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Some skepticism on Belmont hockey deal: lease value seems far below Aqueduct racino; unclear (but large?) cost for LIRR service

As I wrote for The Bridge 12/20/17, The Islanders Say Bye to Brooklyn, But Where Next?, the press conference announcing a new arena at Belmont Park for the New York Islanders was "long on pomp... but short on specifics."

Notably, a lease valued at $40 million "upfront to lease up to 43 acres over 49 years... seems like a good deal on rent for the state-controlled property." Also, the Long Island Rail Road will expand service to Belmont.

That indicates public support for an arena widely described as "privately financed," but how much? We don't know yet, but some more details--or at least questions--have emerged.

An Aqueduct comparable?

Well, we don't know what the other bid was, and there aren't exactly parcels that large offering direct comparables.

But consider: Genting New York LLC in September 2010 was granted a franchise to operate a video lottery terminal under a 30 year lease on 67 acres at Aqueduct Park (as noted by Gov. Andrew Cuomo).

As Crain's New York Business reported 2/12/12, Genting paid "a nonrefundable licensing fee of $380 million—$80 million more than the minimum the state required."

(That's $380 million upfront, not over time, so it can be compared to the $40 million upfront value for the Belmont parcel. Presumably the value of $40 million will be parceled out over time, and cumulatively exceed $40 million, so it will be interesting to see the implied interest rate.)

So at Aqueduct the state set a $300 million minimum, whereas there was no minimum with Belmont, and the lease value there represented only a 20% weighting in the state's decision metric.

Genting's racino cost $830 million and was built in year, reasonably comparable to a $1 billion arena project (including retail/hotel/office) project that will take longer, initially, and surely open in stages.

Is Aqueduct lease worth ten times more?

Sure, gambling suggests a different cost (and profit) structure than other uses. But the numbers seem stark. Breaking down the payment on a per year basis:
  • Aqueduct: $12.666M per year
  • Belmont:  $.816M per year
But Aqueduct is is a larger site. Breaking down that year payment on a per acre basis:
  • Aqueduct: $189,055 per acre each year
  • Belmont: $18,984 per acre each year
A closer look might raise some complications, but, according to that raw comparison at least, the Aqueduct bid is worth nearly ten times more than the Belmont bid.

What about LIRR service?

In the Village Voice 12/21/17, Who’ll Pay for LIRR Service to the New Islanders Arena?, Aaron Gordon wrote:
Despite the LIRR committing to “developing a plan to expand LIRR service to Belmont Park Station for events year-round,” according to the press release, a spokesperson for the MTA, which runs the LIRR, said the agency doesn’t have any accompanying cost estimates. Which is to say, the MTA has promised to provide a service for which it doesn’t know the actual cost.
In Long Island Business News, editor Joe Dowd sounded skeptical, writing 12/21/17 LI’s prodigal sons return to Nassau, barely, and providing an astounding figure:
You were planning to take the train? Sorry: The LIRR will need $100 million or so to make its rail spur to Belmont Park functional. Because it sure isn’t functional now. To get to Belmont, you need to ride all the way to Jamaica and then take a reverse train back to the track.
That "$100 million or so" has not been vetted, but even if the figure is half or one-quarter of that, it's a significant number. And that's without talking about tax-exempt financing and other savings. (Yes, I know tax breaks are not uncommon: Madison Square Garden will save $42 million in 2018, which is indefensible.)

Dowd also expressed skepticism that hockey fans would actually support the team, given the low attendance at Nassau Coliseum during their final year. (Then again, there's no public transit to the Coliseum.)

In a 12/22/17 letter to The Island Now, transportation analyst (and libertarian development critic) Larry Penner suggested that, given other obligations and potential delays, hockey fans should not initially expect a sweet ride to Belmont:
You may end up with off-peak shuttle service between Jamaica and Belmont Park LIRR Stations. The real challenge will be trying to provide full-time rush hour service in both directions. This may not be possible until 2032.
Previous skepticism

I earlier noted that the Daily News suggested that Cuomo should've moved the Aqueduct racetrack to Belmont, freeing up land at Aqueduct for new housing and a new community.

Also, in a 10/27/17 Long Island Business News column headlined The Islanders are heading to Belmont: Coliseum is a lost opportunity, Martin Cantor, director of the Long Island Center for Socio-Economic Policy presciently predicted Belmont as a done deal for the Islanders:
While it will be great to have the Islanders back on Long Island at Belmont Park, what’s unfortunate is that Long Island could have had it all. The Islanders playing at the Nassau Veterans Memorial Coliseum, and the surrounding acres at the Coliseum and Belmont Park developed to their highest and best economic use.
Instead what we have is another significant regional economic development opportunity blown.