This is an archived version of a Field of Schemes article. Comments on this page are closed. To find the current version of the article with updated comments, click here.
January 09, 2008
MSG owners: Our tax break is no worse than the next guy's
It doesn't get a whole lot weirder than this: At a New York city council hearing on Monday on their accidental perpetual property tax exemption, representatives of Cablevision (the owners of Madison Square Garden, the Knicks, and Rangers) asserted that they deserve the $11-million-a-year-and-counting tax break because, well, all the other kids are getting one:
"The value of Madison Square Garden's property tax exemption is substantially less than the level of government support for the other three recent deals in New York," testified Garden consultant Thomas Hazinski, managing director of HVS Convention, Sports & Entertainment Facilities Consulting.
Hazinski said with their new facilities, the Yankees will receive more than $600 million in public support, including $144 million in foregone property taxes; the Mets will get more than $440 million, including a $72 million tax break; and the Nets will get $340 million in breaks, with $14 million in property tax savings.
For a sports team owner to argue that it deserves a subsidy just because other teams get them isn't exactly unprecedented. But it is pretty ironic (or at least ironic) for a corporation that just spent nearly $40 million on ads and lobbyists to denounce a proposed Jets football stadium as a waste of money is now holding up sports subsidies as standard business practice. And the absurdities just piled up from there:
- According to sources who were at the hearing, council chair Christine Quinn - a former ally of Cablevision's in the Jets fight - responded to Cablevision's charge that other teams don't pay property taxes by saying that the Yankees and Mets will pay PILOTs (payments in lieu of taxes) at their new stadiums. What Quinn either didn't understand or just failed to mention: They won't be paying PILOTs into the city treasury, but rather using them to pay off their own stadium construction costs, racking up a $359 million tax break in the process.
- The Daily News editorial page likewise defended the Yanks and Mets deals, writing yesterday: "Yankee and Shea stadiums are publicly owned and the teams pay modest rent. The public was on the hook for very large repair bills. Instead, the teams are using private money to build new ballparks - a huge plus - and the city is using its bonds' tax-exempt status to make the financing cheaper. The treasury loses little." Actually, it loses about $637 million (download the detailed breakdown here), but maybe that's "little" in Manhattan prices.
- One councilmember told the New York Times that one reason elected officials might be finally taking on the Garden tax break after 26 years - aside from that the mayor hates them for blocking his Jets plan - is because their teams suck: "I'm not going to be so flippant as to say that the fact the Knicks have absolutely stunk up the basketball court is a reason to get rid of their tax exemption," councilmember Lewis Fidler, told the New York Times, and if you think you hear a "but" coming, here it is: "But I think certainly the manner in which they've conducted their business otherwise has certainly left people feeling less than warm and fuzzy for them. It has perhaps created an environment in which people are willing to pile on."
Will Quinn betray her former allies to side with the mayor? Will Isiah Thomas' management skills end up costing the Knicks even more than the $11 million they did last year? The full council still has to vote on the measure, and then it must ask the state legislature to actually repeal the tax break - and as we've seen, anything can happen there.