Adelphia Communications is locating 150 new jobs out-of-state that otherwise would have been in Buffalo, citing delays in finalizing a deal to build their planned waterfront operations center.
"We didn't have the confidence and the space to expand it all here," Timothy J. Rigas, executive vice president of Adelphia, said Wednesday. "If the deal was in place, it would have been here."
In a related development, officials revealed Adelphia owes the city $375,000 in ground-rent payments at HSBC Arena.
Rigas confirmed that the company has not made quarterly payments of $125,000 since last summer, when it reached an agreement with the state on building its planned high-rise operations center on the waterfront.
The company stopped paying the ground rent based on expectations that the terms spelled out in the agreement would be formalized quickly, he said. Instead, protracted negotiations have pushed back groundbreaking on the waterfront project until next year.
"The passage of time has created this issue," said Rigas, referring to the nonpayment of the ground rent. "We would be disappointed if this issue becomes another roadblock."
Common Council President James W. Pitts said it was wrong for Adelphia to stop making payments before a final agreement was reached.
"But I'm not surprised," Pitts said. "They've made it clear they just don't want to pay it anymore. I think they need to show a little more respect."
The ground rent contributed to losses at the HSBC Arena that Adelphia officials project will reach almost $20 million this year. The bulk of the shortfall is due to rising player costs.
Player salaries and bonuses climbed from $20 million in 1997 to $36.1 million this year, officials said, while ticket revenues increased from $22.4 million to $25.5 million during the same period.
The Adelphia waterfront project agreement announced last summer covers the construction of the operations center, creation of at least 2,000 new jobs and reducing losses at the HSBC Arena. The deal requires $125 million in public incentives, the bulk of which would come from the state.
Adelphia officials are confident the final deal will eliminate the $500,000 ground rent, saying the matter is something to be settled between the state, county and city.
The latest holdup, both sides say, is over affirmative action goals. The state, city and county want 15 percent minority and 5 percent women participation both for construction and the hiring of permanent Adelphia employees.
The company is offering 10 and 2 percent, respectively, figures it says are comparable to other recent public projects such as the new county court house and the Inner Harbor public works project being developed by the state.
"It's unfortunate we're still talking about 2-3 percentage points on minority hiring that can be accomplished quickly," Mayor Anthony M. Masiello said. "I believe we're very close to having this deal resolved."
Asked about Adelphia's decision to locate 150 jobs elsewhere, the mayor said it was unfortunate.
"I wish they would have said something to us. We could have found space for them here," he said.
Rigas and his father, John J. Rigas, chief executive of Adelphia, also remain confident a final agreement will be reached soon with the city, county and state to build a $100 million operations center.
But during a more than two-hour meeting with reporters Wednesday, the Adelphia executives said there has been a cost to both sides in not finishing the deal, pointing to the loss of the 150 jobs and the continuing financial woes of the arena.
"I'm a little disappointed it's taken as long as it has," John Rigas said, "but being in the business world all these years, I sort of expect it."
Timothy Rigas was more blunt.
"We added 150 employees in Cleveland and Florida," he said. "Those are lost opportunities because of the delays. They could have been in Buffalo."
John Rigas maintained his light touch throughout the meeting, describing Pitts, who has insisted that the city not lose a $500,000 annual ground rent, as sometimes being a "hard negotiator."
"People say the same thing about the Rigases," John Rigas said, "but that's attributable to Tim, not me. I'm reasonable."
Pitts said the Common Council has been unfairly painted as obstructing the deal. He maintains he has not seen any documentation regarding the Adelphia project, although officials with the Masiello administration insist he's been briefed regularly and has reviewed a draft of the final agreement.
"I don't know what's going on," Pitts said. "All this stuff about the Council holding this up is not true. We don't have anything before us."
John Rigas also addressed concerns about Adelphia's future in an industry where mergers and huge buyouts have been commonplace. That pattern has some people nervous about whether Adelphia will be around for the long haul to fulfill its promises.
"I think Adelphia has positioned itself very well for the future," he said. "It's offering new technology for high-speed modems and residential telephony. We're here for the long pull because we think there is a lot of value and it's a great business.
"We believe it's not only got a great future financially, but the human aspect is important to all of us. We are a continuing interest, not subject to a takeover," he said.
Tim Rigas said the next generation of the family, he and his two brothers, are co-owners of Adelphia, also remain committed to the company and believe they can run it better than anyone else.
"We think we can drive revenues and returns better than another company, and shareholders and the family have decided to continue with the business and stay with it," he said. "We enjoy it."
Pitts, meanwhile, said he plans to file a resolution today, demanding payment of the outstanding rent and renewing his call for a public meeting with Adelphia officials, Gov. George E. Pataki and other parties involved in the Adelphia project.
Tim Rigas said he will have to confer with other company officials before he say whether Adelphia will comply with Pitts' request.