The Islanders Say Bye to Brooklyn, But Where Next?

The team wins a bid to build a new arena at Belmont, but their home during construction remains to be seen

The New York Islanders have won the bid to build a new 18,000-seat hockey-focused arena (plus retail shops and a hotel) at Belmont Park in Elmont, Long Island, presaging an end to a mutually disappointing stint at Barclays Center in Brooklyn that produced with low attendance (last in the league, currently 11,567) and low revenues.

Barclays Center operators, wary of a new arena that would compete with both Barclays and the Nassau Coliseum that they manage, reacted cordially, saying, “We are currently awaiting a response from the Islanders to our proposal to bring NHL games back home to the Coliseum on an interim basis. We understand the required approvals from all parties involved to make that happen, and are prepared to facilitate any necessary enhancements.”

The Islanders have already committed to a fourth year in Brooklyn, the 2018-19 season, but need a home rink for at least one more year. (Construction could take two years, but only after an environmental review process.) It’s unclear whether the proposal from Brooklyn Sports & Entertainment is for all games in Nassau County, or a season split between Brooklyn and Nassau.

The revamped but undersized Coliseum, which lacks luxury suites and public transit, is nevertheless closer to the heart of the Islanders’ fan base. Gov. Cuomo, who formally announced the Belmont news today (after it leaked out yesterday), indicated support for a stint in Nassau–and perhaps even financial assistance.

“New York State will negotiate with the New York Islanders to ensure they will play as many games as possible at the Nassau Coliseum while the state-of-the-art arena at Belmont is being built, returning the Islanders home to Long Island in the nearest possible future,” a press release stated.

Yesterday, Brooklyn Borough President Eric Adams started that bandwagon, apparently reflecting Barclays’ wishes, tweeting that “they should consider Nassau Coliseum in the interim period.” (His additional statement that “There’s only one #Brooklyn team for @BarclaysCenter and that’s the @BrooklynNets” antagonized some Islanders fans who noted that they’ll be going to Barclays for at least a season and a half and that the Islanders, unlike the Nets, will likely make the playoffs.) In Brooklyn, some operators of bars and eateries close to the arena are dismayed at losing party-hearty hockey fans, as noted by amNewYork, while some near neighbors might say good riddance to sometimes rowdy fans. A Few Specifics Missing

Today’s press conference was long on pomp–“Yes” chants from Islanders fans, custom hockey jerseys for Gov. Cuomo and Long Island musical icon Billy Joel–but short on specifics. The gubernatorial press release provided one key statistic: “The New York Islanders will have a 49-year lease with renewal options, valued at $40 million for the full build-out.” Since that represents the equivalent of $40 million upfront to lease up to 43 acres over 49 years, it seems like a good deal on rent for the state-controlled property.

THE BRIDGE NEWSLETTER SIGN UP FOR BROOKLYN BUSINESS NEWS Leave this field empty if you're human:

It’s unclear how much the only other bidder, New York City Football Club, proposed to pay for its proposed soccer stadium, but that aspect of the bid represented only 20% of the weighting in the decision metric proposed by Empire State Development (ESD), the state economic-development authority.

The new arena project involves not just the Islanders’ owners, but other partners including Sterling Equities, Madison Square Garden and the Oak View Group, with significant real-estate and sports experience.

The state press release promised that “[t]he $1 billion transformational plan to redevelop Belmont Park will strengthen the local economy, boost tourism, increase visitor spending and stimulate local businesses.” The cost of the arena itself is unclear, as is the financing plan. No estimates of future tax revenues were announced.

The plan indicates some public help, if not direct subsidies, will be forthcoming: “the Long Island Railroad is committed to developing a plan to expand Long Island Rail Road service to Belmont Park Station for events year-round.” The arena will be privately financed, and the Islanders’ bid was not contingent on additional subsidies. However, a payment in lieu of taxes is expected to be negotiated, given state ownership of land, and would–if it follows the template for Barclays–enable savings via tax-exempt financing.

The press release estimated that the project would create 12,300 construction jobs (which are typically expressed in job-years). The press release also promised 3,100 permanent jobs, though it did not provide a FTE (full-time equivalent) calculation. When the Barclays Center began hiring for “2,000 jobs,” representatives of the arena developer said that meant 1,240 FTE jobs. The Belmont project, on underutilized state land long envisioned for development, does involve businesses that, unlike the arena, might be busy daily: a 435,000-sq.-ft.-foot retail-and-entertainment complex and a hotel with 200 to 250 rooms.

Arena Jousting

While Long Island fans are cheering at the opportunity to bring their team “home” and the chances of retaining star John Tavares in contract talks, this also represents a boost in team value for the Islanders owners. After paying $485 million and seeing Forbes value the team at well below that, they now might successfully resume their effort to sell a 15% stake at a $500 million valuation, notes Mike Ozanian of Forbes.

A new arena has to be a blow to BS&E, whose CEO Brett Yormark recently told Pollstar, a concert-industry trade publication, “I do not think we need another venue, nor do I think the market can support another venue.”

The Belmont arena, with a projected 150 events a year, most directly threatens the Nassau Coliseum. Newsday Editorial Board member Randi Marshall thinks both venues can thrive, though Newsday yesterday quoted sports economist Victor Matheson that “These venues will cannibalize events from one another.” There’s no evidence that New York State aimed to assess the impact of the new arena on the Nassau Coliseum (county-owned) or the Barclays Center (nominally state-owned, with subsidies justified in part on projected revenues).

Would Barclays do better after shedding a deal with the Islanders that has proven onerous, with arena operators seemingly unable to grow the fan base and struggling with a physically awkward fit for hockey? Though the New York Post cited “sources” saying BS&E could do better by subbing in concerts and other events, that contrasts with a 2015 statement by Yormark that booking 44 hockey games represented an “insurance policy,” given “the volatility of the concert business.”

So the future’s murky. In October, ratings agency Moody’s expressed caution about Barclays’ ability to lure more profitable events: “While this incremental revenue and margin accretion would improve coverage ratios [and thus pay off arena financing], in Moody’s view, future revenues streams may be less predictable” than originally expected with the Islanders. Then again, those original predictions didn’t pan out.