20 July 2023
Madison Square Garden’s enormous tax break should be eliminated because James Dolan is unlikely to move his teams from the New York City cash cow, according to a new report from the Independent Budget Office.
The tax break, which began prior to Dolan’s reign as MSG warden, has cost New York City roughly $1 billion, according to the government agency, which it called a conservative estimate. Dolan is now saving about $43 million per year on property taxes.
The reason for the tax break — which was established in 1982 after threats from the Knicks and Rangers that they’d leave New York City — is outdated, the IBO determined.
“The current location of MSG in Midtown Manhattan and directly above Penn Station, creates optimal conditions for revenue generation that would be impossible to replicate were MSG to move to New Jersey or another major metropolitan area,” read the 30-page report titled, ‘An Examination of the Madison Square Garden Property Tax Exemption.’ “Furthermore because of league restrictions, it would likely prove challenging to co-locate the Rangers and Knicks outside of the New York area to meet both the National Hockey League (NHL) and National Basketball Association (NBA) league requirements, which are designed to prevent sports franchises within leagues from competing in the same regional markets.”
In other words, Dolan is excused from paying taxes because of an unrealistic scenario. The latest attempt to axe the exemption is a budget proposal from Democrats in the state senate. But Gov. Kathy Hochul, whose reelection campaign benefitted from major donations and support from the Dolan family, was noncommittal on the subject.
”What’s been proposed by a senator is certainly something we look at, a lot of ideas are proposed,” Hochul told Good Day New York. “I just want to make sure that we’re doing the right thing with respect to MSG.”
Despite their struggles on the court and 50-year championship drought, the Knicks represent one of the nation’s most valuable sports franchises because of their location. Forbes placed them at No. 1 in the NBA at $5.8 billion.
A separate battle between the city and MSG has been brewing over the rebuild of Penn Station. Although different proposals have recommended relocating the Garden to elsewhere in Manhattan, the latest from the Department of City Planning is to renew MSG’s permit for 10 years as long as Dolan cooperates with the Penn Station reconstruction.
MSG sits on top of Penn Station.
“We hope and expect that the rail agencies will deliver a great plan for Penn Station, and MSG has committed to collaborating with them,” City Planning Commissioner Dan Garodnick said in a statement.
“But we won’t just take them at their word — we are requiring MSG to come back to the Commission once those plans are 30% complete to ensure that the arena remains appropriately compatible.”
Across the country, Dolan’s newest venue — The Sphere in Las Vegas — was generating viral buzz with its 1.2 million flashing LED lights projecting the building as various spherical objects.
The live-entertainment venue, which was delayed by the pandemic and went about $1 billion over budget, is opening Sept. 29 with a U2 concert.
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