UPDATE 2-NY's Madison Square Garden unveils $500 mln upgrade

(Adds details, paragraphs 3-4, 9-17)

By Joan Gralla

NEW YORK, April 3 (Reuters) - New York's Madison Square Garden on Thursday vowed to spend $500 million of its own money to renovate its 1968 arena, rejecting plans to move as part of a $14 billion overhaul of the adjacent Pennsylvania Station.

Hank Ratner, vice chairman of the Garden and Cablevision Systems Corp (CVC.N), when asked if there was any alternative the state or city could offer to persuade him to move, told reporters, "No, there is not. We are committed."

He later added: "We will renovate the arena and we will not be moving."

"We can accomplish anything we want by renovating," Ratner said, adding the Garden supports the original plan to recreate the former Pennsylvania Station in the nearby post office that has a similar Beaux Arts style. That plan was later expanded to include millions more square feet of offices and shops.

Staying put lets the Garden keep a property tax break that saves it $10 million to $12 million a year, a prize Mayor Michael Bloomberg and Speaker Christine Quinn want the state to eliminate if the arena agrees to move.

The Garden opposed the independent mayor's hopes for a West Side stadium that the state government rejected, dooming New York City's hopes of hosting the Olympic Games.

Ratner said the Garden's overhaul will start in about a year and finish in time for the 2011-12 basketball season without disrupting basketball or hockey games.

The current arena, home to the New York Knicks professional basketball and New York Rangers ice hockey teams, will gain a new upper level party deck, luxury seats including lower-level seats that allow patrons to mingle with players outside the locker rooms.

The lobby's ceiling would be increased to two stories from one, and gain new windows and a skylight to offer fans sweeping views of 31st and 33rd Streets.

The building's footprint and exterior stay the same though Ratner did not rule out upgrading the exterior in the future.

The design work began in 2003-04 and many improvements were suggested by focus groups of fans and concert- and circus-goers.

"The germination of a lot of these ideas came from those groups, came from New Yorkers," said one official.

It was only last week that the Garden said it would renovate instead of moving, just hours after U.S. Democratic Sen. Chuck Schumer tried to kick-start the long-snarled plan to move Pennsylvania Station, which sits beneath the Garden, across the street to the James A. Farley post office.

The renovation only requires the Garden to get building permits from New York City, Ratner explained. The council speaker has warned any upgrade requires the city's cooperation and the Garden's overhaul met with skepticism from some real estate experts who said it could be a negotiating ploy.

Ratner said the Garden was "all for the development of Moynihan Station as the Farley Station project was originally conceived." The original Pennsylvania Station was demolished in 1963 to build the Garden.

The new station would replace the current overcrowded and unpopular building and be named after the late Sen. Daniel Patrick Moynihan.

Schumer, in a statement on Thursday, said: "We're taking a close look at this and will remain in close discussion with all parties with a goal of building the best Moynihan Station possible and developing the West Side."

City and state officials and the Moynihan Station Venture, a joint venture of Related and Vornado Realty Trust (VNO.N) had no immediate comment.

The Moynihan Station Venture last week said: "While we understand the frustrations of Madison Square Garden after three lengthy years of pursuing this grand but complex plan, we have every faith that our City, State and Federal leadership will enable this project to become a reality for all New Yorkers." (Reporting by Joan Gralla; Editing by James Dalgleish, Gary Crosse)