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HOME FORECLOSURES ON THE RISE P. 4 Bannon backs Grimm's future P. 7 HIVES OF ACTIVITY AT JAVITS CENTER P. 39

NEWSPAPER

VOL. XXXIII, NO. 41 WWW.

CRAIN S OCTOBER 9 - 15, 2017 NEW YORK BUSINESS

FROM THE NEWSROOM | JEREMY SMERD | EDITOR

Making an impact

IF YOU WERE IN TIMES SQUARE last Wednesday a ernoon,

you might have seen the jumbotron ash a shout-out to this

year's Fast 50 list. Our photographer, Buck Ennis, captured

the moment for this week's cover.

Companies pay an arm and a leg to get in front of the

nearly half a million people who pass through Times

Square daily. But we just called up New Tradition, a scrappy

media rm that is 46th on our annual list of the fastest-

growing companies in the metropolitan area. New Tradition

" owns rights to sell ads in Times Square, one reason why its

revenue has gone up 375% in the past three years. ere's no shortage of advertising rms on our list this

Pretty much every company on our list

year, but most are ad tech companies that have found

furious growth helping Madison Avenue connect with

is trying in one way

consumers online. No surprise there. Ad tech has dominated the rankings for the past few years.

Although New Tradition's name harkens back to a predigital past, its brick-and-billboard business necessarily

or another to harness the internet's powerful current

competes with the internet. And what better way to do

that than with the biggest screen of all?

Pretty much every Fast 50 company is trying in one way or another to harness

digital's powerful current. ere was a strong showing this year by e-commerce

companies including No. 2 Boxed, No. 3 Try the World and No. 6 MM.LaFleur,

to name three of the dozen companies on the list that primarily sell goods online.

eir success comes as the traditional retail industry has imploded. In 2012

department stores slashed 200,000 jobs nationally, according to the Federal Reserve

Bank of New York. Since 2013 they have cut 80,000 more jobs. E-commerce com-

panies, meanwhile, have added roughly 100,000.

Our Fast 50 e-commerce companies are competing, and sometimes partnering,

with the dominant players, Amazon and Walmart, and doing so in New York, a

high-cost locale. (It helps that some have operations in New Jersey and on Long

Island--one reason we consider the entire metro area.)

ese companies are winning because they can produce more with fewer work-

ers than most brick-and-mortar operations. e 16,428 employees at our Fast 50

companies (a third of whom are in the city) generated about $4.5 billion in revenue

last year. at's nearly $274,000 per employee--far less than at Apple ($1.9 million)

but substantially more than at Chipotle ($60,000). If New York can produce more

such jobs than it loses to retail, the economy as a whole and those at the bottom

rungs could end up better o .

CONFERENCE CALLOUT

OCT. 23

NYC SUMMIT: FIXING MASS TRANSIT

This year's NYC Summit will feature top transportation experts

including Elliot Sander, former Metropolitan Transportation Authority CEO. They will offer insight into how to get our

subways and trains moving again.

SHERATON TIMES SQUARE

8 to 10:30 a.m. CrainsEvents@

Vol. XXXIII, No. 41, Oct. 9, 2017--Crain's New York Business (ISSN 8756-789X) is published weekly, except for double issues the weeks of June 26, July 10, July 24, Aug. 7, Aug. 21 and Dec. 19, by Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing of ces. Postmaster: Send address changes to: Crain's New York Business, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. For subscriber service: Call 877-824-9379. Fax 313-446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. (GST No. 13676-0444-RT) ?Entire contents copyright 2017 by Crain Communications Inc. All rights reserved.

IN THIS ISSUE

4 IN CASE YOU MISSED IT 5 HEALTH CARE 6 ASKED & ANSWERED 7 POLITICS 8 ENTERTAINMENT 9 VIEWPOINTS FEATURES 11 FAST 50

Film boom in China boosts New York

P.36

DR. EDWARD A. ALVAREZ

36 GOTHAM GIGS 37 SNAPS 38 FOR THE RECORD 39 PHOTO FINISH

CORRECTIONS

Lawyers from Skadden Arps Slate Meagher & Flom and Af liates also practice in health care and labor/employment. These industries were omitted from The List, published Oct. 2.

State Sen. George Latimer does not plan to raise taxes. His position on the issue was misstated in the article "Why a Trump fan may lose his seat," published Oct. 2.

Suri Kasirer is president of her eponymous lobbying and consulting rm. The type of rm was misstated in Snaps, published Oct. 2.

ON THE COVER PHOTO: BUCK ENNIS

DIGITAL DISPATCHES

Go to

READ The city's road

map for luring Amazon's HQ2 is

>

taking shape. Local

business and political

leaders weigh in as

the Oct. 19 deadline

looms.

WBAI's bitter dispute with its landlord has left its broadcast future in a cloud of static.

These are the City Council races where Republicans stand a chance.

ATTEND Go to events for the latest opportunities to network with local professionals and learn more about the issues that matter to your business. Coming up Oct. 25: our 2017 Family Business Summit.

BLOOMBERG NEWS, BUCK ENNIS

2 | CRAIN'S NEW YORK BUSINESS | OCTOBER 9, 2017

AGENDAWHAT'S NEW OCTOBER 9, 2017

Don't let tribalism and paranoia stop a much-needed project

As if it were not hard enough to build housing in this town, the City Council is threatening to make it harder. Councilman Antonio Reynoso is leading the opposition to a massive residential project in Williamsburg because the applicant has

not speci ed the number of bedrooms each unit will have--something

developers have never had to do for such projects.

If you're thinking there must be more to this story, you're right. Reyno-

so's Latino constituents have long seen themselves as being squeezed out by Hasidic Jews in a competition for housing in northern Brooklyn. e developers behind this proposal are Jewish, so the opponents fear the project will be tailored to ultrareligious Jews, with large apartments and accommodations designed for strict Sabbath observers. ey want a guar-

ROOM FOR ALL: The Brooklyn development would have more than 1,100 units, including 287 with low rents.

antee that this will not happen.

Such a demand raises more red ags than a military parade in Beijing. determined by consumer demand; Rabsky, a for-pro t developer, has to

Let's start with the precedent the council, which will vote on the project repay lenders and make money while abiding by housing discrimination

this month, would set by asking the Jewish-owned Rabsky Group for some- laws. It is not a front group for Hasidic Jews to take over Williamsburg.

thing it asks of no other developers. Not only would that subject the city to

ird, this vacant plot of land, known as the P zer site, has been un-

a lawsuit, but it is also morally wrong.

productive since 1989. It would be a shame

Second, the development adheres to the de Blasio administration's mandatory inclusionary housing policy, which was approved by the City Council and requires a healthy

The City Council must not set a precedent by supporting ethnicitybased opposition to housing

if squabbling motivated by tribalism and paranoia caused it to remain fallow any longer than necessary. A similar ght over the city-owned portion of the nearby Broad-

portion of a development be devoted to

way Triangle site has for years blocked con-

low-rent units when rezoning allows for

struction of a ordable housing--while the

more apartments. e mandate established a model that is supposed to market-rate units went up as planned. Other local projects are ethnically

obviate disputes about the a ordability of such projects. Rabsky's would mixed, and there is every reason to believe Rabsky's would be as well.

include 1,146 units, 287 of which would rent for less than market rate and

Luckily Councilman Steve Levin, whose district includes the P zer site,

be awarded by lottery. Housing lotteries are overseen by the city and give gets all this. We expect most of his colleagues to follow his lead. e others

no preference to any race or religion. e variety of market-rate units is should reconsider the message that opposing the project sends. -- THE EDITORS

STATS AND THE CITY

FINE PRINT Gun and ammunition manufacturers' stock prices rallied after the Oct. 1 mass shooting in Las Vegas, as they typically do in the wake of such atrocities. Normally those gains last. But when Republican members of Congress hinted at banning the sale of bump stocks, which allow semiautomatic weapons to re like machine guns, the shares retreated. Vista Outdoor shed 4% for the week, and Ruger fell 2% off its high.

25 WORDS OR LESS

"It's hard to say whether this is Uberesque, where the CEO is orchestrating bad behavior, or if it's just a frat party run amok."

--Knotel CEO Amol Sarva on accusations that WeWork has been spying on its of ce-sharing rivals in a scheme to poach tenants

BY GERALD SCHIFMAN

GETTING OUR TAX BACK

NEW YORK STATE is among the biggest recipients of federal spending for the underprivileged. But the state still sends far more money to Washington than it receives.

$41B Federal taxes paid by New York in scal year 2016 that did not return in the form of federal spending, more than twice the 2013 discrepancy and the most of any state

FEDERAL BENEFITS NEW YORK RECEIVES, COMPARED WITH THE

NATIONAL PER-CAPITA AVERAGE

U.S. $360

U.S. $1,134 N.Y. $589

N.Y. $1,777 +39%

+36%

9.4% Share of federal individual income tax paid in 2016 by New Yorkers, who make up 6.1% of the U.S. population

U.S. $97 N.Y. $117

+17%

U.S. $206 N.Y. $250

+18%

93 Billionaires living in New York in 2016, second to California's 124

Education

ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY.

SN(AfoPod stamps)

Medicaid

Otshaefrety net

SOURCES: State comptroller, Forbes

OCTOBER 9, 2017 | CRAIN'S NEW YORK BUSINESS | 3

RABSKY GROUP

AP IMAGES, NEWSCOM

AGENDA

ICYMI

Foreclosures near recession levels. Should we worry?

REPORTS LAST WEEK that the number of home foreclosures in New York City had returned to levels last seen at the onset of the Great Recession le many housing experts scratching their heads.

Economic indicators suggest the opposite should be happening. e city's unemployment rate has been trending down since 2008 and is now just under 4%. Housing prices continue to rise, and area banks are lending to homebuyers. ANYONE HOME? Foreclosures may be up, but economic Federal data show that Ridgewood, Maspeth and Flushing indicators re ect strength in the market. savings banks together made $3.5 billion worth of loans for one- to four-family homes during the second quarter of this year, a 4% increase over last year. Late payments on such loans, a bellwether for mortgages at risk of foreclosure, fell by about 1% over the same time period.

Even so, data from PropertyShark, using information directly from state Supreme Court documents, showed 859 rst-time foreclosure auctions during the third quarter. ose numbers are similar to those seen in 2009, right a er the housing market imploded, and have ummoxed local housing experts. But they say not to panic--at least not yet.

Several factors are likely contributing to the spike. e biggest might have to do with the state's practice of handling foreclosures through the courts, resulting in a backlog that can drag out individual cases. Most cases heading to auction now are years old. e number of new foreclosures in the court system is down. " e intent is to protect consumers, but I think the result is that it really has extended the time lines," said Mike Fratantoni, chief economist for the Mortgage Bankers Association. "States like California and Arizona, which were hard hit by the crisis, moved through it more quickly."

Ironically, legislative changes made to streamline the process are kicking in, allowing the backlog to clear. Also at play are increases in foreclosures reportedly resulting from reverse mortgages. Banks also might be more motivated to foreclose. With prices up, they might be more eager to get control of a valuable asset. -- JOE ANUTA

Package deal

Parcel, a 24-hour delivery startup in Brooklyn, was snapped up for less than $10 million by Walmart to help it gain a foothold in same-day delivery. Parcel, founded in 2013, provides that service for Bonobos and Chef 'd.

Separation anxiety

Mayor Bill de Blasio said that by 2020 New Yorkers will not have to sort their recyclables. e proposal is intended to reduce greenhouse gases, as fewer collection trucks would be needed. e change is part of the city's e ort to meet the goals of the Paris climate agreement.

Re-entering the ring

, which has been dormant and considered toxic in the year since sister sites Deadspin and Jezebel were snapped up by Univision, is being sold by its bankruptcy estate. Parent Gawker Media led for bankruptcy in the wake of former wrestler Hulk Hogan's $140 million lawsuit victory over a sex tape.

DATA POINT

SUBWAY DELAYS COST NYC'S ECON-

OMY AS MUCH AS $389 MILLION

ANNUALLY IN LOST WAGES AND PRO-

DUCTIVITY, THE CITY COMPTROLLER

SAID. THE MOST-COSTLY LINES ARE

THE 4, 5, 7, A AND F.

Ge en Hall. Ge en, who donated $100 million for the right to rename Avery Fisher Hall, said it was "shameful" that more wealthy New Yorkers did not donate to the project.

Going Hollywood

Time Inc.'s Entertainment Weekly is relocating its headquarters to Los Angeles in March. e move is an attempt to get closer to the industry that it covers.

e company said it does not know how many of the magazine's 66 New York sta members will head west.

are the rst to travel with less seating; 10 more are to follow by the end this month. e new car con guration could allow for 100 extra riders per train.

Insults to injuries

Following a disastrous season, Mets manager Terry Collins resigned a er seven years at the helm. He reportedly accepted another position in the organization. A er taking heat for the parade of players who ended up on the disabled list, pitching coach Dan Warthen and head trainer Ray Ramirez also will not return to the bench.

-- CHRIS KOBIELLA

Your money's no good here

Shake Shack's next city outpost, on Astor Place, will be a cashless endeavor. Patrons will place orders through their cellphone or a digital kiosk--which will go directly to the kitchen. Texts will alert guests when their food is ready.

Share offering

Airbnb has partnered with New York? based WeWork to o er business customers of the online lodging provider o ce space at the WeWork nearest to their rental. No launch date for the service has been announced.

Orchestral maneuvers in the dark

e New York Philharmonic and Lincoln Center said they would scale back a $500 million plan to renovate David

Longstanding solution?

An MTA solution to subway overcrowding is to t more people on cars by removing some seats. Two E trains

In memoriam

S.I. Newhouse Jr., co-owner of Advance Publications, died Oct. 1 at age 89. He came to fame helming Cond? Nast starting in 1975. Cond? Nast's stable of magazines includes Glamour, GQ, The New Yorker, Vanity Fair and Vogue.

4 | CRAIN'S NEW YORK BUSINESS | OCTOBER 9, 2017

Publisher, VP Jill R. Kaplan executive assistant Devin Arroyo, 212.210.0701

EDITORIAL editor Jeremy Smerd managing editor Brendan O'Connor assistant managing editors Erik Engquist, Jeanhee Kim, Robin D. Schatz copy desk chief Telisha Bryan art director Carolyn McClain photographer Buck Ennis senior reporters Joe Anuta, Aaron Elstein, Matthew Flamm, Daniel Geiger reporters Jonathan LaMantia, Caroline Lewis data reporter Gerald Schifman web producer Peter D'Amato columnist Greg David contributors Tom Acitelli, Theresa Agovino, Will Bredderman, Erik Ipsen, Cara S. Trager

ADVERTISING advertise advertising director Irene Bar-Am, 212.210.0133, ibaram@ senior account managers Lauren Black, Zita Doktor, Rob Pierce, Stuart Smilowitz, Debora Stein senior marketing coordinator Charles Fontanilla, 212.210.0145 cfontanilla@ sales coordinator Devin Arroyo, 212.210.0701, darroyo@

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CUSTOM CONTENT director of custom content Patty Oppenheimer, 212.210.0711, poppenheimer@ custom project manager Danielle Brody, dbrody@

EVENTS events director of conferences & events Courtney Williams, 212.210.0257, cwilliams@ manager of conferences & events Adrienne Yee, ayee@ events coordinator Ashlee Schuppius, aschuppius@

AUDIENCE DEVELOPMENT director of audience & content partnership development Michael O'Connor, 212.210.0738, moconnor@

REPRINTS reprint account executive Lauren Melesio, 212.210.0707

PRODUCTION production and pre-press director Simone Pryce media services manager Nicole Spell

SUBSCRIPTION CUSTOMER SERVICE subscribe customerservice@ 877.824.9379 (in the U.S. and Canada). $3.00 a copy for the print edition; or $99.95 one year, $179.95 two years, for print subscriptions with digital access. to contact the newsroom: staff 685 Third Ave., New York, NY 10017-4024 phone: 212.210.0100; fax: 212.210.0799

Entire contents ?copyright 2017 Crain Communications Inc. All rights reserved. ?CityBusiness is a registered trademark of MCP Inc., used under license agreement.

CRAIN COMMUNICATIONS INC chairman Keith E. Crain vice chairman Mary Kay Crain president K.C. Crain senior executive vice president Chris Crain secretary Lexie Crain Armstrong editor-in-chief emeritus Rance Crain chief nancial of cer Robert Recchia

founder G.D. Crain Jr. [1885-1973] chairman Mrs. G.D. Crain Jr. [1911-1996]

CRA

AGENDA

HEALTH CARE

City to sue state over missing hospital funds

Health system says it is owed $380 million BY JONATHAN LAMANTIA

The de Blasio administration plans to sue the state for $380 million it says NYC Health and Hospitals is owed for treating Medicaid and uninsured patients.

e money is part of the federal Disproportionate Share Hospital program, which covers the facilities' losses for delivering uncompensated care. It is funded by federal and local governments and administered by the state.

Gov. Andrew Cuomo hasn't distributed funds from the previous federal scal year, which ended Sept. 30, because of a long-planned reduction in federal government reimbursements that took e ect Oct. 1. New York hospitals stand to lose $1.1 billion during the next 18 months.

" e governor is sitting on money required by law to be spent to support New York City hospitals, jeopardizing their well-being and the well-being of 1 million New Yorkers who rely on those services," a city spokeswoman said.

Cuomo said last week that the state will not divvy up what is owed to all the public hospitals statewide until it gures out how to do so equitably. e state is facing a $4 billion budget de cit for 2018.

He said a special session might be needed to allocate the shortfall.

Other local hospitals a ected by the cuts include Stony Brook University Hospital and SUNY Downstate, Westchester and Nassau University medical centers.

"We're paying none of them because we can't pay all of them," the governor said.

e shortfall means Health and Hospitals will ll just 25% of the 250 to 300 jobs that typically become available

each month, interim CEO Stanley Brezeno wrote in a letter to employees last week.

"I recognize that an even larger number of

lost positions across our system will have consequences for patients, for a number of services and for continuity of care, and I deeply regret this,"

Brezeno wrote. "But this budget cut leaves us with no choice."

e system already was in austerity mode,

lling jusTt:7.56205%in of open

positions to close a projected $1.8 billion budget de cit by scal 2020. It cut 396 management jobs in June. Brezeno said on Oct. 6 that the

system had 13 days of cash on hand.

e issue could be resolved if Congress passes a proposal to delay the cuts by one year.

There's a place for high drama ... just not in your health plan.

Broadway's known for making a scene. But when it comes to health plans, you can do without the theatrics.

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Tell drama to take its final bow -- make Oxford the health plan you count on.

Visit OxfordStability or call your broker. Ask about our networks:

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1UnitedHealthcare Service Statistics average for New York, New Jersey and Connecticut Oxford plan members from Jan. 1, 2016, through Dec. 31, 2016, based upon United Experience Surveys. Source: Internal Consumer and Customer Call Center Metrics. 2Oxford HMO products are underwritten by Oxford Health Plans (NY), Inc. Oxford insurance products are underwritten by Oxford Health Insurance, Inc. MT-1139929.0 8/17 ?2017 Oxford Health Plans LLC. All rights reserved. 17-4569 NY-17-444

UEI170020_DownstateNY_Crains_7.625x9.875_FINAL.indd 1

9/28/17 2:37 PM

OCTOBER 9, 2017 | CRAIN'S NEW YORK BUSINESS | 5

Client Alts

Internal & External Team Date: 9-28-2017 2:37 PM

Project Details Depot #: None

Color Cyan, Magenta,

Dimensions Flat: 7.625 in x 9.875 in

T:9.875 in

AGENDA

LEE BRIAN SCHRAGER NEW YORK CITY WINE & FOOD FESTIVAL

ASKED & ANSWERED FOOD

INTERVIEW BY CARA EISENPRESS

The New York City Wine & Food Festival will welcome more than 350 participating chefs and 50,000 guests Oct. 12 to 15, making it the largest extravaganza on the local food scene. Events range from cozy dinners at the city's top restaurants to trade shows and celebrity chef?hosted signature parties at Piers 92 and 94. The force behind the feasting is Lee Brian Schrager, a senior vice president at Southern Glazer's Wine & Spirits, who started the festival in Miami in 2002 and launched a New York version in 2008. The net proceeds will be donated to two hungerfocused charities: the Food Bank for New York City and No Kid Hungry.

"Our tickets aren't cheap, and we have to make everyone happy: chefs, sponsors and consumers

What are festivalgoers in 2017 looking for?

They want access, to touch the talent--not one or two or three big names but dozens. We have a more educated consumer than in South Beach 17 years ago. They want to go to events where they get value. We have pop culture talent, like from the Cooking Channel, and chefs with Michelin stars, like Michael White and Alain Ducasse.

How do they "touch" the talent?

They can experience being in the room with them--watching the ensemble of Chopped at the Smorgasburg event or Rachael Ray at the Burger Bash. Some people don't want to attend the events at the rooftop at Pier 92; they want intimate dinners. We always try to bring the chefs out at the beginning and near the end [of meals]. Sometimes, if the chefs want, each dish is introduced. Some chefs can be shy, but the majority will walk around, take photos or sign books once their course is served.

What's your pitch to busy chefs to donate their time and energy?

It's an invitation, not a pitch. People want to participate--we're raising funds and awareness for two great organizations. We don't want anyone to be involved who doesn't want to be. Bobby Flay had a commitment this year. We love Bobby. We just hope he's coming back next year.

How many people does it take to plan such an ambitious festival?

We have a full-time staff of 10 at the New York of ce who deal with marketing, accounting, PR and ticketing. As we gear up, we add hundreds of event and sponsorship managers and thousands of volunteers.

What's the biggest pitfall in organizing an event like this?

It's important not to overpromise. These are events with thousands of people. We have lines. You just need them to be organized and move quickly. People want a selection to choose from. They want to be entertained. Our tickets aren't cheap [they range from $95 for demos up to $783 for an events package], and we have to make everyone happy: chefs, sponsors and consumers.

How do you organize a line so it moves quickly?

Think of it the way they keep security lines moving at the airport or Disney World. We also encourage chefs to plan ahead and do as much prep work as possible before getting on-site--and to keep their dishes on the simple side.

How much do you raise for the charities?

We have almost always returned at least a million dollars. Our tagline is: "Eat, drink and end hunger."

6 | CRAIN'S NEW YORK BUSINESS | OCTOBER 9, 2017

DOSSIER

WHO HE IS Founder and director, New York City Wine & Food Festival

BUDGET Nearly $7 million, much of which is donated by dozens of corporate sponsors

SALARY None from the festival

AGE 58

BORN Massapequa, Long Island

RESIDES Upper West Side and Miami

EDUCATION Associate of occupational studies, The Culinary Institute of America

SHARING THE LOVE Chef Emeril Lagasse's cooking demo at the festival fell on his birthday last year. Schrager brought a cake onto the stage and led the crowd in singing "Happy Birthday."

FAVORITE DISH Schrager has always loved fried chicken, which he orders every time he sees it on a menu. As a teenager, he and his friends were asked not to return to their local Howard Johnson's-- they had surpassed the per-person limit at its allyou-can-eat fried chicken buffet.

BUCK ENNIS

AGENDA

Grimm outlook gets Breit-er

Tax warrants and a felony plague GOP candidate, but Steve Bannon could help

BY WILL BREDDERMAN AND ERIK ENGQUIST

Back on the campaign trail a er serving seven months in prison and reimbursing victims, Michael Grimm says he has paid his debt to society.

Not quite, according to New York state tax records.

Grimm is bidding to recapture the U.S. House seat

he abandoned in 2015 because of felony tax-evasion

charges related to Healthalicious, an Upper East Side

restaurant he sold a year before his 2010 election to

Congress. Records show his limited liability company,

Granny Sayz, has seven outstanding tax warrants from

2011 to late 2016, totaling $945,000.

A Grimm campaign spokesman, Michael Caputo,

insisted the state liens in 2011 and 2012 are in error. He

said the warrants from 2016 for $442,000 and $445,000

are duplicative and connected to the federal case.

"It's all very confusing, and we believe a lot of it is

incorrect. And that's why it's being disputed," Caputo

said. " e federal restitution has been ful lled, and we

believe New York state has

calculated incorrectly."

e scandal, stem-

ming in part from paying

workers o the books, and

other past misbehavior by

Grimm might matter lit-

tle to the Donald Trump

enthusiasts he is courting

in June's Republican pri-

mary against Rep. Daniel

MICHAEL GRIMM

Donovan, whom the chal-

lenger says is not support-

ing the president's agenda. Any doubt about Grimm's

campaign strategy was erased when he was embraced

last week by right-wing rebrand Steve Bannon, the

Breitbart editor on a mission to oust moderates.

Grimm, who served time in a minimum-security

federal prison, apologized for the crime at an Oct. 1

rally announcing his bid but maintained he had done

nothing more than "hire a handful of delivery boys o

the books." ere was also a $150,000 federal tax lien,

which Grimm paid with help from benefactors he re-

fused to name, the New York Daily News reported.

Grimm insisted he was the victim of a political

witch hunt by President Barack Obama and Loretta

Lynch, who served as the U.S. attorney for the East-

ern District of New York and later as attorney general.

His felony notwithstanding, the ex-con assailed the

"swamp" of Washington and called Lynch "corrupt."

He lauded Trump as "outstanding" and blasted Don-

ovan's opposition to a failed GOP replacement for the

A ordable Care Act.

Tacking right and casting Donovan as a

Trump-abandoning moderate is likely to resonate

far better with GOP primary voters than with the

electorate of the entire district, which encompasses

all of Staten Island and parts of southern Brooklyn.

Because of that, there are fears in Republican circles

that a Grimm victory in June would cost the GOP the

November 2018 general-election race, in which Don-

ovan would be a prohibitive favorite against any of the

ve Democrats running.

New York City business interests are also worried.

Donovan is the city's lone member of the Republican

Party, which is favored to keep control of the House

next year, and can advocate for the city's interests in

ways its Democrats cannot.

OCTOBER 9, 2017 | CRAIN'S NEW YORK BUSINESS | 7

AGENDA

ENTERTAINMENT

New opportunity for NY film industry: China's booming box office

Detective Chinatown 2 sets stage for more of the country's lms BY MIRIAM KREININ SOUCCAR

The rst Chinese movie to lm with a unionized crew in New York is currently in production--and it may set the stage for an in ux of other bigbudget lms from the country.

Detective Chinatown 2, part of a franchise of action comedies to be shot in Chinatowns around the world, will be lming in the city until Oct. 15. e

rst in the series took place in ailand and was a blockbuster in China, grossing $126 million in 2015.

e movie, which began production in August, has lmed at nearly 30 high-pro le locations including Grand Central Terminal, the New York Public Library and Times Square. Its studio work is being done at the Broadway Stages facility in Glendale, Queens.

Shaun Xiang Yue, the movie's producer, said he looked at other cities in the United States as potential locations but decided that New York o ered the most iconic sites. ough he has applied for the state's 30% tax credit on below-the-line costs, he said the credit did not factor into his decision to make the movie in New York. " e tax credit is a bonus; we came here because of

New York City," Yue said. "Nobody can re-create Times Square anywhere."

Yue said now that he has a contract with the unions, he plans to produce more Chinese movies here. His production company in China, Gosh Pictures, opened a U.S. subsidiary, Gosh Films, which is in talks with a number of Chinese movie producers looking to lm in the United States. He is also scheduled to speak at seminars in China about how to make unionized productions in the U.S.

"For movies with budgets over $15 million, it's cheaper to make the movies here than in China," Yue said, because New York's industry has an ecosystem of support businesses, such as prop houses, that large productions rely on. He declined to give the budget of Detective Chinatown 2 but said it was the biggest he has worked with.

China's growth

e emergence of China's movieproduction industry could be a new cash cow for local crews and lm businesses if more productions shoot here, as Yue predicts. e lm-production industry in China is expected to

generate $7.7 billion

this year, an annual-

ized growth rate of

15.8% over the past

ve years, according

to market research

rm IBISWorld of

Los Angeles. With

976 Chinese lms SHOWTIME: A full-cast dance scene was shot in Times Square. released in 2017, up

from 893 in 2012,

Chinese productions now account for complex, and some were lmed over-

almost two-thirds of the total movie night. In one scene, a dead body is

tickets sold in that nation.

found oating in the East River. In

" e trend of shooting in the U.S. another, a car chase takes place in Chi-

is looking to accelerate as Hollywood natown. e biggest scenes are saved

and China draw closer together," said for Times Square. In one, police chase a

Stan Rosen, an expert on the Chinese man driving a horse-and-carriage that

lm industry and director of the East ips over, and he is saved by a motorcy-

Asian Studies Center at the University clist. Times Square is also the setting of

of Southern California.

a dance number at the end of the movie

Detective Chinatown 2 has close that involved the entire cast and crew.

to 200 paid actors and more than 100 Even a few pedestrians made unex-

crew members. To obtain permits, pected cameos.

scout locations and rent studios, Yue is

" e most di cult place to shoot

working with executive producer Kerry is Times Square," Yue said. "It's full of

Orent, who has managed productions pedestrians, and people want to get in

made in New York, such as Rescue Me, front of your camera. You can block it

Michael Clayton and e Get Down.

o , but it's New York City and people

Many of the location shoots were just do whatever they want."

Soaring ticket prices lure bad actors seeking big profits

Entertainment executives expect demand for live shows to grow BY AARON ELSTEIN

Ticket broker Prestige Entertainment has few peers when it comes to scoring seats to hot concerts and Broadway shows. On any given evening, it allegedly has had nearly 40% of all available Hamilton tickets. In 2014 it bought more than 1,000 tickets to a U2 show at Madison Square Garden--in a single minute.

How does Prestige do it? According to the New York attorney general's o ce, it uses computer programs-- bots--to leapfrog ahead of others queuing up for seats. Prestige in May agreed to pay $3.35 million to settle a probe into illegal ticket-buying, and last week the rm was sued by Ticketmaster, which said Prestige violated its agreement with the attorney general by continuing to buy tickets with bots.

It's a sign of the times. Years of soaring prices for top concerts, shows and sporting events have attracted a slew of bad actors--some backed with Wall Street money--to the ticket business. Now law enforcement authorities are trying to drive out the worst players.

"Like ies to honey," said Anthony Sabino, a law professor at the St. John's

University business school. "Anyplace there's money and opportunity, it'll draw the good and the bad."

e most prominent crackdown involves former WFAN host Craig Carton. Federal prosecutors last month charged Carton with cooking up a Ponzi scheme that centered on him buying tickets to popular shows at face value and selling them at a markup. e feds say he used the cash he raised to pay o gambling debts rather than buy tickets. Carton has pleaded not guilty.

e ticket business might be about as old as show biz, but it didn't attract much attention until prices began soaring in the mid-1990s, when the Eagles reunited and charged $100 for a concert. at seemed like an astronomical sum at a time when the average concert ticket cost about $25, according to Pollstar. But other bands and promoters took note when the Eagles had no trouble lling seats. A handful of Broadway shows increased ticket prices as the rise of online resellers made it clear just how much people would pay. But nothing really stuck until 2001, when the producers of e Producers started charging $480

for prime seats. Today theatergoers fork over thousands to see Hamilton.

Economists describe the phenomenon as "cost disease." Consumers are willing to pay ever-higher sums for personal services such as doctor visits, tuition and concert tickets. It's considered a market failure because performers' incomes have risen faster than their productivity. Still, the malady creates an opportunity for investors who see in tickets the kind of returns normally found in stocks and real estate.

Better, in fact.

A new asset class

Beyonc? was the nation's top-grossing performer last year, raking in $169 million in revenue as fans coughed up an average of about $124 per ticket, according to Pollstar data.

e top-grossing act in 2004, Prince, charged an average of $61. Tickets have risen at a higher rate than the stock market (which gained 97% over that time) and even Manhattan real estate (the median sale price for an apartment rose 96%). Such outsize returns might help explain why Carton was allegedly able to raise $10 million

from a hedge fund manager he met at a charity event, and why the fund prepared to o er a $40 million credit line so he could buy face-value tickets and sell them at a markup. Hedge-fund titan Paul Tudor Jones and businessman Michael Dell allegedly were victims of a scam by New York concert promoter Joseph Meli involving Hamilton tickets, according to Bloomberg News. And a former city schoolteacher charged with running a $70 million Ponzi scheme also involving Hamilton tickets is said to have raised $40 million from an unnamed private-equity rm.

"Tickets have become what Wall Street calls an asset class," Sabino said.

James Dolan, CEO of the Madison Square Garden Co., sees demand for live events growing. He owns the Knicks and Rangers, just bought a nightclub company and is planning to open a live-music venue in Las Vegas to add to the company's roster. He sold Cablevision and is looking to unload MSG Networks.

" e experience of being at the event live," Dolan said at a conference this year, "I don't see that being diminished."

8 | CRAIN'S NEW YORK BUSINESS | OCTOBER 9, 2017

JOJO WHILDEN/DETECTIVE CHINATOWN 2

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