USTA owes city $311K in rent: audit
by Benjamin Fang
Aug 27, 2019 | 1808 views | 0 0 comments | 172 172 recommendations | email to a friend | print
A new audit by Comptroller Scott Stringer found that the United States Tennis Association (USTA) underreported its revenue and shortchanged the city of its rent.

Last Thursday, Stringer, along with Queens lawmakers and community members, discussed the findings of his office’s report, which alleged that the tennis organization underreported at least $31 million in revenue between 2014 and 2017.

As a result, the USTA, which operates a 99-year lease at the Billie Jean King National Tennis Center at Flushing Meadows-Corona Park, owes the city $311,202.

“Any corporate entity leasing land from the City of New York must pay its fair share of rent, no ifs, ands, or buts,” Stringer said. “An organization as revenue-rich as the USTA should not be fudging its finances and should not be nickel-and-diming New York City.”

Under the terms of the lease, which was agreed upon in 1993, the National Tennis Center pays the city an annual base rent of $400,000. It also pays one percent of its net gross revenues in excess of $20 million.

While the audit found that the USTA made “timely payments” of its base rent and percentage rent –– as well as maintaining required insurance coverage and paying water and sewer charges –– the organization failed to report or understated over $11.5 million in in-kind benefits earned from sponsorship deals and broadcasting rights.

According to Stringer, those “costly errors” took away $115,000 in additional rent.

The USTA also “inappropriately deducted” over $10 million in operating expenses, keeping another $100,000 in rent from the city, the comptroller said.

Another $4 million in sponsorship revenue was underreported, and $5 million in revenue from ticket fees were also omitted, the report alleges.

Notably, the audit found that the USTA overreported $256,426 in online sales and media revenue.

Additionally, Stringer said, the USTA’s certified financial statements show an $8 million discrepancy with the revenue that it reported to the city. That could potentially translate to another $82,000 in rent owed to the city.

“The USTA’s misreporting and underpayments cannot be shrugged off or swept under the rug,” said Stringer, who called on the USTA to pay its outstanding rent. “They can put the check in the mail right now. They owe it, they should give it back.”

The comptroller’s audit team, which took two years to complete the probe, also found that the USTA’s lease agreement allows the organization to “throw obstacles” onto oversight agencies, Stringer said.

The lease prohibits auditors from carrying relevant financial documents off-site, only allowing them to examine the records on the premises of the National Tennis Center.

The auditors are also not allowed to obtain or examine digital copies of the records, the comptroller said.

Stringer said he brought up those transparency and oversight concerns in the lease agreement when he served in the State Assembly in 1993, and voted against the deal over two decades ago.

“This deal was trouble from the start,” he said, “and is at the root of the problems we’re seeing today.”

He called for the terms of the deal to be “revisited” by state lawmakers in hopes of making it more accessible to oversight agencies.

“This cannot be a one-way agreement,” Stringer said. “We must demand more transparency.”

Assemblywoman Catalina Cruz called on the USTA to meet with its board and staff to “come up with something” that makes them a good neighbor.

“Right now, you’re not acting like one,” she said.

She noted that USTA staff often parks their cars on the lawn within Flushing Meadows-Corona Park, which she said is the backyard for many Corona neighbors.

“When they come to the park and find cars on top of their green spaces, that’s unacceptable,” Cruz said.

Stringer echoed Cruz’s comments about going to the USTA board and having a “frank conversation” about fairness.

“It’s not about lawyering up,” he said, “it’s about having frank conversations with the communities.”

In a release, the USTA said the comptroller’s claims “boil down” to approximately $41,976.25 annually, or 1.3 percent of the total rent paid, over the four-year audit period.

The organization said it prides itself on their relationship with the city and local community, adding that the U.S. Open generates more than $750 million annually in direct economic impact to the city.

In 2013, the USTA noted, the organization committed to pay over $10 million to fund improvements to Flushing Meadows-Corona Park. More than 7,000 people are employed each year at the U.S. Open, over 40 percent of whom are Queens residents.

The National Tennis Center has invested $1.2 billion of its own funds into the facility, with no city or state money provided, the USTA noted.

“As has been the case since its relocation of the U.S. Open to Flushing Meadows-Corona Park in 1978, the USTA remains committed to working with the Parks Department and entities to ensure that the U.S. Open remains a powerful economic driver for the city,” they said in a statement, “and that the USTA Billie Jean King National Tennis Center remains a focal point for members of the local community.”
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