MENU

Reason.com

Free Minds & Free Markets

Brooklyn's Barclays Center is an Eminent Domain-Created Failure

Politicians and developers stole a neighborhood to build it, but it loses money and revitalized nothing.

It's been a little more than three years sinceThe House that Eminent Domain BuiltDreamstime/Zhukovsky Barclays Center, the 18,000-plus seat arena that's home to the NBA's Brooklyn Nets and the NHL's New York Islanders, opened on the site of Atlantic Yards in Brooklyn. After debuting in September 2012 with a series of sold-out Jay-Z shows, the mixed-use facility has held dozens of high-profile concerts and even hosted the 2014 Rock and Roll Hall of Fame induction ceremony

But despite its flashy entrance into a metropolitan market that already has three major indoor arenas, the project has turned out to be (surprise!) a financial loser, failing in just about every quantifiable measure. The promised "affordable housing" has yet to materialize and where the construction of new housing is even being attempted there are major structural and engineering problems. The opening of a few new businesses in the shadow of the arena can't exactly be credited to its existence, as the surrounding areas had been becoming a more desirable place to work and live for years prior to its construction. 

Neil Demause writes in the Village Voice:

As for Brooklyn residents, we now have a terrible basketball team to watch, and a pretty decent hockey team, and a garish arena and some growing housing towers on a site that otherwise would probably have something similar anyway, given that pretty much every possible site in Brooklyn now has a ginormous apartment building going up on it. And any revitalization effect on the surrounding neighborhood has been mixed at best: There’s a Shake Shack and other new restaurants, certainly, but then, there were new restaurants opening in droves in that area even before the arena was planned; data provided to the Voice by the city Independent Budget Office doesn't show any indication that more new businesses have opened in the Barclays Center's 11217 zip code than in other nearby parts of Brooklyn. Meanwhile, the site of the old Triangle Sports sporting goods store, which was cited as the harbinger of a land rush when its owners closed it and put the building up for sale, is still vacant almost four years later.

It’s probably too simplistic to say of the Brooklyn arena that everybody ended up a loser, but we certainly haven't seen any slam-dunk winners yet. So for now, man, is this turning out to be an epic train wreck, or what?

Writing at the Atlantic Yards Report, Norman Oder lays out the current financial details of the "train wreck": 

The Barclays Center had a terrible year financially in the fiscal year ending June 2015. Net revenues plummeted, to less than half the total once projected, and the arena lost some $9 million in what was (roughly) its third year in operation.

A hint of the news emerged in a bond rating document released upon the arena sale Dec. 22, then was detailed in a financial statement--Consolidated Statement of Operations for Brooklyn Arena LLC--released at 4 pm on New Year's Eve, seemingly timed to bury the news.

The arena's net operating income (NOI) fell well behind expectations, to $38 million, due to declines in event and related revenues, while operating expenses remained high. 

Speaking at the site's groundbreaking ceremony in 2010, then-New York City Mayor Michael Bloomberg declared that in 100 years, "nobody's going to remember how long it took. They're only going to look and see that it was done." Typically imagining himself as a benevolent master with a grand vision, Bloomberg considered the public-private development of the Atlantic Yards as his gift to the people of Brooklyn, which his friend and fellow billionaire Bruce Ratner promised would be an "urban utopia."

In reality, it was primarily a gift to Ratner and required the extensive use of eminent domain for the real estate developer to gain control of the property and build his "new neighborhood from scratch," which in addition to the arena was supposed to include more than a dozen skyscrapers. But as Reason's Damon Root wrote in 2011, "To build the Atlantic Yards from scratch meant you first had to wipe part of an existing neighborhood off the map." This meant evicting residents and businesses which had been a part of the community for decades.

As Root also notes, that was far from the worst of it:

In a noxious example of crony capitalism, the Metropolitan Transit Authority (MTA), which runs New York City’s subways, buses, and commuter trains, struck a secret deal to sell Ratner a crucial piece of real estate—an eight-acre train yard—that lay at the center of the Atlantic Yards footprint, without first opening up the property for competitive bidding. In response to the negative media attention generated by [homeowner Daniel] Goldstein and other activists, the MTA announced in 2005 that it would entertain bids after all—but only if those offers were submitted within a mere 42 days. Ratner’s detailed plans had been in the works for years, while his would-be competitors had to scramble.

Yet the real estate firm Extell did file on time, submitting a $150 million bid. Ratner then countered with a lowball offer of just $50 million and still won the rights. That figure was later negotiated to $100 million, which was still significantly less than Extell’s bid. Then in June 2009 the MTA bailed Ratner out again, allowing him to pay a measly $20 million up front, with the remainder due over the next 22 years. As the film points out, this sweetheart deal went down at the same time the MTA was raising the price of bus and subway fares.

Barclays Center is a fitting poster child for eminent domain abuse and the always unfulfilled promises of urban renewal via importing a professional sports team. The seven-year-long saga of the efforts of the Brooklyn community to fight the government's efforts to seize private property and hand it over to a billionaire offering a low-ball figure was the subject of the the Oscar-shortlisted documentary The Battle for Brooklyn

Reason TV interviewed the film's co-directors upon its release in 2011. Watch below:

Photo Credit: Dreamstime/Zhukovsky

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Rich||

    Bloomberg declared that in 100 years, "nobody's going to remember how long it took. They're only going to look and see that it was done."

    But, enough about banning sugary drinks.

  • Je suis Woodchipper||

    according to Bloomberg, in 100 years that shit'll literally be underwater.

  • Hugh Akston||

    Man I just can't wait 'til the NFL comes back to LA. Maybe we'll get the Olympics too!

  • Diane Reynolds (Paul.)||

    If we could eminent domain and raze L.A. to build a mega-stadium, I could allow my libertarianism to look the other way.

  • Illocust||

    "Yet the real estate firm Extell did file on time, submitting a $150 million bid. Ratner then countered with a lowball offer of just $50 million and still won the rights. That figure was later negotiated to $100 million, which was still significantly less than Extell’s bid. Then in June 2009 the MTA bailed Ratner out again, allowing him to pay a measly $20 million up front, with the remainder due over the next 22 years. As the film points out, this sweetheart deal went down at the same time the MTA was raising the price of bus and subway fares."

    Shit like this highlights everything wrong with government. Corruption like this would be near impossible to keep up in a big business. Slashing your profits by two thirds in an advertised to your bosses deal would get you fired so fast you'd break the sound barrier.

  • Sevo||

    "...released at 4 pm on New Year's Eve, seemingly timed to bury the news."

    They've been taking lessons from Obo and Hillary.

  • Diane Reynolds (Paul.)||

    "payoffs to union and community activists".

    In modern urban America, this isn't corruption, this is helping the working man get a break in a cut-throat capitalist world. Straight up.

  • Rhywun||

    Who the fuck anymore is stupid enough to move into a building where other residents will leech off your rent? I made that mistake once - never again.

  • Rhywun||

    "every possible site in Brooklyn now has a ginormous apartment building going up on it"

    There an ugly note of nimbyism creeping into a lot of the reporting on this topic. Many people don't seem to understand how under-built much of NYC is.

  • Jackand Ace||

    It's more than a decent hockey team, it's a good hockey team with one of the best players in the league. The Isles attendance is now picking up, and over time will become a fixture in Brooklyn. The whole thing, including the arena, is pretty young yet, so we will see.

  • kbolino||

    So, eminent domain is fine as long as you like the outcome?

  • Jackand Ace||

    Hated the outcome when the Isles left the Island.

  • Swiss Servator||

    So you don't mind taking other people's property, homes, etc and flattening them so some pro team you like can have a comfy arena?

    Fuck off, slaver.

  • Jackand Ace||

    No, I hated to see the Isles leave the Island. I thought I said that.

  • Mickey Rat||

    You mean left Nassau County. Brooklyn is still on Long Island.

  • Jackand Ace||

    True. Lots of my fellow Isle fans still can't get over it, but that's the way it goes. I've done the train, and it's easy enough.

    Kind of an interesting test underway. Will Nassau really miss the Isles leaving, and will it benefit Barclays and Brooklyn long term. The new digs in Nassau just got delayed again.

  • Rhywun||

    Which billionaire crony is going to pocket all the tax dollars for the Nassau redevelopment?

  • Jackand Ace||

    Not Charles Wang.

  • Rhywun||

    Then he's not doing it right.

  • Jackand Ace||

    When Nassau kiboshed the Lighthouse Project, not only did he lose any benefits for construction, but there went the Isles. And then he sd the majority interest.

  • Jackand Ace||

    *sold

  • kbolino||

    I just want to be clear here. You are a bald-faced liar with no shame.

    Yes or no?

  • Jackand Ace||

    Let me know when you have seen me defend eminent domain, even with Barclays. I responded about the financial viability of it, long term.

  • kbolino||

    Let me know when you have seen me defend eminent domain

    Let me know when you find a libertarian doing the same. Until then, shut the fuck up you disingenuous twat.

  • Jackand Ace||

    Hey Kbo! Enjoy your day!

  • Jackand Ace||

    And Isles play tonight...check it out!

  • Robert||

    I will say this: In NYC & probably lots of other municipalities, major real estate development is so gov't-controlled that you accept either the possibility of eminent domain or an effective ban on all development. Eminent domain isn't used in all cases, but it's understood to always be part of the scene, & factored into every consider'n. If you were to eschew it, you'd be cutting your own throat. It's as w some farm programs whereby you're not allowed to grow & market the commodity unless you accept the subsidy.

  • Idle Hands||

    The capitals have managed to make them their bitch.

  • Jackand Ace||

    Boy, the Caps look great. Sad to say you are right this year, but it's one game. Last year's series was not so one sided. I remain hopeful.

  • ||

    On top of everything else, it's made traffic in the area a lot worse. It was not a brilliant idea to build a giant stadium right at a bizarre intersection where traffic was already bad because several discontinuous grid patterns are forced together.

  • Jackand Ace||

    They should take the subway, it's right across the street.

  • kbolino||

    As we all know, trains have infinite capacity.

  • Jackand Ace||

    Atlantic Terminal is right there. You walk across the street and you are in. And LIRR keeps adding their own trains for Islander games.

    I know...I just defended eminent domain.

  • Jackand Ace||

    And go Isles!

    Oops...there I go again with that eminent domain stuff.

  • Rhywun||

    it's made traffic in the area a lot worse

    That's a peculiar complaint to make against a downtown landmark in a city where most people don't drive.

  • ||

    But Barclays isn't "downtown". And enough people drive to make it a royal pain getting through that intersection on foot now.

  • Rhywun||

    One of the links has some bullshit copy/paste protection but I wanted to throw up a TW for another asinine Spike Lee quote. Something about only rich white people walk their dogs. That man is a real font of derp.

  • Swiss Servator||

    Instead of putting up Hitler pictures - you could just point out how much Trump loves #$%& like this eminent domain slaving.

  • Glide||

    This eminent domain article that carefully avoids saying the word "Trump" still links to three Donald Trump posts as "related".

    So I'd say they might have mentioned it before.

  • Swiss Servator||

    Well, today seems to be the first Hitler-ing...at least, photo-wise.

  • Almanian's Rusty Woodchipper||

    stole a neighborhood to build it, but it loses money and revitalized nothing

    The trifecta!! Never change, government, never change!

  • Crusty Juggler||

    My brother used to work right near the arena, and he told me that the outside of the building always emanated a strong urine smell, worse than the rest of the city.

  • Mickey Rat||

    Given the way pro sports teams discard buildings these days, no one is going to remember the Barclay's Center was there in a hundred years.

  • Jackand Ace||

    Yep, and then new arenas get built elsewhere in 5 years making those new amenities at Barclays old. It's a losing proposition.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online