Big Tax Hike Coming Soon for THE GARDEN ? ? ? ?

Hmmmmmmmmmmmmmmm, if the City of New York plans to end the property tax breaks that the owners of MADISON SQUARE GARDEN have had since the 1970's (when Gulf & Western owned Madison Square Garden/Knicks/Rangers), would this lead the current owners (Cablevision) to look at building GARDEN V outside of NYC ? ? ? ?

THE BOTTOM LINE: I think the Knicks crappy season has made some politicos mad about the property tax breaks the facility has enjoyed for over 25 years, and getting Cablevision to pay 'their fair share of taxes' is a way to get back at them. I think in the end, they will settle this issue (Cablevision gets to build GARDEN 5 in exchange for selling the land MSG/Penn Station currently occupies and putting it back on the tax rolls).


A Tax Scare at the Garden, Among Other Worries

Seth Wenig/Associated Press

Knicks fans at Madison Square Garden last month. The Garden has been exempt from city property taxes since 1982.


Published: January 7, 2008

These are not halcyon days for Madison Square Garden. The Knicks are rapidly affirming their place as the most uninspired team in basketball. Their coach, Isiah Thomas, is greeted nightly by a chorus of boos.

And back-to-back sexual harassment lawsuits, one played out in sordid detail in a Manhattan courtroom before ending in an $11.5 million judgment, have made the once-proud arena, which owns the Knicks, and its chairman, James L. Dolan, easy targets for the tabloids — and for City Hall.

For the third time in five years, the City Council is considering a resolution calling on the State Legislature to end the Koch-era exemptions that, since 1982, have freed the arena from paying city property taxes, estimated at $11 million to $12 million a year.

City Council members pushed identical resolutions in 2003 and 2005. But without the support of the Council’s speaker at the time, Gifford Miller, neither came to a vote. Things are different this year.

The Knicks, Mr. Thomas and Mr. Dolan are at a nadir in popularity. The city’s budget writers are forecasting a downturn in the economy. And more importantly, the tax-exemption proposal, for the first time, has the support of the city’s top two officials: Mayor Michael R. Bloomberg and Mr. Miller’s successor as speaker, Christine C. Quinn.

The Council’s Finance Committee will hold its first hearing on the new resolution on Monday. But some council members have already made their feelings clear. At a full Council meeting last month, two members prominently displayed “Fire Isiah!” signs on the front panels of their desks. They might as well have read, “End the giveaway.”

“I just think clearly the Garden has lost its direction,” said Councilman Leroy G. Comrie Jr., a Democrat from Queens, and one of the two council members who posted the signs. “Management is not connected to the needs of the city anymore.”

The resolution, if it passes the full Council, would have to be followed by legislation in Albany, where Cablevision, the politically savvy owner of the Garden, has had a powerful ally in the past in the Assembly’s speaker, Sheldon Silver. In 2005, Mr. Silver helped Cablevision quash Mr. Bloomberg’s plan to build a stadium for the New York Jets on the West Side that the Garden viewed as potential competition. Mr. Silver’s former chief of staff Patricia Lynch is among the high-powered team of lobbyists that Cablevision has hired to stop the new resolution.

Mr. Silver’s office declined to comment on the tax-exemption issue until the City Council’s resolution is put before him.

Although council members say they would never tie their tax fight to the Knicks’ performance on the court — the team’s 8-24 record is the third worst in the National Basketball Association — the Garden’s battered corporate reputation has not helped its cause.

In addition the sexual harassment suits — one by a former Knicks executive that led to the $11.5 million judgment, and another by an ex-cheerleader for the New York Rangers who settled out of court — The Daily News recently hammered the arena for charging the city $110,000, including $4,000 for confetti, to hold the police academy’s graduation ceremonies.

“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,” said Councilman Lewis A. Fidler, one the proposal’s sponsors. “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.”

He added, “It has perhaps created an environment in which people are willing to pile on.”

The Garden negotiated its current tax deal when the city’s morale was in the depths. Crime was high. The 1970s fiscal crisis was fresh on the public’s mind. And the Garden, then a subsidiary of the Gulf and Western Corporation, was threatening to move the Knicks and the Rangers, the National Hockey League franchise that it also owns, out of the city to escape high tax, labor and energy costs.

Edward I. Koch, who was mayor at the time, said he believed that the exemptions would end after 10 years. Instead, the State Legislature, which granted the exemptions, kept the breaks in place for as long as the Knicks and the Rangers continued to play their home games at the Garden.

Mr. Koch has long since said the exemptions should end.

“I doubt the teams would leave now,” Mr. Koch said, “even without the tax breaks.”

The Garden’s officials are trying to compare their deal with those recently granted to the Yankees and the Mets for their new stadiums and to the New Jersey Nets for an arena that will bring the team to Brooklyn. Those publicly owned venues will not be subject to property taxes either. Instead, the city will get annual payments in lieu of taxes, but that money will be used to pay off the tax-free bonds that are financing the projects instead of going into the general fund.

According to figures that the Garden plans to present at the Council hearing on Monday, the Yankees, Mets and Nets deals amount to nearly $1.4 billion in government subsidies over 40 years, including $230 million in property tax exemptions.

Ms. Quinn said the Garden was disingenuous to compare its deals with those of the other teams.

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She and Mr. Fidler said they did not want to be unfair to the Garden, which is considering building a new arena across Eighth Avenue from the current arena site. If that happens, they said, the Garden would be welcome to negotiate a new incentive package.

But, Ms. Quinn added, after more than two decades, “we have more than appropriately compensated them for staying in the city.”