The Barclays Center: An Economic Snapshot

Our final project this semester is to write an economic snapshot of a neighborhood in NYC. I chose to evaluate the Barclays Center, the new entertainment and sports arena built in Atlantic Yards in Brooklyn.

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Barclays Center Pinpoints Local Winners and Losers in Business

By Sonya Chudgar

A Darwinian evolution transpired in 1962 on New York’s Upper West Side, a neighborhood so rough, it was cast as the lead antagonist in West Side Story. When local leaders unveiled the Lincoln Center for the Performing Arts, the Upper West Side turned to mirror the Center’s classy endeavors, reducing its grit throughout the ‘60s and ‘70s in favor of gentrification.

The Lincoln Center is just one historical example of a facility that ignites urban cleanup in the neighborhood it anchors. Next on history’s list may be the Barclays Center.

The Barclays Center opened in late September in Atlantic Yards, a community announced in 2003 by Forest City Ratner. The development firm championed the $1 billion Barclays Center as a rebirth for Brooklyn. The entertainment and sports arena repositioned the NBA Nets from New Jersey to Brooklyn, and the NHL’s New York Islanders agreed to join the venue in 2015.

Underlying the announcement was the promise of economic development, from the 300,000 square feet of proposed retail space to the boost incumbent businesses would afford.

But weeks after the arena’s opening, several empty storefronts and “out of business” signs dominate Flatbush Avenue to the Center’s right, illuminating one silent truth in Forest City Ratner’s proposal: While the Barclays Center will spur economic development, it will fundamentally change the nature of businesses that can succeed in its vicinity.

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Changing the Economic Landscape

Unlike the Upper West Side, Atlantic Yards was not born on mean streets. Instead, it meets at the cusp of three Brooklyn neighborhoods: Park Slope, Prospect Heights, and Fort Greene. The brownstone and gentrification revolution swept through the area as it did much of Brooklyn in the late ‘50s. Families swayed by the region’s architectural character, diversity, smaller scale, and local businesses moved in and settled into a residential routine there.

The Barclays Center is turning the routine upside down, says Gib Veconi, treasurer of the Prospect Heights Neighborhood Development Council.

“You might have expected a small business to come in, entrepreneurs to come in, everything else,” Veconi says. “Instead, it’s really the landlords and the national brands that will move in there that are going to be the most benefited.”

Listen to Gib Veconi’s take on the Barclays Center and check out some photos of the area!

The Center lies on a patch of land between two distinct avenues. On the left corridor is Atlantic Avenue, where a haven of national brands such as Target, Designer Shoe Warehouse (DSW), Best Buy, and Victoria’s Secret prosper.

National brands dominate Atlantic Avenue to the right of the Barclays Center.

National brands dominate Atlantic Avenue to the right of the Barclays Center.

Across the street on Flatbush Avenue, the Barclays Center is driving rents up and small businesses out.

“If they increase my rent, I gotta leave,” says A.B. Fulani, owner of an eponymous shop that has sold men’s suits and high-end clothing on Flatbush Avenue for 15 years.

“I’ve been around a long time,” Fulani says. “I knew when [the Barclays Center] opened that it wouldn’t be good. It’s not doing me good so far. I’m not getting the same people that I used to get.”

Veconi says rents surrounding the Barclays Center are hitting $175 per square foot, “which is huge.” Retail rents are usually $5-10 per square foot in the area, according to property listings.

At the Furniture House on 170 Flatbush Ave., owner Ruben Mesa regards the arena with narrowed eyes.

Across the street, Flatbush Avenue has fewer prosperous businesses.

Across the street, Flatbush Avenue has fewer prosperous businesses.

“Well, I’m moving,” says Mesa, whose store has been a staple of the neighborhood since 1991. “So, that’s the story—and it’s because of that.” He points at the Barclays Center sitting 30 feet across the road.

Joy Mesa, Ruben’s wife, says she hopes they find a Brooklyn storefront to relocate to, though she’s not hopeful, given the climbing rents.

“A lot of people will tell you, ‘Oh, you’re getting business because you’re near the Barclays Center!’ But no, we’re not,” she says. “It depends on what your business is. If you’re a restaurant or a bar, then yes, you probably are. But us? Not a furniture shop.”

The ultimate victor of Atlantic Yards is Bruce Ratner, whose firm built the complex. Ratner’s is worth about $400 million, according to USA Today, and he earned another $200 million for selling majority ownership of the Brooklyn Nets to Russian tycoon Mikhail Prokhorov. His nonchalant stance in seizing Brooklyn’s eminent domain outraged locals.

The press office at the Barclays Center did not respond to requests for comment.

Brooklyn President Marty Markowitz has been one of the staunch proponents of the Barclays Center since the beginning, galvanized by the arena’s ability to elevate the status of the borough and rejuvenate business in the area.

The Furniture House on 170 Flatbush Ave.

The Furniture House on 170 Flatbush Ave.

“Of course, I remain optimistic that this project will create thousands of jobs and bring much needed affordable housing and even more vitality to downtown Brooklyn,” he said when the new Barclays Center design was announced in 2009.

But for business owners such as Fulani and Mesa, the Barclays Center has been a misery.

Veconi says the neighborhood dynamic will shift from family folk to those chasing the nightlife, as developers commercialize with the fervor of a child quenching a sweet tooth.

“It’s going to feel very different over there,” he explains. “It’s going to be like something that will resemble SoHo or the Upper West Side than what’s been traditional in brownstone Brooklyn.”

The pivot is already in motion, eradicating mom-and-pop businesses and uplifting the food and beverage industry.

The Winners

Logan Bowles is manager at gourmet falafel restaurant Kulushkät on Dean Street, a block from Flatbush Avenue. He says business has improved since Barlcays opened last month, adding that nearby bars now blow up with customers during big sports games.

Business has increased 50 percent at the Cake Ambiance, a pastry shop on Dean Street with sprinkle cupcakes and red-velvet-cheesecake mélanges.

“Especially after games or shows or whatever, people come out and buy,” says manager Modupe Gonzalez.

Rent has not increased yet at the Cake Ambiance. Gonzalez says she expects it will soon, though the store has no plans to relocate regardless of a rent hike.

A handmade shirt from Brooklyn Rock.

A handmade shirt from Brooklyn Rock.

Another beneficiary of the Barclays Center is Brooklyn-centric shopping.

Yukiko Wada and husband Chris Smith own the apparel store Brooklyn Rock on Dean Street. From the teal exterior to the multicolored lights dangling off the wall, their shop oozes flair.

Everything in the store is handmade by Wada and Smith. Humor radiates from the products, from mugs that quip “I got mugged in Brooklyn” to shirts that depict the Brooklyn Nets as hunters who wield butterfly nets and chase basketball players.

The shop’s native appeal made it an attractive investment to the building’s owner, Wada says.

“I’m sure the arena has driven up rent, but our landlord wanted the right business here,” she explains. “We’re Brooklyn made. He wanted to try to get artists and neighborhood people [into the store].”

Yukiko Wada shows off the Brooklyn-centric apparel at her store.

Yukiko Wada shows off the Brooklyn-centric apparel at her store.

Success stories such as Brooklyn Rock and the Cake Ambiance support the views of Veconi and Markowitz. The two differ in their opinions on the Barclays Center, but both are exact about its impact: it will transform the businesses that succeed in Atlantic Yards whilst growing into Brooklyn’s entertainment heart.

“Think about all the jobs that the arena will generate for the businesses that provide services to Barclays Center, and all the shops and restaurants will be booming thanks to the hundreds of thousands of visitors flocking to this arena,” Markowitz said in September at the Barclays Center ribbon-cutting ceremony.

Until the gentrification is complete, though, the defeated business owners on Flatbush Avenue will dwell under the shadow of the Barclays Center.

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When Companies Get Swept Into the Facebook Mythology

You’ve probably heard by now that the SEC is considering a lawsuit against Netflix for a post it published on its Facebook page in June. CEO Reed Hastings shared that the video-streaming platform saw more than 1 billion streams the previous month, and as a result, its stock rose 6.2%.

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The SEC is displeased. According to securities law, companies must share information in a “non-exclusionary method,” like in a press release or a newswire. The SEC wants all investors to have access to the same information—a fair point, if you ask me—and admonishes that Netflix did not file an 8-K or issue a press release in conjunction with the CEO’s status update.

This speaks to a broader problem with life in 2012, outside the micro world of video streaming and company profits: there is a pervasive atmosphere of over-share, promulgated by Facebook and his cousin Twitter, and companies and CEOs need to know where the line is. Perhaps, in fact, we all do.

The ease of sharing on Facebook and Twitter coincides with an overall loss of privacy—which, granted, we all give up easily and without thought, completely ignoring the battle for personal privacy that courts have fought on our behalf for decades—and with no one reminding us when to curtail that sharing, we keep on hitting those “like” and “comment” buttons.

Netflix isn’t the first company to throw some stats up on Facebook, and it certainly won’t be the last. But companies need to not buy into the Facebook mythology that the social network has successfully concocted and spun into all of our brains. We don’t have to share our thoughts on daily happenings, our commentary on sports and politics and our families. We, surprisingly, do not have to post photos of every gathering we go to with our friends.

Facebook has done an incredulous job as a brand, getting us to believe we must log on to feed off its life-giving energy and survive our daily routine.

Regardless, we’ve gotten used to sharing and liking and tweeting our pants off. So what happens when Netflix gets sued for getting caught with its pants down?

Microsoft’s Little Angel: Let’s Just Call it “Halo”

You may have heard by now that Halo 4, the uber-popular video game produced by Microsoft, took in a small fortune in its first 24 hours on sale. While the rest of us were out voting last Tuesday, Halo 4 was raking in $220 million, or the amount that Disney’s successful Wall-E took in after 28 weeks in theaters.

Let’s all ask the question that’s on the mind of non-gamers like myself: What the heck?

To begin, we’ll look at some stats, as reported by The L.A. Times:

  • Microsoft projects “Halo 4” will generate more than $300 million of sales in its first week.
  • More than 4 million people played the game in its first five days, devoting more than 31.4 million hours (some copies of “Halo 4” may have been played by multiple people).
  • Microsoft also said that episodes of a companion live action series it produced, titled “Halo 4: Forward Unto Dawn,” have been viewed more than 46 million times online.

Sometimes, amidst all the lucrative movies and television, it’s easy to overlook the draw of the gamer market. But it’s loud and alive, as proven by big releases such as this.

Credit: Microsoft-news.com

What makes Halo 4 such a draw? Microsoft certainly did a boastful job in promoting the release. A Halo glyph display of more than 113,000 LED lights and 50 feet in diameter flew over the Thames River in London last week, attached to the company helicopter and visible for miles. Tell me that wouldn’t get your attention!

Before Microsoft breaks out the champagne to toast this record-breaking success, I’d take a second to consider the month: with the holiday season upon us, shoppers will be looking for gifts, deals, and retail appeals. The all-time record for highest sales by a video game on its debut day is Call of Duty: Modern Warfare 3, which bowed at $400 million in 2011.

The latest Call of Duty, Black Ops 2, hits stores today. Is that a record I hear smashing in the background?

The “Big Six” Movie Studios; Does Disney’s Lucasfilm Purchase Make Disney King?

It’s been a while, folks. Sandy left me without power for a while (still waiting on that hot water to return, too!), but a few things have happened in the media and branding world that I’d love to comment on. I’ll start with Disney’s $4 billion purchase of George Lucas’ child, Lucasfilms.

Listen while you read! 

My first thought upon hearing this news is that this gives Disney a commodity that makes the brand not quite a monopoly on successful, profitable series, but something close to it. We’ll delve further into this hypothesis by contrasting Disney’s strong franchises to others out there.

There are six movie studios that are considered today’s “big six”: Disney, Paramount, Columbia, Warner Bros., Universal, and 20th Century Fox.

In terms of powerhouse series, Disney owns the wonderful cartoon films children of the ’90s grew up on (OK, not technically a series, but this does include include Toy Story, still spawning sequels), The Avengers and all of its individual superhero series, and now Star Wars and Indiana Jones.

Here’s some background on Disney to help you out:

  • The Avengers film last summer pulled in $623 million in the U.S. alone. It pushed out The Dark Knight to take the No. 3 spot in the all-time domestic box office rankings. (If you’re curious, The Avengers’ worldwide pull was $1.5 billion.)
  • Toy Story 3, a sequel that came 15 years after the original, raked in $410 million domestically in 2010.
  • Pirates of the Caribbean: Dead Man’s Chest and POTC: On Stranger Tides are Nos. 8 and 10 on the all-time worldwide box office gross, respectively.
  • The original Star Wars movie in 1977 earned $307 million its first time in theaters. But its total domestic gross is actually $460 million, meaning this movie alone sold another $153 million in re-releases as it gained popularity across generations. Is that not crazy? And five movies followed. And the craze only grew.

Now that you have some idea of Disney’s prowess in the movie studio competition, let’s examine how the other contenders in the category stack up when it comes to moneymaking:

Warner Bros. v. Disney:

This is a tough contest to call. In terms of the powerhouse series, Warner Bros’ studio produced/owns the Harry Potter, Dark Knight, and Lord of the Rings mammoths. Harry Potter and the Deathly Hallows: Part II earned $1.3b worldwide. The Dark Knight Rises has pulled in $1b so far worldwide and is No. 7 right now in the ranking of all-time box office gross, on both the domestic and the worldwide lists.

But all of these series are over (or will be, once The Hobbit rolls out next month), and despite HP/LOTR/DK having 14 (about to be 15) very profitable movies between them, Disney already has plans to crank out a new Star Wars movie (and I would not be surprised if an Indiana Jones announcement was far behind. I’m sure Shia LaBoeuf is around somewhere.). For comparison, the most recent Star Wars movie, which was Episode III: Revenge of the Sith in 2005, earned $380m domestically and $848m worldwide. I bet the new follow-up, with the invigorated blood Disney will surely pump in the series, earns even more.

Disney may have a lot of juice in terms of series, but you just can’t discount the fact that Warner Bros. knows how to pick ’em. If they struck gold with Harry Potter, the Lord of the Rings, and the Dark Knight series, I’m certain they will do it again.

To call the winner of this match, let’s examine the movies in the top 20 of the all-time worldwide box office.

Disney’s claim to fame (including Star Wars now) is 8/20 while Warner Bros’ is 7/20. I was hoping this would be a bit more definitive, but it’s still too close to call, huh?

Winner — Tie.

Paramount v. Disney:

Paramount is responsible for many successful series of late, including the Transformers, Mission: Impossible, Paranormal Activity, Shrek, and Friday the 13th. It also co-produced the second biggest movie of all time, Titanic (co-producer 20th Century Fox is discussed further below).

But having one mammoth on your plate doesn’t help you going forward; the money’s been made and the brand created, but Titanic certainly is not about to birth any sequels.

So, I’d still argue that any future Star Wars films (and I’m certain there will be more than the one that has been announced) + The Avengers and all of its follow-ups (remember, The Avengers had a $1.5b worldwide gross) from Disney could easily knock out Transformers (the latest grossed $1.1b worldwide) + Mission: Impossible (the latest grossed $694m worldwide) at the box office.

Winner — Disney

Columbia v. Disney:

While Columbia is the brain behind many iconic films—recent examples are The Social Network, Moneyball, and Across the Universe—the studio does not play around with film franchises too much. Its only current holding is the Bond series, and even at that, it’s responsible only for the two films that have come out since Daniel Craig took over as 007.

Winner — Disney

Universal v. Disney: 

Like Columbia, Universal puts out popular films each year such as Snow White & the Huntsman and Despicable Me, but it does not incorporate many film franchises into its umbrella. The few that are still active are Fast Five, American Pie,and the Jason Bourne series—certainly not monetary competitors for the cash crown Disney holds.

Winner — Disney

20th Century Fox v. Disney: 

So, 20th Century Fox has two claims to fame in the movie world, and they happen to be the two most profitable films ever: Avatar and Titanic (co-produced with Paramount).

But if we’re talking series, where a lot of money stands to be made in the move industry, 20th Century does not court many of them. Ice Age and Alvin and the Chipmunks are the franchises 20th Century is pushing right now.

But it’s tough to count out a movie studio that has the two biggest movies ever.

Just to try to make this a little clearer, let’s combine the worldwide grosses of Avatar and Titanic: $2.78b + $2.19b = $4.97b profit at 20th Century Fox.

In comparison, Disney’s ownership of the top 10 is: The Avengers‘ $1.51b + Pirates of the Caribbean: Dead Man’s Chest $1.07b + Toy Story 3 $1.06b + Pirates of the Caribbean: On Stranger Tides $1.04b = $4.68b at Disney.

Still no clear consensus.

Winner — Tie

So, my original hypothesis, that the Lucasfilms acquisition gives Disney a holy monopoly, was proven wrong. There are two competitors, Warner Bros. and 20th Century Fox, who are hot on the heels. Good. For one brand to run away with the game would be no fun.

Redbox: the Hot Ticket

Redbox announced last week that it plans to test selling tickets to live events through its groovy DVD stands. As the WSJ article points out, we’re not talking front-row seats to Kanye and Lil’ Wayne having a riff off. The tickets will likely be nosebleeds or those last-minute seats that have yet to sell out.

The move proves how Redbox is unafraid to offer something customers want—cheap, easy to access entertainment—in an easy manner. Building on its $1 DVD rentals is a good move for Redbox in a style that allows the brand to remain top-of-mind with its core, looking-for-cheap-fun customer base.

The company will roll out its ticketing service in select cities, beginning with Philadelphia. First up is a Nov. 28 Carrie Underwood concert in the area. The Wells Fargo Center arena has 19,500 seats total, though Redbox spokespeople declined to affirm how many of those seats would be doled out by their signature rectangular DVD stands.

Also important is the fact that Redbox will charge only $1 in services charges, which is a steal compared to LiveNation, which can often tack on $15+ on service fees—a vaguely titled fine that makes ticketing ever more expensive and frustrating for consumers who don’t quite understand why they’re being charged for “service.” This isn’t a restaurant.

In the WSJ article, Mark Achler, Redbox’s VP of new business and strategy, says the move exemplifies how Redbox rentals are often an impulse purchase.

I think this is a brilliant strategy on Redbox’s part. The brand proved it is successful in DVD rentals and has helped put Blockbuster and other brick-and-mortar rentals move their business models into the Netflix/online arena. What if it could help do the same for concerts and sports shows?

Carrie Underwood could stand for more than just country music come Nov. 28, when her concert affirms or denies Redbox’s new strategy.

 

 

Does America Still Care About American Idol?

The brand once built upon the personalities of its judges announced another shake-up this morning: Nicki Minaj, Keith Urban, and Mariah Carey, the long-rumored judges for the new season, were confirmed to join Randy Jackson at the judges table next season.

The appeal of the show was once that contestants got to face these famous trio of caricatures—Randy Jackson, Simon Cowell, and Paula Abdul—and hear their critiques, however positive or loathsome. Cowell was in all rights a character that may as well have been written by Aaron Sorkin. His pithy, sarcastic reviews of singers drew viewers to the show, and when he was kind and appraising, America knew someone had made it. Paula Abdul loved everyone with ferocity, and even when she critiqued idols, she did so kindly. Randy was the swing vote, his characterization less colorful—his vote perhaps less meaningful or gratifying—but nonetheless necessary to even out Cowell and Abdul.

In early January 2010, Cowell, the evil genius of musical critique, announced his departure from American Idol. The talent competition that made him a household name, and using that new reputation he wanted to create The X Factor to sarcastically mock singers under a different monicker.

Abdul had already left at the beginning of that season, the show’s ninth. This left just Randy Jackson, the infamous judge of “pitchy” contestants, as the original judge.

Since 2010, Jackson has been joined by judges including Ellen Degeneres, Kara DioGaurdi, Steven Tyler, and Jennifer Lopez. All four departed at some point or another, and so early this morning, Minaj, Urban, and Carey were confirmed.

Shifting judges raises a broader question: Does America still care about American Idol?

With the barrage of new judges brought in recently, no one knows what to expect. None of these judges has an identity as a judgeTheir musical success is unquestionable, but that does not mean America wants to hear what they think of wannabe Gavin DeGraws and Colbie Caillats? Do they have anything insightful or fresh to add to the conversation?

The drawback is, by the time these judges do establish themselves as funny or clever or quippy, they may want off the show. That has been the pattern thus far with DeGeneres, DioGaurdi, Tyler, and Lopez.

America may keep watching because they like the watching the realization of the American dream or want to cheer on hometown heroes, but the lack of personality in the judging booth is certainly a downfall of a show that staked its brand on personality.