Craig Ferguson Investigates

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. 

Artist rendering of the new and improved MSG

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.

For the bullet summary, please go here.

Alan Leventhal, like the Jones’ group seems to have a path to Eric Rosen and MSD Capital. Should any of us be surprised at this point?

Is it a small world or what?

There are no ‘by chance’ referrals in this Glendale saga. Anyone introduced to the City of Glendale needs to be connected to the bigger picture. That much we know.

So,  it’s time to now look beyond Daryl Jones and his group. We learned that  Jones was connected to Onex, and his ex boss Eric Rosen, who left Onex to become the partner with Michael Dell in MSD Capital.

Alan Leventhal owns the Beacon Sports Capital Partners, the firm that was brought in to assess the Jobing.com Arena for the City of Glendale. His firm was referred by IFG (Michael Reinsdorf) to the City of Glendale. The report  from Beacon Sports Capital (Leventhal) was sent to John Kaites a month before the bankruptcy, as described in this article.

A letter summarizing these recommendations was sent to John Kaites on April 15, 2009, a little less then one month before Moyes put the Coyotes into bankruptcy. Kaites is a member of Jerry Reinsdorf’s Glendale Hockey, LLC group.

The whole month before thing shows us there was thinking in the works before Moyes made the bankruptcy official. So when the NHL says his filing for Chapter 11 took them by surprise, we should not be surprised to know it was really no shock at all. Also explains the proxies that were an attempt by the NHL to deter Moyes from actually going through with it.

Now, Alan Leventhal also owns Beacon Capital Partners, that specializes in Real Estate Investment Trusts (REIT’s), as described by Answers.com:

Beacon earns its bacon by collecting offices. A private real estate investment trust (REIT), Beacon Capital Partners invests in and renovates commercial and mixed-use properties in major metropolitan markets throughout the US. Beacon also has properties in London and Paris. The company manages investment funds on behalf of institutional, corporate, and government investors. Beacon Capital Pratners was formed in 1998 after predecessor public REIT Beacon Properties merged with Equity Office Properties Trust in a $4 billion transaction.

Remember, ‘mixed use’ was the term used for the CityNorth land subsidy issue. Could there be use for REIT’s in Glendale and other parts of Arizona? Where there’s smoke there’s fire. Nothing about the Phoenix Coyotes in Glendale is the true draw. Everything outside of hockey is the true reason to help the City with aspects of the Coyotes lease, and arena.

Alan Leventhal is also a Board of Governors member of the National Association of Real Estate Investment Trusts (NAREIT), as shown in this muckety chart. So, he is well connected and well respected with regard to REIT’s, and seems in it for the long haul.

As we are learning in Glendale particularly, sports management  services go hand in hand with real estate  and land development opportunites. One would wonder where the connection with Michael Reinsdorf would be in  this scenario. Why would Michael Reinsdorf connect Lenventhal with consulting for the  Jobing.com arena (and the City of Glendale)?

 Could there be more connections related to commercial real estate with Leventhal and the City of Glendale?

Well, let’s dig a little shall we?

There has to be ‘a friend of a friend somewhere’ that would tie in lucrative and influential Leventhal with land development and other opportunities, that would make that $48,000 he charged the City via Ed Beasley ( carefully placed under the radar) to be a simple loss leader.

Well, here’s a possibility.

Leventhal is the Chairman of Boston University.

A man named Donald Fraser is a Professor at Boston University, and therefore we could assume he would know Leventhal.

Well, Fraser is also by chance a Director of DRS Technologies. Isn’t that a coincidence? So is  Eric Rosen ( a Director of DRS, and Partner of MSD Capital). So Fraser and Rosen are both directors of DRS, and Rosen a partner with Michael Dell. Small world or what?

Therefore, it would seem we can tie Leventhal by the muckety map to connections that would lead him to MSD Capital. And why not? When you are in real estate investments through REIT’s, it sure opens up some interesting opportunities to have contacts in Glendale, through Michael Reinsdorf and Michael Dell.

 To summarize, could the sports management sideline business be an excuse to get in under the radar with Beasley and the City, through Michael Reinsdorf, and lead to other real estate investment opportunities with the City and MSD Capital? It sure opens up that possibility now, doesn’t it?

And in this parade of friends that use sports to get to the real money, it would sure seem to fit this story! And as for MSD Capital? Why does this company always seem to be the root of many relationships?

If some reporter for a paper that wants to get to the bottom of things should check the lunch receipts for Ed Beasley, do you think there is good chance Lenventhal would be etched on the receipts somewhere?