Islanders-to-Brooklyn postmortem: Hockey sightlines still crappy, economic impact uncertain

As expected, every news outlet in New York has reports out today on the Islanders‘ announcement of a 2015 move to Brooklyn, which given that it’s New York means an awful lot of coverage. Some of the more interesting tidbits:

  • The Daily News reports that while lease details weren’t disclosed, “the monthly rent is expected to be more than the $14 million a year the Islanders were willing to pay for a new Long Island home.” If so, that’d be a mild coup for the Barclays Center — $14 million a year comes to $350,000 per game, which should be enough to make up for any loss of concerts — though the more interesting question is how and whether the Islanders will share in proceeds from such things as concessions and sale of luxury suites, which currently all go to the arena owners. [UPDATE: As Norman Oder notes below, the New York Post projects the rent as $6 million a year, which is, obviously, a lot less.]
  • Barclays Center “might just be an awful place to watch a hockey game,” writes SBNation’s Travis Hughes, noting that the overhead scoreboard will be off-center and some sections will have obscured views. There are two Russian hockey league games scheduled for January 19 and 20 — you can bet that plenty of people will turn out for those just to see how things will look for the Isles starting in 2015.
  • Islanders fans aren’t all that upset, at least not those who were at a basketball game at the time.
  • Okay, some Islanders fans are a little bit upset.
  • Forbes contributor (read: unpaid blogger) Teresa Genaro asks: “Teams move all the time, leaving behind a devastated fan base and going to new markets that welcome their arrival…but has there ever been a team that has so brazenly stepped into one of its rival’s markets?” Um, the Nets?
  • The Islanders will be keeping their old logo, but they might want to add back in Brooklyn and Queens to their map of Long Island.

Meanwhile, one topic that I didn’t get to talk much about in yesterday’s coverage is what this will likely mean for the environs of both the Islanders’ new arena and their old one. Mayor Bloomberg’s Economic Development Corporation has estimated that the arrival of the Islanders deal could generate $175 million in annual economic activity, but as Atlantic Yards Report rightly notes, that’s economic activity (i.e., all money changing hands in the arena), not city tax revenues.

The actual impact on Brooklyn is likely to depend on how many current Islander fans take the LIRR into Brooklyn to see games (or more likely, take the subway there after work and then take the LIRR home), since that’s the only way to get actual new money — money spent by city residents will largely be cannibalized from other spending within the city. Ironically, the more “Brooklyn” the team becomes, the less it could benefit Brooklyn.

As for the impact on Uniondale, Long Island, it’s tough to say: While this isn’t necessarily the death knell for the Nassau Coliseum, it’s going to be really tough for the building to survive — less because of the Islanders leaving than because the New York area is now suffering from a major arena glut, and Madison Square Garden and Barclays Center are the clear front-runners for luring acts. (Newark’s Prudential Center would be third.) Even if the Coliseum were to shut down, though, it probably wouldn’t have a huge impact on Nassau County — most attendees almost certainly come from within Long Island, and in any case it’s not like there’s anywhere to spend money around the arena.

One potential bright note for Brooklyn: Adding an extra 40 dates a year to the 200-plus that are already booked does increase the chances that the Barclays Center could be one of the rare arenas that promotes nearby development: While it’d be crazy to open a business across the street from a building that’s dark most of the year, once it’s operating two out of every three nights, that might be a customer base you can actually start to rely on, at least if you’re in the business of selling things that people want to eat or drink before or after a sporting event. Or, perhaps, pay toilets.

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16 comments on “Islanders-to-Brooklyn postmortem: Hockey sightlines still crappy, economic impact uncertain

  1. I really feel for Islanders fans, but this does make a lot of sense. I wasn’t around in ’72 when the team started up but I’m guessing that the arena was built in Uniondale for the same reason Barclays Center was built: because that’s where people wanted to live at the time. The other sad part is that Ratner could’ve just built a darned hockey bowl. Staples Center is one of the NBA’s best seating experiences and it is a hockey bowl.

  2. For that, Ratner would’ve needed the Islanders to agree to a lease at the time (he cut the hockey bowl because he didn’t have the money for it), and back then Wang was still focused on his Lighthouse scheme. Bad timing all around, I agree.

    Has anyone tried to explore yet what this is likely to mean for Islander ticket prices? They always go up in new buildings, obviously, but when you’re also talking about a smaller-capacity arena, Isles fans could have some serious sticker shock coming their way.

  3. If they price it (and most importantly, sell it) like they do in Winnipeg for the Jets your high end tickets are going to be about $200, not $115. And your low end tickets will be about $50, not $35.

    But hardly scientific.

    That’s a small market with a small economic base to work with. If that was Toronto, Edmonton, Calgary, Vancouver or Montreal with minimal competition for the sports fans spending dollar those numbers go up even more.

    I’m sure if the NY Islanders turn the corner and become really good they might get some attention from the casual New York hockey fan or the priced out Rangers fans.

    My hunch is they will be close to what the Jets charge but nowhere near what the Rangers charge.

  4. The NY Post reported: “Terms of the Barclays lease were not disclosed, but a source said the Islanders will pay around $6 million a year.”

  5. Sounds like the seating wasn’t designed with hockey in mind, but did they include the required infrastructure (plumbing) for ice? Just wondering.

  6. I am very aware that Tickets will go up. But, if the choice involves higher ticket prices or no Islanders (Seattle etc), I will pay them. There was no way Wang was staying at the Coliseum, because he knew development was not going to occur (Heck even the Hooters on Hempstead Turnpike is shutting down). There will be a lot of people to blame: Kate Murray, and Jay Jacobs to name two, but for the Islanders if you have the opportunity to go to a place that is already upscale and getting better you do it: 333 Schermerhorn (“The Hub”) will be just the latest example of this. For fans it will be the opportunity to add some new players (To go with John Tavares), and possibly bring back the Cup to long suffering fans like myself.

  7. If Wang is really paying $14 million a year in rent to FCR that is almost 64% of FCR’s debt service on the arena alone (approximate cost of $550 million over 25 years). Great deal for FCR.

    In addition, if Wang really did sign such a one-sided lease agreement (we will know for sure when all the lease details are revealed) it is most likely because he could not financially afford to wait for the RFP’s to be submitted in Nassau County in order to have a new arena built. That is probably why he indicated (in interviews yesterday) that this was “…a deal that had to be done now…”.

    Stay tuned.

    Stay tuned.

  8. Not sure where you’re getting that 64%: FCR debt payments on the state bonds alone are $30m a year currently, and go as high as $50m a year by 2040. So $14m a year in Islanders rent would be great for FCR — assuming that FCR isn’t on the hook for increased operating costs, shares of arena revenue, etc. — but not as great as you make it out to be.

    Also, as Norman points out above, the Post says it’s only $6m a year. It’s really impossible to say much definitive until we see the actual lease.

  9. Neil:

    The 64% was based on the alleged total amount of the lease payments $14 million per year over 25 years, (although it now appears that number is way too high) = $350 million against the alleged construction costs of the arena alone (according to the ESDC-approximately $550 million).

    In any event, a 6 million annual rental payment against the costs of the actual bonds issued is still found money for FCR (even with other terms of the lease agreement not factored in) which they surely would not have obtained through other bookings of the arena (i.e., concert dates, etc.) for 40 + dates per year.

    Until all of the lease details are revealed, no one will really know why this particular deal was agreed to at this time.

  10. Neil,

    I suppose that is true that at the time Ratner needed to cut costs wherever he could. It just always has seemed to me that hockey arenas are not intrinsically more expensive than basketball arenas, despite the difference in bowl size. I have a feeling that he just chose his stock seating bowl design poorly when he chose Indianapolis. He probably could have gotten the Arena bowl for essentially the same price.

    The one positive thing about having a basketball bowl for a hockey game is the preponderance of seats in the zone where the home team shoots twice (which is where most fans tend to prefer to sit). Check out this seating chart from Indianpolis, which basically has the same bowl:

  11. WTH: Paying off $550 million over 25 years doesn’t cost $22 million a year. You’re forgetting about interest.

  12. I am sure Ratner has a very low 40- Year Fixed Interest Rate on the Property (40 Years are standard on Commercial Property), and the desire to take advantage of the Rates are a big reason why you are seeing a tremendous amount of Development going on (Particularly in Prime Real Estate areas like Lower Manhattan, and Downtown Brooklyn).

  13. What will happen to the Nassau Coliseum? Could a third NBA team move into the New York market? Could the facility be torn down to build a soccer-specific stadium?

  14. David, I’m looking at the bond prospectus right now. It’s more or less a 6% rate, though it’s complicated by the fact that they deferred a bunch of the payments until later: annual payments are $30m a year right now, rising to $50m in 2040.

    Michael: I’d be really surprised to see an NBA team going into Nassau – Newark seems more likely, if anything. And I don’t think MLS has any interest in a team on Long Island right now – they’re focused on getting a team in NYC.

    Long Island is a weird market – ton of people, but really hard to get to from anywhere not on the island, putting it at a disadvantage to, say, northern New Jersey, which can draw from adjacent areas. That’s going to be a problem for the Coliseum trying to host concerts, too. I actually kind of liked the building the couple of times I’ve been there, but the location is problematic. (Which helps explain why I’ve only been there twice in a lifetime of living in NYC.)

  15. Neil: Thank you for the Financial information. The terms are not exactly favorable for Ratner, at least for now (Not to mention the fact he has the same issue as Related does with Hudson Yards… The need to build an $800m platform over rail yards). However, if the Brooklyn Market remains hot, he could sell out in 5-10 years so that obligation can be avoided. I think that is the plan going forward. Why? if you think about some of the other projects going on in Brooklyn, it increases the odds. One such project is the one at the Brooklyn Naval Yards where Steiner Studios is building 100,000 ft of sound stages at the site of the former hospital and Admiral’s Row Houses. It will cost $400m and will take 12 years to finish, but it will rival any Hollywood back lot. Throw in Brooklyn Bridge Park, the Fulton Street Mall, and the Domino Sugar Project, and a few others, and almost any land within a 5 mile radius of the waterfront (Except maybe Newton Canal and Red Hook) becomes even more valuable down the line.

  16. I guess lop-sided hockey rinks are making a comeback in the NHL. Seattle’s KeyArena still has a chance!

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