A state tax break for Madison Square Garden is commonly described as worth $42 million per year — but the actual cost is much higher, according to the city’s Independent Budget Office.
An analysis released Wednesday states the $42 million figure stems from a “conservative” undervaluation of the World’s Most Famous Arena — and bureaucrats do not currently need to figure out its true worth, since venue owner Madison Square Garden Entertainment pays zero taxes in pricy Midtown.
“Knowing the property has a full tax exemption –there is little incentive to devote extensive resources to estimating the fair market value of the arena,” the IBO analysis states.
The assessment will likely provide more fuel for Albany Democrats looking to scrap the giveaway, first approved in 1982, in the state budget due April 1.
“We need money for the MTA. It is on a fiscal cliff due to the drop in ridership from COVID. And we have a private business that’s being treated like a church or a nonprofit entity because it doesn’t pay any property taxes,” state Sen. Brad Hoylman-Sigal (D-Manhattan), who requested IBO crunch the numbers, told The Post.
“Let’s tax them fairly.”
MSG’s official fair market value is just $867 million despite its location in the heart of Manhattan — compared to $2.6 billion for Yankee Stadium in the Bronx and the Barclays Center in Brooklyn, as well as $3.2 billion for Citi Field in Queens, the analysis notes.
All three outer-borough venues also sit on tax-exempt public land, but they are on the hook for so-called “Payments in Lieu of Taxes” — totaling $84 million, $44 million, and $39 million this year, respectively – to service debts on tax-exempt bonds used to finance their constructions.
The IBO report adds that “there is general agreement within the field of economics that substantial government subsidies for sports facilities are not typically an efficient use of scarce public resources,” the report said.
“There is little evidence that these types of subsidies generate sufficient economic activity to lead to a net fiscal benefit to the local area.”
A MSG Entertainment spokesperson told The Post Wednesday that the analysis “clearly illustrates what we’ve said all along – all of New York City’s major sports venues benefit from public subsidies, and as the analysis clearly indicates, MSG’s is one of the smallest.”
An effort to repeal the tax exemption is one of several fights between MSG CEO James Dolan and state officials.
Dolan has attracted controversy in recent months for using facial recognition software to find and eject lawyers who work for firms tied up in litigation against him — whether or not the attorneys are directly involved — from venues owned by his company, including the Garden and Radio City Music Hall.
This “dystopian” use of technology also sparked conflict between the mogul and the State Liquor Authority, which has considered yanking his right to sell booze at Madison Square Garden.
SLA officials later found they were being tailed by private eyes hired by Dolan to dig up dirt on them, the New York Times revealed earlier this month.
That move came weeks after Dolan threatened to cease alcohol sales at a designated Rangers game while urging booze-loving Blueshirts fans to call the SLA to complain.
“If you owned a bakery or a restaurant and someone comes in and buys bread and the next day they serve you a lawsuit, they say they hated it. Then the next day they say, ‘I’d like to buy more bread.’ Would you sell them more bread?” Dolan said in January while defending his use of facial recognition software.
Assemblyman Tony Simone (D-Manhattan) even got disinvited from an NHL-sponsored Pride event after speaking out publicly against Dolan’s use of the dystopian tech.
Some Albany Democrats now hope to strike a big blow to MSG’s bottom line while raising money to help support public transit by getting the Assembly and Gov. Kathy Hochul to agree to repeal the tax break in budget talks.
“It’s still alive,” Hoylman-Sigal confirmed Wednesday, “and it hasn’t slid off the proverbial table.”
