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May 2, 2009
"It Still Hurts When You Lose."
CFO Magazine
By Vincent Ryan
There's plenty to give your b.s. detector high readings in this Q&A with New Jersey Nets CFO Charlie Mierswa.
What will the move to Brooklyn mean for the financial growth of the organization?
Everything changes when we get to Brooklyn — I would expect us to be one of the most valuable teams. The difference is the density of the population. Also, we will be in control of the building. Just look at the sponsor values when we move to Brooklyn versus what we're able to garner in New Jersey; it's night and day.The arena will be a destination in the center of Brooklyn, with clubs and amenities that you can't find in other buildings in the marketplace, because they were built 20 or 30 years ago. It's more than just basketball. There will be concerts and family shows. It will be another market for artists to play in.
Do you anticipate any problems raising the funds to build the stadium?
The project has the political support that it needs, and the reason is the number of jobs it's going to bring. The recent financing that the Mets and Yankees did — municipal debt with PILOT payments [payments in lieu of tax] — that's the same vehicle we are going to use. The Yankees's $370 million issue was oversubscribed. Clearly there's an appetite for that kind of financing. We met with the rating agencies and they were very enthusiastic. All we need is the green light. We expect to get it in the next three or four months. We think we will prevail in the remaining lawsuits.
Political support for Atlantic Yards did not come from the paltry number of projected arena-oriented jobs, but from the "Affordable Housing" component of the project. Nobody knows if or when such housing might appear. Does Mierswa's comment indicate that Forest City Ratner is too busy trying to keep the project afloat to control the statements coming from its own team? Also, any discussion of project finances that doesn't take into account the U.S. economy and Forest City's financial health is woefully inadequate.
But you're also scaling back the architectural plans for the arena, right? We're going through a process of "value-engineering" the stadium plans. That will bring down construction costs to a level that will facilitate the financing. There's no question it will continue to stand as a landmark in Brooklyn; it will also be economically viable in this marketplace.
"Value engineering" translates to "Frank Gehry is no longer part of this project."
Posted by steve at May 2, 2009 6:37 AM