Steven Greenfield, Toy Entrepreneur
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Clearing the air over proposed ITC

An interview with Steven Greenfield of NY Toy Tenants

By Brent Felgner -- Playthings, 7/19/2006 11:55:00 AM

It's been anything but easy. The search for a new toy industry showroom building to replace the International Toy Center has been agonizingly slow and frustrating. Rumors and innuendo are rife throughout the industry. Complaints about a leadership void have been offset by whispered—yet unsupported—suspicions of co-opted interests and murky dealings, often contradicting themselves in the very same breath.

There was more confusion Monday, when a published report erroneously identified the Toy Industry Association as the potential master lessee of the proposed center. TIA officials unambiguously refuted the report as "bogus."

The process has been further complicated by confrontations with the new owner of the existing ITC at 200 Fifth Avenue and 1107 Broadway, protracted exit negotiations and allegations of harassment to force out tenants with continuing leases. Elsewhere, suspicions persist that there is still an agenda aimed at leading the industry out of New York.

All of it may serve as a distraction to the industry's clear and thoughtful consideration of the building's suitability at a time when time is critical.

In a no-holds-barred interview, Playthings Contributing Editor Brent Felgner spoke yesterday with New York Toy Tenants co-founder and coordinator Steven Greenfield, a former Toy Industry Association board member, in an effort to clear the air and address at least some of those issues head on.

[Editor’s note: The transcript of the interview below has been edited for length and clarity. In every instance careful attention has been paid to retaining Greenfield's meaning and context.]

Q: Why are you doing this? You aren't a tenant in the ITC. What is your interest in this? Why do you care?

Greenfield: The first question to be asked is why aren't more people doing this? I may not be a current tenant in the building but the toy business has supported three generations of my family for close to 75 years. And my family's company has been in the toy building since before I was born.

The reason I got into this entire project was in January of 2005, while I was on the board of directors of the Toy Industry Association, fellow board member Ken Lewis and I got wind of a proposal about to be made to move the October trade shows to Dallas. We became quite upset that New York City had not been properly considered. We raised those objections at the board meeting. In April 2005, we made a presentation and the board voted unanimously to keep the trade shows in New York as long as it was possible. In February '06, TIA decided it should not be in the "real estate business" but it did still solidly endorse New York City as the home of the industry. When TIA pulled out of the process [of finding a new showroom building], someone had to step forward. And Ken and I, who had been working on this process for the better part of a year, took on the task of doing it independently.

But there was already a tenants' association. Why was there a need for a second tenants' association?

The [existing] tenants' association, at the time, was preoccupied with many of the issues confronting the existing group of tenants at the 200 Fifth Ave. building. And we also felt an independent organization could cut across some of the bad feelings that existed between some of the non-tenants and tenants, and some of the TIA people and non-TIA people that had become an unfortunate reality within our industry. We felt that by removing the process from the existing groups that had been confronting each other we had a better chance of acting as a unified group. And I think we succeeded. But to answer your original question, Ken and I did this because we felt it was the right thing to do. The surveys done show that most people want the industry home to remain in New York. And it's been the overwhelming choice despite some of the higher prices and some of the hardships some people cite. Ken and I felt passionate about it and that's why we went forward.

You must be aware of the suspicions voiced by some people—it must be noted, with no visible supporting evidence—that there are back-channel deals being made; that individuals, including you, will personally profit from the building's selection. Is there any truth whatsoever to those statements? Do you have any financial interest in any aspect of the proposed building?

Absolutely not. The first time I heard a rumor about that was when I was fighting to have the TIA remain in New York City and someone suggested that perhaps Ken and I own real estate in the toy district, which is preposterous. There is absolutely no one in the industry who will be making any profit whatsoever from this. There are real estate brokers who will be paid a commission, there are attorneys and architects who have been retained who will make money in some kind of a normal fee schedule. But in terms of any toy people, absolutely not.

The deal that's being put forth will allow the tenants' association to rent space in the building from our co-tenant. If that space is then rented on a temporary basis and if there is any profit to be generated above the costs to maintain, promote and advertise the building, and provide additional services to the building, those dollars will only be used for the benefit of the industry. There are no salaries being paid, there are no commissions, there are no back deals whatsoever to anyone in the industry that I've been involved with since the beginning.

You are a member of the TIA board and, as you noted, the New York Toy Tenants came into existence almost at the moment that TIA decided to drop its search for a new building. Does the TIA have any control or interest—financial or otherwise—in this building?

Well, let me correct you. My two-year term on the board of directors expired this past May. The TIA made the decision at its February board meeting not to participate in the search process. Moments later the decision was made among a few people to try to band together—so it did, literally, come into existence within hours of that decision. TIA has absolutely no financial interest in this project. If TIA is spending dollars to promote activities at the building for the October and February trade shows, we anticipate reimbursing TIA for some of its expenses. But those conversations have yet to take place.

And if that's the case, will those transactions be open and reported to the industry?

I can't speak for what will be reported by TIA to the industry. I can say that every single member of the NY Toy Tenants Association will have complete and open access to anything we do.

What dealings do The Feil Organization or Winoker Realty [the prospective buyers of 636 Eleventh Ave.] have with The Chetrit Group [new owner of the ITC], as it pertains to the new building?

The Feil Organization has had business dealings with Chetrit in the past, since they are both large real estate entities in New York City. Feil realized that the problems at the ITC were potentially causing tenants not to wish to join the new building, and because they already knew them, they approached Chetrit to see if they could help facilitate people coming into the new building. What I understand is that the new ownership [Feil] has made an offer to current tenants of the 200 building, that if they were to come into the new toy building, they will be given several months in free rent per year, for every year they have remaining on their existing leases. What I've also been told is that that cost will be paid by The Chetrit Group. If there's any other kind of negotiation going on, I haven't been involved in that.

So, are these whispers conscious sabotage? Is it just creeping paranoia? Or, do these people have legitimate or at least understandable reasons to be suspicious of the process?

It's unfortunate. I'm aware of some of it because people have pointed it out to me. One of the reasons might be that people just don't know [what's going on]. People are concerned, they're aggravated, they're anxious and therefore rumors are flying. But there's not a hint of [anything untoward] from anything that I've seen.

Why this building? What does it bring to the party?

There are several reasons why this building was chosen. First, the New York City real estate market is probably the tightest real estate market in a generation; there are very few legitimate choices where the buildings would have been adequate or large enough. The industry appeared desirous of finding an uptown location close to the Javits Center as well as nearby hotels and restaurants. So, our choices were limited. One of the nice things about this building is that, for the most part, it is empty, which gives us the opportunity to have the building ready in time for the next February Toy Fair. There's a big concern that if the larger showroom companies are displaced for two consecutive trade shows, it will be very hard to bring people back together again. This building's got good floorplates, it's got good columns, it's got good ceiling heights, it's got great freight elevators—something we've never had in the history of the toy building. So, it's the best choice at the right time with a new owner—a building group that's capable of putting it together and that wants us. And after it's renovated it will essentially be a new building.

Why now? What is the urgency? Why not keep looking, as some have suggested?

First, it's been made very clear by the TIA that if a new home for the October trade show does not exist by this coming October's board meeting, then TIA needs to find a location for their October '07 trade show. Javits is not available then. There are very few, if any, good options like Javits in New York City. There are a few they are looking at in case our option does not work, and we would expect them to honor the board's decision to remain in New York. The fear is that TIA will move its October '07 trade show to different city and, in fact, TIA does have a space in Dallas reserved should they need it. I personally think it would be a disaster to have the October show in one city and have the February show remain in New York. That puts an unreasonable burden and expense on companies that need to be at both.

Additionally, The Feil Organization and the Winoker group have a deal to buy this building depending upon the number of leases and that also depends on having people in place by February so their rent can begin flowing—that's part of their financials. They do not have to buy this building if we don't have enough people come to the table by July 31. That is the urgency for July 31 that some people appear to be questioning. My understanding is that if we have at least 300,000 sq. ft. of leases signed then they must buy the building. Short of that, they have the option. We are protected so that if we do not get more than 250,000 sq. ft. of leases signed then we have the right to withdraw from the deal. No one has the risk of signing up early and then being in a building that does not have a critical mass. We will not move forward unless we have enough companies to ensure very successful trade shows in the future.

Why aren't companies flocking to the building yet? Your list of commitments is long, yet few of the companies have actually signed leases. What is your sense about why they've been slow to embrace it? It's been suggested by some that the deadline is unrealistic—that you haven't allowed enough time.

First, leases are only being sent out now—July 18 or 19—for the first time. So there haven't been any leases out there for anyone to sign really. But this whole deal came together in a very short time frame, much shorter than most situations would call for. We didn't have a choice, given the availability and February's trade show schedule. We all knew the time frame would be tight. But after two years of questions and concerns about where we will be as an industry, that people would have already thought out all of their decisions and make a rapid execution once a new building was found.

We believe that if the building is in place that there's no way the trade shows can be moved or will be moved [to a different city]. One of the primary reasons the October show has been successful over the last three years is that 99 percent of the companies that exhibited were already in place in showroom space. So we're hopeful that companies will recognize that time is of the essence and come forward.

What about Mattel and Hasbro? From the beginning of this process, they've been present and part of the discussions, yet no one has been particularly clear whether they're in or they're out. They're probably out, maybe they're in. It's been said Hasbro's out, but maybe Mattel is in. At this point, I guess, most people probably believe they will not be in any new toy center. And, some in the industry criticize them roundly for participating in the discussions but not the result.

It wouldn't be appropriate for me to talk about any particular company's or the TIA's decision to sign or not sign a lease in the building.

And the TIA? The association made the decision not to participate in the search for a new building, yet many in the industry were of the belief and expectation that when the time came it would stand up and take space in the building. And certainly most, I think, expected an endorsement of the choice. Are you surprised by the stance the industry association has taken?

This building meets and exceeds every single criteria established by the TIA board and the trade show committee going back several years. They spent $200,000 on the process. Most people I speak with are in favor of the building but the public statements haven't been clear enough to reassure individual toy companies about where TIA stands. So we are a little bit disappointed that TIA has not emphatically stated this is where everything will be, because that is what the industry is waiting to hear.

So, how does this play out? Is the deadline going to be met with the thresholds you need? Is this going to work?

It's July 18. We're still very optimistic this will happen. We're still getting phone calls from companies that are interested. The logistics will be very difficult, but everyone is willing to work around the clock to make it happen. It won't get any better than this and time is not our friend. We need the support of the industry. And every company that can needs to step up and commit now.

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