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When a Team's Home Ice Is Someone Else's Home

Kavitha A. Davidson is a former Bloomberg View columnist.
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Are even the New York Islanders sick of gentrified Brooklyn?

The New York Post reports that the hockey team and the Barclays Center are looking into an escape clause in their 25-year lease that would become an option four years into the deal. Currently in their first season in Brooklyn, Islanders' fans have complained of getting the short shrift compared to the underperforming Brooklyn Nets, whose owner -- Russian billionaire Mikhail Prokhorov recently bought the remainder of the team and arena from Bruce Ratner's Forest City Enterprises -- also own the arena. 

The Post says Barclays' owners could be looking to get out of the deal as well, due to the oddly structured contract they signed with the team. The Islanders declined comment, and Barclays Center chief executive Brett Yormark told the Post that his organization was "looking forward to a long future and partnership with the Islanders.”

The cash-strapped Islanders agreed to forego their rights to their business operations within the arena -- things like ticket sales and sponsorship -- in exchange for a guaranteed annual payment from Barclays, reported to be more than $50 million on average. That payment is contingent on revenue, and is capped at an unknown figure. But the Islanders haven't been a big enough draw this season: With an average attendance of 13,424 (in a relatively small arena that seats 15,795 for hockey), the team ranks 28th in the NHL.

There are well-known issues with the arena, aside from the limit on their potential revenue. It's obvious that the space was originally designed for basketball and retrofitted for hockey, with obstructed views and bizarre sightlines frustrating fans (and probably players): 

Fans complain that the ice surface and video board are also uncentered, meaning the scoreboard hangs directly above one of the blue lines. And you can't even see one of the goals at all from certain seats. Before the season started, Yormark told the New York Times that there were about 400 seats with obstructed views, and that the team wouldn't be selling tickets for those seats. But according to CBS New York's Peter Schwartz, that number is really closer to 4,000, and fan comments this season clearly indicate that many have bought subpar seats.

Given that we're just two-thirds into the Islanders' first year in Brooklyn, and that the team is playing well (they're currently third in the Metropolitan Division), the possibility that either side is seriously considering bailing this early may be overstated. But it also seems there's a disconnect between the team and its arena, stemming perhaps from a failure in promotion. Building a fanbase in Brooklyn was never going to be easy, what with the prevalence of New York Rangers fans and transplants who brought with them their own hometown rooting interests -- not to mention the difficulties the NHL has had in promoting hockey in general. 

But the Nets -- despite all the built-in advantages of owning their own arena, the promotional value of hosting some of last year's All-Star Game events, and the initial Jay-Z bump -- have also recently seen a drop in their attendance. With poor play and front-office turmoil, they aren't exactly a well-oiled machine, either. Islanders fans may understandably feel like second-class citizens in their home arena, but the Nets aren't doing much with their built-in privilege.

Other teams have also had to navigate the complex relationship when one owns the stadium and the other's the tenant. AEG owns the Los Angeles Kings and the Staples Center, which is also home to the Clippers and Lakers. The Clippers have had to deal with scheduling difficulties this season, playing more day games than desired and taking a backseat to the Kings and Lakers for scheduling priority. The Los Angeles Times also reports that the Clippers sometimes have to hold "a makeshift shootaround inside their locker room," taping a foul line to the carpet when the court hasn't yet been changed over from the ice configuration. Clippers owner Steve Ballmer is considering moving the team to their own arena. 

Meanwhile, the Wells Fargo Center in Philadelphia is owned by Comcast Spectator, which also owns the NHL's Flyers and used to own the NBA's 76ers. Both teams still share the arena, and the Sixers are all kinds of salty about it. Team executives have publicly refused to utter the name of the arena, with chief executive officer Scott O'Neil cheekily tweeting this when asked to clarify the location of an event:

As chief revenue officer Chris Heck told Philadelphia Magazine last year, "the particular bank referenced is currently not a sponsor of the Philadelphia 76ers." And that's what gets to the heart of what's really frustrating the Islanders and Clippers and Sixers: When a team is merely a tenant in its arena, it doesn't just relinquish much, if not all, control of its scheduling and overall home experience. It also loses sponsorship revenue.

For the Islanders, that point may be exaggerated because of their unorthodox deal with the Barclays Center. But it could also provide a blueprint -- or at least a warning -- to any team looking to shack up with the soon-to-be Los Angeles Rams. Given the history of the relationship between San Diego Chargers' owner Dean Spanos and Rams' owner Stan Kroenke, and given Oakland Raiders' owner Mark Davis' well-documented money issues, either the Chargers or the Raiders would surely experience the same kind of little-brother resentment should they become the Rams' tenants in Inglewood -- feeling it both on the field and on the bottom line.

(Corrects status of Nets/Barclays Center ownership in second paragraph and hockey seating capacity of arena in fourth paragraph; clarifies reference to revenue agreement and adds quote from Nets executive in third paragraph; eliminates references to Islander organization unhappiness with arena agreement throughout text of article published on Feb. 25.)

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Kavitha A. Davidson at kdavidson19@bloomberg.net

To contact the editor responsible for this story:
Tobin Harshaw at tharshaw@bloomberg.net