That empty feeling: Pandemic crushing New York event venues

The coronavirus pandemic has canceled events ranging from weddings to Wimbledon, putting a huge financial strain on businesses that rely on such gatherings.

Among New York event venues, the revenue losses are greatest at its two major arenas, Madison Square Garden and Barclays Center. But the statewide ban on congregating means spaces of any size are shuttered, save for Javits Convention Center and a few others being converted into temporary medical facilities.

For proprietors with debt to service — the vast majority — pressure is building as zero-income weeks mount. But Michael Halkias, co-owner of Brooklyn’s Grand Prospect Hall, is an exception. Because he and his wife own the property outright, he expects to make it to the other side of the crisis in good shape.

“We owe nobody a dime, so this is the key,” he said. “If you owe people, then you’re in trouble.”

His Park Slope banquet hall has been a popular venue for weddings and concerts for years and is arguably just as well-known for its commercial, which Jimmy Kimmel memorably parodied. Like other event spaces across the globe, it is now dealing with a total shutdown and has shed its staff. Halikas said insurance is not paying.

“Only prudence can cover you by being careful and not being wasteful,” he said.

The stakes are higher at other New York event spaces that have found themselves suddenly — and indefinitely — bereft of business. Madison Square Garden and Barclays Center are suffering the same problem as Grand Prospect Hall on a much larger scale, especially with their primary revenue drivers, professional basketball and hockey, on hold. Even if those seasons resume, it remains to be seen whether fans will flock back to arenas in large numbers given the association of coronavirus with crowds.

Scott Rosner, a professor who leads the sports management program at Columbia University, said it was not just the loss of sporting events that would hurt these venues.

“It’s not just the big things. It’s the little things, too, that happen at places like Barclays and Madison Square Garden and MetLife [Stadium] and these large gathering places,” he said. “They have weddings. They have corporate meetings. They have bar mitzvahs, and those have gotten hit, too.”

The Dolan family’s Madison Square Garden Company owns the Garden, and Joe Tsai’s BSE Global owns the Barclays Center. Representatives for both firms declined to comment.

Madison Square Garden Company had about $1.1 billion in cash at the end of 2019, according to Securities and Exchange Commission filings. It should receive another financial boost soon, as Los Angeles Clippers owner Steve Ballmer last month agreed to buy the L.A. Forum from MSG for $400 million.

A report from Bank of America described the deal as “a win-win for both sides” and another, from Imperial Capital, said the price was “much higher than even the highest estimates.”

But there hasn’t been much else to cheer about for arena owners. MSG’s stock price, which on Feb. 19 stood at $313.69, closed Friday 34 percent lower at $206.86. Imperial Capital has slashed its revenue estimates for the company from about $527 million to $465 million for the third quarter and from $296 million to $174 million for the fourth quarter.

The investment bank noted in its report that Madison Square Garden “has stayed mum” about whether it will file insurance claims over the pandemic and added that “we cannot find anything in MSG’s public filings suggesting that MSG has any insurance to protect itself against situations like this.”

“This company is very ‘New York centric,’” the report says, alluding to the city’s having the nation’s greatest concentration of Covid-19 cases, “and even if the situation stabilizes by the summer, it might be some time before operations return to a normalized volume and pace.”

Although the home teams of the Garden and Barclays were generally having disappointing seasons, they were still dominant income sources for their arenas. The music has also stopped for concerts, such as Billy Joel’s popular monthly gig at the Garden.

“Every game that they don’t have is certainly a low seven–figure loss of revenue,” said Rosner. “Every event that they don’t have, it depends on the contract they’ve got with the performer, but at a minimum, there’s a loss.”

Vince Gennaro, associate dean at the NYU Tisch Institute for Sports Management, Media, and Business, predicted sports would likely resume initially without fans, meaning no ticket or concession sales, and said even limiting attendance would be difficult.

“You could, theoretically, only sell 8,000 seats instead of 20,000 seats for a Knicks game, but I don’t see how that could legitimately be social distancing,” he said, “because I don’t see how you could control the flow of those people.”

Gennaro also noted that for teams and organizations that own their venues, much of their revenue now comes from broadcasting deals, which alleviates some of the pressure of trying to sell out every game.

Regardless, it will likely be a while before venues such as Madison Square Garden and Barclays Center attract the same crowds they were seeing before the pandemic, he said.

“I just don’t see those assets being used in the same way they were used three months ago anytime soon,” Gennaro said. “I think we’re a ways out from seeing normal resumption of basketball games or hockey games.”