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That Cursed Lease: On Hockey Economics, Arenas, the Nassau Coliseum Problem

There's a gap in between
There's a gap where we meet
Where I end and you begin

It's usually not a good sign if I've got Radiohead on the mind. Reading something from our morning links, which pointed to this longer piece at Kuklas Korner, which itself was based on paywall reporting at Crain's Detroit Business, got me thinking about the New York Islanders' arena situation even when I pledged to myself I'd stop.

I find it interesting because the Red Wings and Islanders are two teams, connected by one executive who had a hand in each franchise's success, who hold completely opposite NHL reputations at present, yet find themselves in similar dilemmas that reflect not only the mixed nature of sports-as-business but also the economics of our time:

Regardless of their future plans, the Ilitches and the Wings want to ensure that they don’t get screwed over by the City on their new lease for the Joe as they eventually plan on moving elsewhere—though between construction timelines and the fact that the economy still sucks in Michigan and everywhere else right now, it’s not likely that the Wings would complete construction on a new rink and move there for at least half a decade, if not longer—but neither side necessarily has any incentive to "play nice" with each other going forward, and as the City doesn’t want to lose control of anything they can get their fingers on, it’s not hard to believe that these negotiations have been contentious.

As a general rule, pro sports have been able to leverage people's desire for community rallying points and "winners" -- and politicians' tendency to play into that for advancement -- to soak U.S. cities for a whole lot of help in building sports venues. Incredibly high players salaries are a product of owners and GMs' fear of losing, but they also are tied into this gravy train.

It's not beyond me that this gravy train also feeds off of corporate write-offs for luxury suites and amenities that cater to the expense account and price out the average (and most loyal) fan.

In many ways, driver of that gravy train has slowed to a crawl. A few decades of research on "economic impact" as well as a decade-long stall in the economy have a way of clarifying priorities. For franchises that got in when the going was good, all is well (until the next wave of arenas makes theirs obsolete). It's as if they timed the market and the political winds. For teams stuck in buildings that weren't quite ancient but certainly aren't quite new, it's not so well. They're stuck in the middle. Their lease is their undoing.

That's not to say sports has no economic nor community and spiritual (in a non-divine sense) value. We know it does. (I assume that's why we still show up even as the barrier for entry rises.)

But the economy, the economics of pro sports leagues, and even the fortunes contained in a draft lottery ball operate in much smaller time frames than the life expectancy of a building. (I still think it's absurd that buildings that cost $100-400 million to construct are still treated as if they will be obsolete in 40 years. In what other context or society is such a calculation even conceivable?) In sports, you're at the mercy of your owner and the era in which your team's building was constructed.

Trading Places: Drive for Five and 'Hockeytown'

There was a time when you would laugh to hear Joe Louis Arena called "Hockeytown" (I still laugh, actually) because it was more sparsely populated than Nassau Coliseum in the middle of a snowstorm. Times and fortunes change, as Islanders fans know all too well. The Red Wings of 1979 are the Islanders of 1999. The Islanders of 1980-83 are the Red Wings of 1997-2008 (granting that dynasties aren't really feasible now, the Wings at least had a great run).

We don't know what's going to happen in four years with the Islanders -- people assume it's either a new building or a relocation, but really, we have no idea what economics will be in 2015. Maybe no one has a decent building? Maybe no building has a willing owner/tenant? We're lucky enough that they're based in giant North American market where the choice isn't simply downtown or bust.

And as we all know, again, the fact that Detroit’s former mayor just finished a jail term and that a prominent former member of the City Council is serving a jail sentence right now hasn’t changed the fact that the mayor and City Council remain locked in a power struggle which tends to slow political progress to a snail’s pace as the latter party remains mostly committed to lining its pockets and increasing its members’ spheres of power and influence.

In other words, the city’s government (and the county’s to some extent) remains an entity of ponderous bulk and some very real corruption, so if the Olympia Entertainment/Ilitch Holdings entity doesn’t essentially perform a few backflips’ worth of miracle-making, the City’s politicians are more than petty enough to stare its nearly quarter-billion-dollar budget deficit in the face and do nothing but toss up roadblock after roadblock in front of any Ilitch attempts to build a rink which keeps $2 million, $6 million, $8 million or whatever the city’s both receiving in revenues right now and could receive a cut of in the future out of its coffers.

The above is from the same Kuklas Korner piece by George Malik, discussing Detroit and environs -- not Nassau County and Town of Hempstead. But outside of the jail sentences, the atmosphere sounds familiar, no?

That Cursed Lease

What really stings me as an Islanders fan is the fact that the arena, and the 30-year "worst lease in sports" that ends in 2015 but was at least mildly modified in 2010, has been an issue for the entire time I've been a fan. There has been so much time to rectify this, and yet here we are.

I've always appreciated how Nick Giglia summed up the Coliseum's genesis, and its congenital flaw:

The Coliseum itself is a compromise and an accident that became obsolete minutes after the ribbon was cut. County Executive Nickerson, who envisioned a county-wide destination on that land ever since it was ceded to the county by the Kennedy Administration in 1962, was rebuffed in his efforts to build a 20,000 seat arena with an underground station for the Long Island Rail Road.

Of course that's not what was built, and Islanders fans have suffered the consequences. The County is still ultimately trying to do something like what Nickerson proposed 50 years ago, but what has happened?

Well, from the above description of Detroit, this sounds about right:

"...locked in a power struggle which tends to slow political progress to a snail’s pace as the latter party remains mostly committed to lining its pockets and increasing its members’ spheres of power and influence."

I don't know what final form Charles Wang's Lighthouse Project could have realistically taken, and I'm not one who typically bangs the drum for public assistance for sports (even though again, the County would've maintained its stake in the building in the referendum proposal). But the fact is politicians and power struggles have stood in the way of the Islanders' attempts to rectify their Coliseum problem -- through both privately funded and publicly-aided efforts.

That's Local Politics, Baby

National observers can sit back and observe the referendum defeat and smugly assert it's a victory for Power to the People -- that citizens have finally risen up and said, "Enough. We won't be held hostage by sports teams." You can reasonably dismiss the effort as a victory against "charity" for sports teams.

Heh, if only. That's not really what happened here. Not quite.

What's happened is politics as usual, creating the worst kind of stalemate, where politicians (and the competing developers and special interests behind them) act not based on their philosophy but based on who on the other side. Wang isn't blameless here, not in how the awkward referendum was presented -- but again, look at his public counterpart -- nor in how he let Milbury have the keys for so long (how ironic, and absurd, that had he had more playoff seasons, there might be more political pressure to play ball -- and yet, Wang's first acts as owners were to spend money on the team, driving them to the playoffs).

That's why the referendum was not the ideal solution. But it was *a solution*. One with some built-in flexibility. I don't think these institutions are capable of an ideal solution because there is always someone ready to stand in the way until they get a piece of the pie, too.

Essentially Wang's been given hoops to jump through by multiple administrations, has done the jumping, and has still heard, "No." You could say the problem is him -- but that theory is undermined by the evidence of decades upon decades of multiple municipal administrations failing to get anything done at what is a sub-par event venue surrounded by a parking lot.

Like Illitch, Wang could perhaps move to a new location that wouldn't even make the full name of the team obsolete. That he's never threatened to do so is either a credit to his commitment or an indictment of his trust in political institutions that have failed him.

Go and tell the king
That the sky is falling in
When it's not
...Maybe not.
-- 2+2=5

Of course, the lease goes to 2015. Wang hasn't tried to break it and pledges that he won't. We've still four years to wait while trying to focus on the team on the ice, which looks more promising than it has in quite some time. Surely, things will crystallize one way or another before then, and we'll one day finally put the sideshow politics behind us.

It's just galling, annoying, exhausting, frustrating and disgusting that it's gone on this long. And it's still. Not. Over.