Why NYU Subsidizes a Harvard Professor

Why is New York University giving a sweetheart deal on an apartment in Manhattan’s hottest neighborhood to a professor from Harvard?

Henry L. Gates, known to friends and colleagues as “Skip,” is an academic superstar, a leading intellectual in the realm of African-American studies, a noted critic and author and a sometime TV personality. Gates can well afford the market price for an upscale flat in Manhattan. However, Gates pays NYU’s heavily subsidized “faculty rate” rent for his apartment, though the faculty he actually belongs to is at a competing university 200 miles away. NYU’s largesse saves Gates an estimated $60,000 annually, which, coincidentally, is the sum that NYU undergrads pay for a year at the trendy Manhattan campus.

Has the university been accidentally undercharging Gates? Not likely. When it comes to real estate, NYU runs the most coldly efficient and professionally managed property operation in the history of academe, possibly excluding the alma mater of Genghis Khan. The university owns more than a hundred buildings in New York comprising some nine million square feet of prime space, a property package easily worth $1 billion. That portfolio, which contributes handsomely to NYU’s annual income of $2.3 billion, will grow by 1.9 million sq. ft. if the university can implement its current $6 billion building and expansion plan.

In the real estate arena, sentiment rarely plays a role in NYU’s decisions. When the university bought a building near Washington Square that had been home to Edgar Allen Poe, NYU ignored pleas from historians and preservationists and tore it down.

Because NYU does not allow higher education to interfere with bottom lines, it’s certain that the awarding of a bargain apartment to Henry Gates is bringing something of value back to the university. John Sexton, NYU’s $1.5 million a year president, justified the university’s generosity by stating that he hopes Professor Gates will leave Harvard and set up shop at NYU. Sexton’s explanation jibes with NYU’s history of lavish real estate perks for top faculty and administrators. NYU Law School alone has four tax-exempt nonprofits that help staff members and faculty buy comfy homes. One former law school dean received a $5.7 million loan and Sexton himself got university loans totalling $1.6 million for his vacation home on Fire Island. When current U.S. Secretary of the Treasury Jack Lew left NYU for Washington, the university handed him a juicy severance package and a $1.5 million mortgage.

But Gates has shown no sign he intends to leave Harvard. He explained his cut-rate rent as part of a quid pro quo in which Gates serves as a “consultant” for NYU. Presumably, the university has little need for literary advice, so in what other areas might Dr. Gates be helpful to NYU?

An answer to that question can be found in a story that happened almost five years ago. On the evening of July 16, 2009, Professor Gates tried to force open a sticky door at his house near Harvard. A neighbor, thinking a burglary was in progress, called the police. Gates and the responding officer, each resentful of the other’s tone, exchanged words and Gates was arrested for disorderly conduct. A few days later the misunderstanding was resolved and charges dismissed, but by then the arrest had made national headlines. President Obama, pouring troubled waters on oil, criticized the police. Calm was eventually restored and the president expressed regret for his choice of words. Everyone shook hands at a White House “beer summit” attended by the president, the arresting office and Professor Gates.

In the aftermath it became clear to one and all that Dr. Henry Gates was proficient in both literature and politics. When the president of the U.S. rides to your rescue, people get friendly.

Gates’ access to the halls of power could be particularly useful to NYU. The university’s $6 billion expansion plan is being fought tooth and nail by a coalition of savvy opponents who won a key court case in January. NYU needs friends, fast. But the university is also going global, with campuses in Shanghai and Abu Dhabi and international study centers in 11 other places. International Affairs is a Washington specialty, and for NYU having Harvard professor Henry Gates on their side could be key – a key that opens the door to a Chelsea apartment.


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