Last week I was talking to a source for a story (mostly) unrelated to sports stadiums when they asked me a question: How come the New York Rangers‘ August “home” playoff game in Toronto as part of the NHL’s bubble didn’t count as a violation of the team’s tax exemption for Madison Square Garden, the one that reads:
If one or both of said teams [the New York Knicks or Rangers] shall cease to play their home games in said property at any time, the tax exemption provided herein shall cease immediately and such property shall immediately be restored to the tax rolls and thereupon become subject to taxation and shall be taxed pro rata for the unexpired portion of the taxable year.
Sure, it was just a single game, before the Rangers were unceremoniously bounced from the playoffs by the Carolina Hurricanes. But still, that clause had been enough of a concern that Rangers owner James Dolan made sure that for outdoor games at Yankee Stadium and Citi Field in 2014 and 2018, the Rangers were designated as the road team. So should that one-game sojourn in Toronto have triggered the automatic return of the Garden to the tax rolls, after $555 million in skipped tax payments?
The answer at first appeared to be “no one knows,” but further research revealed that it was actually “everybody says they know, but nobody can agree on an explanation,” which is far more entertaining. As I reported for Gothamist on Sunday:
The explanation from New York state is that “cease to play their home games in said property at any time” doesn’t mean what you think it means. State tax department spokesperson James Gazzale tells Gothamist, “The law is clear that the exemption continues until either team ceases to play home games at MSG—meaning a permanent stoppage, not a temporary relocation due to a global pandemic.” Asked why the Rangers then chose to play Winter Classic games as the road team, Gazzale declined to comment further.
Madison Square Garden officials, meanwhile, had a different explanation for why the Toronto trip was okay: Ed Koch said it would be. Garden officials confirmed a brief note in this New York Post article from July that an “original agreement” between the city and MSG excluded relocations due to Acts of God from triggering the tax renewal clause, but did not provide further details.
The actual agency that would be in the position of deciding to return MSG to the tax rolls, meanwhile, is the city Finance Department, which didn’t get back to me on any of my questions.
As I wrote for Gothamist, this would be a pretty picayune basis on which to make a decision worth hundreds of millions of dollars — but then, that’s exactly how the Garden ended up with its tax break in the first place, when someone neglected to include an end date even though it was intended to expire after a decade. Thirty-eight years later, the tax break is still going strong, and many New York officials are calling for it to be repealed. Just not on a technicality — that wouldn’t be cricket.