With their lucrative tax breaks under fire, officials at Madison Square Garden have defended the decades-old gift by saying it’s no different than the public subsidies New York doles out to other city stadiums and arenas.
But on Wednesday, state Senator Brad Hoylman-Sigal (D-Manhattan) — who has been vocal about ending MSG’s property tax break now valued at about $42 million per year — pointed to a newly released report he commissioned from the Independent Budget Office to refute that claim.
“The IBO report on NYC stadium subsidies shows the exceedingly generous and exceptional financial arrangement for Madison Square Garden. Every stadium in New York City pays the equivalent of property taxes, except MSG,” said Hoylman-Sigal, whose district includes the arena. “MSG pays nothing, zero, bupkis.”
The IBO report found that none of the stadiums and arenas analyzed — Citi Field in Queens, Yankee Stadium in The Bronx and Barclays Center in Brooklyn — pays any property taxes to the city or state.
But the owners of the outer-borough venues all make annual debt payments on the tax-exempt bonds that helped build the structures, in the form of payments in lieu of taxes, or PILOTs. This year, those outlays came out to $84 million for Yankee Stadium, $44 million for Citi Field, and $39 million for Barclays Center.
That money, totaling $167 million, is significantly less than what they’d owe in property taxes, the IBO review found, though the report noted that comparisons of the venues with MSG were difficult to make.
The IBO said there was an incentive for the PILOT-paying venues to have an inflated property assessment, because it provides more security for the debt, while Madison Square Garden was assessed with the knowledge that no property tax payments were due, making it less reliable.
Additionally, none of the PILOT payments flow to city or state coffers, instead going to bond debt service payments, per the IBO.
MSG officials used the difference in projected tax payments and what the outer-borough venues actually paid in debt service to argue that those subsidies were actually more lucrative than theirs.
For example, Citi Field would have a $121 million tax liability based on its $3.2 billion property assessment, but only pays $44 million toward debt service — a subsidy of $77 million, the officials said.
They also said the other statements benefit from subsidies that weren’t included in the IBO review, such as capital replacement reserves and rent credits — which MSG doesn’t get.
“The Independent Budget Office’s report clearly illustrates what we’ve said all along – all of New York City’s major sports venues benefit from public subsidies, and as the analysis clearly indicates, MSG’s is one of the smallest,” said MSG Entertainment spokesperson Mikyl Cordova.
The IBO cautioned that its analysis was somewhat rushed given a tight timeframe before the state’s April 1 annual budget deadline, and therefore incomplete, and noted that public financing for sporting venues is rarely a good deal for taxpayers.
“It is important to note that there is general agreement within the field of economics that substantial government subsidies for sports facilities are not typically an efficient use of scarce public resources,” the report said. “There is little evidence that these types of subsidies generate sufficient economic activity to lead to a net fiscal benefit to the local area.”\
$875 Million and Counting
Madison Square Garden’s tax breaks were first awarded by state legislators in 1982, after the then-owners of the Rangers and Knicks teams threatened to hightail it out of Manhattan if they didn’t get some kind of a deal.
The IBO reports that the savings accumulated by MSG owners since then have totaled more than $875 million, when adjusted for inflation.
In 2013, State Assemblymember Brian Kavanagh, now a state senator, introduced a bill to repeal the tax break — which he re-introduced in the Senate this year along with 10 co-sponsors, including Hoylman-Sigal.
Gov. Kathy Hochul hasn’t said whether she supports the tax break repeal.
As THE CITY previously reported, her gubernatorial campaign against Republican Lee Zeldin last year took in hundreds of thousands of dollars from family members of James Dolan, whose firm MSG Sports owns both the Knicks and Rangers.
Another firm he owns, MSG Entertainment, was involved in more than $500,000 in spending via a political committee Dolan founded that ran TV, digital and radio ads in support of Hochul.
More recently, Dolan made headlines for employing facial-recognition software to keep attorneys with cases against MSG Entertainment from entering venues the firm owns, including Radio City Music Hall.