New York Islanders sign 99-year lease, then threaten to move

AEG president TIm Leiweke was right to downplay the rumors that the New York Islanders might get landlocked in Kansas City’s Sprint Center. Not just because the Islanders weren’t likely to skate into the Sprint Center. But maybe because Islanders owner Charles Wang is a little too unpredictable for Leiweke’s taste (not to mention Wang’s franchise sucks).

Reuters reported today that the Islanders had inked a new deal with Nassau County to renovate the existing arena and signed a 99-year lease. Not so fast, The New York Times reports. Wang is throwing around ultimatums and threats of moving the team. Shouldn’t he be doing that before making a deal?

In other Sprint Center news, Field of Schemes’ Neil deMause is again looking at AEG’s agreement to run the Sprint Center. DeMause is the go-to-guy on arena funding. He’s admittedly not a contract lawyer, but here’s the analysis of the city’s lease agreement with AEG:

• The first $347,000 a year goes to pay back the six million dollars in cost overruns that AEG and Kansas City rang up for the arena, split 80/20 between the city and AEG, plus an interest rate of 4%.

• The next $6.7 million a year goes to pay back AEG’s $50 million share of the pre-overrun arena cost. AEG, however, gets paid back at an interest rate of 12%.

• Next, AEG gets enough money to earn it a guaranteed 16% return (including those interest payments on its $50 mil) on its initial investment. As an added bonus, if there wasn’t enough to earn it a 16% return in some prior year, AEG can take out extra in subsequent years.

• After that, $3 million (total, not annual) is put aside for a Capital Reserve Fund. And finally, if there’s anything left, it’s split 50/50 between AEG and the city. Little wonder that AEG president Tim Leiweke called this a “throwaway provision,” and said his lawyers predicted they’d never earn enough to have to pay it.

AEG is getting paid.

As far as Kansas City, as I reported yesterday, we’re on the hook for $13.8 million in bond payments a year.

AEG is doing a great job booking the arena, but this just confirms what we knew all along: The city gave AEG a sweetheart of a deal to run the joint.

Photo by Scott Spychalski; see more in this slideshow.