Colombo: New Islanders Arena Won’t Mean New Money For Nassau County
By Nick Colombo
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Recently, I wrote that the new Islanders arena shouldn’t be built because there is no guarantee the facility would pay for itself and the money could be better spent on other things. Many people voiced their disagreement. Some disagreed with me just because they want their beloved Islanders to stay on Long Island by any means necessary. However, many others chose to disagree by arguing that this new facility would bring a substantial amount of new revenue to Nassau County.They viewed it as an investment, and said subsequent revenue may ultimately be used to lower taxes, fix the budget, and pay for other needed county improvements.
Well, I decided to test that theory. I did some research to see how much revenue the current Nassau Coliseum brings in, and using the most generous estimates I could think of, tried to see how much a new arena could provide to Nassau County. Now, let’s face it, lots of numbers makes for a boring article. So if you’re interested you can read all the data I collected below. If not, feel free to skip it and head right to the conclusion. I’ve marked both sections for you to make it easy.
First, you should know where I got my data. It’s a combination of three sources. 1. A 2006 audit done by the Nassau County Comptroller of SMG, the company that manages the Coliseum. 2. The publicly available Nassau County Budget. 3. An article that appeared in Newsday in 2009 detailing the results of the new sub-lease the Islanders and Nassau County entered into with SMG.
What the County Gets –
In 2004, SMG paid Nassau County $297,270 in rent; $516,991 for water; and $919,074 for electricity. These are pretty much fixed prices, which will probably increase slightly from year to year, so for the sake of discussion we will use these to conclude the county gets at least $1,733,265 a year from Nassau Coliseum.
Now, the county is also entitled to percentages of parking revenue and concessions revenue. In addition, the county gets $1.50 per seat sold for every event. In 2004, Nassau County received $171,197 for concessions. However, this number was down because the NHL was in a lockout. In 2003, the county received $429,369 for concessions. We will substitute this number in to make our assessment more accurate.
For parking, the Coliseum receives 12.75% of parking revenues a year. The Nassau County Comptroller report says parking revenues average $2,000,000 a year. Thus, we can conclude the county gets approximately $255,000 a year from parking.
Lastly, the money from the ticket surcharge tax. In 2004, the county received $811,533 total from 46 events at the Coliseum. Of course with the NHL lockout active in 2004 that number is low. So let’s assume, if we use a little old fashioned division, that Nassau County gets about $17,642 per an event. If we have 41 hockey games plus the normal 46 other events, that’s 87 events. Multiply that by the $17,642, and we can expect that Nassau County gets about $1,534,854 a year for the ticket surcharge.
Adding all these together, we can conclude that Nassau County receives about $3,952,488 per year from the Coliseum. Considering it’s probably slightly more now, we’ll round it up to $4 million. In 2007, the Nassau County budget wrote that the county collected approximately $3 billion (that’s billion with a B) in revenue. Thus, the Coliseum accounts for approximately .13% of Nassau County revenue.
For those of you wondering if the Sub-Lease signed a few years back changes anything, it doesn’t. To quote an article that appeared in Newsday on the topic on December 26th 2009, “The deal gives nothing more to the county.”
So in a county that collects about $3 billion a year, the Nassau Coliseum accounts for .13% of that revenue with its contribution of $4 million. That’s right folks it’s not even a full 1%. In addition, this is only looking at revenue. I couldn’t find what the Coliseum costs the county a year in the maintenance they’re responsible for (roofing etc.). So it is possible they’re not even breaking even on the Coliseum at the end of the day.
Even if we very generously assume that the new facility will provide 10 times more revenue (through higher rent, more souvenir sales etc), or $40 million a year to the county, that’s still a mere 1.3% of all the money the county takes in. It’s a drop in the bucket, and we haven’t even considered how much of that revenue would go to cover maintenance costs etc. (Keep in mind we’re only talking about money going to Nassau County and the benefits to the county. I’m not trying to predict whether or not the Islanders would be making enough money to pay off the bond.)
Listen, I want the Islanders to stay on Long Island. But the argument that this project is also worth it because it’s going to create tons and tons of money for the people of Nassau County is a falsehood. Will it give some workers jobs during its construction? Yes. Will events at the facility generate money for nearby businesses? Absolutely. However, these are not the gigantic economic benefits supporters are claiming and posting all over this blog about.
Yes, this project will help some on Long Island economically. But the percentage of people being helped is smaller than most of you think, and way too small for the residents of the entire county to take on the risk of being stuck paying for a private company’s (the Islanders) new home.
Questions or comments? Email me at email@example.com
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