For the bullet summary, please go here.
Land development seems to be the order of the day for Related Companies, and MSD Capital. And we are not talking small potatoes either. Here are some exerpts and notes of interest to solidify the land development interests of some of the players in the Phoenix Coyotes case. Take from it what you will.
The New York Times reported the Related Company wooing of the Mayor of New York in 2006:
The proposal — a commercial complex that would rival Rockefeller Center in scope — is sprawling, expensive and fraught with political consequences. But after years of discussions between the developers and the owners of Madison Square Garden, the specifics are finally emerging.
On Tuesday, the developers — Steven Roth of Vornado Realty and his partners at the Related Companies — sought to convince Mayor Michael R. Bloomberg that moving the Garden one block west to Ninth Avenue would open up a historic opportunity to transform a dowdy and claustrophobic transit hub, overhaul an important corner of the city and generate tens of millions of dollars in tax revenues.
And in December 2007, Seeking Alpha reported:
Goldman Sachs (GS), Abu Dhabi’s ever-expanding investment arm and others have agreed to invest $1.4 billion into privately-held Related Cos., a deal that will allow it to continue investing despite today’s less borrower-friendly climate. The deal, expected to be announced today, includes about $400 million from Goldman and Michael Dell’s investment firm MSD Capital, giving them a 7.5% stake in Related. Abu Dhabi and Saudi company Olayan Group will invest about $1 billion, sources told the Wall Street Journal.
And further in the article:
Together with Vornado Realty (VNO), it runs a $14 billion project in downtown NYC which involves building two train terminals and a new Madison Square Garden.
The bigger project did not fly with a moved Madison Square Garden.
And, if you think luxury boxes are special, wait till you see the supersuite! :
The “supersuite” will be the size of 10 suites and can be broken down into smaller rooms if necessary.
At the end of the day, this is the reality, with the other projects put on hold, the priority is the renovation of the MSG:
The renovation of the nation’s busiest arena will take a year longer than planned — the upper level won’t be finished until the beginning of the NBA and NHL’s 2012-2013 season — and will go over its $500 million budget, MSG Vice Chairman Hank Ratner said.
But, “we’re not going to be looking for anyone else to pay for it,” Ratner said.
The city and state have committed hundreds of millions in bonds and other incentives to the Yankees and Mets’ new stadiums and a planned arena for the New Jersey Nets.
Interesting choice of words….maybe the City has learned that the bond issues and the promise of ‘buy now, pay later’ is not necessarily the best choice. If Related had their way, would the financing have been in the same type of sales tax related land development subsidies? Perhaps it will be of interest in future posts to look at the details of the Yankees, and Mets stadiums and the planned arena for the Nets.
Related Companies did not realize their original proposal that would have been huge:
Following rejection, an alternate plan, known as Plan B, was developed by Manhattan Borough President Scott Stringer (D-Manhattan), then-candidate for Governor Eliot Spitzer (D-New York), New York State Assembly Speaker Sheldon Silver (D-New York), and the Moynihan Station Venture – a collaboration between private developers Vornado Realty Trust and The Related Companies. Plan B laid out a significantly expanded vision. At a total cost of $14 billion, Plan B proposed relocating MSG to the Farley Post Office and replacing the existing MSG with a renovated Penn Station and several office buildings. The massive scope and scale of the project, combined with rising construction costs and a weakening credit market, inhibited progress on the proposed project.
While Related Companies didn’t get their way in the MSG and area development, it was not without trying.
On July 31st, it was announced that MSG would break away from the owner, Cablevision parent. I wonder what the new deal will be as a tax incentive to the cablevision shareholders.
The old deal, as reported in 2007 saw:
MSG’s owners, Charles Dolan and his son, Jim, haven’t had to pay property taxes on the famed arena since 1982 – an exemption that’s now worth $11 million a year.
As shown in the ‘old deal’ article, there were the folks that were against tax subsidies to the rich owners of the arena, and I am sure whatever deal the Dolan family has now, it will be just as lucrative.
The difference between MSG and Jobing.com arenas are miles apart. I am sure 72% of taxpayers don’t argue with the deals for MSG. But 72% do argue in Glendale. And that is the important point.