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National Tennis Center in Queens owes city more than $300G in rent: Stringer

An audit released just days before the start of the U.S. Open says the center underreported at least $31 million in revenue from 2014 to 2017.

New York City Comptroller Scott Stringer in Queens

New York City Comptroller Scott Stringer in Queens Thursday at a news conference near the USTA Billie Jean King National Tennis Center to announce the results of a new audit that finds the tennis center failed to report millions in revenue and shortchanged the city in rent payments. Photo Credit: Charels Eckert

The United States Tennis Association underreported at least $31 million in revenue between 2014 and 2017, failing to pay more than $300,000 in rent to New York City, according to an audit released days before the start of the U.S. Open.

The report, released Thursday by City Comptroller Scott Stringer, accused the USTA of underreporting more than $11 million in "in kind" benefits provided by sponsors or broadcasters while inappropriately deducting $10 in operating costs. The USTA signed a 99-year lease with the city in 1993 to operate the Billie Jean King National Tennis Center in Flushing Meadows-Corona Park.

In 2016 and 2017, the tennis center  reported $308 million and $349 million in gross revenue, respectively, the audit found. The tennis center, which will host the U.S. Open starting Saturday, never collected another $4 million from sponsors and failed to properly account for $5 million in ticket surcharges, the audit found.

"An organization as revenue rich as the USTA should not be fudging its finances and should not be nickel and diming New York City," Stringer said at a news conference with Queens elected officials and civic leaders outside the tennis center as the U.S. Open drawings were being announced inside. "But they are and it's at New York City's expense."

In a written response to the audit, the tennis center said it agreed to repay the city $143,297 in rent but disputed that another $167,905 is owed, citing “deficiencies that exist in the draft audit findings." 

The lease mandates the tennis center pay $400,000 in base rent annually to the city plus one percent of its net gross revenue, in excess of $20 million.

But auditors used an overly broad calculation to determine the city's gross revenue, the tennis center said, and repeatedly misinterpreted or failed to consider specific lease provisions.

In a statement Thursday, the USTA said the "exhaustive" two-year audit boils down to a dispute over just under $42,000 annually, or 1.3 percent of the total rent paid during the four-year period. The USTA, it said, paid more than $12 million in rent to the city during the audit period and provided more than $3 billion in direct economic impact to the region.

"The USTA and the National Tennis Center pride themselves on their relationship with city of New York, the borough of Queens, the local community and the Parks Department," the USTA statement said.

Stringer accused the tennis center of using the lease agreement to "throw up obstacles" aimed at impeding the audit and said the city should consider renegotiating the deal.

For example, he said Thursday, auditors were permitted to review financial records only on the grounds of the tennis center and documents were not submitted electronically.

"This is a 21st century enterprise with a $350 million revenue stream that says it wants to be our partner," said Stringer, who voted against the tennis center lease while a member of the state Assembly. "So I don't want to mince words. These requirements actively obstruct reasonable oversight."

Parks Department officials said the lease cannot be changed unilaterally and would require negotiations between the city Corporation Counsel and the tennis center.

"The USTA National Tennis Center is a huge boon for New York City’s economy, generating more than $750 million annually in economic impact for the city and investing more than $1.2 billion in capital investments to expand and revitalize its facility in Flushing Meadows-Corona Park," said Parks Department spokeswoman Meghan Lalor. "While we will be taking the recommendations from the report under advisement, we continue to maintain a positive relationship with NTC."

The audit separately found that the USTA's certified financial statements show $8.2 million in U.S. Open and other tennis center revenue that was not reported to the city, potentially adding up to another $82,310 in rent owed.

"The USTA's misreporting underpayments cannot be shrugged off or swept under the rug," Stringer said. 

The tennis center responded that it needs more time to review those findings and determine their accuracy. 

Assemb. Daniel Rosenthal, a Democrat who represents Flushing Meadows-Corona Park, called the audit findings "a financial injustice" for city taxpayers.

"If anyone here doesn't pay their legally-required rent, they get evicted," Rosenthal said. "It's not OK that because you're a large corporation that you don't have to pay what you have legally agreed to pay. It's enough. We know the USTA is flush and is a successful business … It's time to pay up."

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