Oct. 24 (Bloomberg) -- The New York Islanders will relocate to Barclays Center in Brooklyn when the National Hockey League team’s lease at Nassau Veterans Memorial Coliseum expires in 2015. The team won’t change its name.
The Barclays Center, reachable by 11 subway lines and the Long Island Rail Road, is about 25 miles west of the team’s current home in Uniondale, New York, where fans have no public transportation option to reach the second-oldest building in the NHL.
The announcement of a 25-year agreement was made today at the $1 billion arena in Brooklyn and attended by Islanders owner Charles Wang, arena majority owner Bruce Ratner, New York City Mayor Michael Bloomberg and NHL Commissioner Gary Bettman.
“Charles got offers to move the team out of our state, very good offers,” Ratner said today. “Charles wouldn’t do that. Charles Wang is the real hero today. He has kept this team in New York State.”
The move might be a precursor to a change in team ownership, according to former Madison Square Garden President Bob Gutkowski. It makes the most sense for Nets majority owner Mikhail Prokhorov to buy the hockey team known for its four consecutive Stanley Cup championships from 1980-83, he said in a telephone interview.
“The best deal is for the owners of the Nets and Barclays to buy the Islanders,” Gutkowski, a partner in Lake Success, New York-based Innovative Sports & Entertainment, which advises private equity in sports, entertainment and media company investment. “And if they can’t do that, they need to work out some kind of equity deal.”
Today, Wang said he would remain the sole owner of the team and he signed an “ironclad” lease with the arena.
Richard Peddie, the former chief executive of Maple Leaf Sports & Entertainment, which operates basketball’s Raptors, hockey’s Maple Leafs and the Air Canada Centre, said via telephone that the Brooklyn arrangement would make better financial sense under a single owner.
“What they’re missing is synergies,” he said. “One sales force, one marketing force. They’re missing opportunities by not having the same owner. It’s obviously better than where the Islanders were. I understand why they’re doing it, but it’s not all that it could be.”
The Islanders dynastic teams of Mike Bossy, Denis Potvin, Bryan Trottier and Bobby Nystrom are a distant memory for fans of the club, which has finished last in the Atlantic Division the past five seasons and had the league’s worst attendance in three of the past five years.
“What a dark day for Nassau County NY politicians and residents.” Jiggs McDonald, a play-by-play television announcer for three of the championships, said in a Facebook post. “Shame on you!!!!”
Wang for years has unsuccessfully lobbied for a new arena to replace the coliseum, which opened in 1972. Only New York’s Madison Square Garden, which houses basketball’s Knicks and hockey’s Rangers and is in the midst of a $1 billion renovation, is older.
“We have tried very hard to keep the Islanders in their original home,” Wang, a 1962 graduate of Brooklyn Technical High School, said during the announcement. “Unfortunately, we were unable to achieve that dream.”
The Barclays Center has a seating capacity of 18,000 for basketball and 14,500 for hockey, which would make it the smallest building in the NHL. Twenty-seven of the NHL’s 30 teams averaged more than 14,500 fans last season. Bettman said changes would be made to add at least another 500 seats.
“It’s not an issue,” the commissioner said, referring to the seating capacity.
Andrew Zimbalist, a sports economist at Smith College in Northampton, Massachusetts, said in a telephone interview the Islanders’ difficulties are two-fold.
“They’ve had a lousy team for a long time and no lousy team is going to perform well at the gate and other revenue areas,” he said, referring to the coliseum as the hinterlands. “They were stuck in a loser’s trap. Wang didn’t want to go much above the bottom of the salary cap because he wasn’t generating revenue, and because the team wasn’t good the revenue never got off the floor.”
Zimbalist said the seating isn’t a concern. Like the Boston Red Sox, whose Fenway Park has the smallest capacity in Major League Baseball, there will be a perception of scarcity in the marketplace.
“If demand exceeds supply, you raise prices,” he said.
The Islanders and New Jersey Devils were scheduled to play an exhibition game at Barclays Center on Oct. 2. The game was canceled due to the NHL-imposed player lockout. So far, 135 regular-season games have been dropped through Nov. 1. No talks were scheduled.
The closure of the coliseum in 2015 would cost the county $7.8 million in lost sales, hotel and entertainment tax revenue and result in 1,942 direct job losses costing $64.4 million in earnings, according to 2011 economic analysis prepared for the Nassau County Industrial Development Authority.
Nassau County Executive Edward Mangano said in a statement that he intends to ensure taxpayers benefit from the redevelopment of the arena site and its surrounding area, known as the Hub.
Kevan Abrahams, the county’s Democratic Party leader, said in a statement that the team’s leaving is a “sad day” for Nassau County and “another crippling hit to our local economy.”
“To lose the Islanders, Nassau’s only professional sports franchise, is an epic failure of leadership at all levels,” he said. “We must start working on new ideas for the Hub so that the Coliseum does not sit as a crumbling eyesore for generations.”
The Nets, who opened the Coliseum with a 1972 exhibition game, relocated from Newark, New Jersey, this season into the Barclays Center, part of a $4.9 billion, 22-acre project next to Brooklyn’s main public transportation hub. The arena has hosted concerts and preseason basketball since its opening last month.
Thad Sheely, the former executive vice president of stadium development and finance for the New York Jets, said luring the Islanders is a “big win” for Barclays Center with one caveat.
“The only downside for the arena is that it leaves fewer open dates during the season to attract family shows and concerts from Madison Square Garden,” Sheely, founder of New York-based GridWorks LLC, a real estate and sports advisory firm, said in a telephone interview.
Wang bought the Islanders in 2000 for about $190 million. The team hasn’t made the playoffs since 2007. Last season’s average home attendance was 13,191, second-worst in the league to the Phoenix Coyotes.
NHL spokesman John Dellapina didn’t immediately return an e-mail seeking comment on whether the Rangers have territorial rights over Brooklyn. Stacey Escudero, a spokeswoman for Madison Square Garden, said the company had no comment on the Islanders.
“Who said the rivalry between the Rangers and Islanders couldn’t get any bigger?” said Bloomberg, the majority owner of Bloomberg LP, parent of Bloomberg News. “Well, it just did.”
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