Last December, Apple opened a massive new retail store in Manhattan's historic Grand Central Terminal, adding a high-profile presence to the busy commuting, tourist, and shopping hub. Apple's lease agreement with the Metropolitan Transportation Authority (MTA) was quickly questioned by government officials, who were concerned that Apple had received favorable treatment during the negotiations and was paying significant lower rent than would otherwise have been expected for the location.

The MTA countered those claims with its own statements outlining how Apple is paying four times as much rent as the restaurant it replaced while also paying $5 million to the restaurant to vacate its lease and investing in building upgrades for the new store. The agency also argued that Apple's presence would indirectly boost terminal revenue through increased traffic at other merchants that, unlike Apple, pay a portion of their revenue to the terminal.

apple store grand central front view
But the New York Post now reports that a state audit of those lease negotiations has determined that Apple did indeed receive an "unfair" edge in what was supposed to be an open competition for the space.

A fresh audit by state Comptroller Thomas DiNapoli says the MTA last May allowed the California-based tech giant to set a daunting hurdle for rival bidders to clear in a tight, 30-day window — namely, that they be willing to front $5 million in cash.

“The competitive process followed by MTA . . . was at a minimum severely slanted toward Apple,” reads the report, submitted to MTA officials Friday and expected to be made public today.

The state comptroller's office has announced the release of the audit report, revealing that Apple and the MTA had been in negotiations for the space for over two years and that Apple had already made payments to the vacating restaurant before the space was publicly opened for proposals.

"While Apple may turn out to be a good tenant, the MTA set a troubling precedent when it played favorites and gave Apple a competitive edge over others for the Grand Central space," DiNapoli said. "Apple was directly involved in setting the terms of the lease and given exclusive access to information more than a year before any other vendor knew the Grand Central location was available. The company even signed a $2 million agreement with the current tenant to vacate its space five days before the MTA issued the RFP.

In response to the audit, the state is proposing increased oversight on competitive public authority contracts, a move which give the comptroller's office more authority to examine such agreements before they are finalized.

In a statement responding to the audit, MTA Chairman and CEO Joseph Lhota called the results "not fact-based" and "worthless", also accusing the comptroller's basis of "overt bias" against both the MTA and Apple in declaring that the process was not open and transparent.

Top Rated Comments

JBunkers Avatar
114 months ago
Who's slanted here?

So the state comptroller conducts an audit which finds that the state comptroller should have more power?

I think the audit is "at a minimum severely slanted toward the Comptroller". :rolleyes:
Score: 13 Votes (Like | Disagree)
shartypants Avatar
114 months ago
What a waste of taxpayer money doing the audit, sometimes I think government people just look for ways to justify their jobs instead of doing something useful.
Score: 11 Votes (Like | Disagree)
ConCat Avatar
114 months ago
Looks like the free market is dead. Apple got favorable treatment because having an Apple store in you station increases revenue from all of your shops due to increased foot traffic. I don't see how this is any of their concern. Clearly, people have been enjoying the Apple store.

Really, the free market is a beautiful thing. It works well, and both sides are happy. You give me a product or service I want, and I give you money so you can buy a product or service you want. Really, that's all there is to it. We have not lived in a true free market for almost a century now.
Score: 9 Votes (Like | Disagree)
Slovak Avatar
114 months ago
the state is proposing increased oversight on competitive public authority contracts, a move which give the comptroller's office more authority to examine such agreements before they are finalized.

Translation: Nobody asked us, nobody greased our pockets.
Score: 5 Votes (Like | Disagree)
Mad-B-One Avatar
114 months ago
Looks like the free market is dead. Apple got favorable treatment because having an Apple store in you station increases revenue from all of your shops due to increased foot traffic. I don't see how this is any of their concern. Clearly, people have been enjoying the Apple store.

Really, the free market is a beautiful thing. It works well, and both sides are happy. You give me a product or service I want, and I give you money so you can buy a product or service you want. Really, that's all there is to it. We have not lived in a true free market for almost a century now.

I agree with you but I also think that a free market is not needed for Pareto efficiency. To be honest, this was a mutual goal of MTA and Apple to get the store there. The reason why the bidding wasn't "open" is quite simple: No one would be able to outbid the benefits an Apple Store gets to Central Station simply because of the traffic effect. MTA was looking for a magnet, Apple for a location. Now, find one business (other than a casino) that would have the same effect and would pay the renovation needed and can (and is willing to) pay the rent on top of it.

PS: The auditor should also read up on the Nash equilibrium... that would help and point towards the flaws in his arguments.
Score: 5 Votes (Like | Disagree)
Swift Avatar
114 months ago
Politics. If somebody couldn't put up $5 million, how on earth could they lease the space? Who exactly was cut out? Look no further than the Murdoch filth, the NY Post. Is some different series of regulations necessary? Maybe so. Note: this is a great business deal for Grand Central. Any businessman would see that. But apparently, the Post never saw a public bureaucracy they liked. Gee, was Bain Capital thinking of buying Grand Central and moving it to Mexico?
Score: 5 Votes (Like | Disagree)

Top Stories

Top Stories 57 Feature

Top Stories: Apple Event Next Tuesday, Mini-LED iPad Pro, iPhone Rumors

Saturday April 17, 2021 6:00 am PDT by
It feels like we've been waiting forever for new Apple products, but the wait is almost over as Apple has announced a media event for next Tuesday, so make sure to tune into MacRumors for full coverage of everything Apple announces. While that was the big news this week, we also got some new details on Apple's iPhone plans for 2022 and 2023 courtesy of analyst Ming-Chi Kuo, and we also saw...
flat imac 3d 3 teal

Reliable Leaker Hints Redesigned Colorful iMac to Debut at 'Spring Loaded' Event

Saturday April 17, 2021 4:43 am PDT by
Reliable leaker known as l0vetodream has hinted that Apple may debut its rumored redesigned and colorful iMac at its "Spring Loaded" event on Tuesday, April 20. In a tweet, the leaker posted an image of Apple's logo used for marketing the upcoming event and an image of the retro rainbow Apple logo alongside the colorful lineup of G3 iMacs. Apple leaker Jon Prosser previously reported that...
duan rui iphone 12 13 notch

New Images Show Smaller iPhone 13 Notch Compared to iPhone 12

Saturday April 17, 2021 11:38 pm PDT by
Leaker known as "DuanRui" has shared more images that could give us our best look yet at Apple's redesigned notch for the iPhone 13. The new pictures follow similar images shared by the leaker last week, but the latest shots include a comparison with the existing iPhone 12 notch. DuanRui posted three images on Twitter that apparently originate from Weibo, although source details remain...
iPad Pro Feature Orange

Wedbush Analysts Say 'Spring Loaded' Event Will Debut New iPads With 'Modest Price Increase,' Along With 'a Few Surprises'

Monday April 19, 2021 6:37 am PDT by
Apple is planning to launch a new entry-level iPad, iPad mini, and iPad Pro at its "Spring Loaded" event tomorrow, along with "a few surprises," according to Wedbush analysts. In a new note to investors, seen by MacRumors, Wedbush analysts Daniel Ives and Strecker Backe explained that the iPad will be the main focus of Apple's "Spring Loaded" event, with new entry-level iPad, iPad mini, and ...
important battery message iphone 11

Some iPhone 11 Users Seeing Increased Battery Health Percentages After iOS 14.5 Recalibration Process

Friday April 16, 2021 6:32 am PDT by
In the sixth beta of iOS 14.5, Apple introduced a recalibration process for the battery health reporting system on the iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max to address inaccurate battery health estimates for some users. Apple said this process might take a few weeks to be completed, and now that two weeks have passed since the sixth beta of iOS 14.5 was released, some users are...
third gen Apple pencil leaked video

Video of Alleged Third-Generation Apple Pencil Leaks Ahead of Apple Event

Friday April 16, 2021 6:13 am PDT by
A video purporting to be of the third-generation Apple Pencil has today been shared online, showing a glossy finish that mirrors previous leaks. New ✏️ ready to 🚢 #AppleEvent @TommyBo50387266 pic.twitter.com/s4RCDwDi5M— 漢尼斯·拉斯納 🇨🇳 (@ileakeer) April 16, 2021 The brief video from Twitter account @ileakeer, spotted by 9to5Mac, shows an Apple Pencil with a glossy finish much like the...
iPad Pro

New 12.9-Inch iPad Pro Will Be 0.5mm Thicker to Accommodate Mini-LED Display

Monday April 19, 2021 11:30 am PDT by
The upcoming 12.9-inch iPad Pro will be thicker than the previous-generation version, likely due to the inclusion of the mini-LED display. We've heard several rumors about the change in thickness, and now leaked design images have confirmed it. A source that designs accessories for Apple devices sent MacRumors a series of photos that feature exact dimensions for the new iPad Pro models, and...
parler app

Apple Approves Parler to Return to App Store

Monday April 19, 2021 7:51 am PDT by
Following the removal of the app in January, Apple will now allow the social media app Parler to return to the App Store following changes to how the social media network moderates content, CNN reports. On April 14, in a letter to Sen. Mike Lee and Rep. Ken Buck obtained by CNN, Apple said that the app has improved the way it moderates content, and says those changes are "sufficient" for it...
iphone 12 120hz thumbnail feature

LTPO Displays Supporting 120Hz Refresh Rates Again Rumored for iPhone 13 Pro Models

Friday April 16, 2021 10:01 am PDT by
The two higher-end "iPhone 13 Pro" models that are coming in 2021 are expected to use LTPO display technology to enable 120Hz refresh rates, according to display analyst Ross Young. Young reaffirmed the detail in a tweet that said he'd heard rumors about only one model featuring LTPO, which he says is inaccurate. Heard some rumors in the industry and media that there would only be one ...
maxresdefault

Hands-On With Anker's MagSafe-Compatible Battery Pack

Thursday April 15, 2021 9:39 am PDT by
Anker, a company known for its range of accessories designed for Apple products, recently came out with one of the first MagSafe-compatible battery packs, so we thought we'd check it out to see how it compares to a standard battery pack. Subscribe to the MacRumors YouTube channel for more videos. Design wise, Anker's power bank looks like a typical battery pack, but it has magnets built in...