This story on the battle for Long Island’s Nassau Coliseum is an excerpt rom the latest issue of Billboard (June 8, 2013), which also features a cover story on J. Cole and the follow-up to his album that “changed the business model;” the publishing hitch in Apple’s iRadio roll-out; how five independent labels are working together to create autonomous deals with major distributors; a report on the progress in LGBT music; and much more. Pick up this issue HERE; and become a Billboard subscriber HERE.
When the Barclays Center opened in Brooklyn last October, adding a new world-class arena to an already competitive marketplace, many felt that the Nassau Veterans Memorial Coliseum on New York’s Long Island, at more than 40 years old, would be the odd building out.
But, in an unexpected turn of events, all eyes are on Uniondale, N.Y., as the Nassau Coliseum is now the focus of an intense bidding war, with four viable partnerships making a run at this potentially lucrative market. The stakes are high, the competition fierce, and underlying stories are many. At stake is one of the most valuable pieces of business up for grabs in recent years.
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Jay-Z Joins Group Hoping to Renovate Nassau Coliseum
In the hunt are partnerships led by Madison Square Garden Co. (MSGC); the Nassau Entertainment Committee (NEC), led by Forest City Ratner, the group that developed the Barclays Center; and facility management firms SMG and Global Spectrum, both separately partnered with local developers, and long fierce competitors for business in their own right.
AEG Live CEO Randy Phillips is among those convinced that Long Island is a separate market from New York. “Whenever we do shows at Barclays Center or the Garden, anything that sells out, we’ve never sold more than 13% of tickets in Long Island,” he says. “To us, it’s no different than in L.A., where you have Staples Center in L.A. and the Honda Center in Anaheim. When we plan tours, we never miss playing both markets in Southern California.”
THE BIDS
What each bid has in common is a new Nassau Coliseum, whether through renovation or ground-up construction, at least some change in capacity and private funding. Both Global Spectrum and SMG (representatives from both deferred to their respective development partners) have broad scale, experience and histories of success in a wide range of projects. MSGC is the reigning New York market king and deeply involved in similar projects, and Forest City clearly has ambitions of elevating its presence in this sector and parlaying its success in Brooklyn into flags planted on Long Island and beyond.
Under the NEC umbrella, Forest City partnered with Guggenheim Partners, owner of Billboard parent Prometheus Global Media (Guggenheim recently bought such properties as the Los Angeles Dodgers and Dick Clark Productions and made a hard run at AEG); Yankees investment group Legends on the hospitality side; Nets owner Mikhail Prokhorov’s Onexim Sports & Entertainment on the sports front; and, on the content side, Live Nation and Jay-Z’s Roc Nation. Also onboard is Barclays Center designer SHoP Architects.
The NEC bid calls for downsizing the arena from its current capacity of about 18,000 to around 13,000, with a theater configuration of 4,000-8,000 in the lower bowl. A 15-month construction project would cost about $89 million. Long-term plans call for a retail/entertainment footprint that includes a Fillmore-sized theater from Live Nation, a movie theater, a 2,500-capacity amphitheater and 50,000 square feet of restaurant/retail space. NEC estimates total costs for the continued development to be approximately $140 million, with the entire project costing about $229 million in private money.
MSGC indeed has a strong personal connection to Long Island, which is home to the Dolan family that controls the business. The Dolans, who also control Cablevision Systems, are entrenched in the Long Island market in terms of media: MSG Network (which has telecast Islanders games for 30 years), MSG Plus and Fuse have 700,000 subscribers on Long Island, and the MSG ticket buyer database boasts 650,000 Long Islander names. They also control the local newspaper, Newsday. Word on the street is the Dolans want this one bad.
MSGC indeed has a strong personal connection to Long Island, which is home to the Dolan family that controls the business. The Dolans, who also control Cablevision Systems, are entrenched in the Long Island market in terms of media: MSG Network (which has telecast Islanders games for 30 years), MSG Plus and Fuse have 700,000 subscribers on Long Island, and the MSG ticket buyer database boasts 650,000 Long Islander names. They also control the local newspaper, Newsday. Word on the street is the Dolans want this one bad.
The Dolans’ allies are strong. MSG is partnered with developer the Cordish Cos. (the industry leader in developing entertainment districts around anchor venues) and architectural firm SCI Architects (overseeing the $1 billion transformation of MSG and the $75 million renovation of the Forum in Los Angeles), RXR Realty (“the largest land owner around this project,” MSGC’s Ratner says) and investment firm Jones Lang LaSalle, which is also involved in both the Garden and Forum projects.
MSGC’s “compelling, yet realistic plan” includes flex capacity from 14,500 (highest of the four bids) down to 1,700 seats. It’s projecting 330 events annually, including 150 free community events, along with the Long Island Live! entertainment district from Cordish. Private investment of $250 million would be committed to the project and, as opposed to a multiple-phase development, the arena and district projects would go up concurrently.
New York Sports & Entertainment is partnered with Philadelphia-based facility management firm Global Spectrum in a bid for an interior renovation of the Nassau Coliseum, keeping the exterior as is, gutting the interior and significantly downsizing capacity to about 8,000 for hockey and 10,000 for concerts or basketball, according to NYS&E CEO Bernard Shereck. It, too, would go with all private funding, with the cost estimated between $50 million and $70 million. “We don’t believe it will exceed $100 million,” he says.
Shereck, a native Canadian and self-proclaimed “hockey guy,” owns the Arena of Long Beach (N.Y.) and holds the rights for an East Coast Hockey League minor-league franchise on Long Island, as well as a professional indoor lacrosse team.
Global Spectrum is an industry leader, operating 36 arenas, 30 convention centers and 10 stadiums, among other venues, for a total of 114. The firm also has ticketing operations (Paciolan, New Era), concessions (Ovations) and marketing/sponsorships (Front Row Marketing Services). “We have an agreement in place with Global Spectrum to manage the building and we’re the ones putting up the money,” Shereck says. “We’re David going against Goliath. And you know what happened to Goliath.”
Blumenfeld Development Group, led by Long Island developer Edward Blumenfeld, is working with SMG, the coliseum’s incumbent manager, as well as Mark Rosentraub, a professor of sports management at the University of Michigan. Their plan calls for demolishing the current arena and building a new 10,000-seat arena and a 100,000-square-foot convention center, along with an adjacent residential/retail/entertainment development at some point. The estimated cost of the new arena/exhibition center is approximately $200 million, while cost or timetable isn’t immediately available for the adjacent development.
SMG’s incumbent status would seem a plus, as under SMG’s management Nassau Coliseum has held its own in an increasingly competitive market, especially with the Barclays Center still in the honeymoon stage. So far this year the arena has hosted Luke Bryan, Ricardo Arjona, the Who, P!nk, Romeo Santos, Rick Ross, Miranda Lambert/Dierks Bentley and the “X Factor” auditions.
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