20141215-NEWS--0001-NAT-CCI-CN_-- 12/12/2014 7:02 PM Page 1 STAFFERS AT MOSCOW57 have a good reason to sing CRAIN’S® NEW YORK BUSINESS PAGE 21 VOL. XXX, NO. 50 WWW.CRAINSNEWYORK.COM DECEMBER 15-21, 2014 PRICE: $3.00 Medical school bleeds Yeshiva U University pressured to sell real estate and end Einstein College’s $100M annual losses BY BARBARA BENSON A deal meant to stabilize the finances of money-losing Albert Einstein Col- lege of Medicine of Yeshiva University may be derailed,putting more financial pressure on the university to address losses dating back to a reported $100 million hit from former trustee Bernard Madoff ’s fraud scheme. Hobbled with a junk-bond-status credit rating, JUNK-BOND-B3 Yeshiva University STATUS CREDIT officials have spent RATING for recent years selling Yeshiva University off real estate, debt completing a $175 million private placement to in- ESTIMATED$150M Mayor de Blasio: vestors, and strik- ANNUAL DEFICIT ing the now-falter- for Yeshiva ing deal to create a University as of September joint venture be- 2014 tween Einstein and Montefiore Medical Center in 2/3 Year One the Bronx. SHARE OF newscom But last week, LOSSES from Albert Einstein Moody’s Investors College of The sky didn’t fall, but biz execs THE INSIDER Service issued a Medicine credit-rating re- remain wary of City Hall agenda port that suggested More than horses Yeshiva’s restructuring efforts may not produce results quickly enough.Citing BY ANDREW J. HAWKINS at stake for activist a potential cash crunch, the report raised “the possibility that Yeshiva This time last year, many business owners feared that the impending could exhaust unrestricted liquidity mayoralty of Bill de Blasio, an unabashed populist eyeing the bulging BY CHRIS BRAGG before successfully addressing its deep pockets of the 1%, would doom New York City. operating deficits.” Higher taxes, rising crime, Sandinista sympathizers populating City In January 2013, real estate executive Stephen “Our analysis speaks to the severity Hall—these were the fever dreams of a business community bracing for Nislick met with Bill de Blasio, then the city’s of the issue,” Moody’s lead analyst the departure of Michael Bloomberg, who for 12 years ran the city like public advocate, according to a list of lobbying Karen Kedem told Crain’s last week. the businessman he is. meetings maintained by Mr. de Blasio’s office. “Their ability to turn things around is The fears have since receded, but the private sector still finds itself The deep-pocketed Mr. Nislick had gained limited by their liquidity.” See FIRST YEAR on Page 19 See HORSE on Page 5 See MED SCHOOL on Page 20 50 5 REPORT SMALL BUSINESS THE LIST Entrepreneurs are pushing the marketing City’s largest BIDs clout of do-good capitalism PAGE 11 PAGE 13 NEWSPAPER 71486 01068 0 20141215-NEWS--0002-NAT-CCI-CN_-- 12/12/2014 6:28 PM Page 1 REPORTER’S NOTE Junk bond FYICRAINSNEWYORK.COM Ladies and gentlemen, presenting the Wall Street quote of the year: “I would crawl on broken glass Boroughs get up to speed dragging my exposed junk to get in city’s Wi-Fi kiosk plan this deal.”This head-snapping line came from a toy-industry analyst at oroughs outside Manhattan will be 1-gigabit-speed Wi-Fi kiosks investment bank Needham & Co. getting faster who seemed willing to do, well, than originally planned under a citywide Aaron Elstein B just about anything for a customer. pay-phone franchise agreement approved last In this case, the customer was retail week. ¶ That change and others led the Franchise and Concession Review Committee newscom giant Toys R Us, which was looking for banks to help to Scott Stringer manage an initial public offering four years ago unanimously approve the deal. It also pleased Comptroller and the five borough (though the quote came to light last week). Alas, the presidents, who had criticized the rollout as being unfair to the Bronx, Brooklyn, Queens and CityBridge Financial Industry Regulatory Authority said Staten Island. ¶ Plans for the $200 million project, to be built by the consortium, called for Staten Island and the Bronx to have more kiosks than Manhattan with speeds Needham and nine other firms were a wee bit originally of 100 megabits per second excessive in their enthusiasm for the deal, and fined —faster than what’s in most households but a tenth the speed of a them $43.5 million for promising Toys R Us that gigabit connection—when the eight-year plan is complete.That was partly because the speeds their research analysts would say only good things had been tied to which kiosks carried advertising, an arrangement that favored Manhattan. Now hundreds of gigabit-speed kiosks that don’t have advertising will be installed in the boroughs about the retailer after the IPO.The case reminds me of the Nasdaq-bubble days, when analysts like during the first four years of the project. ¶ There will still be 7,500 kiosks at the end of eight years, Merrill Lynch’s Henry Blodget, Salomon Smith with the biggest number in Manhattan, but the plan now is to make them all 1-gigabit speed where Telebeam Telecommunications Barney’s Jack Grubman and Morgan Stanley’s Mary possible. ¶ One cloud still hangs overhead, however. , a firm that Meeker routinely raised their opinions on stocks to competed to build the network, sued the city, charging it with giving CityBridge monopoly win investment-banking business for their firms. A control of public pay phones in violation of the Telecommunications Act of 1996.The city said it New York attorney general named Eliot Spitzer is reviewing the papers and remains committed to the plan. —matthew flamm forced an end to that. But old habits die hard, and DEVELOPMENT GRANTS. New York costs, leaving it “marginally prof- the Needham analyst wasn’t the only one to go gaga City will receive $61.2 million of the itable.”… MERCY FOR MADOFF AIDES. HOORAY! over the chance to work with Toys R Us. Upon $709.2 million being given out A government lawyer criticized U.S. QUEENS WAS through Gov. Andrew Cuomo’s Re- District Court Judge Laura Taylor NAMED the concluding a meeting with the company’s No. 1 U.S. gional Economic Development Swain, who presided over the cases of tourist management and owners at Kohlberg Kravis Council awards. Only three other four former Bernard Madoff employ- destination by Roberts and Bain Capital, a Goldman Sachs analyst state regions received fewer funds. … ees involved in the Ponzi scheme, as travel INSIDER-TRADING SETBACK. guidebook emailed that he was “EXTREMELY EXCITED” A federal being too soft. Last week in Manhat- Lonely Planet. court put the brakes on prosecutors by tan, the defendants received a com- and “APPRECIATE[D THEIR] TIME.” But determining that to obtain an insider- bined 21 years behind bars, less than istockphoto when a Deutsche Bank analyst wasn’t sufficiently trading conviction, it must be proved half the 56 years recommended by the OY VEY! bullish at a meeting with Toys R Us, an investment that a defendant knew the informa- court’s probation office. … BROKER- tion was confidential and that it was AGE DEAL. Privately held Cushman & A MISTLETOE DRONE at the TGI Fridays banker bemoaned: “Firm totally screwed up—all is in Sheepshead Bay, Brooklyn, hit a provided in exchange for something Wakefield is reportedly close to buy- photojournalist in the face, chipping off lost.” By the way,Toys R Us never went ahead with personally beneficial. The narrower ing Manhattan-based Massey Knakal the tip of her nose. the IPO. At least the Needham guy got to keep his definition led the court to overturn the Realty Services for $100 million. … junk covered. 2012 convictions of former hedge- COP INSPECTOR. In the wake of Eric fund traders Todd Newman and An- Garner’s chokehold death, the City thony Chiasson. The Council has ordered THIS WEEK IN CRAIN’S ruling could bolster ‘I’m off to newly appointed the appeal of SAC NYPD Inspector Capital Advisors’ shoot some General Philip Eure THE INSIDER -----------------------------------------------1 Michael Steinberg. to probe the depart- FEDERAL EBOLA hoops now or IN THE BOROUGHS-------------------------- 3 … ment’s handling of FUNDING. A proposed whatever it is officers who have a to focus on blogging. He has named a IN THE MARKETS---------------------------------- 4 spending bill by Con- history of run-ins seven-person managing board, of REAL ESTATE -----------------------------------------------7 gress would offer $5.4 you do’ with citizens. … which he will be a member,to lead the billion in new funding —Prince William, at a NATURAL GROWTH. firm. … ED CHIEF TO D.C. New York OPINION------------------------------------------------------------- 8 for Ebola response in reception for wildlife The American Mu- State Education Commissioner John nonprofit Tusk Trust, GREG DAVID ------------------------------------------------9 New York City. It seum of Natural His- King Jr.will leave to become senior ad- would include cash to before heading to a tory is planning a viser to Arne Duncan, the U.S. secre- ALAIR TOWNSEND ------------------------- 10 train workers and basketball game at $325 million, six- tary of education. … BLOOMBERG Barclays Center REPORT-----------------------------------------------------------11 repay Bellevue Hospi- story addition along EDITOR. Matthew Winkler, Bloom- tal for Dr. Craig Columbus Avenue berg News’ co-founder and editor in THE LIST ---------------------------------------------------------13 GOTHAM GIG Spencer’s treatment. … BIG CITI dedicated to scientific research and chief since 1990, stepped down and Tanjila Islam’s international CLASSIFIEDS -----------------------------------------17 CHARGE. The bank will take $3.5 bil- education. … GAWKER RESHUFFLES. will be replaced by John Mickelthwait, background helps make lion in charges during the fourth quar- Nick Denton, president of Gawker editor in chief of The Economist.