The New York Islanders NHL franchise was founded in 1972 to counter possible expansion of the rival league WHA. A group of investors headed by Roy Boe, the owner of the New York Nets of the American Basketball Association, brought ice hockey to Long Island. The entry to the NHL cost Boe and his partners a total of $10 million with $6 million paid to the NHL as the entry fee and $4 million paid to the New York Rangers as compensation for moving into its territory.
The Islanders became a successful expansion franchise in the 1970s. It was performing strong on ice and had a solid fanbase, but the operating costs were higher than the income. By the end of 1977-1978 season the franchise had accrued a debt of some $22 million and the majority owner Roy Boe's basketball franchise was also in debt for another $20 million. Boe lost the control of the Islanders franchise after being sued by one of the minority owners for using Islanders funds to cover the costs of Boe's ailing basketball franchise.
Before the start of the 1978-79 season John Pickett, one of the many minority owners of the Islanders franchise, set to rescue the franchise burdened by debt. Pickett took on nearly half of the $42 million debt accrued by the New York Islanders and the New York Mets only in six years under Boe's guidance. He also provided the franchise $2 million from his own pocket and persuaded the other partners to provide another $2 million to operate the team.
Working alongside General Manager Bill Torrey Pickett was able to successfully restructure the franchise. By the end of the 1979-80, in just two years, Pickett managed to reduce the Islanders debt of $22 million to some $6.5 million and signed the franchise to a lucrative cable TV contract.
While John Pickett managed to turn around the franchise financially, the franchise management and hockey operations staff led by Bill Torrey, General Manager and President, and Al Arbour, Head Coach, brought tremendous success to Long Island by winning four consecutive Stanley Cups in the early 1980s. There was no shortage of talent in the Islanders roster during that era: future Hall of Fame inductees Mike Bossy, Clark Gillies, Denis Potvin, Billy Smith and Bryan Trottier.
Pickett was instrumental in saving the Islanders in 1978 and molding it into a powerhouse in the early 1980s. However, the successful financial restructuring, the lucrative cable TV contract and on ice success were only a part of his legacy. In 1985 Pickett signed a 30-year arena lease with the Nassau County and the arena management company, Spectacor Management Group (SMG). This meant that Islanders was slated to play in the Nassau Veterans Memorial Coliseum until 2015, a decision that came to haunt the franchise on multiple occasions.
Pickett was never particularly interested in operating the franchise himself and gradually lost interest in the franchise. He eventually stepped down as the Chairman of the Board and named Torrie in his place. In 1992 Pickett opted to first loan and then sell a portion of the franchise to local investors with the intent to further reduce his involvement in the franchise and to become a silent investor. The local investors were set to manage the franchise despite Pickett's role as the majority owner.
The latter half of the 1980s saw the Islanders gradually shift from a winning team to a losing team. With the likes of Bossy, Potvin and Smith retired by 1990, the General Manager Bill Torrey sought to rebuild the team. He sent Islanders star and future Hall of Fame inductee Pat LaFontaine to the Buffalo Sabres and captain Brent Sutter to the Chicago Blackhawks in exchange for the likes of Uwe Krupp, Pierre Turgeon and Steve Thomas. However, the new management brought in had little patience and replaced Torrey as the General Manager with his assistant Don Maloney in time for the 1992-93 season.
Newly appointed Maloney first refrained from making clear changes to the Islanders roster with modest initial success, but by the end of the 1994-95 lockout season he pulled the trigger on a number of players to rebuild the team. His changes included sending fan favorite Pierre Turgeon and Vladimir Malakhov to the Montréal Canadiens for Kirk Muller and Mathieu Schneider, who were both gone in a year. Maloney himself was gone by the end of 1995-1996 season, having been replaced by Head Coach Mike Milbury.
The mid-1990s also saw the team management update the image of the team by changing the team logo, colors and uniforms. The new look and logo were disliked by the Islanders fans and mocked by fans of other teams. The mid-1990s era Islanders were referred to as the "Fishsticks" due to the resemblance of the logo to Gorton's Fisherman, an advertising character for seafood producer Gorton's. Management woes continued as Pickett first sold the franchise to Dallas businessman John Spano, who failed to meet payments to Pickett, and then finally to a group of investors headed by Phoenix Coyotes part-owner Steven Gluckstern.
Gluckstern and his associates, namely the Milstein brothers, were unable to run the team for profit in the already outdated Nassau Veterans Memorial Coliseum. The new owners feuded with the arena owners and management due to the terms agreed between them and the previous owner John Pickett, which saw nearly all revenue go to arena management company SMG. The Islanders management responded with implying that they had interests in playing home games in other venues, including the Madison Square Garden, the home arena of the rival New York Rangers.
Unable to turn profit with a competitive team under the lease terms of the arena, the owners decided to cut spending accordingly. This led to salary dumping, which saw Islanders core players, such as Bryan Berard, Trevor Linden, Rich Pilon and Zigmund Pálffy, being traded mainly for draft picks. Unable to renegotiate the arena lease or secure a new arena, Gluckstern and the Milstein brothers sold the franchise to Computer Associates executives Sanjay Kumar and Charles Wang in 2000. Wang became the sole owner of the team in 2004 after purchasing Kumar's stake in the team.