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Chelsea Piers Management Inc.

Chelsea Piers Management Inc.

Pier 62, Suite 300
New York, New York 10011
U.S.A.
Telephone: (212) 336-6666
Fax: (212) 336-6808
Web site: http://www.chelseapiers.com

Private Company
Incorporated:
1992
Employees: 1,010
Sales: $1.33 billion (2005 est.)
NAIC: 237210 Land Subdivision; 531210 Offices of Real Estate Agents and Brokers

Chelsea Piers Management Inc. is a private company based in New York City that manages the 30-acre Chelsea waterfront complex. The four landmark piers that make up the complex jut out from Manhattans west side some 800 feet into the Hudson River.

Chelsea Piers includes a 40-lane bowling facility; the fieldhouse, featuring a quarter-mile running track, indoor soccer fields, basketball courts, a gymnastics area, rock climbing wall, baseball batting cages, and dance studios; a golf club with a four-level driving range and a pair of simulators that allow patrons to play virtual replicas of 51 championship courses such as Californias Pebble Beach and the venerable Old Course at St. Andrews, Scotland; the Sky Rink for ice skating and roller skating; a health club that makes use of many Chelsea Piers facilities and also includes a six-lane pool, massive free weight room, and cardiovascular equipment; and a spa.

In addition, Chelsea Piers includes Silver Screen Studios, television and film production facilities where programs such as Law & Order and Spin City have been filmed; the Pier Sixty and The Lighthouse event spaces, several restaurants and snack bars, and shops that sell bowling, skating, and golfing gear. Chelsea Piers has developed a robust business hosting birthday parties for adults as well as children, held at the fieldhouse, the bowling facility, Sky Rink, and Golf Club. Chelsea Piers runs hundreds of youth and adult sports leagues for basketball, hockey, and soccer, and operates nine summer sports camps. Corporations also take advantage of Chelsea Piers facilities to conduct team-building programs.

ORIGINAL CHELSEA PIERS: 1910 DEDICATION

When Chelsea Piers opened in 1910, built by the steamship companies to accommodate the new transatlantic luxury liners of the day, it was the culmination of nearly 40 years of effort, 30 of which were devoted to navigating the shoals of New York politics (and gaining permission from the War Department to make changes to the strategically vital New York harbor). Another eight years were spent building the 800-foot-long enclosed piers numbered 53 to 62, the so-called finger piers, with their ornate pink granite facades that faced the city between 14th and 23rd streets. It was a clear upgrade over the previous collection of wharves and ramshackle facilities, but in a generation the piers would become outmoded. The first liners to use the piers, the 790-foot sister ships, the Lusitania and Mauretania, were ideally suited. Just a year later, however, the 880-foot Olympia steamed into port. Slightly larger, the Titanic was scheduled to dock at Chelsea Piers in 1912, but the maiden voyage of the ship was never completed. Only 675 survivors of that ill-fated journey managed to step foot on the Chelsea Piers, having been plucked from the icy waters by a passing liner as the Titanic went down. Three years later the Lusitania left the Chelsea Piers and suffered its own tragic end, torpedoed by a German U-boat, an event that was instrumental in the United States eventual entry into World War I.

The Chelsea Piers thrived during the war years and into the 1920s when a new breed of luxury liners made use of the facilities. However, after the stock market crash of 1929 that ushered in the Great Depression of the 1930s, transatlantic ocean traffic collapsed. Moreover, the 1930s saw the introduction of 1,000-foot vessels such as the Queen Mary. These liners would begin to use the new terminals at 50th Street, creating what would become known as Luxury Liner Row. Although the Chelsea Piers area would soon be fully used in the first half of the 1940s to support the military during World War II, its days as a major hub for passenger ship travel were over. By the end of the 1950s, the transatlantic passenger ship trade had been all but usurped by the new commercial jet airliners. Some freighter firms rented space at Chelsea Piers, but with the introduction of container ships, which required large, open-pier space, the facilities were abandoned by the cargo companies by 1967. Chelsea Piers had lost much of its ornamental luster; the granite facades were removed in the 1950s as a safety precaution, and in the 1970s and 1980s the harbor area quickly degenerated, becoming little more than a rusting fire trap. A couple of the piers were used for city bus storage and a U.S. Customs Impounding station, and eventually the city began storing impounded cars there. New York State bought the property in order to construct a new highway to replace the decaying Westside Highway, but the Westway Project, which was to be an underground highway covered by parks and development projects, collapsed in 1985. The most likely fate for the Chelsea Piers was that fire would put an eventual end to the once regal facilities.

However, in 1991 a new idea was put forward by Roland W. Betts, Tom A. Bernstein, and David A. Tewksbury, founders of Chelsea Piers Management, to make use of the Chelsea Piers. Betts, a 1978 Columbia Law School graduate, practiced entertainment law at the firm of Paul, Weiss, Rifkind, Wharton & Garrison before founding Silver Screen Management, Inc., in 1983 to raise money to produce films. Bernstein was also part of the Entertainment Department at Paul, Weiss, Rifkind, Wharton & Garrison, which he left to join Betts and become one of the two principals at Silver Screen. Together they raised $83 million to produce films for Home Box Office, followed by more than $1 billion in a joint venture with Walt Disney Company, for which they were involved in the funding of such films as Beauty and the Beast, Pretty Woman, The Little Mermaid, and Three Men and a Baby. Betts met Tewksbury, a real estate executive, at the Sky Rink, Manhattans only indoor, year-round ice-skating rink, originally located in an office building on West 33rd Street. Betts was there because his daughter was an aspiring figure skater, while Tewksbury used the rink to play hockey. Because Sky Rink was so heavily used, the two men found themselves forced to use the facility at odd hours, often late at night or early in the morning. Both became members of the nonprofit Sky Rink board in 1986, and in 1990 they began looking for a new location, one that could accommodate two rinks and alleviate the booking problem.

COMPANY PERSPECTIVES

Beginning in August 1995, Chelsea Piers Sports and Entertainment Complex opened in stages. Situated on Piers 59 through 62, and in the connecting head-house, the Complex features: The Golf Club, The Sports Center, Sky Rink, The Field House, The Spa at Chelsea Piers, Surfside 3 Maritime Center, AMF Chelsea Piers Lanes and more. This $100 million, privately-financed project has transformed the historic, but long-neglected, Chelsea Piers into a major center for public recreation and waterfront access.

CHELSEA PIERS DEVELOPMENT PUT UP FOR BID: 1992

The search for a new home for Sky Rink took Betts to the four remaining piers of Chelsea Piers. By this time the facility was still being used by the city as a car towing pound. The World Yacht tour company, a dinner-cruise line, made some use of it for docking space, and a makeshift soundstage had been created in some loft space at the head of the piers for the filming of Law & Order. On the upper level of Pier 61 Betts found what he was looking for: column-free space large enough to accommodate a pair of end-to-end hockey rinks. Bernstein was brought into the project and the partners tried to secure a lease from the state Department of Transportation, which had bought the property as a part of the effort to build the Westway Project. State officials liked the idea, so much so that they decided to lease all four piers as a package for a ten-year period, and they opened it up to bids. In 1992 Betts, Bernstein, and Tewksbury formed Chelsea Piers L.P., in conjunction with Sky Rink and Silver Screen, to submit a bid to develop the Chelsea Piers. Their original plans included ice-skating rinks, film and television studios, and a marina and yachting school managed by Dennis Conner, the three-time winner of the Americas Cup.

Nine development groups issued bids for Chelsea Piers, but only the top three made the cut with the state Transportation Department. The top bid, made by colorful real estate developer Abraham Hirschfeld, was for $162,000 a month. World Yacht, in partnership with the Stanley Stahl Organization, the owner of a number of New York Metropolitan area buildings, bid $161,000 per month. Chelsea Piers L.P.s bid of $157,000 was the lowest, but after Transportation and city officials, along with representatives from the newly formed Hudson River Park Conservancy, charged with overseeing riverfront development, reviewed the bids, the lease was awarded on an unanimous basis to the Betts, Bernstein, and Tewksbury partnership because their proposal offered the most detail and was deemed to be the most appropriate to the community. Hirschfeld, never known to mince words, predicted the Betts group would never obtain financing, adding, They will do something with those piers when hair grows on my palms.

In addition to arranging for financing to the tune of $100 million, the next two years were spent obtaining some two dozen permits from city, state, and federal agencies; the final permit was granted in May 1994. Architect James G. Rogers III was also hard at work designing the new sports and entertainment complex while maintaining the historic integrity of the two intact structures, Pier 60 and Pier 61, both of which were little more than covered sheds. Chelsea Management also had to contend with community and environmental activists, some of whom had successfully defeated Westway a decade earlier. The complex was slated to include a large Hermans sporting goods store, which met with vehement objections from area residents, and it was scrapped in order to maintain good community relations. Instead, the space was used for a gymnastics center and indoor basketball courts and soccer fields.

CHELSEA PIERS PARTIAL OPENING: 1995

Chelsea Piers opened in stages, beginning in August 1995, when Sky Rink, which had been purchased and turned into a for-profit venture, opened, along with a pair of outdoor roller rinks, a golf-driving range, and a gymnastics center. Over the next year other facilities were added, including a running track, rock-climbing wall, indoor sand volleyball courts, a gymnastics center, and the first restaurants, Chelsea Brewing Company and the Crab House.

It took some time for New York residents to embrace Chelsea Piers, which was not easily accessible other than by car, but slowly the complex began filling up with patrons. Chelsea Piers attracted 2.1 million people in 1996 yet still came close to bankruptcy, primarily because the project had gone over budget by some $20 million and was weighed down by high-interest debt due to the short lease the state had granted the project. Late in the year, however, New York extended the lease to 49 years, allowing Chelsea Piers to refinance and shave off millions of dollars in interest payments. Attendance continued to climb in 1997, topping three million, and the venture was able to turn a profit. By this time Chelsea Piers was becoming in the words of the New York Times, sort of a collective rec rooma mega-mall of health and fitness.

KEY DATES

1910:
Chelsea Piers opens to serve luxury liners.
1992:
Chelsea Piers L.P. acquires lease to develop sports and entertainment complex.
1995:
First attractions open.
1996:
An extended lease permits refinancing and lower interest payments.

Chelsea Piers had turned a corner and continued to grow in popularity, as nearly four million people visited its attractions in 1998. By this time it had also become the birthday party center of Manhattan, with more than 100 parties a months hosted in the Fieldhouse alone. Nevertheless, Chelsea Piers still suffered through some growth pains. An equestrian center on Pier 61 that opened in the summer of 1997 did not work out and filed for Chapter 11 bankruptcy protection at the end of 1998. In addition, the Crab House restaurant, which never recovered from poor reviews upon its opening, went out of business in January 1999, and in that same month, Chelsea Piers filed papers to have Chelsea Brewing Company evicted because it was several months behind in its rent payments.

In the late 1990s Chelsea Piers looked to duplicate its success in San Francisco, making a bid to develop a sports complex at the foot of Telegraph Hill on piers owned by the Port Commission of San Francisco. Not only did the effort prove unsuccessful, it brought some unwelcome controversy. In January 1999 Port Director Douglas F. Wong encouraged Betts to hire California State Senator John Burton as a consultant on the project, suggesting that it would help Chelsea Piers chance of winning the development deal. Over the next year and a half, Burton was retained at $5,000 per month for two separate periods, in all receiving $43,000. The Mills Corp. won the bidding despite offering little that met with the criteria of a recreation project. While Chelsea Piers proposed something along the lines of what it had built in New York, Mills plan called for 184,000 square feet of retail and restaurant space and another 272,000 square feet for offices. Recreation space was limited to a new YMCA on the site. Mills $50,000 contribution to California Governor Gray Davis, who appointed many of the members of the three agencies that decided on the project, was noted in the press, as were the other local officials hired to lobby on behalf of the bidders, a situation which, while deemed tawdry, was not strictly illegal. Bernstein told the San Francisco Chronicle that he and his partners thought that hiring Burton was inappropriate, adding, But we enquired about the legality of it and were told that this in fact is the way things are done in San Francisco.

The Chelsea Piers partners focused their attention on growing their sports and entertainment complex in New York, where instead of politicos lining up for consulting contracts they had to wrangle with residents upset over views of the Hudson River that were blocked by Chelsea Piers. For the most part, the community although some members were never placatedwas pleased with the addition of the facilities, which they reasoned were a vast improvement over the blight that the piers had replaced. More facilities were added in the new century. A new 20,000-square-foot Extreme Park was opened in the spring of 2001, catering to those devoted to inline skating, skateboard, and BMX riding. In 2003 the Golf Club added its two full swing simulators to allow members to play 36 championship courses. More courses would be added steadily. Also in 2003 the Spa at Chelsea Piers unveiled a new line of skin care products and expanded its facilities. A year later a wine program was launched, which included wine classes, wine tasting programs, and special events. A child-care center opened in early 2005.

Receiving more than four million visits a year, Chelsea Piers marked its tenth anniversary in 2005. Over the course of the decade it was estimated that 105 million golf balls had been hit, 12,000 teams had competed in more than 100,000 league games, 23,000 childrens birthday parties had been given, nearly 800 television episodes had been shot, and 25 million movies had filmed there. Chelsea Piers was so well established that it was taken for granted as an integral part of the city.

Ed Dinger

PRINCIPAL SUBSIDIARIES

Chelsea Piers Field House; Chelsea Piers Golf Club; Chelsea Piers Sky Rink; AMF Chelsea Lanes; The Spa at Chelsea Piers.

PRINCIPAL COMPETITORS

Town Sports International, Inc.; Bally Total Fitness Holding Corporation; Golds Gym International, Inc.

FURTHER READING

Dao, James, Bids Accepted to Develop 4 Chelsea Piers, New York Times, May 23, 1992, p. 1.27.

, Plan for Ice Rink and TV Studio on Chelsea Piers, New York Times, June 18, 1992, p. B3.

Finnie, Chuck, N.Y. Developer Says Burton Was Touted for Lobbyist Job, San Francisco Chronicle, June 28, 2001, p. A1.

Foderaro, Lisa W., Chelsea Piers Surmounts Its Financial Growing Pains, New York Times, March 6, 1998, p. B1.

Goldberger, Paul, Chelsea Dawning; Giving New Life to Old Piers, New York Times, November 17, 1995, p. C1.

Miller, William H., At Chelsea Docks, Memories Float at Anchor, New York Times, October 11, 1980.

Pulley, Brett, On the Waterfront; Investor Builds Reputation as He Develops a Recreation Complex on the Chelsea Piers, New York Times, February 4, 1995, p. A21.

Stamler, Bernard, Waves of Trouble Are Lapping at Chelseas Piers, New York Times, January 31, 1999, p. 14.

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