Is New York Islanders Arena Deal Bad Business?


Oct 8, 2012; East Rutherford, NJ, USA; Aerial view of the Barclays Center. The venue is the home arena for the Brooklyn Nets of the NBA. Mandatory Credit: Kirby Lee/Image of Sport-US PRESSWIRE

Alas, Mr. Charles Wang & Co. can finally escape the catacombs that is the Nassau Coliseum.  The New York Islanders have come to an agreement with Barclay’s management in a 25-year lease agreement beginning in 2015.  The team is believed to be keeping their “Islanders” tag and Mr. Wang will reportedly remain the sole owner.  The move may come as no surprise to many but one perplexing detail that left me scratching my head is the seat count.  In order to host NHL games the arena will have to slim down from 18,000+ to 14,500 seats, making it the record low seating chart in the NHL, down from the current low 15,004  held by Winnipeg’s MTS Centre.

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Most of the new venues are increasing in size, ranging from 17,000 to 19,000. New Jersey Devils Prudential Center is a prime example.  At max capacity, it holds 17,625 for hockey games and even more for basketball.  While they may not sell out every night, it’s the ability to bring in extra revenue that makes these colossal buildings favorable.  It is also known that the Islanders have been in the cellar of the leagues standings regularly and attendance and profits are a reflection of this.  I personally attribute this to two factors. First is the building they currently play in, The Coliseum.  It may be the most shoddy sports venue in the United States and has been known to turn off potential free agents, specifically during Paul Martin’s free agency he was quite concerned about the locker rooms of his future home.  Second, is Islanders management. Between the owners poor record of negotiating contracts (Rick DiPietro, Alexei Yashin) and the Generals Manager’s inability to lure big name free agents, fans don’t have much desire to spend the precious few extra dollars on a team that cannot make the playoffs regularly.

Today Islanders management fixed one problem – the arena. They will now play in one of the nicest arenas in the country – Barclays Center in downtown Brooklyn, NY.  The final task at hand is getting more out of team management. If they cannot build a winning team fairly quickly, an inability to fill the seats is expected to directly affect revenue. Therein lies the issue at hand.  How are they going to cover this potential shortage without an option in the seats?  How are they going to be able to sign big name players without “hamstringing” the rest of the roster in a salary cap world? These questions will be answered and sadly, we should expect it will be made up in concessions prices and box seats.  If you thought the Prudential Center’s $9 soft drinks were bad, you can almost bet Islander cocktails will go beyond the $10 mark.

Furthermore, the genuine, original Long Island fan base will now have to travel farther and pay more to see their team.  Now the cost of seeing the Islanders is increasing very fast and Islanders ownership are waging a risky bet here treading on Ranger territory.  Unless the majority of Islander fans live in Brooklyn, Staten Island or New Jersey, it will be a tough sell for newer fans that may be lukewarm on hockey.

Another big issue is the end of year profit sharing scheme.  Now that they have strictly limited themselves in seat availability, what happens if management continues its failing ways on the ice?   Do you believe the Islanders should be eligible for revenue sharing in light of this streaky record of questionable business decisions? It is after all, at the expense of the rest of the league and this particular issue is front and center in the current Collective Bargaining negotiations.

Despite the sizable contributions and flexing ability of money moguls (Mikhail Prokhorov and Charles B. Wang), this is a prime example of the importance of the current middle class debate in the race for the White House.  Here we witness two people ranked in the top 100 businessmen who depend on middle class workers to run their operations and pay their players salaries.  However, when business is bad, those same individuals will be the one’s who take the hit – cuts in work hours, pay, and even job losses.  Ultimately this decision may yield more questions than sighs of relief.