Coliseum leaseholder urges investors to move money to another project

Nassau Coliseum’s new leaseholder is encouraging his investors to move their money into a Times Square project because the county-owned Coliseum "generates little to no revenue, and it continues to lose substantial sums of money each month."

The leaseholder, Nick Mastroianni II, warned the Chinese investors who funded the Coliseum’s outstanding $100 million loan that they will not be paid back "for at least several more years in order for the effects of the pandemic to be gone," according to a letter obtained by Newsday.

Mastroianni’s Nassau Live Center took over the Coliseum lease and assumed the outstanding $100 million debt in August after its previous leaseholder, Russian billionaire Mikhail Prokhorov, defaulted and walked away in June amid the COVID-19 shutdown.

Nassau Live Center, as the new Coliseum leaseholder, also assumed Prokhorov’s contractually obligated partnership rights with Scott Rechler’s RXR Realty on the proposed $1.5 billion Nassau Hub development plans for the 72 acres of county-owned land that surrounds the Coliseum.

Mastroianni, in a statement, said: "This letter is a regular communication to our investors. The possible actions outlined in the letter have no impact on the operations of the Coliseum or the long-term success of the Nassau Hub development."

A spokesman for RXR on Wednesday said the company was "very fortunate" Mastroianni stepped in a partner.

"As we continue to move forward on a new dynamic live, work, play community in the heart of Nassau County, we have no concerns about a routine letter to investors and its impact on the development of the Nassau Hub," said the spokesman David Garten, a senior vice president at RXR.

Reopening the Coliseum and developing the HUB is a priority for County Executive Laura Curran, a Democrat who is up for reelection next year.

Curran administration officials declined to comment directly on the letter and referred Newsday’s questions to Mastroianni.

Mastroianni took over the lease in August because his Jupiter, Fla.-based company, U.S. Immigration Fund, or USIF, orchestrated the $100 million loan for the Coliseum’s renovation. County officials have said their only alternative was letting the Coliseum’s previous leaseholder go into bankruptcy and risking years of litigation.

Mastroianni raised the money for the Coliseum renovation in 2015 through an EB-5 loan, a federal program that provides a pathway to a visa in exchange for a $500,000 investment toward job-creating projects in the United States.

He raised $100 million from 200 Chinese investors. The financing method was endorsed then by the administration of former Nassau County Executive Edward Mangano and also approved by the Republican-controlled Nassau Legislature.

USIF, unaffiliated with the federal government, has had ties to influential politicians such as President Donald Trump’s personal attorney Rudy Giuliani, Trump’s son-in-law and White House adviser Jared Kushner as well as former New York Gov. George Pataki and former U.S. Sen. Alfonse D’Amato.

Mastroianni’s letter to Coliseum investors said "unless the situation changes materially, the borrower will have no ability to pay off the loan" and investors likely will not receive their money until "well into 2025 or later," two years past due.

The letter encourages them to move their money to another "materially safer" project at 1568 Broadway in Manhattan. The $4 billion project features a "luxury hotel, retail space, a newly renovated historic Broadway theater, and the largest video screen in Times Square."

The 1568 project, with financing support from Fortress Capital and Goldman Sachs, "remains reasonably on time to be completed by the third quarter of 2022" and investors of that project "will likely be repaid prior to the repayment of the Nassau Coliseum Loan," according to the letter.

The county agreed Nov. 20 to allow Mastroianni to not pay rent for the foreseeable future. The lease amendment, which calls for rent relief until six months after the state lifts all restrictions on arena events, requires approval by the Nassau County Legislature.

Mastroianni references the rent relief in the letter to investors.

Under the current lease, Nassau County would collect more than $4 million in annual rent from the Coliseum leaseholder. Mastroianni has not paid rent since taking over in August.

By Jim Baumbach

jim.baumbach@newsday.com,candice.ferrette@newsday.com

Jim Baumbach is an award-winning investigative reporter at Newsday, where he has worked since 1998. He spent two decades in the sports department, where he covered every professional team and league, including events such as the Super Bowl and World Series.