Last year, following the revelation that the owners of the New York Islanders and the owners of the Barclays Center had a mutual out clause to escape from their 25-year lease in 2018 or 2019, I wrote at length about why the Islanders owners might and might not want to avail themselves of this option. (Might not: They didn’t have anyplace better to go. Might: At least it could provide them some leverage to demand improvements to Barclays for hockey.) What I didn’t expect was what happened yesterday: Bloomberg News revealed that the arena owners were preparing to ask the Islanders to remove themselves from their place of residence, effective following the 2018-19 season:
The arena, which is already home to the NBA’s Nets and one of the world’s top-grossing concert venues, would make more money without the National Hockey League team, according to people familiar with the facility’s financials.
Russian billionaire Mikhail Prokhorov, who owns the building and the Nets, has since November been seeking an investor to take a stake in both. As of earlier this month, a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season — a clear signal that the team won’t play there, the people said.
That’s a little hand-wavy as evidence goes — that financial projection could just have been accounting for the possibility the Islanders owners might choose to leave, and the lease out clause requires the two sides to be engaged in “good-faith negotiations” before it can be triggered — but let’s give Bloomberg’s unnamed sources the benefit of the doubt and assume there’s something to this. Given the weird lease deal between the Isles and the arena where Prokhorov pays the team a guaranteed $53.5 million a year and in exchange for its revenue from ticket and suite sales, and the fact that the Islanders haven’t been able to draw flies (outpacing only the sad-sack Carolina Hurricanes and Arizona Coyotes), and that the arena has maintained a busy concert schedule (even if by offering steep discounts on rents), it isn’t all that crazy that Prokhorov might think, “Go play in the street, Islanders, it won’t be hard to find some musicians who can sell more than 12,000 tickets at a time.”
As for where the Islanders would go, that’s the excellent question that the news media spent most of yesterday asking. There’s been talk previously of building an Islanders arena on the Willets Point land near the Mets stadium in Queens that is currently being cleared of its venerable collection of auto shops by eminent domain, something that was again raised by Queens borough president Melinda Katz in her state of the borough address last week. (In case you’re wondering what power a borough president has to build an arena: Mentioning it in an annual speech is about it.) Nobody’s offering to pay for an arena in Queens, mind you, and building one with your own money seems daft in a metro area already suffering from arena glut, but it can’t entirely be ruled out.
There’s no way a Queens arena would be ready in two years, though, so in any case the Islanders would need somewhere to play starting in the 2019-20 season. That could be Nassau Coliseum, the same building they left in a huff two years ago, but which has since been sold and renovated by Bruce Ratner, the same guy who signed the Islanders to their Brooklyn lease before selling that arena to his then-business partner Prokhorov*. The Coliseum will only hold 13,000 for hockey in its new configuration, but that’s not all that much smaller than Brooklyn’s hockey capacity (15,795), and the Islanders aren’t drawing that many fans anyway, and at least there everyone would be able to see both goals.
And then there’s this:
The recurring fear then among the yo-yoed fan base, of course, would be an outside city such as Quebec or Kansas City or Seattle or Hartford, making and snaring a bid for relocation.
My gut feeling says all this is jumping the gun just a bit: While the Islanders owners and their landlords may indeed be contemplating a divorce, there’s a lot of time for haggling between now and 2019, and this could still all just be a negotiating tactic. What this does mean, though, is an intensification of talk about a new arena somewhere in the NYC area — which almost certainly means the Islanders owners, Jon Ledecky and Scott Malkin, will try to get a good old-fashioned bidding war going among New York City, Nassau County, and anyone else they think they can rope in. (Quebec? Probably not, since New York is such a lucrative TV market even when fans aren’t showing up, but sure, use Quebec as a threat, can’t hurt.) This could get almost as ugly as the view from those obstructed seats.
*CLARIFICATION: Prokhorov has since bought operations of the Nassau Coliseum from Ratner as well. This could be a problem for the Islanders owners if you think this is about a feud, or not if it’s just about both sides realizing that Brooklyn isn’t really working all that well for either side. It certainly complicates the leverage aspect, though.
Why doesn’t the Russian guy just buy the islanders? He could than move them to thier old arena on LI he currently owns.
Didn’t the owners over pay for the isles based on Brooklyn dreams. The Russian also over paid when he rescued the basketball Ratliff scam. If he’s looking for investors , he might not be able to buy team even at a reasonable price.
Wouldn’t operating both areas be beneficial to negotiate a resolution, where Barclays can buy out year four for a certain amount and move them over to NAssau Coliseum for year four and possibly beyond. Yormark gets 40 dates back at more lucrative Barclays and schedules dates at Coliseum.
Those auto-shops were an NY institution. When I was just starting out that is where I would have to go for parts for my car.
As far as the TV contract goes, its a good deal but if they go to the right market (Hamilton, QC) they could come close enough that they can bridge that gap with better arena revenues.
Owners make their money by the increase in franchise value, though.
Access to the NY market makes the franchise value far higher than owning a team in Hamilton or Quebec.
I agree. The new owners bought a semi portable franchise in the NY area. That’s what they paid for. If they want to own a team elsewhere they’d be better off selling the NY one and buying one somewhere else.
I gotta think this is a negotiation tactic. Finding “…some musicians who can sell more than 12,000 tickets at a time…” can be hard when you need to do it 40 times. Plus the concert touring business is unpredictable from year to year. There’s some value to the predictability of 40 Islander dates a year. (42 if you count playoffs.)
What’s the meadowlands arena up to these days?
Practice space for musical acts, for starters:
http://archive.northjersey.com/news/former-izod-center-to-serve-as-practice-space-for-musical-acts-1.1644365
The basketball NY mayor has already shown zero support for a privately funded soccer park for a team that sells 25k tickets a game. Will he support public funding for a team that’s had close to a century to average 12k a game?
Can they put affordable housing in it? If so, yes.
Ha Ha. Yes , promise to build low income housing but never do it.
A century? Hardly. The Islanders took to the ice for the first time in 1972, as I recall. The main reason for their existence was not an underserved NY hockey market so much as the fear that the then new WHA would put a successful franchise in the largest city in the nation if the NHL didn’t…
Perhaps build a new arena on Gorton’s Fisherman island?
The Bloomberg article is clearly an attempt to have the Islanders move back to the renovated Coliseum which will reopen in April.
Without the luxury boxes or advertising revenue at the Coliseum it is clearly more beneficial for the Islanders to try to obtain financing for a new arena with Elmont site available (it is controlled by the ESDC).
The Queens site would have to be built next to Citi Field and a new multi story parking garage would also have to be constructed on the existing parking lot which is clearly cost prohibitive.
The best solution for all sides would be to renovate the lower bowl of Barclays Center and commit the Islanders to the balance of their lease there in exchange as well as increasing the Islanders revenue streams in the building (in addition to the yearly payment to play there).
I would guess a final decision will be made by years end.
Stay tuned.
An attempt by whom, though? Bloomberg doesn’t have a dog in this race, and Prokhorov presumably doesn’t need to use the press to boot out the Islanders to Nassau if that’s what he wants.
Increasing the Islanders game day revenue streams would not help the Islanders, though. As I understand it, they get a fixed payment and all “variable” arena related revenues go to the arena owners. Effectively, Mr. Wang sold his team’s game day income futures for an annuity (albeit a healthy one).
I would have to think that if Prokhorov thought he could make more than $53m annually over the course of the lease by renovating, he’d already be arranging the construction contracts.
If anything, the story about the arena owners deploying their escape chute suggests that they don’t believe any amount of renovation to the arena would make this deal worthwhile in the long run. That can’t be pleasing Mr. Bettman, can it?
Either that, or they’re sick of paying the annuity and want to get out of it. With the Islanders owners meanwhile sick of the lousy hockey sightlines, you effectively have two negotiators here pointing a gun at the same hostage.
Can Barclays even be redone to help hockey sightlines? Where do the nets and islanders go during the renovation, Long Island? I guess the other issue for the NHL is it wise to have 3 teams in metro NYC. Is moving to Quebec an option for islanders?
Only if they blow out that side of the building and move the building out into the street, effectively having to then do street construction to re route the streets… this is construction project that would need to shut down the arena. Pokorov aint doing that.
You mean the front of the building? There’s that plaza there, and a good bit of entry hall before you get to the arena proper, so it’s not *entirely* impossible. But yes, it would not be a simple or cheap task at all — certainly not worth it given the marginal revenue increase you might get from having the Islanders there vs. booking concerts.
There isn’t a lot of room — there’s a subway station on one end, and an apartment building foundation on the other. If you recentered the ice, it *might* work. Or you might just end up with semi-obstructed seats at both ends.
Best solution might be a time machine to go back in time and tell Bruce Ratner what a nightmare he’s setting everyone up for by “value engineering” away compatibility with hockey.
True, but he did offer the former Islanders owner the opportunity to be an equity partner in an arena built to suit both hockey and basketball. It was Mr. Wang’s decision to decline that opportunity (or at least not to negotiate it) that put his team where it is today.
Ratner offered Wang opportunity to be an equity partner? Can you point me to a link?
Somewhere in Manhattan an intern is being ordered to research demographics in Jacksonville, Oklahoma City, and San Antonio.
The Spurs aren’t going to allow hockey into San Antonio. Unless they own the team. Also the demographics don’t line up with traditional NHL crowds.
AT&T would have similar sight lines for hockey as Barclays does.
Couldn’t they play at citi field? It seems the NHL is doing a good job at luring fans to buy tickets to sit and watch hockey outside in the cold by the looks of their “stadium series\'”.
To all those speculating about a move out of greater New York, a reminder that the Islanders largest revenue stream, the MSG television contract runs through 2031. It’s Brooklyn, Uniondale or a ridiculous new arena.
An arena built primarily for hockey can much easily be modified for basketball than visa-versa. Nassau Coliseum (despite reduced capacity) would seem to be the favored option.
Probably. In the long run, though, the real issues with Nassau were rail and road access for “non local” fans. A renovated arena is nice, regardless of location. But it’s not like the renovation fixed everything about it.
Of course, a team owner could use some of his own money to subsidize train routes on game days to allow fans easier access… but that’s just crazy talk isn’t it?
There will be a lockout in 2019-20 anyway so it’ll be a moot point that the Isles don’t have a home to call their own.