Last week I griped that Big Media like Fox Business wasn’t telling us what’s in the term sheet for a new NYC F.C. stadium even after its reporters got a look at it, and never let it be said that FoS readers (and Small Media) aren’t eager to help out, because Chris Campbell of the NYC F.C. Substack newsletter The Outfield, which has been following this story closely, jumped in to send over the actual text.
The NYC F.C. plan is a super-complicated dance by the city, the soccer team, the New York Yankees who are part owners of the soccer team, and the bondholders who financed the parking garages that the Yankees wanted but which the soccer team now wants to tear down some of to make way for a soccer stadium, so it should probably come as no surprise that the term sheet has a ton of moving parts:
- The first step would be splitting the parking garages lease into two parts, a “balance lease” for the garages that would be unchanged, and a “severance lease” for the garages that would end up as rubble or otherwise buried under a soccer pitch. The garages marked for death include Garage 8 (better known as the Triangle Garage because just look at it), plus surface lots on the other side of the Major Deegan Expressway and across 153rd Street and River Avenue from Garage 8, only some of which would be needed for the stadium, but NYC F.C. partners Maddd Equities want to build a whole bunch of other development there and nobody really wants to park there, so sever those puppies already.
- Maddd will pay the bondholders $46.25 million (actually written out as “$46,250,000 million,” which would be, um, a million times as much) for the garages being demolished. Not only do the bondholders — primarily the real estate investment company Nuveen, which has ended up the majority bondholders — have to approve this, but so would a bankruptcy court, since the shell nonprofit the Yankees had created to run the parking garages is currently in bankruptcy after it turned out that building lots of parking garages in the 21st century for a site with many, many public transit options plus a bunch of cheaper parking options was kinda dumb. (The city would also presumably have to approve forgoing some of its $50 million in future rent revenue from the garages, but given that it’s pretty much written that money off as uncollectable thanks to the whole bankruptcy thing, that’s probably not so big a concern.)
- While the plan would still leave parking for 5,611 cars at the remaining parking garages, plus 3,516 more at what remains of the “severance lease premises,” the huge section in the term sheet on “parking requirements” mostly makes clear that the Yankees and the parking corporation are having a huge squabble over how many parking spaces are made available for Yankee games.
The Outfield reports that what happened last week to blow up the deal, at least temporarily, was that “both the Yankees and Maddd Equities had last minute changes to the lease terms — terms that they had drafted themselves.” Yankees officials wanted more parking concessions (something about guaranteeing more “attended” parking as opposed to “unattended” parking, if you really want to go down the rabbit hole of understanding valet parking requirements, be my guest), while Maddd wanted to pay less than $46.25 million, which, okay, but why did you put that number in there in the first place?
Either way, it doesn’t sound like Yankees president Randy Levine is correct to complain that the city and bondholders are “refusing to do what they agreed to do in the bond offerings and in the terms sheets,” but rather that the Yankees and the developer are — but Randy Levine pretty much exists solely to serve as misdirection, so this is totally on-brand for him.
There are still a ton of steps before this crazy scheme can become reality — we didn’t even get to the part about decommissioning a highway ramp that nobody can agree who would own — so figure on a couple more years of squabbling and public hearings even if NYC F.C. and the Yankees somehow manage to dig themselves out of this hole they’ve put themselves in. That’s a long time for Nuveen to hold its breath hoping nobody notices that the agreement would actually guarantee them $46.25 trillion, but as a fan of expensive typos, let me say that I sincerely hope it happens.
This is pretty much standard “getting to yes” negotiating conduct… propose something which the other party might think is an opening offer, then when they either accept that as “better than nothing” or counter with a higher number, blame them for being unreasonable and attempt to retreat from the number you voluntarily proposed as a starting point (even calling it ‘unworkable or magical thinking’). Then come back with a number much lower than the one you first offered…. or possibly reverse the flow of cash from the entity you are supposed to buy out and offer to let them pay you for the privilege of forgoing whatever contractual agreement you’d made with them years ago.
And, of course, hope nobody notices… which in this case Levine and Associates have clearly failed at.
I for one, would like to see the team forced to pay up for the original amount in the document ($46 trillion, and change). Hey, what good is an agreement if you can’t honour the terms?