Expect the area south of Powell Street Station to turn into a consumer-centric nightmare. That’s because Westfield San Francisco has purchased the Sony Metreon complex for $70 million. Now David Lazarus might tell you that the Sony Metreon venture was a sad failure. He might imply that this was a dream that didn’t deserve to die. And he certainly paints a human face in talking with Trevor Bryant, the senior vice president who supervised the development of the Sony Metreon and who claims in Lazarus’s article, “It was supposed to be a place where you couldn’t tell where the entertainment ended and the retail began. I truly believed in it 100 percent.”
But if customers are constantly entertained, how then will they purchase products? And doesn’t it make sense to give the customer clear terms with which to purchase these products? I’m no MBA, but how can any business succeed if the customer doesn’t even know what the hell he is buying?
I smell bullshit. It seems pretty clear to me that Trevor Bryant was played for a fool.
Here’s what I think: The Sony Metreon, arriving in 2001, was one of those crazy ideas that came into fruition during the dot com days. Sony wanted presence and presence alone, not unlike the MGM Grand in Las Vegas. Alas, presence is not exactly the best of business models. Not unless you can turn a profit.
Now just as the deal gets finalized, Sony starts to get cold feet. Or, rather, they wake up. They wonder just what the hell they’ve gotten themselves into and perhaps fire the crazy bastard who convinced some top man that the Metreon was a great idea. But at this point, the deal is too far along to stop. And besides this is a really hot property development spot in San Francisco. There are all sorts of things being built nearby. An Old Navy store. An Apple store. The like. All of them constructed and developed because with Sony’s $85 million move, there’s an aura in the air that, around Fourth and Market, some serious and profitable shit is going down.
So, six months after the Metreon opens, Sony cuts off the development money it’s earmarked, per Bryant’s corroboration in the Lazarus article, and they think to themselves, “Let’s see what Bryant can do on nothing.” So Bryant works his ass off, while some transactional law and assessment division of Sony starts factoring in just who in the hell they can sell this big complex to. Meanwhile, the economy’s not doing so hot because of September 11 and the recession that lasts through 2003. Stores open, stores close. But the movie theatre is successful. But who the hell cares? Because this thing’s a big shark waiting to die.
And then the economy picks up and Westfield, who just happens to own the nearby San Francisco Shopping Centre, starts thinking about malls and monopolization. And Sony sells to them for $70 million. This may seem a bad deal. But au contraire. Because let’s consider how much Sony’s made leasing out all that space, as intermittent as it was. Let’s also factor in the strange arrangement in 2002, where Sony offered to operate a store on a retailer’s behalf, a way to accumulate a quick amount of cash and ensure that some income was coming into Sony’s coffers. Surely, much of this makes up for a $15 million shortfall, doesn’t it?
So Sony makes most, if not all, of its $85 million development money back. It gets free advertising for five years, but without having to pay for it to like Pacific Bell (later SBC, later AT&T) did for the ballpark. And the area around Fourth and Mission Streets turns, two years from now, into either a bona-fide, obscene and profitable mall or another ghost mall to decimate the landscape. One thing’s for sure: the drive to open more retail isn’t going to hinder that area’s homogenized development anytime soon.
Regardless of Westfield’s success or failure with the Metreon, Sony makes out okay on this score. But for San Francisco, the area loses any and all distinction. It’s another “bad” business deal in which many unspoken entities win, but the people lose.
© 2006, Edward Champion. All rights reserved.