John Henry Faces T&G Labor Dispute And Globe Toxic Waste
Wednesday, October 23, 2013
This summer, the billionaire Henry - one of three primary owners of the Red Sox - agreed to buy the T&G and Globe for a total of $70 million in cash. That’s only about 5 percent of the price that the New York Times paid when it bought the two papers and their properties almost 20 years ago.
At first, it seemed like a great deal for Henry. But Judge Shannon Frison, of Worcester District Court, had other ideas, as she demonstrated, last Friday, by freezing the sale “until further order of this court.”
Her decision came on the very same day that the Times was reportedly scheduled to complete its sale of the T&G and Globe properties to Henry.
'Creative accounting' alleged
Judge Frison’s action came in an ongoing, four-year-old class-action suit filed against the T&G by independent newspaper carriers, who maintain they should be treated as employees instead of as independent contractors. Previously, a Gardner District Court judge and, subsequently, the state Appeals Court ruled in favor of the carriers.
Judge Frison has set $60 million as the "maximum end" of any settlement agreement. That means almost all – if not all - of the $70 million that Henry has agreed to pay the Times could be put into escrow until the civil suit is resolved.
The independent carriers are furious over the fact that the $70-million price tag represents less than one-fifth of the $380 million in revenue that Times’ New England Media Group, of which the T&G and Globe are part, posted for 2012. The T&G generated for $42 million of that revenue total.
Fitchburg attorney James Galliher, who represents the independent carriers, reportedly told Judge Frison this Monday that the "creative accounting" used by the Times to determine the sale price could cause the T&G to be "basically worthless." He also reportedly called the Globe a "distressed property" that is being sold well below its real value.
Saturated with toxic chemicals
Judge Frison’s temporary injunction, which stopped the sale of the T&G and Globe to Henry, was followed, yesterday, by a Boston Business Journal article, Boston Globe's site contamination hampers development options.
The contamination, according to the BBJ article, was first documented 17 years ago by Green Environmental. “A spokesman for the DEP,” the article states, “confirmed that some or all of the contaminants outlined in the Green Environmental report stem from spillage and leakage of diesel fuel stored and distributed from tanks on the Globe’s property.”
The Globe property has been valued “between $29 million and $71 million,” the BBJ article reports, citing confidential financial documents prepared by New York investment bank Evercore Partners plus interviews with local real estate sources. “The Evercore report noted that the higher end of those appraisals was based on an ‘in-use’ valuation, meaning the Globe’s headquarters would continue to operate as a printing and newspaper distribution facility under a new owner.”
However, the BBJ article cites “sources familiar with this summer’s bidding for New England Media Group. “Every proposal,” those sources reportedly say, “included plans to sell the Globe’s 670,000-square-foot headquarters and move its operations to a smaller space.”
Henry was not available for comment, according to the BBJ article, and both the Globe and Times declined to comment.
Wait ‘til next year?
The latest batch of bad news for the Times and Henry may be the straw that breaks the proverbial camel’s back on their famous deal.
Adding to the challenges facing their pact, is the state of New England Media Group’s finances. The primary properties of the Group are: the T&G; Telegram.com; the Globe; BostonGlobe.com, Boston.com; GlobeDirect, the Globe’s direct-mail marketing company; and a 49-percent interest in Metro Boston.
As BBJ reported in August, in an article titled John Henry’s shrinking Globe, the Group’s total revenue “is expected to fall to $363.8 million next year, off 18 percent from the $440.6 million booked in 2009. Despite around $35 million in cost cuts teed up through 2014, the company has forecasted nearly $20 million in net operating losses over the next two fiscal years.
When the Times and Henry announced their deal in August, they expected it “to close in 30 to 60 days.” Now, though, Judge Frison’s independent-carriers ruling coupled with the toxic mess on Morrissey Boulevard, the closing may - as Red Sox fans declared for 86 seasons – have to wait ‘til next year.
Steven Jones-D'Agostino is chief pilot of Best Rate of Climb: Marketing, Public Relations, Social Media and Radio Production. He also produces and hosts The Business Beat on 90.5 WICN, Jazz Plus for New England. Follow him on Twitter @SteveRDAgostino.
Related Slideshow: Historic Arcade Reopens With Ribbon-Cutting Ceremony
On October 21, the historic Providence Arcade opened its doors, revealing nearly a dozen retail shops (with more to come), several restaurants, and Providence's first 'Bicycle Garage." The ribbon-cutting cermony included appearances by Governor Lincoln Chaffee and Mayor Angel Taveras.
Governor Lincoln Chafee, Mayor Angel Taveras, and the Arcade's Owner/Developer Evan Granoff cut the cermonial ribbon upon the historic landmark's front steps.
Governor Lincoln Chafee
Chafee gave a brief statement regarding the Arcade's reopening, and lauded the efforts of its owner and developer, Evan Granoff in restoring the landmark.
The owner and developer of the Arcade, Evan Granoff spoke at the ribbon-cutting ceremony in which he stated that the Arcade's mix-use of retail and residential space has created "economic viability for the first time in its history."
Mayor Angel Taveras
Mayor Taveras was excited by the addition of more than a dozen new small buisinesses in downtown Providence, and thanked Granoff for his efforts in restoring the Arcade.
J. Michael Abbott
The restoration project's lead architect, J. Michael Abbott of Northeast Collabrative Architects, and his design team were on hand for the ceremony. Their design creates an historic atmosphere blended with modern amenities.
(Not pictured: Partner John Grosvenor and associate Andrea Torizzo)
The new signage throughout the Arcade is styled to refelct back to the landmark's history.
Eleven new small businesses now reside within the Arcade. In the next weeks and months, four more retail, two more restaurants, and two levels of new downtown residences will be added.
Liiscensed cosmotologist and aestheticin Rehka Salwi is bringing her business into Providence from Fall River. She has more than 25-years of experience in the practice of eyebrow threading, and is founder of the National Eyebrow Threading Association.
Featuring a collabrative of six distinct fashion designers, the people at nude. offer a wide assortment of handmade clothing and accessories suitable for everybody.
From t-shirts to dresses, from shoes to children's apparel, Ntrendsice offers "Clothing + Accessories for the Bold, Wild + Free"
With items ranging from knick-knacks to furniture, That Guy offers a variety of goods for the home.
Gayle Gertler of Southwest Passage makes several annual trips to trading posts and reservations in Arizona and New Mexico, bringing Native American crafts, jewelry, and accessories to Rhode Island.
New Harvest Coffee and Spirits
Pawtucket-based New Harvest Coffee Roasters brings in a mixture of brewed by the cup single-origin coffees and exquisite teas to the Arcade. Combined with craft beers, single-malt and single barrel liquors, this spot has something for thirsts of all kinds.
Started as a bike messenger service in 2009, Dash's Arcade location offers bicylce repair services, rentals, and bicycle accessories.
Named for the owner's (guku) grandmother, Adirah Gallery features fine art from all over the continent of Africa.
Jessica Ricci Jewelry
Jessica Ricci repurposes various items found at bazaars and flea markets into "wearable luxe art," giving a second life to many once-loved treasures.
Sugar Coated Heaven
(COMING SOON) Sugar Coated Heaven creates hand-crafted, unique gourmet chocolates, and claims to be "the best sugar coated treats this side of heaven."
Founded in Newport, Royal Male offers a wide variety of English and European-style country clothing.
(COMING SOON) Rogue Island will be a full-service restaurant featuring a menu that is more than 90% sourced from within 40 miles of Providence.
Lunia Glamour is a full service beauty and style shop, offering blow outs, makeup lashes, and facial waxing, along with locally-designed clothing, jewelry and accessories.
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