MTA gave Apple unfair edge for Grand Central shop, state audit says

“Note to all lease applicants: An Apple Store is strongly preferred,” James Covert reports for The New York Post.

MacDailyNews Take: Of course, it is and as it should be. The world’s number one retailer increases foot traffic in all areas where they open a store, benefitting adjacent businesses in significant fashion.

“The Metropolitan Transportation Authority gave the iPad maker an unfair edge last year as Apple ruthlessly bid for its prime retail perch overlooking Grand Central Terminal, according to a scathing new report obtained by The Post,” Covert reports. “A fresh audit by state Comptroller Thomas DiNapoli says the MTA last May allowed the California-based tech giant to set a daunting hurdle for rival bidders to clear in a tight, 30-day window — namely, that they be willing to front $5 million in cash. ‘The competitive process followed by MTA… was at a minimum severely slanted toward Apple,’ reads the report, submitted to MTA officials Friday and expected to be made public today.”

“Apple’s chic open-air shop has been mobbed with commuters and tourists since it opened last December, and it is expected to rake in hundreds of millions in revenue annually,” Covert reports. “MTA officials blasted the report, accusing DiNapoli’s office of ‘overt bias against the MTA and Apple… This audit is not fact-based, and, accordingly, their opinion is worthless,. MTA Chairman and CEO Joseph Lhota said in a statement. ‘The MTA’s lease process with Apple was open, transparent and followed both the spirit and letter of the law.’ MTA officials said Apple is paying $1.1 million in rent this year — four times what [the previous tenant] had been paying.”

Read more in the full article here.

MacDailyNews Take: We’re shocked. Shocked that a quasi-governmental public corp. like the MTA has such sound judgement, especially one that is currently mired in $31 billion in debt and suffered from a $900 million gap in its 2011 operating budget. They obviously need to do everything they can to get people onboard their transit systems. Landing as many Apple Stores as possible should be a priority, especially when Apple pays four times the rent than the previous tenant which generated a tiny fraction of Apple Store’s foot traffic.

Apple Retail Stores generate their own rising tide which lifts all boats.

Related articles:
Why authorities waive rents and taxes to land Apple Retail Stores – May 20, 2012
The new Apple store at Grand Central is a sweet deal for MTA bus and subway riders – December 12, 2011
Apple Retail Stores: More than ‘magic’ – June 17, 2011
Secret to success inside Apple’s retail juggernaut – June 15, 2011
Apple Retail Stores challenge department anchor stores – June 10, 2011
Apple’s retail juggernaut is magical and revolutionary in its own right – May 25, 2011
Apple Retail Stores hit 10th anniversary (with video of Steve Jobs’ tour of 1st store) – May 18, 2011
Apple Store: ‘The best damn retail experience in America!’ – December 2, 2010
Apple’s retail stores generate huge sales – December 27, 2007
Piper Jaffray finds ‘gravitational pull’ at Apple Retail Stores – November 26, 2007
Apple thinks different with cash register-less retail stores that bring in billions – November 23, 2007
Apple makes retail seem ridiculously easy – May 29, 2007
How Apple’s Steve Jobs is revolutionizing Manhattan retail – May 08, 2007
Fortune: Apple Inc. is America’s best retailer – March 08, 2007
How Apple Retail Stores beat Best Buy, Neiman Marcus, and Tiffany – December 19, 2006

49 Comments

  1. The state determines how much money you can keep and how much you must give to promote “fairness”. This is nothing new.

    Read Frederic Bastitat.

    1. Thank you, MacFreek. I didn’t know about Frédéric Bastiat. I downloaded a modern English translation of his “The Law” from here at Constitution.org.

      I am now 8 pages into my 40-page printout.

      Yes. It is notable that Comptroller Thomas DiNapoli takes the Metropolitan Transportation Authority to task for the following “errors”

      1) The MTA desiring a magnetic anchor tenant like Apple to attract foot traffic (something that mall owners would saw off several toes to obtain)

      2) Demanding that the new anchor tenant (Apple) pay $5M cash to move in (apparently, a bad thing because only a big, evil corporation can do)

      3) Getting four times as much rent per square foot as the previous renter (also apparently a bad thing for the Metro, its services, its patrons because a less-advantaged company with fewer resources should have had a chance via a lottery of some sort).

      It’s notable that mall owners, when trying to attract an anchor tenant, typically give anchor tenants a big break but the MTA did the opposite and got the largest possible concessions from Apple and the most possible cash for their cash-strapped public transportation system.

      I see why Frédéric Bastiat came to mind when you saw that. It sort of seems to me that Comptroller Thomas DiNapoli doesn’t “get” the U.S.’s free-market system and would rely instead upon what Bastiat would call “false philanthropy” (tax the crap out of the ‘evil fat cats’ and pass it around so that everyone can be equally poor).

  2. MDN takes are almost scary! Bring in a similar designed major chain in that space and voila same results. Apple stores are not anchor stores.

    I can appreciate the Apple leaning comments given that this website does not hide his love affair with Apple, but no company should ever be given an advantage over another in any negotiations that entails fair play for all.

    1. Putting aside whether there exists a “similarly designed” entity, what “major chain” do you think would have provided the same results? I certainly can’t think of any.

    2. I am a user and a lover of Apple products for longer than many you have been alive. The Apple retail experience is excellent and innovative. But your relentless fanboy approach to this obscures the intent of this report. It may well be that Apple was the best choice for this retail space. I just hope they attained it in a fair and open manner, exactly like any other bidder for the space.

      1. Since when is leasing retail space about fairness and openness? It’s about who is willing to pay the most money for a prime real estate location. Period.

        So is it unfair that McDonald’s can offer to pay 4x more than you for the corner lot at a major intersection, and pay in cash rather than getting a loan, and the property owner thinks that’s a better deal than your offer? Really?!?

    3. Apple stores are not anchor stores?!?!?
      Time to take your head out of the sand Pat!

      BTW – Having the money to afford prime space is NOT and unfair advantage.
      Yes, I would have loved to opened up a boutique shop in that same space but, well . . . I just didn’t have the money.

    4. Quoting Pat: “Apple stores are not anchor stores.”

      Gee, Ain’t the Internet cool? Even people who have no idea whatsoever about what they are talking about can pull up a soap box, stand on it, and yell “Hey! I have no idea what the hell I’m talking about but like to open my pie hole in public places!”

    5. Pat, have you taken the high power prescription drugs your doctor prescribed you for your constant depression? You definately need to take them now. I know you are suffering from chronic depression the moment i read your MDN take as scary. MDN take is not scary at all, it is shockingly corect. Have your chill pills and go to bed, sweet dreams 😏🐒

  3. I am rapidly losing respect for the MDN staff based upon the consistently mean-spirited bias in their takes. Sniping against Samsung? Fine. Against Microsoft and Google? Fine, as well. We are (mostly) Apple fans with legitimate gripes against all three of those companies. But repeated grenades against anything and everything that might be associated with the government – lazy and lame.

    MDN blasts the MTA as being mired with $31 billion in debt and suffering from a $900 million gap in its 2011 operating budget. Yeah, that sucks. But are you aware of the background behind that data? Who sets the budget? Who sets the rules? Is the MTA given authority commensurate with its responsibility? The ability to establish long term, stable development and operations plans? Or is the MTA told, meet these requirements and don’t raise fares? I don’t know. My point is that MDN is likely ignorant of the details, as well, and is just taking potshots at anything and everything outside of the private sector. The “Wow, someone in a government organization actually got something right” has gotten very stale.

    MDN appears to have partaken of the Kool-Aid in the popular flavor, “All governmental and quasi-governmental organizations are evil, corrupt, and populated by people who are stupid, lazy, and lack sound judgment.” Grow up MDN staff. The world is not that simplistic. There are a lot of good people working in the public sector. And yes, there are some bad ones, too…same as everywhere.

      1. Such a wonderful, well-though-out rebuttal. Truly, you convinced anyone who was on the fence on this issue that your perspective is more worthy.
        /sarcasm

    1. The state wants nothing more than more people like you who think that the state is above reproach and beyond criticism. Consider this, if the state was absolutely benevolent and benign there would hardly be a peep made regarding the state.

      1. Nice strawman you set up there, MacFreek.

        kingmel didn’t say government/state was above reproach or beyond criticism. He’s not even saying the MTA is faultless in their financial situation. He’s saying MDN consistently attacks government and related organizations regardless of (or in willful ignorance of) the facts. Here we have a clear case where a government-affiliated entity is in the right, and MDN STILL attacks them.

        That is wrong. criticize when it’s warranted, but give credit where it’s due.

      2. Nobody says “above reproach and beyond criticism.” People with a brain in their heads say criticize when and where it’s required, not as a blanket statement that all government action is evil and unwarranted.

      3. The “state” is not above reproach. I am actually a strong critic of federal, state, and local governments. But I apply that criticism with judgment. I don’t pander to the cretins by making blanket statements disparaging large organizations or groups of people (except, of course, cretins).

    2. ‘MDN appears to have partaken of the Kool-Aid in the popular flavor, “All governmental and quasi-governmental organizations are evil, corrupt, and populated by people who are stupid, lazy, and lack sound judgment.”

      Keeeerect!

      1. Right there with you, kaplanmike. I remember when we had fun speculating on the next Apple hardware or software release on this forum. The mantra now is quantity over everything. All you can do is make your voice heard to MDN and, if MDN doesn’t listen, vote with your mouse by going elsewhere. All MDN is mostly doing is reposting other content, anyway. The occasional insightful SteveJack piece is the only real value added by MDN.

    3. kingmel, I am rapidly losing respect for government managers who think like you and happily waste other people’s money (taxpayers) by letting golden opportunities slip through their fingers because they can’t see the forest through the red tape.
      This is about doing what is best for Grand Central, the MTA, all the other shops there, and most of all . . . the taxpayers!

      If the MTA is having having the money troubles MDN mentioned, then (on behalf of the taxpayers) they should be patted on the back for doing everything they could to get that Apple store in there.

      Good job MTA!

      State Comptroller Thomas DiNapoli should loose his job, the taxpayers don’t want him!

      1. To “The Other Steve” and other anonymous people who harbor the same resentments towards government organizations and employees. I could make a hell of a lot more money elsewhere. I have been offered jobs for more money, but Money is not the most important thing to me. IF more people felt that way, then our economy would not have been crippled by avarice and stupidity.

        And I don’t “happily waste” anything, at home or at work. I change my own oil, spark plugs, struts and shocks, rotate my own tires, install my own siding and drywall, etc. I am a fixer rather than a tosser. I recycle. I have donated thousands of hours to my work for free. I have worked through many holidays. I seek to save money anytime that I can and I have often traveled on weekends on *my* time so that I am at the job on Monday morning through Friday evening. So, you might be able to see why I don’t appreciate the blanket disparagement of government and government workers that is currently so rampant in politics and society. If you are an American citizen, then *you* are the government. Take some responsibility for it.

        If you can’t appreciate that most people – public or private sector – are doing the best job that they can, then I feel sorry for you. Because your holier than thou, condescending attitude likely means that you have very few friends, and no really good ones at all.

        1. Dear anonymous kingmel,
          I do appreciate hard working public employees, I don’t appreciate employees who are incompetent and cost taxpayers boatloads of money while blocking attempts by others to be efficient and make intelligent decisions. I’ve met a ton of those. They’re out there, don’t pretend they are not.
          Anyone who would criticize someone for bringing in one of the worlds most sought after retailers in the world as an anchor store while charging four times the previous tenant AND getting $5 million in advance, um maybe Comptroller Thomas DiNapoli, doesn’t deserve the money he stole from the taxpayers to produce that report.
          And anyone who would accuse someone of being bias, say MDN, for having the that same opinion that government shouldn’t be boneheaded with taxpayers money, well . . .

    4. kingmel, you should re-read MDN’s take again. MDN actually PRAISED the MTA for having the business sense to lease the space to Apple rather than some other tenant, AND to resist the urge to give Apple incentives or breaks to lease the space but instead received $5 million CASH and 4X the rents of the prior tenant.

      MDN pointed out that the MTA is seriously in debt, as are a majority of public services such as public transportation authorities. Yet the MTA held out and won a great lease from a major, major traffic driving tenant. Which will bring many other shoppers to the other retailers, thereby creating more revenue (if those leases include a percentage of sales as rent) or will drive up lease rates for future lease renewals/new tenants. Nice job, MTA!

    5. Kingmel you are So Wrong, MDN like myself think the MTA is a bad organisation that runs regular losses every year, and speaking out is not a bad thing. MTA is very corrupt and it provides bad service, its not Apples fault that MTA is in charge of retail in the Grand Central Station. Here are 3 links to MTA and stupidity from its board members, have a look at all 3 videos and tell us why MDN is wrong on it take on MTA. Looking foreward to hear from u

      ^^ MTA bosses wants free cars and free Gasoline

      MTA bosses want free travel on trains

      MTA raises fares2 times in a year

    1. $1.1 million doesn’t sound like much compared to what, exactly? Apple is paying four times more per square foot than the previous tenant (a restaurant), and that restaurant wasn’t a “destination” for nearly the volume of customers as those going to the Apple store.

      I’m curious… In what context is nearly $100,000/month in lease payments “not much”?

      1. It sure sounds like a lot here in middle Alabama. But, come on, Grand Central Station is PRIME real estate. I do not know what the going rate is there, but they have huge presence and square footage.
        So, it is probably a good deal for Apple and MTA.

  4. See your Trolling again Pat.

    During the past few days you have literally thrown out your bias hate for Apple on a number of posts on this site.

    When a person trolls a site, it’s obvious that they are effected by the content, in the case of trollers like yourself, does it really do you any good to reafirm your inadequacies and fear of a better company and products compared to what you do use, say “Android”, Microsoft” etc…

    Nice that you come around, we can use a little comedy in our lives and boy you are a side show to say the least.

    And by the way, that write up by the “Post” is a opinion piece and nothing more, the “Post” started this awhile back, it was looked into and found that nothing was given to Apple by the MTA, but a few people disliked the idea of Apple coming to the MTA, and now the post try’s to resurrect an old story that died, such as the Post.

  5. Now the MTA just needs to put Apple Stores ON their trains instead of just next to them.

    Want to visit an Apple Store? One is coming near you, in about 20 min., just have your ticket ready!

  6. I see Kingmel havent replied to me, i have posted 3 videos showing how bad MTA bosses are and something which MDN also stated on thier take. As for the troll Pat, he is depressive as ever , no improvements there 😡😖

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