Passing the hat to collect $1.4 billion
New York City is being touted as "the world's second home." The city is also one of the most crowded. So where exactly could an 86,000-seat stadium fit along the Manhattan skyline?
Tucked snugly in the new Convention Corridor between 30th and 42nd streets, near the entrance to the Lincoln Tunnel, just three blocks west of Times Square. That's where Olympic Stadium will be constructed, should New York City be selected as the host city of the 2012 Summer Games some 400 days from now. The International Olympic Committee releases its shortlist of finalists on Tuesday.
In late March, New York governor George Pataki and New York City mayor Michael Bloomberg announced the financing proposal for the stadium, which would be built on Manhattan's far west side on a platform covering the Long Island Rail Road's Hudson Yards.
The stadium would open in 2009 and serve as the home of the New York Jets, which agreed to pay $800 million and finance any cost overruns on the project, before it was used as the Olympic Stadium. Another $600 million would be split equally between the city and state to build the platforms and put a roof on the stadium, which could boost its usefulness for conventions and trade shows.
Having the secondary use for the stadium is critical in resisting backlash from the public. In a recent Quinnipiac University poll, 60 percent of New York City residents said they objected to the use of public funds to build the stadium. With the Jets willing to run the facility year-round without any public subsidy, public and team officials predict that the city will more than make up the cost in tax revenue.
Critics of city economic feasibility studies aren't so sure that the stadium itself will serve a separate purpose as a convention facility, given that part of the revitalization of the area also includes a $1.4 billion expansion to New York's largest convention facility, the 18-year-old Jacob Javits Center, which will expand from its current capacity by 80 percent. Madison Square Garden already fills the niche as a possible convention destination, with 36,000 square feet and 20,000 seats to offer. A spokesman for Cablevision, which owns Madison Square Garden, said officials in charge of the facility would have no comment on the Jets/Olympic stadium proposal.
Aside from pitching the merits of the year-round capacity of the stadium, NYC2012 officials are selling the proposal to the people of New York by saying they believe that their use of the space is most advantageous to the city's future. There has never been any developer who has been this interested in purchasing the air rights, which literally means selling the space above an already-established structure, over the rail yards.
"You have to remove the eyesore of 22 acres of open yards and make something attractive out of it," said Jay Kriegel, the executive director of the city's bid. "Just building a platform over it isn't enough. You need to create an attractive destination that would entice private investment."
City officials say that there is capacity, over the next 30 years, to have 12,000 apartments and 30 million square feet of office space built around the area, some of which will be prime waterfront property. But aside from the fact that officials with New York real-estate company Newmark say that there is already 35 million square feet of office space available for lease, critics are skeptical that the stadium can spark economic growth in the area.
Kriegel says he's "quite optimistic that people will want to be located around the spectacular area with direct access to the river and a beautiful park system." Optimism isn't enough, according to sports economist Andrew Zimbalist, who recently released a report that found a new Nets arena over Brooklyn's Atlantic Yards would send hundreds of millions of dollars into the state coffers, in part because Nets owner Bruce Ratner has included the building of 4,500 apartments as part of the project. The report was commissioned by Ratner.
"I don't think they have compelling evidence to say that this facility will bring the amount of investment to the area they are projecting," Zimbalist said.
Despite apparent concern over public sentiment from NYC2012 and city officials, the state does not have referendums, so it would be difficult for a stadium decision to appear on any ballot put before the public. The choice likely will be up to the city council and state legislature.
The $1.4 billion estimate for the project already surpasses the current estimate of London's new Wembley Stadium and its surrounding infrastructure. That project, scheduled to open to the public in 2006, will cost approximately $1.34 billion and would not even serve as the Olympic stadium should London win the 2012 bid.
New York's project figures do not include the extension of a subway line to reach the new development, the land costs or the air rights that need to be secured from the Metropolitan Transit Authority to have the right to put a platform over the rail yards and build on top of it. Former MTA chairman Richard Ravitch, who was also the chairman of the city's 1984 Olympic bid, estimated that the rights could be worth billions of dollars if the organization received fair market value, according to a report in Newsday last month.
An auction for the space among developers isn't expected. The MTA, the city and the Jets signed a memorandum of understanding that they intend to include air rights in making the transaction. However, MTA spokesman John McCarthy said that the organization -- which has a $9 billion budget and is projecting a $500 million budget gap for 2005 -- has had no formal discussion with any potential buyer of the air rights over Hudson Yards.
The Jets, who currently have to split some of their largest revenue generators at Giants Stadium with both the Giants and the New Jersey Sports & Exposition Authority, will finance most of their $800 million contribution from the sale of luxury suites, club seats and naming rights. They also have access to a loan of as much as $150 million as part of the NFL program, which lends money to teams building stadiums.
Cost overruns on the stadium would be the Jets' responsibility, a tremendous burden according to Hatch. "When I was a project manager, I'd take the estimate I got and automatically double it," he said.
"I'm comfortable with the concept of us handling the overruns, but I'm nevertheless very nervous," admits Jets president Jay Cross, who has overseen the building of both the Air Canada Centre in Toronto and the American Airlines Arena in Miami.
Cross says the Manhattan location allows the team to minimize its risk compared with other potential locations. With no taxpayer dollars committed to the operation of the facility, Cross said the team hopes to operate it on a break-even basis.
New York City's appearance on the pared-down list of 2012 candidates on Tuesday might mean that the dream of having the Olympics in the city for the first time ever is a step closer. But all one has to do is look at the most ambitious stadium project ever attempted to realize just how small that step really is. Next month, the Environmental Impact Statement on the scope of the development is due. According to Kriegel, the report is expected to be 12,000 pages.
Darren Rovell, who covers sports business for ESPN.com, can be reached at firstname.lastname@example.org.
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