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Sports territorial rights put Newark, Brooklyn and the N.Y. Islanders at a disadvantage

prudentialcenter_optBY EVAN WEINER
NEWJERSEYNEWSROOM.COM
THE BUSINESS AND POLITICS OF SPORTS

When Mikhail Prokhorov arrives in Brooklyn with his New Jersey Nets franchise, can he bring with him a National Hockey League team — specifically the New York Islanders? The answer according to someone who has been around hockey for a long time is no because the Madison Square Garden's owners, the Dolan family, and the league won't allow Charles Wang's Islanders to invade New York Rangers territory.

The Gulf and Western owned-Garden in 1971 collected millions of dollars from the expansion New York Islanders owner Roy Boe and in 1982 from New Jersey Devils owner John McMullen when both teams opened shop in the metropolitan area as Boe and McMullen "invaded" Rangers territory. The Garden also got millions from Boe when his American Basketball Association New York Nets joined the National Basketball Association in 1976.

Money talks.

Perhaps Dolan would change his mind if Wang renegotiated his Madison Square Garden cable TV deal and gave Dolan more favorable terms than he presently enjoys which would allow Wang to move to Brooklyn.

(Dolan's cable TV Cablevision franchises partly depend on two planks, he has the rights to Islanders games which takes care of his Long Island systems and New Jersey Devils games which gives New Jersey systems local programming. The other is News12, which provides local news in Nassau and Suffolk counties in New York and New Jersey's News 12 does the same thing in the Garden State. It is actually clever programming and use of money as no other multiple cable systems operator can offer local cable boards when contracts are renewed that sort of option.)

NHL Commissioner Gary Bettman has thrown water on the idea that Wang's Islanders could move about 20 miles west of the franchise's present location in Uniondale. The NHL does have the right to control franchises shifts as does the National Basketball Association according to the latest court case (the 2009 Phoenix Coyotes bankruptcy proceedings in Judge Redfield Baum's courtroom in Phoenix) involving a league and that league's ability to control franchise shifts. In 1994, NBA Commissioner David Stern and the majority of the league's 27 owners blocked the sale of the Minnesota Timberwolves to New Orleans interests led by boxing promoter Bob Arum. The Arum group planned to move the Minneapolis franchise to New Orleans.

New Jersey Governor Chris Christie has already met with Stern to discuss the possibility of replacing Prokhorov's Newark-based franchise with another NBA team. It is hard to imagine Stern warming up to the idea of putting a third team in the New York metropolitan area although ultimately it is the NBA owners, not Stern, that decides where a franchise can operate.

Stern was so angry with New Jersey officials in 2005 after another set of New Jersey Nets owners could not get an arena built in Newark that he lost his cool and showed the not so polished side of his media-made "Easy Dave" persona when he admonished them by proclaiming "you blew it."

Madison Square Garden's James Dolan and Prokhorov probably would lead the charge to block another NBA owner from moving to Newark even though Prokhorov is giving up the New Jersey territorial claims. By the time Prokhorov leaves for Brooklyn, there could be a large number of small market franchise owners that might be looking for greener pastures. Presently, the league owns the New Orleans franchise, Indiana is losing copious amounts of money, and the Maloof brothers are not any closer to getting a new building in Sacramento than they were five years ago. In retrospect, the move of the Vancouver Grizzlies to Memphis by owner Michael Heisley has not produced the financial results and might be considered a failure. The league's return to Charlotte has not produced a good result. Milwaukee needs a new building but it is unlikely the team's owner — United States Senator Herbert Kohl — will move the team because that would signal that Wisconsin is not a good place to do business (although new Governor Scott Walker seems to be doing a good job shooing business away from the state in his initial six weeks on the job.)

Stern and his owners seem to be playing out the clock with the players in regard to the present collective bargaining agreement, which expires on June 30. Stern wants to change the way players are paid and shift revenues back into his owners' pockets. That could help the small market owners. Should Stern fail to produce that type of result, the NBA will lock out the players. If Stern does not prevail, the NBA might see franchises move with Seattle, Louisville, Vancouver, San Jose, Anaheim and yes even Newark in play.

Because of the 1922 United States Supreme Court ruling that baseball was a game not an interstate business and therefore was entitled to an antitrust exemption, New Jersey will never get a Major League Baseball team. In northern New Jersey, the Steinbrenner Yankees and the Wilpon-Katz Mets have veto power and can nix a third team in the New York City area and Philadelphia Phillies ownership can do the same thing in southern New Jersey. New York City once had three Major League Baseball teams and the area could support a third team. People in Major League Baseball know this but there is that antitrust exemption which would preclude franchises seeking new facilities like Oakland and Tampa Bay from checking into New Jersey.

Getting back to the Islanders situation and Brooklyn. It may be a good time for Eric Holder and the Department of Justice or oversight committees in either the United States Senate or the House of Representatives to take a look at franchise movement because of the vast amount of public dollars that have been poured into sports.

American sports is not a private entity.

It is a government-subsidized business. Cities are building stadiums and arenas for teams and in some cases paying owners outright to make sure the owner keeps a franchise in town like Louisiana does with New Orleans Saints owner Tom Benson. The "major league" sports industry has grown financially thanks to antitrust exemptions and all sorts of tax breaks for owners.

Municipalities have been moving money around to pay off sports facilities debt. New Jersey is still paying off the debt on the departed Giants Stadium in the Meadowlands. Houston, Pittsburgh, Seattle, Indianapolis, and Vero Beach, Florida residents to name a few cities are paying bills on departed stadiums or in Vero Beach's case improvements at a spring training facility that was abandoned by the Los Angeles Dodgers, a franchise that has a history of leaving town.

The owners of new Meadowlands Stadium (the Giants Mara and Tisch families and the Jets Woody Johnson) are paying significantly less in property taxes than had other owners developed the property for different businesses. In 2006, East Rutherford mayor James Cassella noted that the Meadowlands should be generating more than $10 million a year in property taxes and that East Rutherford was getting a small percentage of that. In 2009, Mayor Cassella again wanted more money from the property. East Rutherford is getting $5 million in rent from the teams and through payment in lieu of taxes (PILOT), $1.3 million or so annually instead of a full share of property taxes.

Prokhorov's new Brooklyn building will be costing New York taxpayers hundreds of millions of dollars. If there is a National Hockey League owner who is willing to work out a deal with Prokhorov and put a team in the Brooklyn building then the deal should not be squashed by a bunch of owners led by someone who does not pay New York City property taxes.

Madison Square Garden is not on the New York City property tax roll and has not be paying property taxes for nearly three decades (1982) thanks to politicians led by then Mayor Ed Koch who fell for the line that the New York Knicks and the New York Rangers could not compete for players with other teams because of the property tax burden. New York City and state elected officials gave the Garden a property tax exemption.

Mayor Michael Bloomberg has declared war on public employees and wants concessions because he claims the city cannot afford pensions, school costs and other public services. The Garden's estimated $14 million a year property tax bill contribution, if the Garden was forced to pay the tax, won't solve the city's fiscal problems but it might save a few jobs. That money does not need to go to LeBron James or Carmelo Anthony or Chris Paul.

New York sportswriters, assuming their usual on their knees cheerleading positions for a team---this time the Knicks, are pushing, hoping and wishing the Knicks land Carmelo Anthony in a trade. Anthony's next contract could net him more than $20 million a year. If Dolan can pay an employee $20 million annually, he could and should be forced to pay his tax bill.

It isn't Dolan's fault that New York capitulated to the Garden's demands. He inherited the largess when his family bought the team in 1994 from Viacom.

 



 
Comments (8)
8 Wednesday, 01 February 2012 22:16
Chris TMC
...writing this article. You really don't know what you are talking about.
Way not to research anything and just spout crap on the Internet! *applause*

Next time, get a better source than some unnamed dope who has no clue about this situation.
7 Wednesday, 16 February 2011 10:26
Daniel R
I have to disagree with NJFAN2010 and Net Income on this issue. While true the NHL could not get in the Barclays Center as designed now, Bruce Ratner, the majority owner of the Barclays Center, said back in late 2009, before construction started, that the Barclays Center would be retrofitted to accomodate NHL Hockey and would welcome the Islanders into that building. Brooklyn is definitely in play here and IMO, is the favorite right now to get the Islanders once the lease at the Nassau Coliseum is up in 2015.

They will have Hockey in the Barclays Center (College Hockey). Its very possible that an Islanders move to Brooklyn is very real and it can fit if its going to be retrofitted as Ratner has already gone on record saying he would do. 14,500 for NHL Hockey can work in the Barclays Center, as Brooklyn is part of Long Island (Very Western end).
6 Tuesday, 15 February 2011 23:45
evan weiner
Let's get some facts straight, Leon Hess traded Monmouth Park to New Jersey in exchange for his Jets t the Meadowlands. That happened in 1983 under Ed Koch. That was part of the USFL-NFL antitrust trial as Leon testified. This column is about monies diverted from public coffers into owners pockets. Dolan can pay Lebron, Melo the equivalent of the city's property tax. Brooklyn can be fitted in med stream just like Toronto did at their arena to house hockey. Leagues can rewrite territorial rights whenever they want. It is a business, that is what sports is.
5 Tuesday, 15 February 2011 23:20
NYIFC
Mr Grossman

Gary Bettman gave this interview back on 2/14/2010, not 2011 so why is this here now and not New York winning streak or a few well deserved words on Grabner? . The New York Islanders have full territorial rights to move anywhere in New York outside of Manhattan which countless articles have confirmed.

Wang said recently he would go to the games in Flushing or Brooklyn in an interview.

Without the New York Islanders being what the Yankees were to YES when they were getting started there would be no Cablevision for the Dolan's to attempt to buy the Islanders from John Pickett (which failed) and eventually Msg.

Mr Grossman you want to impress us with something new how about hitting on Bloomberg and Dolan for hypocrisy, now both are hanging out at Msg and going to see Cablevision's hockey team after all the money this city losses on that tax exemptions after they cost NY the Olympic and the NJ Jets.

Nothing short of Murray and Wang at Islander games would be more shocking.
4 Tuesday, 15 February 2011 18:01
NJFAN210
This whole article is irrelevant. The real reason the Islanders can't move to Brooklyn is because the arena is being built specifically for basketball. An NHL rink cannot fit on the building's floor. Ever since Frank Gehry's design was scrapped (which actually included an event floor large enough to hold an NHL rink) the idea of the Islanders moving to Brooklyn has been killed. The reason it had never been brought up during the Gehry arena years is because at that point in time, the Lighthouse Project was Wang's priority.

The Islanders are talking about building in Queens and the Rangers cannot claim any territorial rights, because the Islanders are already established in the region. This has already been confirmed by the league and the NHL has said Queens might be a logical place for the Islanders to wind up. The same territorial rights issue in the NBA allowed for the Nets to move to Brooklyn without any issue from the Knicks.
3 Tuesday, 15 February 2011 13:42
evan weiner
If you fellow owners like you and you are part of the "in" crowd, you can do whatever you want like Art Modell, Bud Adams, Bill Bidwell, Bob Irsay, MLB owners with the Nationals, Lew Wolff has been a good boy in Oakland, maybe MLB will let him eventually go to San Jose which is five times as far as Oakland in mileage from San Francisco
2 Tuesday, 15 February 2011 11:27
evan weiner
Whatever the territorial rules are, they are easily broken---Al Davis v NFL, Donald Sterling v NBA and owners make up rules as they go, AFL, Jets pay Giants $10 million, Raiders pay 49ers $8 million in 1966, the MLB's Nationals franchise gives up cable TV income to Peter Angelos and the Orioles in a combined regional sports network so the territorial rules mean nothing. Getting owners to pay their fair share of taxes, that is the point of this column and then when owners pay their fair share, they can dictate terms. $14 million a year in NYC is a drop in the bucket but with the national war on municipal workers on going by politicians who give the store away to business in general, perhaps it is time to rethink PILOTS, tifs and other tools and start with getting sports owners to pay their share of the tax bill
1 Tuesday, 15 February 2011 11:00
Net Income
As part of their agreement to get out of the awful IZOD lease, the Nets abandoned their rights to New Jersey, just as the Knicks abandoned their rights to any NYC locale other than Manhattan, the Bronx (and Westchester). And just as the Nets didn't need to compensate the Knicks for the right to set up shop in Brooklyn (or Queens), a successor team in Newark won't need to compensate the Nets for right to set up in Newark or any other location...not that the NBA is going to put a third team in NJ.

I would also suggest double-checking on the Islander rights. I have been told a completely different story, that the Islanders could move to Brooklyn without compensation to the Rangers. However, the point is moot. With the downsizing of Barclays Center in 2009, there is little room for an NHL franchise. The max capacity of the new arena for hockey is a paltry 14,500, considerably less than the Nassau Coliseum. In addition, the sightlines for the best seats in the arena are not optimum for hockey. There is no way the NHL or its owners would permit such a small capacity arena...no matter how new or now well located.

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