Jets Owners Say: If We Get Stadium, No Rock Concerts

About two weeks before Christmas, state officials dropped a present down Charles Dolan’s chimney at Madison Square Garden. For months, the 77-year-old Cablevision chairman had been worried that the financially troubled Garden, which he owns, might have to compete with the proposed West Side Jets stadium for arena events like concerts, boxing matches and tennis tournaments. But in mid-December, state officials got the Jets, the prime builders of the proposed West Side stadium, to withdraw their plans to construct a stadium-arena hybrid.

As envisioned now, the Jets stadium will only host football games and serve as expansion space for the nearby Jacob K. Javits Convention Center. It would also be the centerpiece of the 2012 Summer Olympics.

In all cases, the Garden’s status as the premier arena in Manhattan would remain unchallenged.

Charles Gargano, the head of New York’s Empire State Development Corporation and chairman of the Javits Center’s development corporation, was largely responsible for brokering the agreement, which he said he did without consulting the Garden.

“I did not discuss it with Mr. Dolan,” said Mr. Gargano, “but it was well known that M.S.G. had concerns about having a second all-purpose arena nearby.”

Indeed, an official in the ESDC said Mr. Gargano acted for the express purpose of eliminating any potential competition between Mr. Dolan and the Jets.

Jay Cross, the Jets president, downplayed the Dolan connection and said the switch turned out to make economic sense for the stadium. “At the end of the day,” he said, “our concern was driven more by a need to get the building to within a design budget.”

He said that by not building a stadium-arena hybrid, the Jets will lose an estimated 40 to 50 annual arena events, but they will save on construction costs by being able to build a less complicated structure. More importantly, dropping the arena component increases the square footage they can squeeze out of the stadium when it’s used as a convention center, which allows the team to host more lucrative events.

“There was also a strong desire in the convention industry for ‘bigger is better,'” said Mr. Cross. “So we now have a better chance of satisfying the convention business.”

Conventional Wisdom

Javits Center officials have long argued, and New York state officials agree, that the existing Javits Center must expand beyond its current boundaries if it is to attract the kinds of convention shows that regularly bypass New York in search of larger venues.

The existing facility, which runs from 34th Street to 39th Street between 11th and 12th avenues, currently has about 800,000 square feet of space, which ranks it 14th nationally. Las Vegas, for example, has a convention center with about 2 million square feet.

City and state officials, along with the Jets, have seized upon this issue as a way of building support for the creation of a West Side stadium directly south of the Javits Center, running from 30th Street to 33rd Street. The Jets only play 10 home games a year. The idea is that during the off-season and in-between games, the stadium could be used as additional convention-center space. The stadium would also host the opening and closing ceremonies of the Olympics, should New York beat out the eight other international cities vying for the games.

The Jets would own and manage the stadium as a convention center, meaning that they would be responsible for booking the space themselves. It’s unclear at this point, however, how the team would split the revenue it makes on those events with the Javits Center. Officials on both sides say they are currently working out the details.

The stadium would be built on a platform atop what is now a stretch of M.T.A.-owned rail yards. According to the current arrangement brokered by Daniel Doctoroff, the deputy mayor for economic development, the Jets will kick in $800 million for the stadium, and the city and state will contribute $600 million for the platform, and a dome roof and air-conditioning system, all of which would be required to use the space as a convention center.

Javits officials, meanwhile, are proposing a $1.5 billion expansion plan that would increase the center’s square footage by about 38 percent, to around 1.1 million square feet. The plan involves greatly reconfiguring the interior space, as well as expanding the center two blocks to the north over the next 10 years. The first block north, spanning 39th to 40th streets, is a storage warehouse that the Javits Center already owns; it would be buried beneath the center. The next block north is currently a bus depot owned by the M.T.A. The Javits center must purchase that land and remove the depot, but the M.T.A. is refusing to allow construction to start until the Javits Center builds a new depot elsewhere. And as that is expected to take five years, that portion of the northward expansion will likely be delayed until then.

It was the Jets who originally came up with the idea of constructing a stadium-arena hybrid. Under that plan, the stadium would have offered about 130,000 square feet of space for convention-show purposes. Without the arena component, it now offers about 180,000 square feet. The Jets hope to attract about 40 three- to four-day convention-related events, about five one-day events like product launches or banquets, and several one-time sporting events like college bowl games or high-school championships.

Of course, not everyone is convinced that the Jets stadium will prove to be a popular choice among trade-show bookers and other entities looking to bring conventions to New York.

Jeff Little, whose company brings 17 shows to the Javits Center annually, wrote in a recent letter to Governor Pataki that the Jets stadium will be insufficient for the center’s expansion needs.

“They’ve always tried to wrap the stadium into the Javits expansion,” Mr. Little told The Observer , “and Mr. Gargano and the others don’t want to hear the reality-that we as users don’t feel that that is desirable space.”

Cristyne Nicholas, president and chief executive of N.Y.C. and Company, the city’s tourism bureau, acknowledged such critiques, but said that taken with the Jets’ investment in the stadium, the Jets’ offer is the best one that the city is likely to get in the foreseeable future.

“Anything that will drive us to more exhibition space is something that has to be taken seriously,” she said. “And given that the Jets are putting $800 million in private financing to achieve that goal of expanded exhibition space-but also a stadium that will draw millions of visitors to New York City over the years-that’s nothing to sneeze at.”

Dolan’s Second Front

The Jets’ agreement with the state gave succor to Mr. Dolan, whose Cablevision empire includes controlling ownership of the Knicks, the Rangers and three million cable subscribers, in addition to Madison Square Garden; but the West Side stadium is not Mr. Dolan’s only worry. While, on the one hand, Mr. Dolan was fending off encroachment by the Jets to the west, he was simultaneously keeping a wary eye on his eastern flank, where developer Bruce Ratner was charging ahead with his plans to buy the New Jersey Nets and move them to a new Frank Gehry–designed arena in Brooklyn. Under that scenario, not only would Mr. Dolan face more competition for arena bookings, it’s also possible that the Nets would draw ticket sales away from Mr. Dolan’s Knicks-an unwelcome development for a fiercely territorial man who has gotten used to having a monopoly on professional basketball in New York.

That scenario began to look like reality on Jan. 21, when the news broke that the Nets ownership had accepted Mr. Ratner’s bid for the team over a rival group of bidders headed by Charles Kushner, a powerful New Jersey developer and onetime contender to head the Port Authority, and Jon Corzine, the Democratic Senator from New Jersey.

Hurdles still remain before New York sees basketball’s first “subway series”-Mr. Ratner must get league permission for the sale and the construction of the arena; he needs the city to condemn properties on the site; and local residents are threatening lawsuits-but Mayor Bloomberg and Governor Pataki have thrown their full public support behind the project.

To guard against that possibility, Mr. Dolan’s son, James, Cablevision’s chief executive, has reportedly been lobbying the N.B.A. furiously against the proposal. According to a report in The New Jersey Star-Ledger , it was Mr. Kushner who enlisted Mr. Dolan’s help in the lobbying effort, but a spokesman for Mr. Kushner called the report “patently false.” Through a spokesperson, the Dolan family declined to comment on any aspect of this story.

If the Nets do come to Brooklyn, it remains to be seen whether the addition of a second N.B.A. franchise in New York does end up boosting ticket sales to Knicks games, as proponents of the plan argue, or whether the Nets will bleed away fans from the Garden, as Mr. Dolan is wont to imagine. What seems more certain, however, is the likelihood that the Garden will have to compete with Nets stadium for arena events.

“There’s only a limited demand for events like dog shows and circuses and ice shows and other things that typically happen in these arenas,” said Ronnie Lowenstein, director of New York City’s independent budget office. “[With the new arena,] these productions will end up being spread more thinly across the available venues.”

If history is any guide, the Dolans will likely use all means at their disposal to prevent any erosion of their companies’ profit margin. After all, the family risked incurring the wrath of millions of Yankees fans when James Dolan blocked the upstart YES network from broadcasting Yankees games in the homes of Cablevision subscribers for the entire 2002 season.

Making matters worse for the Dolans, the Garden is on a shaky financial footing. According to Cablevision’s most recent quarterly filing with the Securities and Exchange Commission, the company’s Madison Square Garden division-which controls the Knicks, the Rangers and the arena itself-posted a loss of $6.9 million for the first nine months of 2003, compared to a $36.7 million gain in the same period in 2002.

The filing cited the loss of broadcasting Yankee games on its MSG network, along with ballooning player salaries and declining ticket sales. The Garden also saw fewer arena-type events than the previous year, which also ate away at profits. As a result, M.S.G. warned in the filing that it might end up violating some of the terms of its loans.

Not that the Dolans are in any real danger of going belly-up: According to the filing, Cablevision as a parent company was financially sound; it may just end up having to front money to M.S.G. to help cover its subsidiary’s losses.

And if major-league basketball ends up giving M.S.G. a direct competitor for the Knicks in the Brooklyn Nets, then how much the Dolans will lose remains to be seen.