New Year, New Regime, New Problems for NYCFC Stadium Plans

IMAGE, NEW YORK YANKEES

An independent budget office report condemning the Bronx Stadium plan … a new mayor expressing “real concerns” over the particulars of this Bloomberg era deal … local leaders pondering ransom demands in exchange for their blessing to use city space … major media reports condemning the stadium project for its series of “sweetheart” deals …

Just over a week into the new year and it’s safe to say — 2014 hasn’t been kind to New York City F.C.

What once was presented to be a shoo-in deal for an innovative plan to install a soccer stadium in the South Bronx has already hit major roadblocks. It’s been a deluge of bad press and condemnation against the Yankee/Manchester City project from the moment new Mayor Bill De Blasio took office. That, of course, shouldn’t be a surprise to Major League Soccer, who surely expected opposition after losing their biggest backer in outgoing-Mayor Michael Bloomberg.

But this kind of backlash seems almost comical in it’s scope. For months, reports leaked about a possible land grab by NYCFC in the South Bronx that would bring a 28,000 soccer seat stadium mere blocks from the Yankees stomping grounds. Little more than a whisper of protest was heard about the deal — even into the final days of 2013.

Suddenly, further scrutiny of the deal has revealed quite a bit of warts, and the opposition — emboldened by regime change — have taken great pleasure in exposing them, en masse.

A key part of the deal to build an arena is the acquisition of land occupied by the Bronx Parking Development Corp. An Independent Budget Office investigation uncovered several alarming issues regarding the deal. As is well documented, the BPD received $237 million in tax-exempt bonds to build their infrastructure as part of the new Yankee Stadium deal. In exchange for the bonds, the company was supposed to pay $3.2 million a year in annual rent along with real estate taxes for the property.

That hasn’t happened in over six years, with BPD amassing a $50 million debt in rent, taxes and penalties.

Under the new NYCFC deal, the BPD corporate holding approved plans that would make those debts virtually disappear. From the IBO report:

The New York City Football Club, a partnership of the Yankees and the Manchester City Football Club (a British Premiere League team), would pay the Bronx Parking Development Company $25 million for its part of the proposed stadium site. Under the terms of the so-called forbearance agreement between bondholders and the Bronx parking company, three new series of bonds would be issued to replace the originals as part of the restructuring of the company’s debt. No provisions are made for money owed to the city.

The lease the city signed with the Bronx parking company anticipated that revenue could fall short of needs and made debts to the city secondary to those of bondholders. The terms of the new bonds presume the city will get nothing for more than 40 years. All revenue received by Bronx parking, from the proposed soccer site as well as the parking company’s other sites, would go to bondholders. Two of the three series of new bonds would not reach maturity until 2056, meaning the city would not begin receiving lease or other payments from Bronx parking until then—foregoing about $150 million in lease revenue alone.

Translation? The current debt would be absolved while subsidies nearly double — a major red flag in De Blasio’s pro-revenue agenda.

The IBO report has fueled opponents like Juan Gonzalez over at the New York Daily News to speak out against the entire deal, encouraging De Blasio to take a critical eye to the matter.

That shouldn’t be a difficult sell. Mayoral spokeswoman Lis Smith has already issued a cold response on behalf of the administration regarding the stadium proposal, stating, “We have real concerns about investing scarce public resources and forgoing revenue to support the creation of an arena for a team co-owned by one of the world’s wealthiest individuals and will review any plan with that in mind.”

To make matters worse for NYCFC, a key De Blasio ally, Councilwoman Melissa Mark-Viverito, currently sits as the frontrunner for Council speaker. According to Capital New York, she is an opponent of the project as it currently stands, and as Council Speaker, would have the power to impede it’s progress. A key redistricting has also put the 153rd street location under her jurisdiction, further complicating the team’s efforts.

While the political arena has shifted away from NYCFC, so has the battle for local support. One-time stadium carnival barker Bronx Borough President Ruben Diaz has taken a far more muted stance in the lead up to the installment of the new mayoral administration. For all it’s misgivings, the “MLS to QUEENS” initiative enjoyed a multitude of local political support from assemblymen, state senators and grassroots leaders. The Bronx plan has lacked the political capital to sway support in their favor. Diaz, in many respects, is the face of the pro-stadium initiative and losing his vocal support in this matter weakens the team’s stance.

As political opposition grows and support diminishes, those same grassroots leaders are ready to throw a lifeline towards NYCFC – at a price. A Bronx Times report quotes community leaders brainstorming over what exactly they could get out of the deal. Described as “bitter” over their exclusion in the new Yankee Stadium project, many have suggested outlandish requests in exchange for their backing, including the installation of a community center within the stadium complex and “park access” for local residents on non-game days. In a page out of the Flushing Meadow opposition playbook, others have even suggested NYCFC owners replace parkland lost in the building of Yankee Stadium in order to secure the land they seek.

“If parking isn’t needed, then let the community have its park back,” Parks advocate Geoffrey Croft told the Times.

Clearly, things have become far more complicated than originally anticipated.

Does this spell the death of the much ballyhooed 153rd street plan? No, of course not. However, the landscape has changed around NYCFC and they have to adjust if they truly want the South Bronx stadium to happen.

The good news for NYCFC is that they still have two vital aces up their sleeve; time and money. It is an accepted fact that the club will start play out of a temporary home grounds, so there is no rush to find an immediate stadium solution. The fact that they have found this outside-the-box, dream location in an air-tight New York property market is a victory in itself. That alone is worth a sustained push by the club.

Meanwhile, they have the resources to address many of the concerns listed by the IBO report while investing within the local community and garnering the support they so desperately seek. If Mansour is willing to relocate a 100,000 squarefoot elevator company at no cost, what’s to say further investment to the project is beyond his reach? Recreational space for local residents? Addressing the City’s BDP tax concerns? Each issue can find a solution so long as NYCFC is willing to return to the bargaining table and unleash their purse.

How this plays out is anyone’s guess, but one thing is certain; this is no longer Bloomberg’s New York. The sooner NYCFC comes to grips with that, the better off they will be.

  • James

    The comment about $150M in forgone revenue isn’t fair nor does it correctly reflect reality. Under the current situation (where the parking site is losing money & having trouble paying debts, no less additional rev payments to the city) nobody expects that $150M to ever be paid to the city. This plan satisfies bondhders and eliminates the possibility of default – the bigger issue.

    • Andre

      You are absolutely correct – but unfortunately ppl with agenda’s skew the reality. For one thing – they aren’t forgoing anything since nothing is being generated at all. It’s ridiculous.

  • Dan in New York

    Good reporting, as usual, Dave. I’m very pro-soccer but this deal NYCFC carved out with Bloomberg stinks. The city should be able to get more out it from NYCFC, which, clearly is not hurting for funds.

    • Andre

      The reason they aren’t hurting for money is because they know how to do business. No company will just build a hugely expensive stadium to just sit empty most of the time. That’s why ALL major stadiums either get some form of public financing or tax breaks. This is actually one of the best situations since no public cash would be used.

  • Sean David Johnson

    No rush? How about damaging interest in the team? New York soccer fans are too cultured to accept a soccer club in a baseball stadium. This launch has been mishandled.

  • rafael

    As much as I support MLS, this forcing NYCFC was a farce to begin with. Meanwhile, other clubs HAVE to have a stadium in place BEFORE being awarded a franchise. My hopes is that Yankee Stadium’s grass is torn to shreads, leaving that surface worse than Montreal’s Olympic stadium…but then I am a Red Bulls fan leaving in Miami, so maybe I am bias.

  • jspech

    read my lips no Welfare for Oil Magnate. U also failed to point out tjis plan will also require the elimination of an exit ramp for the Highway. Bloomberg is a smart Businessman, no needs to to reminded of that. I can not believe he really expected this to goes thru. Especially for a team that has no ties to NYC, except for the ownership, which is looking pretty similar to the JayZ mior ownship in Nets in exchange for some legit foothole. This club does not need it. On the other, hand maybe the final solution will be a shared Stadium with the NYCosmos, in Belmont or Brooklyn.

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  • Garber said it would be entirely funded by private means. Receiving tax exempt bonds, waivers, etc is a breach of that promise. If this team truly cared for the community, they would pay it all themselves and be taxed by the city.

  • Joe Linhart

    If anything BigAppleSoccer is reporting that there will be a town hall meeting set for the 15th to discuss the project: http://www.bigapplesoccer.com/teams/nycfc2.php?article_id=36117. Looking at the facebook link enclosed in the article, it appears that this is being posted by South Bronx United, so not sure if this is officially connected with NYCFC or if SBU is trying to create groundswell support for the new stadium

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  • South Bronxite

    Shame on you for saying that the community’s demand for a community center within the stadium complex and access to the soccer field during off days is outlandish. What’s outlandish and disgusting is a city giving handouts to a billionaire when not to long ago it’s finances were in the red. All you supporters should donate your own money, don’t use my tax money to suffocate me in never ending traffic jams and chaotic subway rides.

    • First off, I am not a supporter. Second, it is outlandish in context – there is no stadium in America, to my knowledge, that allows public access to their field. If we were talking about a 20 acre parcel of land, absolutely NYCFC could add a separate rec. center and the demand by the community would be justified, but WITHIN the stadium seems a tough ask. I know the Bronx – especially the South Bronx – and the community should push for redevelopment of some of the other dilapidated areas. That would be a better move. Thanks for reading.

  • New Yorker

    For what it’s worth, I like soccer and MLS, but am not particularly attached to the Red Bulls. So in a lot of ways, I might be part of the target audience NYCFC is hoping to attract.

    That said, if any proposed deal involves losing any parkland or involves using city funds (whether via subsidies or debt forgiveness), I would absolutely prefer not to have NYCFC exist. Frankly speaking, sports teams are entertainment – they are NOT crucial public goods that the city should be spending money on, and they certainly don’t benefit all New Yorkers. If NYCFC has the money and support needed to build this stadium on their own – great! If not, well….then they should probably focus on building that up first.

    I was also against Yankee Stadium getting the ridiculous amounts of public subsidies and tax cuts it eventually received. If they wanted to move and become the Indianapolis Yankees or whatever, good riddance.

    • Andre

      Then no sports teams would exist in this country… We know at the end of the day teams generate billions in revenues all across the country.. So are you advocating for the dissolution of all high end professional sports??? Just so you know – most MLS stadiums are paid for in public cash (which is less than the Yankees or NYCFC looked for or got previously)

      • New Yorker

        Sports teams existed just fine before they got massive amounts of public subsidies. Would corporations such as the NFL be guaranteed massive profits every year without them? Perhaps not, but the NFL’s annual profit numbers are over $1 billion, and each owner additionally makes massive amounts of money off their teams. Pacific Bell Park, home of the San Francisco Giants, was completely privately funded/built right in downtown.

        In short, teams don’t just generate millions in revenues – they generate millions in profits. There is absolutely no reason that owners should not use those profits in their investments – rather than requesting taxpayer money. I would much rather New York City have used the money they blew on the Yankees to, say, renovate every gym in NYC rather than ensure the Yankees have an expensive new home.

        Don’t get me wrong, I like sports – I go to games when I can, etc. But wasting public money on them? *shrug* I don’t see it as a priority when we have a $2 trillion backlog of infrastructure maintenance (source: http://www.economist.com/blogs/democracyinamerica/2011/06/more-stimulus ). Plus, not counting the 84,000 bridges connecting main arteries that are classified as “functionally obsolete” (meaning they can remain open, provided suitable weight and speed restrictions are enforced), there are a further 66,500 major bridges with known structural defects. Just fixing the backlog of these defective structures was estimated in 2004 to cost taxpayers $32 billion – now, the number is probably much higher (source: http://www.economist.com/blogs/babbage/2013/11/difference-engine ).

        Basically, we have better uses for our money than subsidizing the wealthy.

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