Out of all the preening, egomaniacal billionaires in New York, James Dolan may be unmatched. The owner of the famed Madison Square Garden, Radio City Music Hall, the New York Knicks, and the New York Rangers, Dolan has long been a uniquely powerful figure in America’s largest city, a mogul who always seems to get his way. Of late, he’s been in the news for wielding facial recognition technology to wantonly ban from his properties anyone who offends him. Attorneys who work at firms engaged with litigation against Dolan’s company have found themselves turned away from Knicks games and shows at Radio City.
Dolan’s use of facial recognition technology is particularly brazen. No Yankee or Met or Giant owner is attempting to block paying customers. In January, Dolan dared the Democratic politicians in New York who have raised legal questions about his bizarre security practices to come after him. N.Y. Attorney General Letitia James is already investigating Dolan, and it’s possible, if unlikely, that the state could yank MSG’s liquor license. “Now, this isn’t going to bother me, because I’ve been sober 29 years. I don’t need the liquor,” Dolan said in a TV interview. “Instead, what we’re going to do is, where we serve liquor, we’re going to put one of these up, which says, if you would like to drink in a game, please call, right? Sharif Kabir, chief executive officer [of the State Liquor Authority], or write him an email at this number, right? And tell him to stick to his knitting and, you know, and to what he’s supposed to be doing and stop, stop grandstanding and trying to get press.”
If Dolan was blasé about his prized property’s losing its liquor license, he was entirely mum on another possibility: Madison Square Garden’s getting denied, at last, its property tax exemption. Most New Yorkers don’t know that MSG, for the last 40 years, has not paid a penny in property taxes to New York City. The freebie is worth, at this point, around $43 million a year; over four decades, the city has lost out on several hundred million dollars.
Unlike other tax subsidies, which at least, in theory, hold some policy justification—creating jobs, retaining certain industries—there is no good-faith argument for ripping up MSG’s property tax bill in 2023. “This particular tax break to Madison Square Garden and Dolan is probably the most cynical and naked example of pay-to-play in politics,” said John Kaehny, the executive director of Reinvent Albany, a good government group. “It’s really just an absolute monument to the unfairness of Albany.”
Indeed, it’s the state government, not the city, that determines the tax structure and will decide the fate of the abatement. The state legislators who represent Midtown Manhattan, where MSG is located, want to end the giveaway. “The idea that we are funneling over 40 million a year to Madison Square Garden just so they stay in their current location—nobody wants them there anyhow—is an absurdity of the status quo mentality,” said State Senator Brad Holyman-Sigal.
Holyman-Sigal was referring to the long-running but so far fruitless attempt by city and state lawmakers to move the Garden, which sits on top of Penn Station, to another Manhattan location. The hope is that one day Penn Station, a dismal underground commuter hub, can be restored to its old glory without an arena built over it.
Tony Simone, Hoylman-Sigal’s counterpart in the State Assembly, said recently that his invitation to attend an event at MSG was taken away because he criticized Dolan’s use of facial recognition technology. “If he is turning away members of the public who disagree with him, let’s see what he does if we take away his corporate welfare,” Simone said.
MSG’s sweetheart deal dates back to 1982, when leaders were fearful that the Knicks and Rangers would leave the state, as the Jets and Giants had already done. Less than a decade before, the city had nearly gone bankrupt, and the shadow of that fiscal crisis made men like Ed Koch, the mayor of New York City, desperate. Koch claimed later that he only wanted the abatement to last a decade, not in perpetuity.
Dolan, the scion of the Cablevision empire, inherited the tax break when he acquired MSG in the 1990s. At various points in the 2000s, politicians explored the idea of rescinding it, particularly in the years after the September 11 attacks, when city government was bleeding tax revenue. Democrats and Republicans in the state legislature, however, always ensured that talk of a tax repeal would always remain just that—talk. Bills to strip it from the books went nowhere.
Through sizable campaign donations and the lure of controlling New York’s premier entertainment venues, Dolan has long been able to buy favorable treatment in the state capital. The powerful longtime speaker of the State Assembly, Sheldon Silver, was a Dolan defender who happened to be an ardent Rangers fan. Silver, who ran the Assembly for 21 years and eventually went to prison on corruption charges, ensured that any bill to scrap the tax break never got a vote on the floor. Andrew Cuomo, the longtime governor, hobnobbed with Dolan, and even placed him on a business task force for reopening New York during Covid.
Cuomo, like Silver, is gone, but his successor, Kathy Hochul, benefited from more than a half million in donations and spending from the Dolan family during her reelection bid last year. Carl Heastie, who replaced Silver, was invited recently to drop the puck at a Rangers game. When asked if there’s any movement in Albany to repeal the MSG tax break, Michael Gianaris, the deputy leader of the state Senate, simply replied in a text message, “dunno.”
If Dolan keeps his abatement for another year, he’ll still have other political worries. Madison Square Garden needs a special permit from the city to host events, and it’s up for renewal this year. Ten years ago, the City Council granted an extension with the hopes that the arena would eventually relocate. Dolan wants to make the permit, like the abatement, permanent, but city Democrats are unlikely to grant such a favor.
At the very minimum, New York politicians could force Dolan to halt his use of facial recognition technology. They have accumulated enough leverage to make the billionaire squirm.
“We should have all options on the table,” Simone said.