Nassau County, NY, the home of the New York Islanders since that club's formation in 1972, will hold a public referendum on a rumored $400 million bond facility to fund a replacement for the outdated Nassau Coliseum. Never mind that the Islanders are reported to perennially lose upwards of $20 million per year, have consistently suffered large financial losses and declining attendance for more than two decades and have sustained a greatly-eroded fan base and public profile as their old fan base has aged and newer fans were driven away by a persistent culture of losing.
Crime, Politics and Policy also previously speculated on the Islanders' owner, Charles Wang, using bankruptcy as a greenmail strategy to escape a money-losing situation. In fact, should this referendum be voted down, one should expect more than ever that Wang will put the Islanders into bankruptcy.
Meanwhile, the commissioners of the town of Glendale, AZ last night voted 5-2 to have taxpayers fund $25 million to offset the upcoming season's losses of the Phoenix Coyotes, another perennially money-losing franchise which has reported to be losing in excess of $30 million per year. Crime, Politics and Policy detailed how bad these losses were; see this 2009 commentary which provides a link to actual Phoenix Coyotes financial statements contained within the club's bankruptcy court filing.
But one council member in Glendale got it right. Council member Norma Alvarez voted against the proposal, saying:
"We cannot use taxpayer's money to subsidize the team and neglect our community."The Coyotes' future in Arizona depends on completion of a sale to a hedge fund owner, who has agreed to purchase it only if a bond deal closes. A threatened Goldwater Institute lawsuit charging that the bond offering is unconstitutional jeopardizes the bond deal (by making potential bond purchasers skittish) and by extension, the franchise's purchase and thus its remaining in Arizona.
Many Tea Party organizations actively oppose public subsidies for private benefit on strong philosophical grounds including the aversion to government fiscal irresponsibility. The bailouts of the Islanders and Coyotes qualify as such public subsidies. Tea Party opposition to both bailouts may be expected.
Are the subsidies worthwhile to the fans? The Islanders' bailout, involving the construction of a new arena, would support the owner of a franchise which was dead last in NHL attendance this past season. The Coyotes were next to last in average attendance in the 30-team league. Is this responsible to taxpayers in the slightest?
Eric Dixon is a New York lawyer and Yale Law School graduate with over 15 years of experience in corporate finance as well as handling complex investigative matters, election law disputes and sensitive negotiations. Mr. Dixon is a former Islanders season ticket holder and specializes in legal and investigative matters, corporate due diligence and exposing corporate and political disinformation. Mr. Dixon is available for comment at 917-696-2442 and by e-mail at edixon@NYBusinessCounsel.com.