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Thursday, March 28, 2024

NY State Senators Seek to Repeal MSG’s Annual $40M Tax Break

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By:  Hadassa Kalatizadeh

James Dolan’s iconic Madison Square Garden arena benefits from a New York State tax break of roughly $40 million annually.  This lucrative tax break, however, may not last much longer, if certain state senators get their way.

As reported by Crain’s NY, Democrats in the senate included a repeal of the controversial tax abatement in their one-house budget last week.  Moving forward, the senate will propose this among other initiatives when they meet with the Assembly and Gov. Kathy Hochul.  At the same time, Democrats in the City Council are mulling whether or not to renew MSG’s special permit to hold oversized events, which is set to expire later this year.  State Senator Brad Hoylman-Sigal,  in whose district MSG currently is, and Sen. Liz Krueger have been arguing that MSG needs to be relocated in order to fully redevelop the neighborhood, as part of the Penn Station Redevelopment.  They were also the ones who pushed the repeal of the tax breaks.

Mr. Dolan, 67, the Cablevision heir who also owns the New York Knicks, the New York Rangers, Radio City Music Hall and the Beacon Theatre, has long fought to stay put, resisting every efforts to move MSG.  Despite his estimated net worth of roughly $2 billion in 2023, Dolan has, perhaps, never learned the art that so many other billionaires depend on.  Many billionaires would seek to get on politicians’ good side by making some generous campaign checks to the Democrats in control, and then they would try to stay out of the limelight.  Dolan, on the other hand, has attracted plenty of legal scrutiny by using controversial facial recognition technology to boot select ticketholders out of any Madison Square Garden event. State and city lawmakers, members of Congress and the state attorney general’s office have all become embroiled in the controversy of the legality of Dolan ejecting persons from event at MSG—including attorneys who work for law firms engaged in litigation against his company.

As per Crain’s, MSG’s generous tax break has existed for some 40 years, beginning in the early 1980s by NYC Mayor Ed Koch, in his effort to help the city climb out of a fiscal crisis.  Losing the abatement would surely be a tough blow to Dolan.  Repealing the abatement is not a sure thing yet, though.  The State assembly did not include the repeal in their one-house budget like the senate did.  Also, Gov. Hochul has not denounced the tax break.  “I know how important the Garden is to this city,” the governor said in an interview with Fox 5. “What’s been proposed by a senator is certainly something we look at, a lot of ideas are proposed and so I just want to make sure we’re doing the right thing.”

Being that now Democrats in Senate want MSG moved, they claim they have the right to demand full taxes for the property, unless Dolan agrees to move the arena.  For his part, Dolan has said that MSG owns the land where the arena is and it would cost $8.5 billion in public funding to build a new arena elsewhere.  “If the Garden’s [permit] is denied, MSG would retain the right to operate the Garden, but would have to limit capacity to 2,500 seats,” MSG said. “Moreover, MSG would be permitted to raze the Garden and build another structure above Penn Station on an as-of-right basis.”

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