Cablevision Nears Deal to Change
Site of Madison Square Garden

NEW YORK -- Sports landmark Madison Square Garden will be demolished and relocated under a tentative agreement signed by Cablevision Systems Corp., paving the way for more than $3 billion in real-estate development that will include a new train station, office towers and shops in the heart of Manhattan.

According to people familiar with the matter, MSG, a Cablevision subsidiary, signed a nonbinding memorandum of understanding several weeks ago with Vornado Realty Trust, a publicly traded New York real-estate investment trust, and Related Cos., a private developer, to build the new arena.

Exact terms of the deal weren't disclosed, but it would involve the parties agreeing to develop office towers where the current Madison Square Garden stands and rebuilding the arena a block away from its present site above Pennsylvania Station, New York's busiest commuter rail hub and a gateway for hundreds of thousands of workers, business travelers and tourists.

Vornado and Related won a contract last year from New York State to convert the historic James A. Farley Post Office -- across the street from the current Penn Station -- into a new commuter rail station, shopping and commercial space. The move has been widely talked about for weeks. The memorandum was earlier reported in Crain's New York Business. All parties declined to comment. The pact isn't finalized.

The deal could create a windfall for Cablevision, of Bethpage, N.Y., and the real-estate developers. Shares of Vornado Realty Trust, which has been buying property in the area for years, rose on the reports. As of 4 p.m. in composite trading on the New York Stock Exchange, Vornado was at $91.12, up $1.68. Cablevision was at $26.50, up 10 cents, also on the Big Board.

Vornado, headed by real-estate heavyweight Steven Roth, has long coveted the current MSG site. Vornado owns several adjacent properties. Mr. Roth has said that his company realizes higher profits by owning clusters of properties because improvements to one building benefit the others. Related Cos., a politically connected New York developer, is well-known for tackling complicated mixed-use urban projects.

Another beneficiary of the deal could be Brookfield Properties Corp., a publicly traded real-estate company based in Toronto that owns a large plot across the street from where the new MSG will go. It has plans for a 2.5 million-square-foot mixed-use project there.

The transaction, if completed, means that, for the fifth time in its history, the New York arena is slated to be rebuilt. The original Madison Square Garden was built in 1874 in a converted train station at Madison Square, near Broadway and 23rd St. Architect Stanford White rebuilt the venue 10 years later, and it became a premier venue for boxing. In 1925, a new Madison Square Garden was built on 50th Street. In the mid-1960s, Pennsylvania Station was razed to make way for yet another MSG.

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