New Idea to Rebuild Penn Station Will Pay Billionaire Dolan $500 Million

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Cable tycoon James Dolan, who owns New York’s Madison Square Garden area, will be paid $500 million as part of a new proposal to rebuild the dilapidated Penn Station railway hub below.

The plan, announced Wednesday by Italian infrastructure company ASTM, includes paying Dolan the amount for its Hulu theater, which is located next to Madison Square Garden. Developers would then demolish the theater to open up space in the notoriously cramped station, creating a main hall with 55-foot-high ceilings.

Fixing Penn Station has become one of New York’s most vexing civic endeavors since the original station was torn down in the 1960s. The station is the gateway to Manhattan and handles more daily passengers than the three New York area airports combined.

But any payoff to Dolan could prove politically fatal. Most recently he raised the ire of New Yorkers by using facial recognition technology to ban perceived enemies from the Garden. The billionaire has long been vilified by activists who denounce his venue as a bad neighbor.

ASTM estimated its plan would cost $6 billion — or $1 billion less than a rough alternative design presented this week by New York Governor Cathy Hochul that would leave Hulu in place.

Peter Cipriano, chief executive of ASTM North America, rejected the suggestion that the payment to Dolan could be treated as “a gift”, and said that Dolan’s MSG Entertainment would also pay for other contributions to the proposed project, Including new exterior cladding for the 1960s. Vintage arena.

“This is private property in New York City. The only way forward for this project is to gain control of some of that property. , , There is no cheap gift,” Cipriano said.

Patrick Foye, the former head of New York’s Metropolitan Transportation Authority, who has since joined ASTM, said the $500 million price was the result of robust negotiations: “To be clear: We wanted to pay less , they wanted more – like any conversation. And we reached a price.”

MSG Entertainment declined to comment on the $500 million figure, saying: “While acknowledging that it is not up to us to decide which plan to pursue, we will work with all key stakeholders to improve Penn Station.” Look forward to cooperating.”

An MTA official, which has a central role in the redevelopment, expressed skepticism about ASTM’s cost estimates and the need to pay public funds to Dolan to close the theater.

More broadly, the official complained about an attempt by a private company to forcibly join after the initial design contract had already been awarded. “They have made an unsolicited proposal for a design that is already in the works,” this person said.

The design preferred by the MTA and publicized Monday by Hochul would place the main train hall closer to Seventh Avenue, unlike the ASTM plan. Its supporters believe that this will avoid the need to remove the theatre.

The long-running effort to overhaul Penn Station has entered a new phase with Hochul’s recent acknowledgment that it is no longer feasible to rely on revenue from the 10 new office towers surrounding the site to finance the project.

Instead, both proposals would tap state and federal funds, including those from President Joe Biden’s Inflation Reduction Act.

The ASTM plan would be a public-private partnership with an Italian company having a 50-year contract to operate the station and an equity investment of $1 billion. In return, it would seek $250 million in annual payments that, upon completion, would be split by Amtrak, the station’s owner, and its two main tenants, New Jersey Transit and the Long Island Rail Road.

ASTM and its partners, including architect Vishan Chakraborty, the former head of city planning in the Bloomberg administration, are calling for an open competition for proposals — which the state says is already far enough advanced.

Chakraborty and other architects have drafted a plan that would completely remove the Gardens to restore Penn Station’s grandeur and open its corridors to natural light. But even some who support that view now believe it may be unrealistic — especially after Dolan committed a $1 billion renovation. Removing Hulu, a 5,600-seat venue that’s also located above train tracks, would be a less dramatic option.

“We’re happy to compete,” said Foy. “We want an open, competitive process.”

Get free New York City updates

we will send you one myFT Daily Digest Latest Email Rounding New York City News every morning.

Cable tycoon James Dolan, who owns New York’s Madison Square Garden area, will be paid $500 million as part of a new proposal to rebuild the dilapidated Penn Station railway hub below.

The plan, announced Wednesday by Italian infrastructure company ASTM, includes paying Dolan the amount for its Hulu theater, which is located next to Madison Square Garden. Developers would then demolish the theater to open up space in the notoriously cramped station, creating a main hall with 55-foot-high ceilings.

Fixing Penn Station has become one of New York’s most vexing civic endeavors since the original station was torn down in the 1960s. The station is the gateway to Manhattan and handles more daily passengers than the three New York area airports combined.

But any payoff to Dolan could prove politically fatal. Most recently he raised the ire of New Yorkers by using facial recognition technology to ban perceived enemies from the Garden. The billionaire has long been vilified by activists who denounce his venue as a bad neighbor.

ASTM estimated its plan would cost $6 billion — or $1 billion less than a rough alternative design presented this week by New York Governor Cathy Hochul that would leave Hulu in place.

Peter Cipriano, chief executive of ASTM North America, rejected the suggestion that the payment to Dolan could be treated as “a gift”, and said that Dolan’s MSG Entertainment would also pay for other contributions to the proposed project, Including new exterior cladding for the 1960s. Vintage arena.

“This is private property in New York City. The only way forward for this project is to gain control of some of that property. , , There is no cheap gift,” Cipriano said.

Patrick Foye, the former head of New York’s Metropolitan Transportation Authority, who has since joined ASTM, said the $500 million price was the result of robust negotiations: “To be clear: We wanted to pay less , they wanted more – like any conversation. And we reached a price.”

MSG Entertainment declined to comment on the $500 million figure, saying: “While acknowledging that it is not up to us to decide which plan to pursue, we will work with all key stakeholders to improve Penn Station.” Look forward to cooperating.”

An MTA official, which has a central role in the redevelopment, expressed skepticism about ASTM’s cost estimates and the need to pay public funds to Dolan to close the theater.

More broadly, the official complained about an attempt by a private company to forcibly join after the initial design contract had already been awarded. “They have made an unsolicited proposal for a design that is already in the works,” this person said.

The design preferred by the MTA and publicized Monday by Hochul would place the main train hall closer to Seventh Avenue, unlike the ASTM plan. Its supporters believe that this will avoid the need to remove the theatre.

The long-running effort to overhaul Penn Station has entered a new phase with Hochul’s recent acknowledgment that it is no longer feasible to rely on revenue from the 10 new office towers surrounding the site to finance the project.

Instead, both proposals would tap state and federal funds, including those from President Joe Biden’s Inflation Reduction Act.

The ASTM plan would be a public-private partnership with an Italian company having a 50-year contract to operate the station and an equity investment of $1 billion. In return, it would seek $250 million in annual payments that, upon completion, would be split by Amtrak, the station’s owner, and its two main tenants, New Jersey Transit and the Long Island Rail Road.

ASTM and its partners, including architect Vishan Chakraborty, the former head of city planning in the Bloomberg administration, are calling for an open competition for proposals — which the state says is already far enough advanced.

Chakraborty and other architects have drafted a plan that would completely remove the Gardens to restore Penn Station’s grandeur and open its corridors to natural light. But even some who support that view now believe it may be unrealistic — especially after Dolan committed a $1 billion renovation. Removing Hulu, a 5,600-seat venue that’s also located above train tracks, would be a less dramatic option.

“We’re happy to compete,” said Foy. “We want an open, competitive process.”