The issue of Madison Square Garden’s 32-year-old tax exemption is again up for debate.
The arena, home to the New York Rangers and the New York Knicks — as well as the host for other events including concerts and the circus — has enjoyed a real property tax exemption since 1982.
According to the Independent Budget Office, the tax break saved Madison Square Garden about $17 million this fiscal year.
But with the estimated market value of the newly renovated Garden rising to $1.2 billion — from around $800 million — the value of the exemption is poised to balloon. In 2015, according to the IBO, the tax break will save MSG about $54 million in taxes.
“There is a broad consensus within the economics field that government subsidies for sports facilities are not an effective use of scarce public resources,” George Sweeting, deputy director of the IBO, said in testimony before the Finance Committee of the New York City Council on Wednesday.
The tax break, enacted by the state in 1982, only applies to MSG. In fact, it is the only property tax exemption in New York that applies to just one private for-profit firm.
Sweeting said that the policy is “increasingly inconsistent with the city’s other benefit programs. Most glaring is the open-ended nature of the benefit.”
The owners of the Garden won the exemption in 1982 by telling the city that increased costs might force them to move their teams to New Jersey.
“Today,” Sweeting said, “it is unlikely those conditions remain.”
Madison Square Garden is not the only sports venue to receive help from the city. According to the IBO, the city has doled out major subsidies to the other major sporting venues in town: $362 million for Yankee Stadium, $138 million for Citi Field and $350 million for the Barclays Center.
While the issue has come up before — the city council voted to end the tax deal in 2008 — an official change will have to be made by the state legislature. — Claire Moses