State legislators are closer than ever to scrapping a decades-long measure that has saved Madison Square Garden hundreds of millions of dollars in property taxes. But its success – part of ongoing budget talks – hinges on the support of Gov. Kathy Hochul, who’s received significant financial support from the family that owns the massive arena above Penn Station.
While there have been previous attempts at eliminating MSG’s property tax exemption – valued at roughly $43 million a year – the most recent commitment to lift the tax break marks the first time the State Senate has backed an effort to rescind it. Unlike the Assembly, the Senate has since included it in their budget proposal released on March 16.
If the exemption ends, New York City could receive millions in annual tax revenue from the Garden, which would then be diverted to fund the MTA, as outlined in the proposal.
“It is such an embarrassing overreach of government to provide Madison Square Garden with this tax exemption in perpetuity,” said state Sen. Brad Hoylman-Sigal, D-Manhattan, one of the legislators behind the proposal. “I hope we’re shamed into action because the status quo shouldn’t stand – especially when Madison Square Garden is making record profits at the expense of New Yorkers.”
Despite little sign Hochul will support the measure, Senate Democrats are banking on a slew of controversies to boost their efforts, including greater in scrutiny over the financial benefits stadiums receive after Hochul and lawmakers approved a budget last year committing more than $600 million in state funds to construct a new venue for the Buffalo Bills.
I hope we’re shamed into action because the status quo shouldn’t stand – especially when Madison Square Garden is making record profits at the expense of New Yorkers.
When asked, Hochul’s office declined to comment further and instead pointed to comments she made on March 16 during an interview on Fox’s “Good Day New York,” where she did not take a clear position.
“What’s been proposed by a senator is certainly something we look at, a lot of ideas are proposed,” she said during an interview. “I just want to make sure that we’re doing the right thing with respect to MSG.”
“Everything is very fluid, it’s a very fluid situation,” she added, later on in the interview. “But, right now, I know how important MSG is.”
The Garden’s special permit – which clears the arena to seat more than 2,500 people – is also up for review by the City Council. This is happening at the same time as the venue’s CEO James Dolan is battling the New York State Liquor Authority over the venue’s use of facial recognition software to blacklist lawyers – who work for firms suing his company – from games and concerts.
Hoylman-Sigal told Gothamist that the city is also hurting for more money.
“I think there’s an awareness among my colleagues that this is inequitable because Madison Square Garden sits [atop] the busiest train hub in the western hemisphere and doesn’t pay a cent of New York City property taxes,” he said, adding that the revenue could go towards refurbishing Penn Station and keeping mass transit affordable.
The world-famous venue received its tax exemption in 1982, when Mayor Ed Koch pushed for its passage. Koch and other city officials were attempting to keep the New York Knicks and Rangers from following in the footsteps of the New York Giants, who fled the city for the Meadowlands in New Jersey in 1976.
The Garden’s owner at the time, Gulf & Western, accepted the lofty deal under an agreement that the tax exemption would end if either the Knicks or Rangers stopped playing its home games at the Midtown arena over the next decade. When the Dolan family bought the Garden in 1994, it inherited the same exemption.
In recent years, the Dolans contributed a total of $449,900 to Hochul’s reelection campaign, according to state records – a mere fraction of the millions it would owe the city if the exemption ends.
Hoylman-Sigal alluded to the governor’s culpability if the budget proposal dies.
“This proposal will be at the table so New Yorkers will know at the end of the day who is responsible for killing it,” he said. “I think that’s potent leverage for getting this done.”
At least nine members of the Dolan family contributed to Hochul’s campaign – including James Dolan and four of his sons, as well as his father, Charles, and two of his sisters. The Garden’s political action committee contributed another $52,100. James Dolan also contributed $117,000 last year to the state Democratic Committee, which is essentially controlled by Hochul.
Still, Assembly Democrats, who control a large majority in their chamber, did not include the measure in their budget proposal so it's unclear if that chamber backs ending the tax break.
MSG spends heavily on lobbying in Albany and New York City to advance its interests or fight against measures, such as Hoylman-Sigal’s bill to end the venue’s facial-recognition policy. The company spent $50,000 lobbying state lawmakers in January and February of this year, even before the Senate backed rescinding its tax break.
A Garden spokesperson also defended MSG’s tax abatement, calling the venue “a significant job creator and an economic leader within both our community and the city.” The tax exemption, MSG argues, is “hundreds of millions of dollars less” than what other teams and venues in New York receive.
Jon Campbell contributed reporting.
