Madison Square Garden Tax Break Has Cost City Nearly $1B

Madison Square Garden may be home to sky-high salaries paid to New York Knicks and New York Rangers stars, but those pale in comparison to the entertainment mecca’s annual tax break.

The Independent Budget Office estimates the arena’s tax exemption has cost New York City an inflation-adjusted $947 million since its origin in 1982, Crain’s reported. The exemption is estimated to ring in at $42 million this year alone.

The tax break has never cost the city’s coffers less than $10 million annually. It shot up roughly a decade ago, however, when a renovation of the arena was completed in 2013.

The state-level exemption was born out of a desire to make sure the two primary occupants of the arena stayed in place, a legitimate concern in the 1980s. Tides have changed in recent years, however, as some have called for the arena to be moved in the name of a Penn Station redevelopment; MSG owner James Dolan has previously expressed his stance against moving the “World’s Most Famous Arena.”

A spokesperson for MSG dismissed the report, telling Crain’s it is “slanted, clearly politically motivated and unfairly singles out Madison Square Garden.”

State lawmakers pushed to have the tax exemption removed this year, including a repeal in the Senate’s one-house budget proposal. The measure failed after Gov. Kathy Hochul signaled interest in keeping it in place.

This is a critical time in the life of MSG. The arena’s special operating permit — required for arenas with at least 2,500 seats — is up for renewal with the City Council. While Dolan wants a permanent authority to operate above Penn Station, the Department of City Planning only recommended the permit be renewed for 10 years.

The push to have MSG pushed to elsewhere in the city, meanwhile, has lost steam. Hochul recently shelved plans for millions of square feet of commercial development around Penn Station, instead launching a design process for an overhaul of the transit hub, which could open more possibilities of the arena staying in place.

— Holden Walter-Warner