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Staten Island’s very own version of the London Eye, the New York Wheel, is supposed to be so lucrative as a tourist destination, its developers say, that it will even surpass the Empire State Building in terms of revenue, The Real Deal reports. However, merely a year before its opening, millions of dollars are being spent in cost overruns, and some problems arose among the investors.
The initial projections for the 630-foot-tall New York Wheel were estimated at $250 million, but have actually doubled to $500 million. According to The New York Post, the completion date was first announced in 2012 for 2015. Developers behind the project, Meir Laufer, Richard Marin and Andrew Ratner are estimating pre-tax revenues of $127.85 million in 2017, thereby surpassing the revenue earned by the Empire State Building’s observatory deck, which made $111.5 million last year.
There have been some issues among the investors, though. Eric Kaufman, who began working on the wheel in 2008 and remained a minor investor, contends that the project lacked a coherent business plan and effective management and that there were “cost overruns without explanation,” reports the Post.
Supposedly, in 2014 Kaufman and other board members were asked to put $17 million in addition to what had already been paid. Since Kaufman had already paid $3 million in 2013, and refused to pay more, Wheel Estate LLC, an investment group with the majority stake in the project, sued Kaufman’s company in August 2015as well as an entity belonging to original investor Meir Laufer. Laufer, the chairman of the board for New York Wheel, claimed he was being pushed aside because he’s an Orthodox Jew.
The Jewish Voice reported on December 23rd that in November 2015, the developer of Ferris wheel sued his partners for shutting him out of the project because of his Chasidic appearance. In State Supreme court filed papers, Mr. Laufer stated that “the investors conspired against him, manufacturing ways to dilute his share in the project both financially and otherwise,” as reported by The Real Deal.
In earlier legal papers filed in July 2015, Laufer claimed that he was treated differently than other investors and board members, which included the Feil Organization, well known investor Richard Marin, Lloyd Goldman of BLDG Management and businessman Joseph Nakash. That treatment was supposedly caused by his Chasidic looks.
In addition, allegedly, Richard Marin told Laufer that, in order to attract investors, the project should not have more than one board member from the Jewish community, according to the court documents. Laufer claims that his stake in the project has been reduced from its original 33 to merely three percent because of various financial manipulations in place, coming from a very negative motivation.
Moreover, he stated that his name was removed from all press releases, that he has been excluded from project updates and that he has been forbidden from speaking out publicly about the project, reports Vos Iz Neias. According to Laufer, the New York Wheel concept was born in 2008 after he had found himself intrigued by the London Eye and envisioned a similar attraction for New York City.
Despite the complicated relationships between the investors and developers, NY Curbed reported that in their first year of operation, the Wheel will make $96 million in ticket sales, $10 million for sponsorship deals, and $8.7 million in gift shop sales. By the year 2021, the attraction could be making as much as $166.52 million in revenues. In order for these estimates to prevail, the Wheel will have to attract four million customers its first year, and 3.5 million tourists each year after that. By way of comparison, Empire State draws 4.3 million visitors annually.
The tickets for the rides on the Wheel will be priced at $35 in comparison to $32 tickets to go to the observation deck of the Empire State Building, NY Curbed reports. The project most recently got the approval of the City Council, and is slated for completion in 2017.
Kala Jerzy