Law & Owners Special Islanders Unit: Steven Gluckstern & The Milstein Brothers

"Maybe we should talk to her again?" - Abby Carmichael, Assistant DA, NYC

In the professional sports system, there are two types of owners: those who do underhanded, immoral and illegal things to win at all costs and those who get caught. Throughout their history, the New York Islanders have had more than their share of the latter. These are their stories. DUN-DUN!

Finance executive Steven Gluckstern and his then-partner Richard Burke bought the Winnipeg Jets (version 1.1) in 1995 and, after some half-assed lip service to the good people of Manitoba, announced they were moving them to Phoenix to start the 1996-97 season. Gluckstern didn't stay in Arizona long enough to get a sunburn before he set his sights on the New York Islanders.

In September of 1997, he signed a letter of intent to buy the team from John Pickett, who had regained control following the John Spano fiasco. Under the name New York Sports Ventures, Gluckstern and his three business partners got a heck of a triple play bundle for the low, low price of $195 million (according to the Newsday):

Gluckstern said that of "significant appeal" to him and his partners in the purchase was the chance to redevelop the 70-acre Mitchel Field parcel at Nassau Coliseum. Gluckstern: "This is about three things that were attractive to us. The franchise, a unique television contract and the 70 acres we're sitting on top of now." New York Sports Ventures also includes "two major" NY real estate developers, Howard Milstein and Stephen Ross, as well as NY businessman Dan Doctoroff.

Howard Milstein, one of those "two major" real estate developers, came from a wealthy, powerful New York lineage and wasted little time in joining the family business. Just a few years after graduating from Cornell, Milstein was already buying, restoring and selling properties around New York and building his own fortune.

Though his younger brother, Edward, also works in the business, Howard established himself as Paul's heir apparent early on. In 1978, Howard spearheaded the purchase of the Royal Manhattan Hotel on a then-seedy stretch of Eighth Avenue between 44th and 45th streets, reincarnating it as the Milford Plaza (known to many for its commercials employing the catchy song "Lullaby of Broadway").

Edward Milstein would also enter the Islanders picture, eventually buying into New York Sports Ventures and sharing a 45 percent stake with his brother. Gluckstern had another 45 percent and minority owners Doctoroff and Ross were in for five percent each.

Gluckstern and the Milstein brothers had reputations of swinging big money deals and using some unpopular tactics to make a buck. They may have also taken real estate advice from Lex Luthor. But they had no idea what they were getting into then they tried to flip the Nassau Coliseum for profit.

BEAST OF THE LEASE

To understand the Gluckstern-Milstein Wars, one must first understand what the new owners were actually buying in 1997.

The story really starts in 1985 when Pickett signed a lease with the county and the company that manages the Coliseum, Spectacor Management group (later simply SMG). The lease, which is still active and runs out in 2015, gave Spectacor/SMG all of the revenues from parking and concessions, plus 11 percent of the box office and one-third of the advertising. This left the Islanders with three main sources of revenue all their own: merchandise, a long-term deal with broadcaster Cablevision and the scant few luxury boxes at the Coliseum.

So content was SMG with this arrangement that before the sale to New York Sports Ventures could be completed, the company threw up a potentially deal-breaking road block. After allegedly receiving some disturbing reviews from the new owners regarding the deteriorating conditions at the Coliseum, SMG wanted assurances - in writing - that their contract was secure. Gluckstern and Howard Milstein would do no such thing and SMG would not approve the sale until they did.

A "handshake agreement" was eventually made between the two parties under the aggravated auspices of Nassau County executive Tom Gulotta. The sale was completed on the last day of February, 1998. But the battle lines had been drawn.

And in fairness to SMG, (I know, I know...), they had every reason to worry.

Gluckstern and company talked a big game, tweaking Rangers fans in a letter to Newsday, hosting a bizarre fisherman merch buyback program and making the much-appreciated return of the team's original logo on some more classically-leaning jerseys. But no matter what they said or did, the truth was that their purchase of the Islanders was always about one thing: building a new arena, and maybe more, in the heart of Nassau County.

"This is a real estate deal," said a source close to the Republican leadership of the county. "Buying the Islanders is just the price of admission for getting in on the development of what's being billed as 'Nassau Central.'

Privately, a number of local lawmakers agree with that assessment. In their view, it's most significant that New York Sports Ventures is a partnership that combines a love of hockey with money and the where-with-all to see a major real estate development through.

"Buying the Islanders is a two-part deal," said Mort Certilman, chairman of the Long Island Regional Planning Board and of the Nassau Veterans Memorial Coliseum Privatization Committee, during a recent interview with this newspaper regarding the future development of the Nassau Hub.

"Gluckstern and Milstein are buying the Islanders and hoping to get development rights too. Of course, we haven't given them that yet, but clearly, they are the favored parties."

Good plan, right? There's one problem, though: getting away from that anchor of a lease.

THE ROOF IS ON FIRE

In August of 1998, barely six months after finalizing the sale, the first official shot across the lease was fired. New team president and Gluckstern/Milstein mouthpiece David Seldin publicly accused SMG of not disclosing that a hoist holding up the scoreboard at the Coliseum was faulty and posed a safety risk. SMG, of course, denied the allegations confirming that the equipment was secure and indeed was going to be replaced anyway.

About a month later, the Islanders sued SMG saying that the safety issues at the Coliseum caused the team to leave their home and warranted an immediate (and convenient) voiding of their infernal lease. The war was on.

The lawsuit, filed in U.S. District Court for the Eastern District, sought a declaration that the Islanders have no further obligation under the Coliseum lease by virtue of having been evicted due to SMG's failure to maintain the arena in a safe condition.

In addition, the Islanders sought punitive damages of at least $10 million because of ``SMG's brazen conduct knowingly jeopardizing the public safety and breach of its fiduciary duties.''

The Islanders packed up their offices, which are located in the bowels of the Coliseum, and temporarily moved to another building. Gluckstern even spoke about playing "home" games in other arenas, including the recently-vacated Hartford Civic Center and - gulp - Madison Square Garden. A state supreme court judge quickly ordered the team to return to the Coliseum and barred them from playing games anywhere but Uniondale. Judge Joseph Barton also urged the NHL to inspect the arena and determine its stability.

Gulotta was not amused. During one of the negotiating sessions following the SMG lawsuit, the county exec described the team owners as the now-infamous "Pigs at the Trough" in a classic tour-de-metaphors.

Following a 6 1/2 hour meeting with team officials yesterday, Gulotta called the Islanders lawsuit "nothing more than a ruse" aimed at forcing the county and arena to give the franchise more revenue from its lease. Gulotta: "They're pointing a gun at the head of the taxpayers of this county for their own financial benefit and gain."

New York Sports Ventures was open in their desires: get the residents of Nassau to foot part the bill for a new arena or in two year's time, they would move more than just their filing cabinets.

SCORCHED ICE

And how were in the Islanders in 1998-99? How about "abjectly terrible" for a start? Somehow, they finished with 58 points and 24 wins. They played their first 32 games without winger Ziggy Palffy, who was embroiled in a bitter holdout as Gluckstern and the Milsteins refused to pony up for a guy who had just completed his third straight 40 goal season.

In-season trades included sending dynamic defenseman Bryan Berard, a Calder trophy winner just two years earlier, to Toronto for a washed-up Felix Potvin and then sending goalie Tommy Salo to Edmonton for center Mats Lindgren and a pick (Radek Martinek). Ted Donato, Sergei Nemchinov and Robert Reichel were also traded. Captain Trevor Linden, who signed a one-year deal after some management hardball over the summer, was eventually shipped to the Canadiens for a first rounder.

(Fun fact: This was also the year that former center and current Avalanche coach Joe Sacco finished with three goals, no assists and a -24.)

Bad as that season was, the subsequent summer may have been even worse. It started with ownership flatly stating that if a new arena plan wasn't put into place payroll would be cut to about $12 million. Twelve million dollars. For the entire team. Even in 1999, that's just crazy.

Attempts to get a new arena, either through bullying, kvetching, purging or occasional negotiating, all failed spectacularly. SMG wouldn't budge on the lease and Nassau's leaders weren't agreeable to funding the project. No deal materialized and, for once, Gluckstern and the Milsteins stuck to their word. The resulting action would be one of the most bizarre and demoralizing transactions in Islanders history.

THE SLOVAKIAN MISSILE CRISIS

It was hard to believe at the time, but the rumors were true. The Islanders had a deal to send Palffy and longtime defenseman Rich Pilon, probably the two players on the roster most closely associated with the team, to the Rangers. Coming back the other way would have been ornery forward Todd Harvey, second-liner Niklas Sundstrom, a first round pick, a prospect and cash. It was a done deal. Until the Islanders owners interjected.

Holding up the deal was money, specifically the money that Cablevision had been paying the Islanders to broadcast their games. Gluckstern and the Milsteins wanted more straight cash than the $2.5 million maximum the NHL would allow in a trade between teams at the time. With Cablevision in the unique position of both owning the Rangers and the Islanders' broadcasting contract, New York Sports Ventures demanded more money coming their way in the cable deal in exchange for Palffy and Pilon.

While the principals tried to wring the last drop of blood from this stone and the players waited to find out where their gear was to be sent, Islanders fans were living in a sports nightmare. One minute, a guy is your favorite player. The next, he's scoring goals for your most hated rival. And they guys you got in return could be generously described as "depth" players.

After a couple of tense days, the trade was nixed by NHL commissioner Gary Bettman, who objected to the amount of cash changing hands. Palffy, forward Bryan Smolinski and goalie Marcel Cousineau were instead traded to Los Angeles for prospects Olli Jokinen, Matheiu Biron and Josh Green as well as a first rounder.

The doomsday scenario had been averted. But the landscape was still a wasteland.

BRASS BALLS

While their hockey team experienced more ups-and-downs than a buoy off Moriches Bay, the Milstein brothers had their eye on another purchase.

In April of 1999, along with partner Dan Snyder, the Milsteins won a bidding war for the Washington Redskins and agreed to buy the club for a monstrous $800 million dollars. If the idea of the owners of a gutted, last place team with a payroll of pennies that was suing to break its lease and extorting its county for a new arena also offering nearly a billion dollars for another team in another league seems bizarre to you, you're not alone.

Howard Milstein eventually withdrew his bid when it became apparent that NFL owners were all fully capable of reading the sports section of Newsday. Milstein's actions with the Islanders were key to derailing his entrance into the NFL's inner circle.

However, as owners left the hotel, it quickly became clear money wasn't the only thing at issue. Tagliabue said some owners were concerned about Milstein's confrontational stewardship of the Islanders, who are involved in multiple lawsuits in a fight for a new arena.

``Emotion may have gotten invovled in it to some degree,'' said Dallas Cowboys owner Jerry Jones, who supported the bid. ``They did have past experience, and I think some of those issues were perceived negatively, fairly or unfairly.''

The schadenfreude felt by Islanders fans following that news would represent one of the most satisfying victories of the Milstein era.

Howard's little brother, meanwhile, was perfectly happy with the team he already owned. Edward Milstein was prepared to buy out his sibling's share had the Redskins bid been successful. And when a suitor emerged to buy the Islanders in the form of former Madison Square Garden president Bob Gutkowski, Edward exhibited a surprising reluctance to sell.

Gutkowski's name hung around the fringes of the Islanders for almost a year. He signed a letter of intent to buy the club in August of 1999 but was never able to secure financing from investors nor - if you can believe it - work out an amenable restructuring of the lease agreement with SMG. He formally withdrew his bid in April of 2000, clearing the way for Charles Wang and Sanjay Kumar to buy the team.

Gluckstern and the Milsteins, who arrogantly thought they could clear both the rock and the hard place to get whatever they wanted, were more than happy to sell.

FAST AND FURIOUS

In a way, Steven Gluckstern and the Milstein brothers got lucky. They often get passed over in the Big Book of Terrible Team Owners because their era was sandwiched between the regimes of an outright conman and a recalcitrant risk taker who makes observers seriously question his sanity. Which label describes John Spano and which describes Charles Wang is up to you.

Gluckstern and the Milsteins owned the Islanders for a little over two years. In that short time they sang all the greatest hits of the worst team owners: they were cheap, they talked big but won little and they cared more about scoring in court than on the ice. Certainly they had help from a financially-constrained local government and an uncooperative lease partner. But no one made more noise and did less than the team's owners.

That's the worst part. All those moves and all that drama amounted to nothing. The Islanders were a lousy team in an old arena when they bought them and a different lousy  team in the same old arena when they sold them.

At least they had the common decency to leave the team where they found it.

NEXT TIME ON LAW & OWNERS SPECIAL ISLANDERS UNIT: "The Cable Man Cometh, co-starring...George Steinbrenner?"

___

Part Four of a series. Read the rest of the series here.

Reporting cited in this article:

1. http://articles.latimes.com/1995-12-10/sports/sp-12641_1_phoenix-jets-nhl
2. http://articles.chicagotribune.com/1997-09-13/sports/9709130174_1_steven-gluckstern-gluckstern-and-partners-john-spano
3. http://www.sportsbusinessdaily.com/Daily/Issues/1997/09/15/Franchises/ISLANDERS-BUYER-GLUCKSTERN-GETS-GOOD-REVIEWS-FROM-MEDIA.aspx?hl=Media&sc=0
4. http://therealdeal.com/issues_articles/milstein-dynasty-back-in-fray/
5. http://www.grantland.com/blog/the-triangle/post/_/id/862/no-place-like-home
6. http://www.antonnews.com/threevillagetimes/1998/03/06/sports/
7. http://www.antonnews.com/floralparkdispatch/1998/03/06/sports/
8. http://www.nytimes.com/1998/08/15/sports/hockey-arena-s-scoreboard-cables-were-unsafe-isles-charge.html
9. http://www.apnewsarchive.com/1998/Islanders-Sue-To-Break-Lease/id-6bf2b6557f93a5bdc7390b2e1b004c3a
10. http://www.nytimes.com/1998/09/30/nyregion/judge-finding-coliseum-safe-says-islanders-must-play-in-it.html
11. http://www.nytimes.com/1998/09/12/sports/hockey-islanders-start-search-for-temporary-home.html?src=pm&gwh=53939EEB535B2958DC230722D7DDF6A7
12. http://chronicle.augusta.com/stories/1998/09/24/oth_239918.shtml
13. http://m.sportsbusinessdaily.com/Daily/Issues/1998/09/18/Franchises/ISLES-WAR-GETS-UGLY-GULOTTA-CALLS-TEAM-PIGS-AT-THE-TROUGH.aspx
14. http://www.nytimes.com/1998/09/10/nyregion/battle-over-islander-ice-intensifies.html?pagewanted=2&src=pm
15. http://www.newsday.com/sports/isles-cut-arena-deal-or-we-trim-1.256391
16. http://www.nytimes.com/1999/07/10/sports/hockey-islander-arena-deal-has-strings-attached.html?src=pm
17. http://www.nypost.com/p/sports/item_iNjNSMOsH79RMniFTca2LJ
18. http://www.apnewsarchive.com/1999/Islanders-Trade-Palffy-to-LA/id-be36d37eecc89f5d07ceb15d594a9647?SearchText=palffy%20traded%20to%20los%20angeles%20kings;Display_
19. http://www.apnewsarchive.com/1999/Redskins-Sold-to-Milstein-Group/id-1997413a4446e42b4dfd8fb1018cee1f?SearchText=howard%20milstein%20washington%20redskins;Display_
20. http://www.apnewsarchive.com/1999/Milstein-Withdraws-Redskins-Bid/id-d2b37a47c6f5a093111327174c82ed11?SearchText=howard%20milstein%20washington%20redskins;Display_
21. http://www.nytimes.com/1999/01/24/sports/hockey-milsteins-plan-for-isles-is-approved.html
22. http://www.newsday.com/sports/mixed-signals-milstein-hedges-about-sale-of-islanders-1.335054
23. http://www.nytimes.com/2000/04/13/sports/hockey-gutkowski-is-withdrawing-his-offer-to-buy-islanders.html

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