Ratings want to be free

Embedded video is unfortunately not a very efficient way for me to absorb information, particularly when this video does not show up in my RSS feeds. But I not only clicked through, but watched the whole damn thing when Barry Ritholz' Big Picture pointed me to a video of two gentlemen proposing an alternative to the big ratings agencies.

The two gentlemen - computer scientists Jesper Andersen and Toby Segaran - have formed an open-source venture called Freerisk, which describes itself as "project with the goal of making freely available the data, algorithms and tools necessary to perform risk modeling". More bluntly, the founders, as you can see from the above-linked video, want to loosen the stranglehold of the agencies on credit analysis.

This is a timely, worthy, necessary and maybe even feasible goal. The founders acknowledge that access to the data necessary for debt analysis needs to be improved, and that this data should be provided, presumably to the SEC in a machine-readable format. The algorithms necessary to perform this analysis would be open source.

I say timely because the Obama administration's instincts have been to ask issuers and agencies to provide a greater amount of information, and I say worthy because, as the Freerisk founders demonstrate persuasively, investors need to have access to better means of measuring credit risk. The current system of semi-regulated, issuer-paid, nationally-recognised statistical rating organisations is simply not stable.

I say maybe feasible, because if you're going to start trying to chip away at the agencies' dominance, you'll start, much as newer outfits like Gimme Credit and Egan-Jones have, by looking at corporate debt. The models are simpler, and the inputs and assumptions are much more transparent.

But let me look now at some of the potential pitfalls. I have no idea, for starters, whether publicly-registered bond issuers provide the right information in a homogenous fashion, in the same way that registered equity issuers do. Issuers of bonds that can only be bought by accredited large investors (Rule 144A buyers) do not have to disclose any information at all. You might say that 144A buyers are presumably less in need of this sort of protection, but then you wouldn't have been reading the papers much recently.

Then there's the fact that agencies have not had a particularly horrible time with their corporate ratings of late. Now this is all relative, and their work on financial institutions has been, at the very least, far from timely, but the agencies' biggest failure has been in the rating of structured products.

The Freerisk principals say quite clearly that having proprietary and closed algorithms was one of the factors that got us into this mess in the first place, but if Egan-Jones can't work out a way to break into the rating of structured products, you can assume that the barriers to entry in that business are fairly high. It could be that it's easier than the big boys make it out to be, but he way the industry developed suggests not. Which is not, of course, to say, that issuers can or should be concentrating on structuring fiendishly complicated instruments these days.

They do do things differently in debt markets, this peculiar mixture of wild west and gentleman's club. In equity markets the assumption is that any idiot should be allowed to go out and own any stock they like. In debt markets there's an assumption that some products are definitely left to the professionals. which doesn't make a massive amount of sense because debt products - in general - provide a much more stable income stream and better recovery prospects, though they also require a bit more supervision of issuers, whether directly or by a trustee.

Regulators have traditionally enforced this distinction by leaving the decisions to the agencies, and there's no sign that they will either let investors buy whatever debt securities they feel like or staff up in a sufficient fashion to make these distinctions themselves. That decisions still confronts them.

But chipping away at the edifice of ratings agency dominance will be a gradual process (I see challenges to their use of First Amendment protections to be another means of doing so). I see Freerisk being complimentary to efforts by competing agencies to check their rivals' work by offering unsolicited ratings. Regulators have traditionally frowned on unsolicited ratings, seeing them as a form of blackmail (hire us or we'll put out an unsolicited rating that makes you look bad). But they're probably the quickest way to establish a means of checking ratings shopping among the big agencies.

It would also get investors used to the idea that even if a competitor, whether paid for or free, doesn't have the best analytical tools, then if it has a better record with the way its using assumptions and inputs it could still provide an alternative to the big agencies. I'll be curious how it works out.

Hanger Wan

About the only thing that can rouse me from my blog torpor these days, aside from Doom Metal, is the latest series of exciting gyrations at the Atlantic Yards project.

I happened to be out of the country acting as a heritage management professional when Senator Perkins called a massive public meeting about the project but neglected to stock it with any useful questions or event security. The result was a meeting that by all accounts managed to be both rowdy and substance-free, not unlike the empty theater that is the city's rent-review process.

I'm still unsure about the provenance of the people who were so insecure about the Atlantic Yards rationale that they needed to drown out a rather milque-toast set of interrogations. I read variously that they were genuine unionised construction workers or a mob assembled by the community groups that Ratner has paid to support the project. That said, I have an enduring fascination with the iconography of the American hard-hat. That the use of the hard-hat in the practice of wedge politics still has an edge even as America's native working class has largely abandoned the construction sector to recent, usually non-union, immigrants, and the country's heavy industry sector has hollowed out.

I thought about this as I read Rick Perlstein's wonderful Nixonland, and his account of the occasion when the city's construction workers acquired a taste for hippy blood. Perlstein's book has been much praised by bloggers, usually as way of explaining the yawning cultural chasm that exists in American politics. I liked it because my entire knowledge of the politics of 60s and 70s America comes from Hunter S. Thompson books, and I know, deep down, that that isn't healthy.

Some of the most fascinating bits of the book are those that illuminate just how culturally divided New York City was. I'm referring, of course, to a period before the flight to the suburbs, a time when the city was host to a huge white working class population. Sorry, I should have said, huge violent white working class population.

I'm thinking about the photo from 8 May 1969 of the stockbroker and hardhat apparently joining forces to beat up a student protester. You can see it here. I'm not going to be crass enough to compare arguments over an undistinguished basketball arena with the Vietnam War, but it's a nice and visceral illustration of the marriage of labour and capital in action.

The hard-hats kicked off the beating, and the white-collar worker joins right in. It illustrates the coalition that Nixon assembled to power his two presidential victories despite being massively weird, old and dishonest. So why does this tactic still endure in the Brooklyn of 2009? I mean, this is Old Skool.

It's possibly not that weird though, since Bruce Ratner learned his lessons about urban development as director of a Model Cities program for the Lindsay administration, which was the hapless bystander to the unrest of the late sixties in the city. He presumably learned the value of keeping labour onside, as well as, presumably, the value of dubious, though deniable, racial rhetoric in undermining opposition.

I doubt, though, that portraying construction workers as the stooges of capital would have any more force now than it did in 1969. It would probably be even less effective than following the marshmallow-brained Marty Markowitz about while dressed as a gigantic phone and screaming "MARTY! IT'S BROOOOOOCE" every time he tried to get on television (it's a reference to a moment in a New Yorker article when he had a very obsequious phone call with Ratner. Oh, never mind.)

I was tempted to carve out the news about the replacement of Frank Gehry with the hanger-building hacks into its own post, but the pub beckons, and I don't have much to say about architecture.

I'll just leave you with this datapoint. Last year, the Louisville Arena Authority started construction on a $238 million arena with a capacity of 22,000 seats. That can host ice shows, concerts and swimming. Even after tossing Frank Gehry's design and "value engineering" the hell out of the arena, they've managed to come up with an $800 million arena that won't host ice hockey and has a capacity of 18,000. AND IS UGLY AS HELL.

I'm not going to go over the model again. I'm not even going to argue about whether New Yorkers are going to pour three times as much love into a second-rate NBA basketball franchise as the good people of Louisville will into their top-ranked NCAA basketball franchise.

Let's remember the lower naming rights payments from Barclays, the slowing economy, the lackluster suite sales, the crumbling political support and say: Good. Luck. With. Your. $800 million. Hanger. Brooce.

[Addition: It occurred to me, several days after completing the post, hitting the pub, and trolling for link love, that there's an excellent way to tie the two halves of this post together. There reason why Ratner is saddled with an $800 million hanger, despite plumping for the most functional design he could get away with, is the cost of his unionised construction workforce. Those same guys who wrecked the Perkins hearing. That, my friends, is karma.]

All Hail The Doom Claw

I've been somewhat busy with offline activities of late, or at least activities that don't require the use of this internet persona. It would be remiss of me not to big up the new Sunn O)) album. However, I have yet to acquire the album, at least a physical copy, and have also yet to listen to it.

I was very close to doing so last night, and was all set to take advantage of Mrs. Cutesome's absence last night slurping ramen. So, I gently warmed up with a listen to the Earth 3: Thrones & Dominions. By the time this was finished and I had cued up the aforementioned "Monoliths & Dimensions" my lovely wife had returned, and she has very little patience for drone metal, even played at polite volumes at barbecues, as Miguel attempted the other day with Domkirke.

I'm off to the old country for a few days, with little access to high-end audio equipment capable of the volumes that drone metal requires (a blown pair of Mission 760i speakers and a 30-year old pioneer amp with rusty innards will not do the work). So I will have to wait for a while, and possibly save my cash for the inevitable deluxe vinyl pressing. Vinyl fans really are the last readily exploitable niche in music.

But while looking for Sunn O)))-related content I stumbled upon this weird internet meme being spread by self-described rock music and pop culture website The Quietus - the Doom Claw. It was moderately funny for a while, and then it was applied to top British Islamic extremist Abu Hamza, and it got very funny.

But needless to day, doom metal, if not for the spurious economic reasons advanced by New York Magazine, is gaining strength. All hail!

Stop Me Before I Cook Again

Was jolted out of my month-long reverie by a Double Threat. The New York Times has written something dumb about bond insurance. Not any old dumbness about bond insurance, but special dumbness about stadium finance bond insurance (h/t nolandgrab.

Here's what happened. The company that insured some of the bonds that were used to finance Citi Field has been downgraded. (By way of digression, I keep referring verbally to the Mets' ballpark as "Shea". Normally I'd spend hours practicing how to adopt such an antediluvian affectation, but this one comes really naturally.)

Quelle domage, as they say in Paris, where the parent of one of Moody's competitors, Fitch, is headquartered. And what does the unstoppable New York Times manage to extrapolate from the news that Ambac has been downgraded:

"Moody’s Investors Service said that $613 million worth of the municipal bonds that were issued to pay for the construction of Citi Field could be downgraded to junk status." WRONG. The bonds could be downgraded to bond status, just as they could be transformed by passing aliens with a peculiar sense of humour into Yankees bonds. But any downgrade to junk, or below investment grade status, will be entirely separate from the issue of the downgrade of the bonds' insurer.

This is because the Mets' stadium bonds have their own underlying rating, in this case one of Baa3, which is the lowest non-junk rating, but is not junk. It's the rating the bonds would have if there weren't insured, which is basically what has happened because of the downgrade of Ambac. This underlying rating is important, because unless it was not junk at the time of issue, the hapless Ambac would not have been able to insure the bonds. This rating, as Moody's stresses in its report, is not under threat. All that happens after Ambac is downgraded is the poor Mets are paying for insurance which is about as useful as a chocolate fireguard, because the insurer is worse rated than the Mets stadium.

There are plenty of scenarios under which the Mets bonds' underlying rating might be downgraded, particularly if the New York economy stays in the doldrums and the stadium does not generate as much revenue as it should. But let's remember this is a popular franchise in a large city with a very patient fanbase that gets plenty of excitement in September, if not in, ahem, October. Don't try and pretend that any Nets financing could get a rating like this as easily. I love the Mets, but they're a bit trashy. Compared to the Nets though, the Mets are that really classy lady in the black dress and pearls that fronts the Lexus dealers' adverts. Yes, that classy.

Couple of bond basics. The interest rate that a stadium pays, provided that it is fixed at the time the bonds are issued, is basically immune to the effects of a downgrade. There are plenty of financings that can be the victims of insurer downgrades particularly in the floating-rate market, but the Wilpons didn't hold with that nonsense, so we've got pretty boring bonds, except for the whole crappy bond insurer issue.

If you're holding the bonds you've got to be pretty sore, because you have to remove them of the metaphorical liquor top shelf and stuff them down behind the bar with the other chemical aftertaste no-brand Military Special gin type stuff. But the holders have been getting these shocks ever since Ambac stopped being triple-A, and are probably resigned to it now. The holders just act now as if they own bonds without insurance, which is hardly the worst thing in the world to be owning. I mean, they could own CDOs or Chrysler bonds.

Maybe, you're thinking, and I know the Times reporter must have been thinking when he realised that the Ambac downgrade meant nothing to the Mets, that this might prejudice their future access to the capital markets, what with only being low investment grade and all that. For saddling investors with bonds that collapsed in value they will be be punished! "If they are downgraded to below investment grade, or junk, the team may have to pay higher interest rates if it issues new debt notes the reporter, seeing the light at the end of the tunnel of irrelevant conclusions.

"Um, Mr Belson," screeches your blogger, reaching into his draw for the bag marked 'NASTY AD HOMINEM DEBRIS' "you HAVE toddled up on the seven train to Shea of late, yes? You have noticed that the damn thing is built, and there are people wandering around there working out how best to funnel their savings to Danny Meyer? You have noticed, because you wrote it, that they have already come up with the financing to meet the cost overruns? Why on earth is the the stadium going to need to raise more financing? Because they think that that the 5% they are paying in interest (plus I should note, in the interest of fairness, the premium the Mets are paying for bond insurance that doesn't work) is utter usury and needs to be refinanced? It ain't.

In fact, now I think about it, the only reason I could think for suggesting that "the Mets" might ever be looking for additional financing, is if the reporter is completely unaware that the issuer for the stadium bonds and the Sterling Mets organisation are entirely separate entities, which do not guarantee each other's debts, and is wondering how on earth the Mets are going to scrape together money for the next big shipment of Jose Reyes bobblehead dolls.

Companies, and countries, that issue bonds get downgraded. Sometimes it's a big deal, sometimes it isn't. The Mets bonds and Ambac isn't a big deal, unless you own the bonds and there aren't that many of you and you were presumably well aware that Something Was Up with your bond insurer. A Times reporter resorting to ambiguity and insinuation to stretch a one-line nib to a nine-paragraph laugh-fest was woefully under-employed yesterday.

Before anyone says (not that they will, this is hardly a popular blog with the pro-stadium crown, well it's hardly a popular blog at all, what with the infrequent postings and paucity of stimulating subjects, but you get my drift) that the preceding might be construed as a clean bill of health for the business of New York sports, please read the bit about the Mets' resilient brand, and note also that the Mets attracted new financing from the one standing bond insurer (Assured Guaranty) for a small amount for a pretty much complete stadium for a solid team. It won't do the same for the Nets. The New Jersey Nets are the Typhoid Mary of High Finance, and no-one wants to eat their delightful cooking.

The New York Times Fluffs Bond Insurance. Again

Oh, lordy, almost no posts for ages, and then two days in a row. Both about the New York Times' ability to come to quite witless conclusions based on fairly straightforward information. Today, Don Van Natta has a go at probing the municipal bond market. The results are far from good-looking,

Now I'm a bitter, angry person. You can see it in my treatment of by all accounts blameless, and occasionally impressive, Times reporters such as Andrew Ross Sorkin and Gretchen Morgenson. You can probably dismiss a lot of this as needless sour grapes, if the Times didn't pump out awful adverts talking about how "the Times employs the best journalists in the world. Period." So screw 'em, they can take it.

I must say, I thought that I would soon have to hang up my "slightly ropey monoline bond insurer expert" hat, accept that being familiar with bond insurance now ranks up there with being an expert on the workings of the VCR. Had my fun with the Times and bond insurance. Time to move on.

Apparently not.

Mr. Van Natta is not that familiar with finance, beyond a stint covering some of Eliott Spitzer's antics. As far as I can tell, he's the nearest thing the Times has to a Clinton expert, so he deserves more than a little credit for trying to find a more stimulating beat.

But really. Guys. This is bad. But let's get through some of the useful angles first. No doubt about it, the cozy collusion between local municipal bond underwriting firms and state governments is an accident waiting to happen. It's not at all reassuring that the only major casualty of a probe into this collusion is the nomination of Bill Richardson as commerce secretary.

No doubt that the private sector's tutoring of public sector employees is not as thorough as it should be. Still, let's see how taxpayers react when they try and go on some $2000 a head external training course. Maybe the ratings agencies could run it for cheap. Heh.

First we have a couple of paragraphs telling the story of what happened to the town of Lewisburg, Tennessee. Then we get the lede:

Lewisburg is one of hundreds of small cities and counties across America reeling from their reliance in recent years on risky municipal bond derivatives that went bad.

Crikey! They mentioned derivatives! Case closed, Orange County all over again. [Quick note at this stage - Orange County was using derivatives as investment products, not as part of its debt issuance]

I'm now going to quote the offending paragraphs in full, where the reporter tries to explain what happened:

For decades, the tax-exempt municipal bond was considered as safe a way to raise money as it was to invest money. If a city wanted to build a bridge, a hospital or a school, it raised the money by issuing a bond and repaid investors over decades. Bonds were considered conservative and dependable.

[If this was a Michael Moore documentary we'd be hearing perky 50s music and grainy scenes of nuclear families gambolling in the suburbs. This paragraph is not too objectionable, though somewhat loosely-written, possibly to make the contrast between then-prevalent and current municipal finance look greater than it really is. I mean, most municipalities are still issuing long-term debt to build bridges, schools hospitals, sewers, even power plants. Most of these bonds are still considered safe and dependable.]

Beginning in the late 1970s, big states like California began to use variable rate bonds as a way to save money. By the late 1990s, some rural counties and small towns jumped on board as a way to avoid raising taxes.

[See, this is where things might have got interesting. Why did munis switch to the floating rate market? Where did the demand come from? Why, for instance, did the market not have some helpful financing corporation like Fannie Mae propping up 30-year fixed finance?]

Not long afterward, interest rate swaps were introduced.

[At this point the Darth Vader March kicks in. Needless to say, an issuer with revenues that are not correlated to movements in interest rates might want to look at hedging this interest rate exposure.]

A swap allowed a municipality to keep a portion of its debt at a fixed interest rate and a portion at a variable rate [Or all of it]. The municipality was, in effect, betting that interest rates would move in its favor [No it wasn't. It was hoping that they wouldn't go lower than the rate at which the swap was struck, at which point letting the bonds float would have made more sense. This is called being out of the money. At this point, you're kicking yourself, but you're hardly in the poorhouse. You might even be able to reassure yourself that while you are paying a little bit more in interest you're not going to suffer if interest rates shoot up again, which they well might over the term of a 20-year plus bond]. Investors protected themselves by taking out insurance that guaranteed they would be paid [Gari's head explodes. No. No. No. No. No. The state and its underwriters set up the bond insurance. It's one reason, alongside hitting up the variable rate market, that the bonds were so cheap.] But as the nationwide credit market collapsed, most of the bond insurers’ credit ratings were downgraded, including the Ambac Financial Group, the primary insurer of Tennessee bonds. That allowed the investors to accelerate the retirement of the debt, usually from 20 years to 7, leading to a steep increase in the interest rate.

Although such a provision was in the swap contract, several local officials said that possibility had not been explained to them.

[By now, the explanation has not so much gone of the rails, but is trundling through a fifth dimension breaking all laws of physics, and the driver's natty striped uniform has morphed into something from George Clinton's band]

Please, Don, you're going to have to lay out what happened. Either you, or one of the interns, or one of your sources is going to read the bond indenture. Because this makes no frickin' sense. Was Ambac insuring the issuer's obligations under the swap contract as well as its obligations to bondholders? Could well be. But it ain't what you wrote. The bondholders have the right to accelerate the bonds in the event that the insurer is downgraded. That, my friend, is a story that has already been written, it's about the perils of relying on bond insurers, who buildt a business model built on inaccurate ratings, and it has zip to do with derivatives.

Should a municipal treasurer have said "sod the .3% saving in interest costs, I think these bond insurers might go bust'? Maybe. Should he have avoided tapping the auction rate securities market? Maybe, in fact, I'm still not 100% certain that Van Natta isn't describing an auction rate deal gone wrong (The link, by the way, is to a more lucid Times story to which Sorkin contributed reporting. Can't be hating all day long). But then I haven't seen the indenture.

[I have, by slim way of qualification, recently turned down the offer of an interest rate swap on a largish agricultural loan. This is because I think that rates will stay low for quite a while. But if they do head up, I will not complain to the papers about how evil derivatives are. I promise. But I digress]

I can lay out a couple of scenarios under which derivatives might have become part of the story. The swap counterparty - the guy taking the fixed-rate payments in exchange for making the variable rate ones, might have had the right to accelerate, or even terminate, the swap, in the event of an insurer downgrade. Happens to a bunch of people, I'm sure. This might, in turn, have allowed the bondholders to accelerate their bonds. Or the swap had nothing to do with it. I don't know, I don't have a copy of the bond indenture. I pray that Mr. Van Natta did.

The article's reporting seems to follow the underpants gnome strategy:

Step 1: Load up on risky stuff like "derivatives" and "bond insurance"
Step 2: ?
Step 3: Ruin

If the Times wants to suggest that too much diversity in municipal finance products is a bad thing, have at it. I think my inability to discern from the article exactly what happens gives you an indication that there are several ways to skin a muni. Ditto for inveighing against bond insurance, dubious statehouse-prowling bond firms, floating rate debt and genial but clueless state treasury officials.

But don't, for the love of all that is sweet and beautiful, fling out a premise like "derivatives are some scary sh1t, run for your lives", and then fail to explain what went wrong with using an interest rate hedging strategy. This is financial illiteracy of the highest order. Epic fail.

[Accrued Interest has the adult explanation here]

The geography of nasty scummy celebritards

The New York Times excelled itself this morning with a hamfisted attempt to read more into a neat geography project than it should have. This is, in a sense, reassuring, because if there's one cultural touchstone that we'd like to survive the current unpleasantness in New York, it is that the NYT is the house journal of thousand-year-old white Upper West Side-dwellers.

We'll give you the lede in full:

Apologies to residents of the Lower East Side; Williamsburg, Brooklyn; and other hipster-centric neighborhoods. You are not as cool as you think, at least according to a new study that seeks to measure what it calls “the geography of buzz.”

The Times has come to these conclusions based on where in New York people get photographed by Getty Images photographers. Which is rather like measuring the depth of religious feeling in New York by counting the number of people coming in and out of St Patrick's cathedral. The Times says that "It was not a culturally comprehensive data set, the researchers admit, but a wide-ranging one."

No, it's a very wide-ranging data set covering where celebrities are most likely to want to get photographed. Note I didn't even say "appear", since I dare say Getty is not going to pay some poor sap to stand around outside the Bowery Ballroom in the hope that Ric Ocasek from the Cars drops by to catch a show. OK, OK, he's not really a celebrity, and I don't even know if he hangs out at the ballroom any more, but you get my point.

Appearances by celebrities constitute the least useful measurement of a city's cultural health since People Magazine's Club Toilet Coke Price bar chart (I made that up, presumably). This is why orange E News anchors, who don't know better, strive to maintain a kind of equivalence between New York and ghastly places like Las Vegas and Miami.

If there was ever a moment for the Times, in its constipated, pooterish fashion to say "nice charts, but you're talking out of your derriere, lady", then this was it. Instead it got all excited because the study apparently showed that the Lincoln Center was minting cultural currency by the bucketload. Rather than just attracting a lot of socialites.

Further down there's a somewhat impenetrable and needlessly jargon-ridden discussion of the news media as cultural gatekeepers, with a further concession from the organiser of the study that these locations represent "buzz and desirability hubs". Which is kind of a condo-developer's way of describing cultural currency, like those listings you see for Wall Street developments that say "Lindsay Lohan might have been prepared to use the bathroom here."

Now I shouldn't get as excited as this about a piece of rank trollery from a major newspaper adapting rather awkwardly to the internet. But it's been a while since I posted. What can I say?

Name Over

Intriguing little nugget in the UK's Independent (h/t nolandgrab). The article discusses the disquiet in our fair Borough over Barclays' deal to buy the naming rights to the proposed Nets arena in Prospect Heights.

We'll leave to one side the hackneyed "grows" headline, on the grounds that British people won't yet be sick of it, and take a look at this sentence towards the bottom of the article.

The deal is a 20-year commitment, originally valued between $300m and $400m, but the bank is believed to have renegotiated the cost down since then.

This is, I'm fairly certain, the first time we have heard any indication that the naming rights deal might bring in less cash than originally anticipated.

Still, we're talking about a gap between two unknown numbers, since we only have rumour and guess work to go on about the size of the original deal. The conventional wisdom, echoed by this Independent reporter, is in the region of $300-400 million, over 20 years, or $15-20 million a year. By comparison, I think Citi paid the Mets $20 million per year for 20 years, and I'm tempted, given the Nets' weaker franchise (Mets fan bias here) to assume the Barclays number is nearer $15 million a year.

That the deal might have been renegotiated comes as little surprise, given the repeated delays, and the fact that the original naming rights deal had a deadline that had to be extended. Then there was the "value engineering" plan, which involved making the stadium cheaper and less shiny. Finally, there's the lingering suspicion that Frank Gehry isn't really working on the project anymore. I'd want a discount on my naming rights for a discount stadium.

I'm going to speculate a little about why this little nugget got out there at this moment in time. If you have the time, go read my earlier rant about the relationship between financial journalists and their PR handlers. I'm guessing that the reporter, not unacquainted with matters of reporting hygiene, went to Barclays for comment. Now when a US-focused scumbag (I use the term fondly) asks Barclays PR about their deal, they're bound to say "we remain fully committed to the fragrant Mr. Ratner. Screw those Brooklyn swine, they don't buy enough ETFs anyway" (I made the last sentence up, of course. Anyhow, Barclays' ETF business is up for sale, they say). The intention here is to keep the heat off Ratner and his political catamites in New York.

But the Indy doesn't have that many readers in the US (it doesn't have that many readers in the UK, either. Bad-Um-Chah! That's why they pay me the no bucks). So one assumes that if their man in New York goes to the PR, the PR will guess that the bigger story for the Indy readers is why a venerable UK high street bank is flinging money at a second-rate sports franchise in the middle of a financial nuclear winter. I imagine the bank PR might have said something like "this is strictly not for attribution but we're not on the hook for anywhere near as much. We're not that mental".

I could very well be wrong, and I apologise profusely in advance if I have traduced the reporter, who in fact has been working on a source inside the Empire State Development Corporation for many months. But if I'm right, then opponents of the arena might indeed have an ally in the form of the Great British Public, and its lack of tolerance for spendthrift bankers. And its poor impulse control.

Let's go back that old set of arena projections, shall we (you can find a discussion here)? We see that the developer was looking to meet between $30 million and $35 million of the arena's then-projected (and probably too low) $43 million in yearly debt service with sponsorship revenue, which would presumably include the naming rights. Any reduction in the naming rights' contribution to this already meager total might be fatal.