Wednesday, July 27, 2011

Rock The Referendum: A Special Get Out The Vote Contest


Attention all people who care about the referendum, regardless of whether you live in Nassau County: You've been asking how we can help, and here it is!  Let's tip the scales!

In association with Joe Conte, an associate at Gotham Government Relations & Communications, four Islanders bloggers have come together to present a contest to Rock the Referendum.

Whether or not you live in New York, we hope that all of our readers participate.

The goal: to entice Islanders fans to enlist as many Nassau resident non-Islanders fans to vote on Aug. 1st.

The prize: 5 winners will each receive personalized Islanders jerseys, plus all five winners and a guest will enjoy a pre-game dinner with the writers and seats in a luxury suite at an Islanders game during the upcoming season. (The suite has been donated by blog sponsors and the jerseys by Gotham).

In addition, every reader who enlists at least 20 voters will be personally acknowledged on all four Islanders blogs.

Here’s how the contest works:

All fans interested in participating in the contest must send an email HERE by 6 PM on Friday (but the sooner the better!)  The email must include name, address, phone number, and preferred contact email.

Once received, you will be invited to join a folder shared by only you and the administrators of the contest.  In that folder will be an excel spreadsheet.  On that sheet, you are to enter in the name and city and state of everyone person you personally contact to vote.  If that person votes, you get credit.  We will check everyone's database with the voting record from August 1st.  While this is tedious and time consuming, as far as we are concerned the more work we have to do the better.  The contest ends when the polls close Monday at 9 PM. In other words, you have the next six days to line up as many Nassau voters as you can.

Our solemn vow: Your information will only be utilized for this effort for the purpose of monitoring the contest. It will not be shared with anyone else.

Remember, once again: the one way this initiative truly moves the needle is if readers make the effort to sign up non-Islanders fans. We sincerely hope all of our readers take part and together we can make a significant impact.

If you have any questions, email Joe Conte at help.islesfanvotecontest@gmail.com

Also follow @GothamGR on Twitter where Joe will be updating everyone as to the progress we are making, such as how many people signed up, number of names in the leading vote-getters, etc.

We can tip the scales.  Let's do this!

Your Participating bloggers:
B. D. Gallof, Hockey Independent
Nick Giglia, Let There Be Light(house)
Dominik Jansky, Lighthouse Hockey
Chris Botta, Islanders Point Blank

Tuesday, July 26, 2011

Goldilocks and the Three Fallacies


Please tune in tomorrow morning around 10 AM for a BIG announcement.  Until then, we have a lot to cover.

Charles Wang Media Blitz

Charles Wang has been out and about making his case for the new areener.

Last night, he was on FIOS 1.

This morning, PIX 11.

This afternoon, WFAN with Mike Francesa (though, as one person on Twitter pointed out, he should have ceded his time to let Jay Jacobs keep digging that hole). That audio link is not available yet; please check newyorkislanders.com for it.

Also, please stay tuned Friday as Mr. Wang is scheduled to be on Boomer & Carton in the morning, also on WFAN.

Jay Jacobs Embarrasses Himself Multiple Times

You probably already know that Jay Jacobs, head of the Democratic Party for both Nassau County and New York State, appeared on Mike Francesa this afternoon to voice his opposition to the new arena.  In a 12-minute long interview, Jacobs lied, obstructed, and stumbled his way to something I didn't think was possible.

He managed to take a perfectly reasonable position that people can support (no taxpayer money for a sports arena), in front of a host who has in the past come out dead-set against taxpayer money for sports facilities, and proceed to make a fool of himself.  I won't say anything more because his own words are far more damning.

In addition, Jacobs sent an email to all registered Democrats called "What do you buy for a billionaire?" that was obtained by Let There Be Light(house).  Jacobs continued to bash the plan in this mailer and included a Daily News editorial which bashed the project but said more than it intended to.

From the Daily News (and let's ignore the blatant factual mistakes for now):

The bottom line is that, while on the hook to repay the bonds even if Wang goes bankrupt, and being obligated to pay for heavy upkeep of the building, every taxpayer would have the privilege of spending $20 or so a year in order to enable Wang to enjoy gross annual revenues, by his own calculation, of $229 million. Absurd.
Here's the catch: Under these calculations, 11.5% on $229 million gross revenue would result in revenue-sharing of $26.34 million.....enough to cover the debt service.  Seriously, the Daily News cited numbers that would result in zero net cost to taxpayers to bash this as a bad deal for taxpayers....can't make this up.


The Three Fallacies

The main argument against the economic impact of losing Nassau Coliseum and the New York Islanders is that the numbers are not absolute.  In other words, money not spent on the Coliseum will enter the Nassau economy through other conduits.  It sounds reasonable, right?

Not so fast...

This is an argument based on three key assumptions:

Assumption 1: All attendees at Nassau Coliseum events are from Nassau County.

FALSE.  Even anecdotal evidence suggests that in many cases the majority of attendees to Nassau Coliseum events are from outside Nassau County.  Charles Wang said on Mike Francesa earlier today that only 30-40% of Islanders season ticket holders are residents of Nassau County, and I can't imagine the split is radically different for other events that are held in that arena.  It is simply wrong to assume that everyone who attends a game in Nassau Coliseum is from Nassau County, so it should not be considered sole property of the Nassau County economy.

Assumption 2: Entertainment Budgets Are Fixed.

FALSE. It is wrong to believe that people who hold season tickets for the Islanders or attend concerts at Nassau Coliseum are guaranteed to pay the same amount of money somewhere else in Nassau County if that arena was not there.  This leads me into the next assumption......

Assumption 3: Money not spent at Nassau Coliseum will be spent somewhere else in Nassau County.

FALSE.  This goes back to Assumption 1.  If all attendees at Nassau Coliseum are not from Nassau County, then the money those attendees would have spent in Nassau Coliseum is not guaranteed to be spent in Nassau County. There are 2 perfect quotes to illustrate this:

First, the caller to Mike Francesa who told Charles Wang he was an Islanders season ticket-holder from New Jersey who would have no reason to go to Nassau County if the team was not there.

Second, a brilliant quote Brian Compton from NHL.com said to sum this up: "It's not like 3,000 Canadiens fans will take buses down from Montreal to see a movie in Westbury."

People who attend Nassau Coliseum events are not guaranteed to follow the same spending habits.  I work and spend a lot of time in Manhattan, and if there are no Islanders games to attend I might go to a Broadway show (Book of Mormon was fantastic - I'd see it again) or a nice dinner during Restaurant Week.  I'm not guaranteed to spend money at Nassau Coliseum, and to assume the money spent there is simply "moving money around" from other streams in Nassau County is ludicrous and wrong.


Bottom Line


The intellectual dishonesty and faulty numbers exhibited by referendum opponents has really been something to behold.  Jay Jacobs making a fool of himself on WFAN earlier today did not help their cause, and we now have the ammo to counter these arguments should an opponent try to use them.

Stay tuned tomorrow for that BIG announcement, and look for Dave's "Arguing With An Arena Skeptic" series around Thursday.


PLEASE SHARE YOUR THOUGHTS IN COMMENTS. EMAIL. TWITTER. FACEBOOK.

Monday, July 25, 2011

Why the Arena Deal Is Like Your Fixed Rate Mortgage (And Why This Matters)

It’s getting difficult to keep up with the blizzard of data being generated in connection with the proposed arena plan. By my count, there are a total seven reports on the arena plan and I am sure more will surface in the final week before the vote. I want to discuss one very significant point recently made by Camoin Associates that must be kept in mind when considering the long term financial impact of the arena deal. This point has been ignored by all of the media reporting I have seen on the arena plan.

Millions of Americans have fixed rate mortgages. While the advantages of a fixed rate mortgage are obvious, there is one feature that may escape notice, and that is the inflation effect. Because your monthly payment on a fixed rate mortgage doesn’t change, the real cost of the of your payment goes down over time. This is because the purchasing power of a dollar steadily declines due to inflation. So while our salaries (we hope) go up and the prices of goods go up, our monthly mortgage stays the same.

The arena deal will benefit from the same effect. The debt service on the bond will be similar to a fixed rate mortgage. The county will be responsible for approximately $26 million each year for 30 years. However, the revenue stream will increase each year due to inflation. The price of the things that constitute the revenues subject to sharing under the lease -- tickets, concessions, parking -- are all subject to the trend of price inflation that effects the entire economy. So whether you adopt Camoin’s more optimistic revenue estimate of approximately $28.2 million in year 1 (yielding a $2.2 million profit for the county) or the OLBR’s estimate of $18.9 million in year 1 ($6.7 million cost for the county), the revenue stream will increase each year:

Thus, the OLBR’s conclusion that the plan will have a minimum impact of $6.7 million per year to the County, or $13.80 cost per year for the average homeowner, is only true for the arena’s first year of operation. The tax impact declines each year has revenues increase. At a certain point, even under the OLBR’s “worst case” scenario, arena revenues will exceed the debt service.

Note that for this same reason, the Nassau County Democratic Chairman Jay Jacobs recent insistence that the arena deal will "leave taxpayers on the hook for $12 million to cover the rest of the debt service — every year for the next 30 years” not only ignores their own projections, but violates this basic law of economics as well.

There is Only One Answer: A Formal Endorsement on the Arena Referendum





(Warning: This is a long one, and not my usual tone.  No jokes, no "areener," nothing but an impassioned plea to Nassau County's electorate.  I've sent this to every newspaper on Long Island as well)

I want to share a story with you that frames my thoughts about this referendum and where my endorsement will fall.

I was in the middle of a business trip to San Francisco in February of this year, waiting to meet a dear friend for dinner outside an Indian restaurant in Lower Pacific Heights. Multiple groups of people - maybe about 10 - passed by me as I leaned against the brick wall of the restaurant.  I couldn't hear their whole conversation, but what I picked up was unmistakable.  Every group was talking about doing a startup in San Francisco with that almost naive optimism that comes from someone convinced their idea will change the world (I'm infected with it myself; I'd know it anywhere).

I was struck by this experience all throughout a lovely dinner, and in the post-dinner conversation my friend startled me.  Out of nowhere, she asked me what ever came of "that arena thing I blogged about a couple of years ago" - did we win, or lose?

Stopping and casting my gaze downward, I mumbled "We lost."

She surprised me further by looking at me and saying, in a tone that suggested both shock and exasperation, "Why?! It seemed like a perfect deal!"

That's a question, isn't it?  I had never dwelt on the dead Lighthouse Project for long enough to come up with a pithy synthesis of what had happened.  Suddenly, out of nowhere, I had a moment of perfect clarity, and blurted this out:

"Because there are people who would let Long Island sink into the ocean, while they sat on their decks and preened to nobody in particular about what a great place Long Island is."

I think my friend was as startled to hear this line as I was to have said it, and it prompted a deeper conversation on the mindset and belief system that was the Lighthouse Project's undoing.  I was almost exasperated that I wasn't getting through to her, until I had another moment of perfect clarity.

She doesn't understand.


She can't understand.


That world, and that mindset, are foreign to someone born and raised, as she was, in the go-go, can-do world of the Bay Area, a world where dreams come true for young entrepreneurs practically every day.

But that world, and that mindset, have given rise to a hideous disease that has taken control of Long Island's very soul.  The region that gave birth to the entire concept of a suburban life and symbolized the can-do optimism of post-World War II America has become a time capsule, frozen in time by its own self-defeatist ethos.  Grand visions are not welcome here anymore, and any attempt to re-set this once-runaway train that now has its emergency brake permanently on  are crushed and broken under a misguided ideology that wafts to the heavens like a terrible prayer: "This is Suburbia."

Long Island has been in a crisis for many years.  The region Charles Lindbergh carried with him across the Atlantic, that came to epitomize the ideal in American life of a suburban house with a white-picket fence, that left a piece of itself on the moon with the Grumman-designed Lunar Module, lost its identity somewhere along the way and now defines itself by what it isn't.

"We are not the city."

"We are not for young people or renters."

"We do not want to be a 6th borough."

"We do not welcome big ideas."

Residents constantly complain about issues such as choking property tax rates, yet they continue to elect and re-elect the same venal politicians who provide lip service to these issues while continuing to support and expand the very system that perpetuates them.  Partisan hackery has taken the place of true statesmanship and a willingness to band together for the common good.

Even the area's only remaining professional sports team, the New York Islanders, are an accidental team playing in an accidental arena.  The Islanders exist wholly because Nassau County wanted to keep the upstart WHA out of the soon-to-be-built Nassau Coliseum, and the NHL was all too willing to oblige.  Therefore, after a territorial invasion fee of $4 million to the New York Rangers, the Islanders opened play in 1972 in the brand-new Nassau Coliseum.

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.  Some undoubtedly assumed the Islanders were a placeholder and would leave the area as a distant memory once the WHA folded and a major metropolitan area came calling.

Then, on May 24, 1980, a funny thing happened on the way to obscurity.

Tonelli.

To Nystrom.

Score!

Stanley Cup Champions!

Three additional championships later, the Islanders were here to stay, and discussions about replacing Nassau Coliseum began shortly after the 4th banner was raised to its already-aging rafters.  In fact, to illustrate how truly absurd this situation has become, just imagine a new arena had been built in the mid-1980s after the Dynasty.  The time to replace THAT building would be drawing near.

The team has not had similar success in recent years, but it is still a part of all of us, possibly even moreso for me.  You see, I began following hockey in 1992 as a young boy, and I was so excited when David Volek scored his overtime winner to eliminate the two-time defending champion Penguins that I ran upstairs to tell my parents, tripped on our living room carpet, and tore a gash above my left knee by hitting the corner of our coffee table.  That scar, and the Islanders, are a part of me forever, and this team has for too long been used by both sides of the aisle as a political football instead of a symbol for Long Island and a $250 million per year economic engine for Nassau County.  For too long, fans have been talking about NIFA, supermajorities, and Draft Generic Environmental Impact Statements instead of Tavares, Streit, Strome, and Niederreiter.

I can't deny my passion, but this issue is bigger than merely a hockey team.  It goes beyond politics.  It is about a grander vision for what Long Island will be in the future, and that is why I urge you to vote YES on the new arena Monday, August 1.

I and many others wished the Lighthouse Project could become our shining utopia, but as we know, "utopia" has 2 roots in classical Greek, one meaning "the good place," and the other meaning "the place that cannot be."  The Lighthouse Project was our "good place," but political jockeying and the feelings I outlined in the beginning turned it into the "place that cannot be."

This referendum must not be considered against a now-dead development proposal; it must be weighed against the cost of doing nothing.

Independent reviews have cut through the scare tactics and presented us with a stark choice.  For example, the Office of Legislative and Budget Review pegs the cost of a new arena at a maximum of $13.80 per household per year.

The cost of doing nothing and losing the Islanders and Nassau Coliseum?  $16 per household per year, with $243 million and 2,660 jobs projected to disappear from the Nassau County economy should the team move and the arena be shuttered.  When presented with that choice, how can you choose nothing over something?

I do not believe this arena will be a cure-all for Long Island's problems, but it can serve as the first step in an admittedly long journey.  This decision can lead to other good decisions and smart ideas that will define how Nassau County chooses to be suburbia in the 21st Century.  That is the world I choose to believe in.

Voters will be faced with a stark choice when they go to the polls on Monday, August 1.  They can continue the defeatist woe-is-me that has infected this island, all under that poisonous rallying cry of "This is Suburbia," or they can stand up and say enough is enough.

I say enough is enough.

I choose to stand for building something instead of tearing it down.

I choose to stand for optimism instead of pessimism.

I choose to believe Long Island can be better than it is now.

I choose to believe one good decision can lead to others.

The choice is clear: Please vote August 1, and I urge you to vote yes.  For Long Islanders, not the New York Islanders.  For citizens, not for Democrats or Republicans.  For what Long Island can be, not for what it was.  For the belief that our best days can still be ahead and we can choose to stand for something, rather than falling for everything.

We, at this time, at this moment, can stand up and break the cycle that has gripped Long Island for generations, and help set us on a path that will hopefully result in our children being as mystified by the self-defeatist ideology as my friend in San Francisco.

Thank you from the bottom of my heart for your time.


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Sunday, July 24, 2011

The Question Anti-Arena Nassau Democrats Should be Made to Answer

Above is a table that appeared in a 2006 report commissioned by Democrat Tom Suozzi when he was County Executive regarding redevelopment proposals of the Hub. The chart estimates the revenues of a new Coliseum from 2009 through 2035. As you can see, it estimated Coliseum revenues rising from a bit over $200M in 2009 over $400M in 2035. In contrast, Mangano's consultant, Camoin Associates projects revenues starting at only $163M and increasing to approximately $360M at lease end.

If a new Coliseum achieved Suozzi's estimates, the payments received by the County under the proposed revenue sharing agreement would be around 30% higher than the payments projected by Mangano, would easily cover the debt service and would yield the County a hefty profit.

The question for anti-arena Nassau Democrats: Why are you telling County residents that voting Yes on August 1st is going to cost the County $12 million a year? Were you lying to Nassau residents then or are you lying to them now?

Saturday, July 23, 2011

A Tale of 2 Headlines (Plus, More Reports and What We Can Do)


Dave knocked it out of the park with a fantastic review of the lease between Nassau County and Charles Wang's Arenaco LLC, but right now we have a few other things to get to.

First - What We Can Do

The areener referendum is vastly different from the Lighthouse process because the special election affords us knowledge of exactly what we can do and how to do it.

Letters to the Editor are a great way to get our opinions out into a more general audience (everyone remembers my very famous letter to the editor from 2 years ago....), and the Islanders have taken the liberty of putting together an easy primer to help you get your letter to the right person.  As always, feel free to shoot an email if you'd like a proofread of your letter.

In addition, I've talked to a few people, and I want to get your opinion on this.  Would you be willing to phone bank and make calls to people in Nassau who've purchased tickets at Nassau Coliseum to drive up yes votes?  I mentioned it to some people but want to gauge interest.

Don't Fear the Areener

This coming Wednesday, July 27, at 4 PM, there is a big outdoor rally at Nassau Coliseum to support the areener.  Blue Oyster Cult will be playing a free concert, though it's unclear who will be playing cowbell (I'd like to volunteer).


In fact, I had a Twitter discussion on Friday...we should bring a sea of cowbells to support the referendum.  Cowbell up!

A Tale of Two Headlines


On Thursday, County Comptroller George Maragos released his report (separate from the OLBR report, which had another interesting tidbit in there that I'll get to later) on the areener situation.

Maragos' report is overall positive, and he makes common-sense requests that, if done, would make it "a good deal" in his estimation.

First, Maragos wants Charles Wang to be responsible for any cost overruns, as he fears the areener will cost more than the allotted $350 million (as Dave pointed out, this is already written into the lease, and people I've spoken to who are close to Charles Wang see no issue with doing this).

Second, George Maragos expressed concerns that "Arenaco LLC," which Charles Wang recently incorporated to manage the new areener, is a shell corporation with no assets of its own.  Maragos believes it is important for Wang and the Islanders to guarantee the payments for which Arenaco is responsible, in order to provide the highest level of protection for taxpayers.

Third, Maragos noted that the current lease deal gives Charles Wang development rights on the property and suggests an RFP (again).

In addition, Maragos mentioned the Camoin report and the OLBR report, both of which were highly positive on the areener, saying the numbers were optimistic but not unrealistic at all.  That's an important step as it once again validates the studies we've seen.  In fact, the OLBR report, which suggested that the areener could cost taxpayers $13.80 a year, also suggested the maximum exposure (if there is no lockbox and revenues are not used to offset new taxes) is $51.50, not the originally-calculated $58.

It's important to realize 2 major things about the Maragos report: He is not asking for anything unreasonable, and many of the changes he suggests are actively being negotiated.  For the first time since the Democrats launched their anti-areener campaign (and don't kid yourselves - Jay Jacobs penned the "Vote No" op-ed in the Herald this week), I see a path to this being built (assuming passage).

Quick Aside


2 more very fascinating numbers came out of the Camoin Associates report that was prepared for Nassau County.  The report was more optimistic than the OLBR report, stating that if the revenue projections, which Maragos has called "optimistic but not unreasonable," pan out, residents could see a tax SAVINGS of $26.81 per household per year.

In addition, we finally have a quantification on the cost of doing nothing: $16 per household per year.

It's important to note that this report only looks at tax revenue, and not the overall impact on jobs and the economy (which was already pegged at 2,660 jobs lost and $243 million lost from the economy every year).  Residents are faced with a truly stark decision:

$13.80 (assuming a lockbox), or tax savings....for something.

or

$16 for nothing.

Let's get the word out and make sure Long Island makes the right choice.

Fun With Headlines

Now, here's where the fun starts.  Newsday originally posted an article about the Maragos report with this headline:


Both Dave and I had been ratcheting up criticism on Twitter, and we were heartened to see the $13.80 was finally covered.  This seemed like an even better step forward in terms of framing of the issue.

Then, later in the night, the headline was changed:


And to make matters more interesting, the article itself was re-written to sound more negative, including quotes from Desmond Ryan (who finally exposed himself as wanting the development rights for his cronies, which I've been saying all along was the source of his vicious opposition to this project that he didn't have the guts to declare to Chris Botta back in May).

I and many others were naturally outraged, and we started hammering with more criticism of the framing of this issue.  That's where this gets interesting...

They changed it back.

Either way, we have had a good few days for the areener, including major endorsements from unions.  I don't blame the County workers' union for endorsing but not explicitly instructing members to vote yes because the County recently cut jobs and he's in a tough position between management and the rank and file workers.  I'm fine to give that a pass.

Let this be a lesson: pressure does work if it's coordinated and based on fact.

Moving Forward


Expect a formal endorsement of a voting position on Sunday morning, and an announcement of my plans for Election Day on Monday.  I'm also planning a look at 3 huge logical fallacies underpinning reports that the Islanders leaving and Nassau Coliseum shutting its doors will not have that bad an effect on the economy.  Dave will continue his amazing series of deep dives into the documents and reports, and we hope to have some great information for you.

Bottom Line


The vote is 9 days away.

Last stand at the OK Corral.

As Chris Botta reported, the "concerned citizens" of the Association for a Better Long Island are sharpening their knives, ready to release a media barrage blasting this plan to high heaven (Ironically - go look at their web site....there's still a Lighthouse Project rendering in the flash montage at the beginning of the site).  Polls are due to come out over the next several days (also according to Botta), and despite my previous insistence that polls are untrustworthy, they will show the vote to be close.  I wouldn't at all be surprised if one poll said the No votes were in the lead.  We've seen vandalism of Vote Yes signs (reader Scott says signs he put up in Levittown were vandalized, and I had a Vote Yes sign stolen off my lawn), so please do not kid yourselves.  The opposition exists.

However, there's a bigger truth, like my friends at The Community Alliance love to say: The only poll that matters is the one on Election Day.

As I've said before, let's leave it all on the ice and let everyone know that we will fight to the end.  We can't take this or anything for granted in terms of the vote.

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Friday, July 22, 2011

Arenaco, Shmarenaco



Forgive me in advance for the denseness of this post. The purpose of this post isvto respond to criticisms raised regarding Arenaco SPE LLC, the entity that will be the county’s tenant of the Coliseum property namely. Many have raised this as an issue, including Desmond Ryan, NIFA and Comptroller Maragos. The criticism is, what if Arenaco defaults on its obligations under the lease? Doesn’t that leave the County holding the bag? As I have explained earlier, the answer is that the Islanders entity is ultimately responsible for the rents under the lease. However, I thought it made sense to map out exactly how the lease provides for this.
1. The Arenaco/Islanders Sublease. Under Section 4(n) of the lease, as a condition of the lease becoming effective, Arenaco is required to enter a sublease with the Islanders. The Islanders “shall pay to [Arenaco] each year as rent under the Sublease an amount equal to or greater than the Annual Rent…due hereunder.” The lease defines “Annual Rent” as “an amount equal to the greater of (a) 11.5% of all Coliseum Revenues received for such Lease Year, or (b) $14,000,000…less any credits to which Arenaco is entitled pursuant to the terms of this Lease.” Coliseum Revenues is defined to include gross revenues related to “the operation of, or the activities conducted at, the Coliseum Improvements and any and all other improvements or businesses from time to time located upon the Land, including without limitation, pre-season, regular season and post season hockey ticket revenues, ticket revenues from other sports and ticket revenues from family events, concerts and other entertainment…radio broadcast, sponsorships (including signage and other advertising), internet…,naming rights, publications, parking and personal seat licenses…” In sum, the Islanders will have to enter a sublease with Arenaco requiring payment of the greater of $14 million minimum rent or 11.5% of all Coliseum revenues, whether or not Islander-related.
2. The Islanders’ Obligations to the County. OK, but the sublease is between Arenaco and the Islanders. How is the County protected? The answer is that the lease contains provisions that have the effect of directing the Islanders’ rent obligation directly to the County.
Section 25.1 provides:
“as security for the performance of its obligations under [the] Lease”, [Arenaco] shall execute and deliver to [the County] (a) an assignment of leases and rents in a form and content reasonably acceptable to [the County]…pursuant to which [Arenaco] shall collaterally assign to [the County] as security for the performance of Tenant’s obligation hereunder any and all subleases….and the rents, issues and profits collectable by the Tenant thereunder… [T]he Islanders shall…agree to pay to [the County] all sums due from the Islander to Arenaco upon receipt of Notice form the County of the occurrence of an Event of Default…and to the right of the County to enforce the Sublease directly against the Islanders.”
The above language means that (1) while the Islanders’ sublease is with Arenaco, as a legal matter, the County stands in the shoes of Arenaco under the sublease and the County can therefore sue the team directly for failing to pay rent, and (2) if Arenaco goes bankrupt or defaults, the Islanders are obligated to pay rent directly to the County. Thus, with respect to the rent/revenue sharing under the Lease, Arenaco’s financial status is irrelevant.
3. Cost Overruns Not Guaranteed by Islanders. Note that the provisions above – that amount to a virtual guarantee by the Islanders – are limited to the rent. Arenaco’s obligations to fund cost overruns are not backed up by the team. This is a point Comptroller Maragos identified and Wang may need to remedy this to get the lease approved.

Followers