Last week, the Wall Street Journal reported that the Islanders would receive an annual payment from the Barclays Center when the team relocates there for the 2015-16 season and each year thereafter. The Journal reported that this payment was believed to be in the tens of millions of dollars per year.
A Point Blank source has seconded the WSJ’s report that the team would receive a large annual payment from the Barclays Center and has provided further details.
The source added that the payment to the Islanders would increase at a single-digit percentage annually. There are also stipulations in the agreement that could cause the payment to be reduced but the exact details of such stipulations were not known.
In exchange for the large lump sum payment each season, the source tells Point Blank that the Barclays Center will receive the majority of team revenues. Those revenue streams include ticketing, merchandising, suite sales and other revenue sources that Islander games at the Barclays Center will produce.
In the deal, the Islanders also agree to play most of their regular season games at the facility as well as a guarantee of three pre-season games per year.
The agreement appears to give the Islanders financial stability with a set annual payment from the arena while the arena will bear the risk and volatility of revenues each season. From year-to-year ticket sales may dip or jersey sales may increase, however the Islanders bottom line will be largely unaffected by these ups and downs under the terms of the agreement. The Barclays Center will bear the brunt of the risk for variance in revenues.
In August 2011, the Islanders worked with Nassau County Executive Ed Mangano and attempted to pass a bond proposal to build a new arena via public vote. If that agreement had passed, the Islanders would have paid the County $14 million per year in rent plus a cut of arena revenues. The vote failed and instead the team signed the agreement with the Barclays Center in October 2012 to relocate to the Barclays Center for 25-years following the expiration of the team’s lease at the Nassau Coliseum during the summer of 2015. Since then, the two organizations have slowly become intertwined with the Barclays Center taking over Islanders business operations this past June.