Hedge fund billionaire Dan Loeb appears to be courting NYC Mayor Eric Adams over charter schools

Politics

NYC Mayor Eric Adams (L) and Dan Loeb, CEO of Third Point LLC.
Getty Images | CNBC

Hedge fund billionaire Dan Loeb appears to be cozying up to New York City Mayor Eric Adams after pouring $1 million into the political action committee that helped get him elected, according to people familiar with the matter.

Adams and Loeb have held several private discussions since Adams was sworn in earlier this year, focusing mostly on Loeb’s passion project: the city’s charter schools, these people explained, asking not to be named to freely discuss Loeb and Adams’ discussions. Loeb has long been one of the city’s most affluent charter school supporters and served as the past chairman of Success Academy, which operates a network of about 50 schools in New York City and boasts higher testing scores on standardized tests than most public and private schools.

The election of Adams marked a shift in the city’s relationship with charter schools from former New York Mayor Bill de Blasio, who favored public schools over the publicly funded but independently run schools. The charter schools have more freedom to set their curriculum and are seen as a free alternative to public and private schools.

Adams was invited to Success Academy’s spring gala on April 25, according to people familiar with the event. The dinner honored former Mayor Mike Bloomberg who announced plans the week before to raise $50 million for NYC charter schools. Loeb, who still sits on the board, donated $250,000 to the dinner, according to its website.

The contribution allowed Loeb to have VIP-type seating at the event, with a table for 10 people, the site said.

Though Adams’ spokesman, Fabien Levy, said the mayor did not attend the event, other people close to the mayor believe Adams received an invite because of his ties to Loeb.

“The mayor has repeatedly said that he is willing to work with anyone and everyone to build a more prosperous city for all New Yorkers, but we do not discuss private conversations,” Levy said.

A spokeswoman for Success Academy said Adams’ was invited because of his critical role in the city’s education system.

“He is the mayor of NYC, and the educational success of NYC’s children is of paramount importance,” Ann Powell, a spokeswoman for the charter school network, told CNBC in an email. A spokesman for Loeb declined to comment on the Wall Street executive’s private conversations.

Charter schools are publicly funded by New York taxpayers with some funds from the federal government or private foundation grants. In New York, charter schools are considered public schools but operate independently from traditional school districts.

The schools are initially granted a five-year charter either by the SUNY Board of Trustees or the New York State Board of Regents. The schools’ charters could include standards for test performance, graduation rates or other operational requirements.

Critics and supporters of charter schools have sparred over whether those institutions have pulled critical state funding away from traditional public schools.

Adams has indicated that he wants to maintain the statutory cap on charter schools that limits the system to 460 schools across the state, but he also wants to duplicate institutions that have a successful track record, Chalkbeat New York, which reports on the city’s education system, reported late last year.

New York Gov. Kathy Hochul’s 2023 budget proposal boosted the per-student funding of $16,844 for Big Apple charter schools by 4.7%. The final budget agreement, however, didn’t lift the statutory cap on the number of charters allowed across the state.

Loeb’s tenure as chairman of Success Academy’s board in 2017 was marked by controversy after he attacked New York state Sen. Andrea Stewart-Cousins in a racially charged Facebook post.

“Meanwhile hypocrites like Stewart-Cousins who pay fealty to powerful union thugs and bosses do more damage to people of color than anyone who has ever donned a hood,” Loeb said, invoking the Ku Klux Klan in criticizing Stewart-Cousins, who is Black, according to The New York Times. She has been the state Senate majority leader since 2019.

Loeb later stepped down as chairman and has since apologized for the post.

He has a track record of donating to candidates on both sides of the aisle, making him a potentially wealthy ally for Adams if he runs for reelection in 2025.

Loeb has signaled to allies that he aims to contribute to New York state races in the final months of the 2022 election cycle, according to a person briefed on the matter. And he’s tried to cultivate political alliances across the country and political spectrum.

In March, he donated $250,000 to the Senate Leadership Fund, a super PAC run by allies of Senate Minority Leader Mitch McConnell, R-Ky., that aims to elect Republicans to the Senate, according to data from the nonpartisan Center for Responsive Politics.

That same month, he gave $250,000 to the Congressional Leadership Fund, a super PAC that supports GOP House candidates, and $125,000 to the Democratic Majority for Israel.

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