Islanders announce 25-year “ironclad” lease in Brooklyn, starting in 2015

The New York Islanders press conference at Barclays Center about their impending move to Brooklyn just wrapped up — you can read my liveblog here. The important highlights:

  • NHL commissioner Gary Bettman said maybe a few hundred to a thousand seats can be added to the arena’s 14,500 hockey capacity, but in any case, given that Winnipeg’s arena is only 15,000 and Nassau Coliseum only 16,000, “it’s not an issue.”
  • The lease will run from 2015 through 2040, and according to Islanders owner Charles Wang, “The lease that is signed is ironclad. We have 25 years with the Barclays Center.”
  • The decision was only officially made last night, though obviously it’s been under discussion for a while.
  • Wang wouldn’t talk specifics about how much rent he’ll be paying to Bruce Ratner, or other financial details of his lease. “It’s obviously very skewed toward attendance and how we do,” he said. “We believe that if we move to a facility like this, we will do better.”

So, obviously I was dead wrong when I said that an Islanders-to-Brooklyn move was unlikely, and any concerns over capacity and the Islanders being tenants in someone else’s building paled in comparison to being able to tap into what’s looking like a lucrative Brooklyn market. If there’s a lesson here, it’s that while most stadiums and arenas aren’t cash cows once you take construction costs into account, and most team owners’ goal is to be the primary tenant in their own arena, not all buildings — and markets — are created equal, and things can work very differently when a market the size of New York City is involved.

Which, of course, raises the question of whether New York City and state should have driven a harder bargain about getting the Barclays Center built in the first place, now that it turns out that teams need Brooklyn more than Brooklyn needs teams. I’d ask Mayor Bloomberg, but he’s already left the building…


16 comments on “Islanders announce 25-year “ironclad” lease in Brooklyn, starting in 2015

  1. From the comments section of another article on this topic, “now they can be called the Coney Islanders.”

  2. Based upon the fact, that the building will be occupied most days of the year, the City will do pretty well when it comes to tax revenue.. I don’t think The Islanders really needed Brooklyn (If it was not available, Wang could have sold the team and had it moved to Seattle, Canada, or Kansas City). Being an Islander fan, I am happy it was available (Even more so because they will not end up in Seattle).

  3. If the arena lease is really “…tied to attendance…” it is now clear that the Islanders will be paying little or no rent in Brooklyn. Since he will not have to pay his share of construction cost (s) (for a new arena in Nassau County) the only revenue he will be losing is the Suite revenue-he is also probably receiving all the advertising revenue from the dasher boards and during the games as well.

    I would not be surprised if either FCR or Onexim has a first refusal clause when and if Wang does decide to sell since he has given up the considerable leverage he had if this really is a “…25 year iron clad lease…”.

    If attendance at the Coliseum completely collapses due to the impending move do not be surprised if Wang pays off the balance of the lease with Nassau County to move to Brooklyn in 2012-2013.

    With the documented asbestos problems in the building Wang could also sue to void the remainder of the arena lease in Nassau as well.

    Stay tuned.

  4. They are not going to move this Season (There may not even be a Season). Throw out the fact that even if there is a Season there are scheduled Islander Games that overlap Net Games and other events. However, I would not be shocked to see a deal to see them move for the 2013-2014 Season.

  5. Wang swore up and down that he wouldn’t be buying out the lease before 2015. But of course it’s an owner’s prerogative to change his mind.

    As for the city making more in tax revenue, unless a ton of Long Islanders start heading to games in Brooklyn rather than Nassau (which is always possible — the LIRR is right there, though you need to change at Jamaica to get most anywhere), this won’t help city tax revenues much, since people from Brooklyn going to games would just be reshuffling Brooklyn money.

    Where it does get interesting is that assuming they can squeeze in 40 nights of hockey without displacing any concert dates — not at all a sure thing — then they’re looking at 250+ nights a year when the place is busy. At that point, it actually starts to make a little bit of sense to locate a restaurant or whatever near there just to cater to arena patrons, where it doesn’t if it’s dark most of the year. So maybe you get a little bit of extra spinoff effects, though it’s not like there were many vacant storefronts around there before the arena.

    One thing that’s clear about Barclays is that large-market arena economics are different in significant ways from most other stadium and arena economics. I think that’s one reason I was misled into thinking the Islanders wouldn’t move — anywhere else they’d be foolish to agree to be a secondary tenant in the league’s smallest building, but here, maybe not. We’ll see.

  6. I seem to remember some time ago you posted an article that compared the point at which arenas pencil out vs the number of dates the typical new arena then has. Wasn’t it 160 to break-even, and most arenas typically had 100?

    Point being, at 250, it looks like Barclays may actually make sense.

  7. MikeM: It was 200 to break even. See:

    http://www.fieldofschemes.com/2012/08/31/3740/seattle-virginia-beach-arena-projections-anticipate-nearly-double-the-national-average-in-annual-events/
    http://www.fieldofschemes.com/2012/08/21/3680/live-nation-says-markham-arena-cant-work-without-pro-sports/

    Dan: Props to you on this one. And I will refrain from mentioning that you also predicted that the Nets would be in Brooklyn by 2010 and would sign Lebron James.

  8. In the end the Islanders TV deal with MSG offset everything else.

    My question is why does the building only seat 14,500 for hockey?

  9. As an Islander Fan who lives in the City, I will certainly go to more games, as will other NYC Islander fans, and Ranger fans who go to the Coliseum for Islander/Ranger games will come to Brooklyn, plus people from Nassau, and Western Suffolk, so it is a win for the City.The reality of the matter, is Long Island is dying and Northern Brooklyn/Downtown is HOT! It will be even more so when Fulton Mall, City Time and Brooklyn Bridge Park are finished, so this move by the Islanders makes a whole lot of sense from their perspective.
    The funny thing is as far as building sports facilities are concerned, and teams moving (The focus of this blog), this basically puts a cap on it (At least as far as New York/ New Jersey are concerned). I know the Monday Morning Quarterbacking over stuff like Parking Lots and Parks will continue, and the fate of MLS/ National Tennis Center and Willets Point is still to be determined, but these are not the issues that will take over a decade to determine (Like the fate of the New York Islanders). I suspect, that by the time the 2014-2015 Season comes about and the Islanders start Game 1 in Brooklyn, even Willets Point and sports will be one for the History Books. I wonder if Neil thinks the end game is here?

  10. David: Obviously, with every team in the NYC area having a new/renovated building, we should see a few years of quiet, yes. Though the Staten Island and Coney Island stadiums are already into their second decades, so it’s only a matter of time before those teams start demanding upgrades…

    Fenway: It only seats 14,500 because they downsized the building during construction to save money, then had to wedge in hockey later when the Isles showed an interest:

    http://cdn1.sbnation.com/imported_assets/1264487/barclays-center-seating-chart_medium.jpg

  11. Neil the way I look at the issue is this: Certain Projects are multi-BILLION $$$ projects (See Barclays Center and Willets Point (With sports being just one component of it) ), and some are smaller (A renovation of Minor League Stadiums being an obvious example), and they really are different, when it comes to reasoning behind it, price and in complexity. For example: If the Yankees decided to pull out of Staten Island (Which isn’t happening see what happened in Scranton as an example), but if they did, it would not be a game changer, like the construction of Barclays, or the MLS would do at Willets Point (That is if it replaced junkyards, and made the ultimate goal of the cleanup and Redevelopment of The Point easier). Basically, The City would not bat an eye if the SI Yankees left and the Yankees and Mandalay both know it. I suspect that you will see nothing more than touch up jobs on those two Stadiums going forward.

  12. @Fenway

    To touch further on the attendance thing, the ice is completely on one side of the arena as opposed to being centered like everyone else in the NHL. Because of that, you can’t see the goal if you’re in the upper deck at one end of the arena so they won’t be selling those tickets.

    Ironically, that was the entire reason that they built the Glendale Arena, the same arena that gets tons of run on this site. The Suns downtown arena had the ice completely at one end like they have it at Barclays so they went and built the Glendale crib and now look at the headache it has caused.

    That being said, I think they should do a small renovation of Barclays and find a way to center the ice. They’ll have to reconstruct the end of part of the lower bowl so that the basketball seats at that end can fold into the wall. That way, the ice can be centered and the entire arena can watch both goals.

  13. I’m not actually surprised that this is happening…. Wang had left himself with no real option (those thinking he would voluntarily leave the NY market underestimated his greed as well as his intelligence – the latter of which isn’t often on display, to be fair) but to spend his own money @ Hempstead if he didn’t go to Ratner/Prokhorov. One suspects that Ratner knew Chuck would be back when they agreed to disagree a few years ago.

    The thing that does baffle me is why he didn’t at least maintain an interest when the building was being built? Had he not walked away, it is likely that this building would have been built to more easily accommodate hockey than it does now (though I do recall Neil saying that the building was downsized for cost reasons, rather than just to keep the smelly hockey equipment out…)

    As True blood says, if it is at all possible and economically viable, I would expect some modifications to be made before 2015 that would “help” the Islanders fit into the building better/less badly.

    Given the importance of “demand” (real or imagined) in modern sports marketing, I don’t think 14,500 seats will be an issue for Wang. He will likely generate far more money @ the ‘brutalist dog turd’ than he did at NCC. Will he generate enough to pay the $6m in rent and make up for whatever he loses on concessions/suites? That’s also possible. But the upside is limited in a building he doesn’t control, meaning he’s unlikely to be outspending the Dolans anytime soon.

    Though really, hiring Isaiah Thomas to be GM of his hockey team wouldn’t be much dumber than hiring his backup goalie to do it.

  14. I’m shocked. An exhibition game I would expect, but for the Islanders to play their home games at the Barclays Center in Brooklyn given the hockey configuration and the seating capacity, I don’t know how it will work out in the long term.

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