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James Dolan, the prominent cable baron and owner of Madison Square Garden arena in New York City, may potentially receive a significant payment of around $500 million as part of a proposed plan to rebuild the deteriorating Penn Station railway hub. The Italian infrastructure company ASTM announced this plan, which involves compensating Dolan for his Hulu Theater located adjacent to Madison Square Garden. The theater would then be demolished to create more space in the congested station, resulting in a main hall with a 55-foot tall ceiling.
Revitalizing Penn Station has long been a challenging task for New York City. Since its original demolition in the 1960s, fixing the station has been a matter of utmost concern. The station serves as a major gateway to Manhattan and handles more daily passengers than all three New York-area airports combined. However, any payments made to Dolan could prove to be politically contentious. Recently, he faced backlash from New Yorkers for using facial recognition technology to ban individuals he deemed as enemies from entering Madison Square Garden. Dolan has been widely criticized by activists who consider his venue to be a problematic neighbor.
According to ASTM’s estimate, their proposed plan would cost $6 billion, which is $1 billion less than an alternative design presented by New York Governor Kathy Hochul. Hochul’s alternative plan would retain the Hulu Theater in its current location. Peter Cipriano, the senior vice-president of ASTM North America, refuted any claims that Dolan’s payment would be seen as a “giveaway.” He emphasized that Dolan’s MSG Entertainment would also contribute to the project by covering expenses such as new exterior cladding for the existing arena, which dates back to the 1960s.
Cipriano stated, “It’s private property in New York City. The only way to move forward with this project is to acquire control of some of that property… There’s no giveaway.” While he did not disclose the exact price agreed upon, Cipriano assured reporters that it would be “less than half a billion” dollars.
Patrick Foye, the former head of the Metropolitan Transportation Authority in New York, who now serves as ASTM’s North American chief executive, explained that the price was determined through vigorous negotiations. He clarified, “To be clear, we wanted to pay less, and they wanted more, like any negotiation. And we reached a number.”
MSG Entertainment chose not to comment on the approximate $500 million figure, stating, “Recognizing that the decision on which the plan goes forward is not ours to make, we look forward to collaborating with all key stakeholders on improving Penn Station.”
An official from the Metropolitan Transportation Authority expressed skepticism regarding ASTM’s cost estimates and the necessity of public funds being used to compensate Dolan for closing the theater. Moreover, the official raised concerns about ASTM trying to intervene in the project after a preliminary design contract had already been awarded. The official remarked, “They’ve presented an unsolicited proposal for a design that’s already in progress.”
Both proposals, including the one favored by the Metropolitan Transportation Authority and Governor Hochul, would rely on state and federal funds rather than revenue generated from new office towers. Under the ASTM plan, a 50-year public-private partnership would be established, with the Italian company operating the station and making a $1 billion equity investment. In return, ASTM would seek annual payments of $250 million upon completion of the project, to be divided among Amtrak, the station’s owner, and its two primary tenants, New Jersey Transit and the Long Island Rail Road.
ASTM and its partners, which include architect and urbanist Vishaan Chakrabarti, a former director of city planning for Manhattan, are advocating for an open competition of proposals. However, the state claims that the process is already well underway.
Chakrabarti and other architects have proposed plans that involve removing Madison Square Garden entirely to restore the grandeur of Penn Station and introduce natural light into its corridors. Yet, even some supporters of this approach now believe it may be unrealistic, particularly considering Dolan’s $1 billion renovation of the arena. Removing the Hulu Theater, a 5,600-seat venue situated above the train tracks, is viewed as a less drastic alternative.
“We’re eager to compete,” Foye stated. “We desire an open, competitive process.”
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