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RSJ

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Posts posted by RSJ

  1. http://www.msgnetwork.com/content_news.jsp?articleID=v0000msgn20050307T185156158&newsgroup=ap.sportsml.columnist.article&sports=american-football&team=Jets&league=nfl

    Bob Wischusen

    Casualties of Gang Green's free agent frenzy

    Mar 08, 2005

    Kareem McKenzie signed a free agent contract with the Giants this past week. And after signing the deal with Big Blue, he was asked if he was surprised the Jets weren't more aggressive in attempting to re-sign him. He said this: "Not at all, because in looking at the history of the Jets and seeing how they have trouble keeping key players to maintain consistency, you never know what to expect around the corner."

    Now, I really like Kareem McKenzie. He is as bright a player as there is in the NFL. And any player -- any man for that matter -- would probably be a little put off if the message is sent loud and clear that he really isn

  2. It doesn't for RB's in my eyes. Bettis and Martin take a pounding in the regular season and are definitly slower and less dangerous come playoff time. It's not thier fault that they took 90% of the snap in the regular season giving them nothing left in the tank for the playoffs. If you look at the super bowl winning teams since the Rams they all had RB by commitee or in the Ravens case J Lewis missed much of the season. Fresh leges or a commitee approch is best when spread over the long season and playoffs.

  3. i have seen NOTHING that says any area within the project will pay taxes, i have seen articles that say the whole rezoned area will pay PILOTs to the LDC to pay off the debt. would you agree, and you, too, rsherry, that if no taxes are be generated under the current scheme, the project is a loser with the potential for real fiscal disaster without the olympics?

    In the "Original Project Plan" you provided it say the following.

    Economic Impact

    ESDC has performed an independent economic impact analysis of the Project. (Separate analysis

  4. i can't imagine that 8 days worth of income tax on player salaries, as large as they are, could offset that - employees of my ad agency that travel a lot break out their income on days they don't work in new york, i can't imagine these guys wouldn't.

    You would need to further explain why your employees break out there income on days they do not work in the city. There are certain acceptable reasons. It is not only players salaries that will be taxed though. It is entire events as well as money generated surrounding those events.

    i can only speculate, but i don't think the deal works with a non-football team b/c there aren't enough open weeks in desireable time periods to host the 14-30 javits events they need. as for the giants, i would guess woody, as a key republican party findraiser, might have an edge; also might be that the giants are sold on jersey...

    I'm not sure that is true one way or another.

    stripping out all tax earnings on the project for 30 years seems like a steep price to pay to hedge something that is unlikely - the risk/reward ratio seems way off. the entire rezoned area is subject to the PILOT, due to the associated costs of a stadium. so i don't see the ancillary income that would be greater in contrast to development without the stadium.

    I didn't see that the whole area is subject to a PILOT. I thought that is was just the stadium. Again, commercial real estate is far less stable than any other type of real estate.

    if that's true, then it makes all the more sense to invest more heavily in residential development, an area where the prospect of growth exceeds all expectations and projections.

    I would agree that it makes more sense to try to build a residential building in the city than a commercial one at this point. But this is an entertainment complex that will hopefully attract corporations that otherwise might not do business in the city.

    in ABC, from what i know of it, activity is what crushes profitability, not lack of it - because those activities consume resources, usually 'overhead', that are not accounted for in traditional cost accounting. i fail to see how that applies in this broad sense - ABC analysis requires knowledge of overhead costs and direct costs tied to a product or service, in order to calculate the 'true' cost, and this determine profitability.

    In all cost theories "Overhead" is a fixed cost. Your overhead costs are the same whether you produce 500 units or 5000. Variable costs are tied to production. You are right that in order to determine profit you need all these figures in order to compute true cost. Activities do consume resources which are considered variable but you are increasing profits. And with a lack of activity you do not consume resourses but you still have the same fixed overhead costs.

    Anyway, this is a complicated issue and I'm pretty much done. I will say one thing that I honestly believe. I honestly believe this is a good deal for the city and the Jets. Also in none of these newspaper articles have I seen them quote a renowned economist or accountants analysis of this project. All I see is a lot of politicing. It would be nice and very possible with all the figures to breakdown the whole deal from a numbers standpoint which is were I think our seperation in beliefs is at and many others.

  5. so do you disagree with the appraisers that say that mixed development would be more valuable? it would certainly would be less risky, and it would realize more immediate return, along with more tax revenue...

    i get your points, but i kind of disagree on one - that the city could not do this alone - maybe not, but 'this' doesn't have to be a stadium, and it could be with another party, not alone...

    i think it's over-subsidized - i think the jets would still do the deal, even if they had to dip into their own project-based (i.e. stadium) reveue, eventually, to pay for it - that's the way most manhattan development projects were PILOTed, like battery park, where the PILOTs covered the time before the project realized revenue - then it converted to traditional taxes and traditional debt repayment (i.e., 'from the developers pocket'). maybe they wouldn't, but i don't think we need to offer them that option. especially if we're only going to collect after it's paid off, and at that time, under the agreement, the jets are under no obligation to stay.

    also, the stability of the PILOT cuts both ways - if the stadium and surrounding area truly is a 365 day booming area, taxes would surely eclipse the PILOT payments (whatever they might be within the confines of paying off $600MM of debt - or whatever the jets bonds are - in 30 years).

    I don't disagree that you can build a better mixed bag of real estate in that spot and it would be more valuable from a real estate perspective. But not from a city income perspective. Look at just the players salaries that will be subject to city income tax. Same goes for the bands that will perform there. I'm pretty sure this would outweigh a little more property tax from higher valued buildings from a mixed bag scenerio.

    The city could do this with another party. But let me flip it and ask you this. If the Jets are getting such a sweatheart deal why haven't the Giants, Yankees or Mets jumped on it?

    You are 100% correct that the pilot cuts both ways. But the guarentee is that the building will never be worth what it costs to build it and could be worth far far less and not be drawing any venues 5 years from now. Not likely, but could happen. Also if it is booming and business is great that means the city is collecting a ton of revenue from all the other revenue streams included in this project plus the fixed revenue from the pilot.

    This is not being set up like other projects because it is different than all the others. There is also economic problems that exist in the city that did not exist back then. The prospect of the city growing commercially is not good at all. This is why the city needs to be on its heels on this project. Lastly this project is based on a cost theory called activity based cost. Where there is what's called a cost floor and activity does nothing but shrink the cost basis. But lack of actuivity does not crush the project.

  6. you have to admit, there are as many levels in which the deal is shady,if not more, as there are in which it makes sense.

    I really do not think it is that shady. I do think it is very, very complicated and based on some optimistic thinking. I think the media again is very biased and twisting things around to confuse people.

  7. the other issue, of course, with the LDC is that while it offers bankruptcy protections (and let's face it, the taxpayers of new york city are the best guarantors on the planet, so that's not an issue - our relatively stable rating, even in times of financial crisis, is as big a testament to that as any) it was set up to enable the PILOTs (that's the point you didn't want to discuss, but the Jets couldn't do this by themselves, because they wouldn't be able to use tax exempt bonds, or own the stadium) and, perhaps more importantly, to sidestep city council authority - if the monies went from the city to the jets directly, it would all need couincil approval.

    Two things here:

    1) The bankrupcy thing is a good protection whether the city is great guarentors or not it is a smart move to protect the city and its taxpayers.

    2) The Jets may not be able to do this by themselves but neither could the city. The stadium and all the revenue it will generate is the focal point of this whole project. The city is hurting right now and could use to create new revenue streams. This project will do that. Though it may take some time to materialize it will be a great revenue stream for years to come.

  8. the only question i have with that part, is "how is the city not paying the bill under the PILOT program?"

    don't forget, the PILOT doesn't just cover property taxes, but all other taxes as well - ticket sales, concessions, etc. since that money definitely would have been in the general fund, and now it it being used to pay the jets bonds, how is the general fund (a/k/a nyc, a/k/a taxpayers) not paying the bill?

    Again it is a trade off. The west side and all the projected developement around it stands to benefit from the construction of the stadium. The city may not benefit in concession revenue but they will benefit from tax revenue created in the surrounding area from the stadium being there. We really need to see the PILOT agreement before we can speculate on how much the city will benefit. It will be largely based on the payoff figures for the PILOT.

    The last point on this is that the city set up a phantom corp in order to run all the financing through. In order to make investors more confident in the investment into the bonds that this corporation will distribute they need to attach a revenue stream to them. That way investers can feel more confident that the bottom won't fall out and they are left with nothing. The revenue from this whole project in the end will filter into the general fund but it first must be set up to pay debtors or no one will invest.

  9. Not True:

    Pilots are replacements for TAXES. However, they can be used in lieu of Bonds as a loan with a Small interest accumulation added to the Pilot in order for revenue to be re-couped by the city that offers them.

    My responce was in relation to if there were no PILOTS, the JETS would still get a TAX EXEMPTION, just like the DOLANS/MSG have in place right now.

    Should they remain in NJ, The JETS would have to pay revenue taxes to NJ - Something that they do not want!

    I don't think you can make the statement that these payment will have a small interest rate attached to it without seeing the agreement.

    Again, I'm not sure the Jets would be tax exempt if they brought the cash to the table. Perhaps they would if they built the stadium all by themselves and there was no developement being done in the surrounding areas or extention of the 7 line. But this is where the city really makes out if the developement takes off.

    As far as New Jersey goes you can't bleam woody for trying to get the best deal possible. If all goes as planned this deal can benefit everyone involved.

    Again I want the Jets to stay in NJ or go to Queens I honestly do. But I think there is a biased in the media right now and they are falsly reporting things.........as ussual.

  10. And you just put in perspective the main reason that the JETS want a Manhattan home - TAX EXEMPTION. Even if there were no PILOTS in place (They have to be - Construction expenses $$$$) The JETS Organization would demand that they get the SAME tax exemption that another Owner of Sports Teams is getting on the SAME ISLAND.

    Therefore, even if the stadium becomes a loss, there will NEVER be a TAX revenue from the Team that becomes the TENNANT/LANDLORD of the project.

    PILOTS are not tax exempt in terms of protecting the Jets from paying taxes. The are tax fixed and making the Jets pay a fixed tax which in the end is higher than the City/State would otherwise collect.

  11. my issue isn't that they're issuing PILOTs for the city and/or state portion, it's with allowing the jets to pay back their bonds with PILOT payments to the state phantom corp set up to funnel the money - in my view, there are 2 problems with that setup:

    1 - those PILOT payments belong in the general fund, not paying woody's debt - if money that would otherwise be in the general fund is used to pay back woody's debt, the taxpayers are, in effect, paying for woody's portion of the stadium as well.

    The way I read it is that the money is not being used to payback Woody's debt but rather the projects debt. In the early years this project will lose money but the PILOT program will solidify or put a basement on loses.

    2 - why on earth shouldn't the jets use their revenue, in part or in whole, to pay their debt?

    The city is not putting any of its main assets on the line in this project and neither should the Jets. This goes back to the purpose of the corporation which is to protect the city from this project failing all together. If the Jets were to build a stadium in Queens using $800 million and went to the bank for a loan the bank would attach the Jets revenue as a form of paying the debt back. The city is doing the same thing but by attaching a PILOT. The PILOT will then turn around and secure the developement of the surrounding area from any financial colapse if it were to happen. The Jets could go to a bank and take out the loan but then the nightmare scenerio of the city developing the area and values plummiting that I described above could happen. Remember this is based on optimistic developement of the surrounding area too and not just a stadium.

  12. that would be true, and make sense, if the payments were going into the general fund. those financing proposals, if i understood and remember them correctly (and from what i've read, i did), have the state setting up a phantom corp. for the purpose of issuing the bonds for the jets (the jets can't issue bonds through a PILOT themselves, since they're a private entity), then receiving the PILOT payments from the jets and using them to pay off the bonds. furthermore, it's a double-benefit, as the bonds that are being repaid by diverted tax money will be tax free from the outset, so we lose twice on the same dollar.

    You bring up a ton of issues here.

    First the issue of starting a Phantom Corp. A Phantom Corp is being started to protect the City and States interests first and formost. This way if the project went belly up the Corporation can file for bankrupcy and it won't effect the city or states assets or revenue and only this projects. This is just protecting the city and state and is smart. Most if not all corporations do this when starting a new venture to protect thier main business.

    I'm not sure what you mean in your statement regarding the "double benefit". A PILOT is not a Bond in itself but rather a loan. The revenue will be used to pay off the Bonds because of the shortfall that will happen in the begining years of this project. Some of the bonds that are for sale to the public will come due or could come due before revenue is generated to pay for them. This is why the city and state took out a 1 billion dollar line of credit. In order to protect for additional shortfalls beyond the potential projected shortfalls plus possibly cover city and state overages.

    The Jets could issue bonds themselves but we won't get into why they don't. Lets just say it is better for the city to.

    I think were the problem you are having is the fact that you think a PILOT is a deiversion of taxes of some sort. Maybe you don't feel that way but if you do you should get that thought out of your head. It is a loan where the Jets pay it back. This loan can not go down in terms of what the Jets pay but only go up.

  13. i think you're using one of the many definitions of PILOT that exists - however, none of the manhattan PILOTs are formula-based, from what i've read - they've all been negotiated, some with the intent of covering specific segments (usually education) of what would have gone into the general fund, and putting that money exactly there.

    OK, I'm going to take this a segment at a time. I think it will be easier this way.

    There must be some formula they are using to base this PILOT on. It is not fixed in the sense that there isn't a variance from year to year rather it has fixed increases in it that match the aggresiveness of the projected growth. I'm speculating on this but this is the conclusion I'm drawing based on the research I did on PILOTS and the articles I read that you provided. No where did I see the specific PILOT agreement. Just knowing how they work makes me confident in my speculation. I hope this answers this part of it. As far as where the revenue goes I don't see where the problem is wit the revenue going into the general fund.

    PS if you could snag one of the actual PILOT agreements I would love to look it over and break it down.

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