracker on October 2, 2008 04:36 PM
Sorry but the nets arent going to newark they are either going to brooklyn or long island.Either way vince carter will like either place.
Posted by Dan on October 2, 2008 06:07 PM
I am sure that there are many people who will be happy if Atlantic Yards does not get built (Of course,the question remains what will replace it, besides a big pit?). As an Islander fan, I will be very sad to lose my hockey team to say Kansas City. Fans of the Rays, Marlins, A's (A team the won FIVE titles in Oakland), Vikings, Rams, 49ers, Raiders, Chargers and Saints may be in the same boat.
Building sports facilities are NOT about bailing out "Rich Owners" as some charge. But helping to create jobs and perhaps more importantly, giving a city POSITIVE national and worldwide exposure. For example: If it was not for the Raiders & A's, Oakland would be viewed as Camden West (Nothing more than a gang related, crime ridden, ugly step-sister, of San Francisco (If anyone bothers to think of it at all?)).
As for Yankee Stadium, I am 100% for it. There is NO doubt in my mind, that stuff like the Metro North Station, and road improvements along the Grand Concourse (BOTH of which benefit the community), would NOT have been built without it. The cost of that project is a BARGAIN compared to the transportation hub at Ground Zero or bailing out AIG to the tune of $81,000,000.
I am a person who thinks that Keown is right (Although I am for sports arena and stadium construction). It is a near certainity that Obama will be President. The Democratic Party (Particularly in California) is against this kind of funding (UNLIKE the 90s). One of two things will happen. a: They will be successful, and get things turned around economically (And be in office for at least 8 years (Making things tougher in teams. EX: Unfavorable tax terms)). b: Things will get WORSE, and the average taxpayer will be even angrier than before (See how angry people are over the $700b bailout), and are more likely to be like the folks in California and Brooklyn in opposing sports stadiums and arenas.
I think the two most interesting cases are the ones that get the least attention: Long Island and Miami. Nassau County has not generated the opposition to the Islanders like Brooklyn has to the Nets (And if they are able to get the shovels in the ground this spring, they can possibly get the Nets as well. If not they will be in Kansas City or Las Vegas very soon). The Marlins, have a drop dead date, they have to vacate Dolphins Stadium after the 2010 season. If they do not have a new stadium funded, they may be forced out of business.
Actually, the Marlins' landlord has said that 2010 is *not* a drop-dead date for them to leave their current stadium, though I'm sure the Marlins don't like to mention that:
http://www.fieldofschemes.com/news/archives/2005/03/when_threats_co.html
And as for Oakland, the A's and Raiders arrived in the '60s, which pretty much coincided with when it reached its low point in public image. If anything, it started gentrifying in the '80s, after the Raiders left. So I don't think you can credit or blame the sports teams for the well-being of the city as a whole (which is the same conclusion that numerous economic studies have come to).
Posted by Neil on October 4, 2008 01:47 PM
Neil, I agree with you that in the case of the Marlins, something can be worked out temporarily. But,I stress the word temporarily, because The University of Miami had such mistrust of the City Goverment, being able to renovate it, they moved out of the Orange Bowl, which is something Dolphins Stadium management must take into account, when deciding if the Marlins will have a future home in South Florida. There is no way, the management can let this linger on forever.
I am not as familiar with Oakland's situation as I am with South Florida's (I lived in Pembroke Pines 2 miles from Dolphins Stadium). But I know that situation is a mess. the Raiders are owned by a man (Al Davis), who is not only untrustworthy (Moving out of TWO cities (Oakand & LA)),and is now pushing for a football only stadium. www.sfgate.com. I will note that the Raiders have to SHARE concessions with the A's during RAIDER games (But that is Davis's fault). He also might be the worst owner in professional sports today. The A's are well run, but they are second fiddle to the Giants in the Bay Area, and play in the worst stadium this side of Dolphins Stadium.
Finally, if something is not worked out with Marlins, I could see MLB, try to clean up the situations in Miami and Oakland (Assuming Fremont is not an option), by buying the Marlins and A's, and dispursing the players throught the league (Think the Nationals would like Henley Ramirez?). While Oakland could have a shot of keeping the Raiders, and hopefully, they (And the team) can be rid of Al Davis within the next several years.
Well, the Marlins have been threatening to leave Miami for, what is it, ten years now? I suppose at some point they might follow through, but given that the most likely candidate they've come up with is San Antonio, where even city officials say they're a decade away from being ready to hold an MLB team, I'm not holding my breath.
And as for MLB buying the teams and dispersing them, there's just about zero chance of happening. I covered this the last time MLB was going on about "contraction" in 2001 (be sure to flip the jump to page 2):
http://www.villagevoice.com/2001-11-13/news/send-money-or-we-ll-shoot-this-team
Posted by Neil on October 4, 2008 07:12 PM
Neil, I think the odds are greater for contraction than most people think. I know the threat of contraction was a scare tactic back in 2001. But I think times are VERY different. The Credit Crunch, public opposition to sports stadiums is greater, and the fact the economy in general is worse, could actually create a possibility of contraction.
The key to it, is to see where the economy is this time next year. If the same factors are in play, and the Marlins are no closer to a new stadium, then baseball may have no choice to act (And fold the A's while they are at it).