MSG unveils $1B in new renovations, but will they soon face the wrecking ball?

I’m pleased to announce that today I make my debut writing about sports economics for Sports on Earth, the spiffy newish website that is a joint project of USA Today and MLB Advanced Media. (I’m trying not to think about whether this means that Bud Selig will be signing my checks. Or touching them, even.) And while my portfolio will range a lot wider than just stadiums and arenas, today’s item is right in the wheelhouse of this site: a look at Madison Square Garden’s new $1 billion renovation, why the Garden’s owners were willing to throw this much money at a 45-year-old building, and the looming threat that the city could evict the Knicks and Rangers in another ten years.

Here’s a highlight:

The permit may expire in 2023, but there’s nothing magic about that number; as we’ve seen in numerous other manufactured crises around stadium deadlines, leases are made to be extended. The city could technically order the Knicks and Rangers to vacate the premises after 10 years, says Independent Budget Office chief of staff Doug Turetsky — “theoretically, they could ask them to tear it down” — but far more likely is that the city will use this as leverage to get the Garden’s owners to start thinking about moving elsewhere whenever the shine wears off the new scoreboards.

Go read the rest! Poppa needs a new set of hit counts! Also, you might learn yourself something.

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18 comments on “MSG unveils $1B in new renovations, but will they soon face the wrecking ball?

  1. Neil, I happen to agree with you that this is nothing more than a leverage issue. However, there is no way the City or State will give up Tax revenue generated by MSG (Note: Since Bruce Ratner got Nassau Coliseum Redevelopment Rights, that option is gone for James Dolan). One big question and it is the big “X-Factor” involved, is what will the Economy be in 2023? If we are having another “Great Recession” (or worse), it is not happening. That said, I think the steps are already underway to move the Garden. On Thursday, there will be a City planning Commission Vote to Rezone (in a Downsize) 530 Blocks, in the Ozone Park Area. I saw the map, and the one area NOT included is Aqueduct and the immediate area (it was already approved by CB’s 9 &10), so if it becomes Law, and the State decides to close down Aqueduct, this could be the New Home for the Javits Center (keep in mind, that unless they want to rezone it Residential for say Affordable Housing), Developers should be able to build as is? Maybe a football stadium or mall?. Then the Garden can get moved to the Javits Center Property (maybe by the State giving the land, in exchange for building a New MSG), and the City gets its New Penn Station? It could work? Opinion?

  2. That’s a lot of maybes, and the Javits Center site is a pretty bad one for an arena, for the same reason it’s a pretty bad one for a convention center. (Yes, there will soon be a 7 train station there, but one train line for 20,000 fans is not going to work well.) It’s probably more workable than putting a new Garden in the post office building, but not by much.

    What do you mean by “there is no way the City or State will give up Tax revenue generated by MSG”? Just that the city isn’t going to force the teams to move to New Jersey? I agree that’s a given, yes.

  3. I think it is highly unlikely that the convention center will move to the aqueduct site. while closer to JFK, it’s not closer to Laguardia and it’s very far from the mitdown hotel concentration, and it can take an hour to get there via car or subway. it’s my understanding that convention centers and hotels rely on each other for business; at least now, you can stay in a midtown hotel and take a short bus ride to the convention center…but putting the convention center at aqueduct makes it even less attractive than it already is.

    If there were hotels on site, that would present a big disincentive for conventioneers to leave the compound to spend their outside dollars on bars, restaurants, etc. Since convention centers always sell themselves as a boon to the local economy, one at this location would really work against that goal.

  4. Good work and congrats on the new gig, Neil.

    Did MLBAM decide on the name “sports on earth”? If so, is this some sort of rights declaration to all sports in any media on earth? Or is it just an attempt to ward off any thoughts sports not on earth might have of horning in on MLBAM’s pan global (but apparently not pan universal) action?

    Don’t worry about Al signing your cheques. Your long time readers will keep an eye out for articles on FoS titled “Why Bud Selig is the greatest commis-, nay, Human Being, in the history of the world” and the like…

  5. It would be nice if they could move MSG to Aqueduct or even Willets Point and call it a day, but that is not happening. What happens with the Aqueduct Property, when it closes (and I would be shocked if it is open five years from now), is a story to watch. Something will be done with it: It could be it a Football Stadium, Soccer Stadium, Housing, Mall, Convention Area, whatever. Once this question is answered, then we may learn more about IF they can move the Garden (without a nasty Court Fight), and then where.

  6. Not familiar with NY building processes (except the typical yet egregious large scale corruption that goes with practically any major city project), but I have a couple of questions/points:

    1. Assuming that MSG’s lease/agreement with the city does not allow it to do anything it likes any way it wants on the land over Penn Station, someone somewhere would have had to approve their plan to build/renovate and issue them some sort of license or permit to do so.

    2. Given (1), isn’t it unlikely they don’t at least have some sort of agreement (written or otherwise) that gives them assurance that they won’t have to start disassembling the entire building in order to have the site cleared for handover to the city in 2023?

    3. I agree that the Garden could probably and should probably be moved somewhere else. But as you’ve noted, where? Beyond floating stadia and platforms over railyards etc, isn’t it going to be prohibitively expensive to assemble any kind of parcel of land large enough to shoehorn a new arena into in Manhattan? Even with willing sellers of land who understand that this is for the ‘greater good’ (of the Dolans anyway) and agree to sell their land for less than market value (which I’m sure is very very common in Manhattan…), it seems likely that the land costs will be greater than the cost of building.

    And with that in mind, isn’t any site that might not be cost prohibitive also going to be in an unfavourable location as far as access and transit go (assuming we aren’t talking about the new Madison Square Garden being even farther from Madison Square than this one is… like the Meadowlands…)

    4. I was not yet walking upright when “this” MSG opened, but isn’t land cost one of the reasons why this site was chosen/permitted in the first place?

    5. While I’d like to see the old Penn station rebuilt (or at least a modern facility rebuilt to look a great deal like the old one did before the present abomination was built), can the city (or the transit authority) actually afford to do so (I’m thinking the $1bn+ estimate is probably very, very low)? Are they sitting on $4bn in cash and desperate to put it to use, for example?

    6. I agree, it’s all about the money… in fact, is it possible that the leverage is all about ending the property tax exemption and nothing else?

  7. 1. It’s not a lease, it’s a zoning variance that allows the Garden to operate on a block otherwise not zoned for it. Until it’s rescinded, I think they pretty much can do anything they want to on the property.

    2. MSG owns the Penn Station site (it bought it from the Pennsylvania Railroad in the ’80s), so it doesn’t have to hand over anything to anyone. It could be forced to dismantle the Garden if it’s ruled to violate the zoning, but as Doug Turetsky notes, that would require years of litigation.

    3. I don’t know about the land costs being greater than the costs of building, but they’d be very, very high, yes.

    4. Penn Station was torn down because the Pennsylvania Railroad was broke and wanted to make some cash by letting developers build on its property. (And there was no landmarks law at the time to stop them.) Not sure exactly why MSG chose to move there — it certainly wasn’t because of a desire to develop the land the arena had been on, as that ended up a parking lot for my entire childhood until the Worldwide Plaza tower was built in the late ’80s.

    5. “Where would the money come from?” is the #1 unanswered question here. Unasked, even.

    6. You’d think, but none of the “kick them out” crowd has said boo about the tax break. This genuinely seems to be about wanting to find a way to build a new grand train station, never mind the financial details.

  8. Neil, I do not know how close you follow Real Estate, but there is an ever declining amount of available land (especially in Manhattan). If I am Jim Dolan, I would hope that De Blasio is a traditional “Soak The Rich” ‘Share With The Outer Boroughs” Progressive. Because if he is NOT and is for projects like a New Penn Station (which I think is a MISTAKE) and for Development (and Redevelopment) in Manhattan, then he stands a real opportunity to get screwed, because if he has to one day, move, then there is no decent alternative in Manhattan, it may have to be Queens (or sell the Franchises). The first clue to De Blasio will be the East Side Midtown Rezoning, which (if passed) will turn a huge tract of land (73 Blocks) into lots of New Office Space, as well as Condo & Hospital City (1st Ave), and one less landing spot for a New Garden. Thoughts?

  9. Here’s the thing about putting an arena in Queens:

    Show me a spot that’s easily accessible from the whole city (and for folks who want to stop off after work for a game and then head home). Okay, now show me one that isn’t midtown Manhattan. Now show me one where the Nets don’t already play.

    See the problem?

  10. Neil, I agree with you 100% that Midtown is perfect from Dolan’s Point of View. But if the powers that be are hell bent on building a Second Penn Station based upon the original, no matter the cost, then I need to take this into account ( including finding a spot for another Garden)

  11. I don’t buy the $1 billion number. Anyone read the MSG financials? I am pretty sure that a huge portion of that $1 billion is signage, a website, MSG network specials and other b.s. used to publicize the renovations.

  12. The ideal location for the Garden to move to would be to 32-33rd streets between 6th and 7th Avenues-including the site of the Hotel Pennsylvania and the Manhattan Mall- which replaced the old Gimbel’s Department Store.

    Vornado Realty Trust -which owns the Hotel-had previously proposed tearing it down and replacing it with a office building.

    The problems are who would pay for the current landowners on the block to sell their property, for how much, and how much would the Dolan’s want to be compensated for the move-i.e., the cost of the current renovations, extension of their current property tax exemption in perpetuity, etc.

    Is it really worth the cost in exchange for a new Penn Station?

  13. What happened to building the replacement Penn Station across the street in the Post Office?

  14. Neil: Interesting. Unless you New Yorkers use vastly different kinds of zoning variances than the rest of the world, though, it wouldn’t allow MSG/Cablevision to do “anything”. Zoning variances tend to be case specific (whether you need to build a fence that isn’t quite on your property or a sports arena over top of something else).

    If I understand your article correctly, that variance now has a fixed (well…) expiry date. This may or may not amount to anything a decade from now, but certainly the city could make aggressive efforts to enforce it.

    And we’ve made it more than 24 hours into this discussion and no-one has used abusive language and “Robert Moses” in conjunction yet!

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