Competition is supposed to make everything cheaper, but lately it’s been making the West Side a whole lot more expensive-especially for the New York Jets.
Just a couple of months ago, the football franchise was willing to put up $100 million to lease the 13 acres on which it would build a stadium. Now, to prevent Cablevision from turning the area into an urban planner’s paradise, it is offering $280 million.
The stadium, the world’s most expensive stadium-to-be, got suddenly pricey, too: $1.9 billion, according to the bid submitted to the Metropolitan Transportation Authority, which owns the rail yard. That makes it a third higher than the $1.4 billion number thrown around as recently as last fall, and it doesn’t even include the cost of the land. A team source said that the lower number dated back to January 2002 and was never updated to reflect higher construction costs and more exact blueprints and demands from banks to expand the contingency funds.The high cost has been a major objection to the plan.
Still, the Jets say they will be able to make their money back in just the 10 Sundays a year when the team plays at home.
“Ten games a year will give us the lion’s share of our revenue. We’re not just talking about 75,000 seats. We’re talking about suites and hospitality packages, too,” the source said. “It’s the same thing as building an office building in New York City, it costs a lot more, but your demand is there. This is a good investment for the Jets.”
Cablevision also upped its original offer for the M.T.A. land, from $600 million to $760 million. Months ago, it seemed like the Jets would have the rail yards handed to them on a platter-as well as on a government-subsidized platform that would cover the yards with a giant platform and make it possible to build on them. Then Cablevision jumped in to fend off competition for large events now hosted by its subsidiary, Madison Square Garden. A Jets stadium would also hold conventions and sporting events like the Final Four-and maybe even the 2012 Olympics, should New York win them.
It would seem, just on the basis of the numbers, that Cablevision would be the clear winner. But numbers are never as clear as they seem, and in this case, even less. Community groups and public officials are calling for the M.T.A. to postpone making a decision on which bid to accept beyond Thursday, when the board was originally scheduled to vote. Among other reasons, the bids were only made public late Monday.
“I think releasing the bids 48 hours ahead of time does not give anyone, the public or the M.T.A., enough time to really understand what is in there,” said John Raskin, spokesman for the Hell’s Kitchen/Hudson Yards Alliance. “I don’t think people understand how little the Jets are willing to put up, for example.”
The fact that Mr. Raskin’s group, which opposes the stadium and has joined forces with Cablevision, is calling for a time out would suggest that the Jets have come out ahead, now that the bids have been made public. Not only are the Jets offering $280 million of its own cash (or, very likely, someone else’s cash raised or borrowed for the occasion), but the team got six big-league real-estate firms to throw in another $440 million, if only they could buy the excess air rights over the stadium and transfer them to a surrounding neighborhood.
Well, it turns out this condition is just that: conditional. The firms say theirs is a nonbinding offer and rezoning the area to permit the transfer of air rights would require the approval of the City Council, whose speaker, Gifford Miller, has staked his Mayoral candidacy on opposing the stadium.
That $280 million isn’t exactly upfront cash, either. While $50 million of it will be provided at the closing-by June, according to the bid-the balance will be spread over four years.
But if it works out, the M.T.A. could walk away with $720 million.
By contrast, under the Cablevision offer, the M.T.A. would walk away with $400 million at most. Another $360 million would go for the platform to go over the rail yards and permit the company’s mixed-use development to go on top: residential towers, school, public library and park.
Cablevision, until now one of New York City’s great unsung developers, would also have to have the property rezoned-but the company said in its bid it would be willing to close the deal and fork over the cash well before that happens. This week, the company said it would be willing to pay everything up front.
“Immediately means immediately,” said Whit Clay, a Cablevision spokesman. “In terms of cash on hand, the M.T.A. will clearly get more from us.”
Not only that, the pro forma finances that Cablevision included in its bid notes that the company is prepared to pay th e city property taxes for the entire year of 2005-an estimated $6.4 million-something the company doesn’t even do for Madison Square Garden (it got a permanent exemption in the 1980′s) and which the Jets won’t do for 30 years out.
To the Jets, this possibility sounds too good to be true.
“I think Cablevision has shown it is willing to do anything to hold onto its monopoly,” said Jets spokeswoman Marissa Shorenstein.
Including bidding up the New York Jets.