PACKET EDITORIAL, May 10
By: Packet Editorial
It isn’t often we find ourselves agreeing with Bret Schundler, the former mayor of Jersey City and Republican gubernatorial candidate whose solution to almost every public policy problem seems to be cutting taxes, eliminating tolls or downsizing government.
But on the matter of the proposed new arena for the Nets and the Devils in downtown Newark, he’s got it right.
Not entirely right, mind you. We disagree with Mr. Schundler’s call for a statewide referendum on this proposal. We believe the governor and the Legislature should just kill it themselves.
And we believe this for the same basic reason Mr. Schundler opposes the plan. At a time when school districts, senior citizens, commuters, state college and university students, corporations, property taxpayers and just about everyone else in New Jersey is being asked to chip in a little more or make a few sacrifices in order to help balance the state budget, the idea of publicly subsidizing the profit-making enterprise of George Steinbrenner and his YankeeNets cronies is unconscionable.
It isn’t as though the Nets and the Devils have no place to play. Their current home, Continental Airlines Arena in the Hackensack Meadowlands, opened just a shade over 20 years ago. It has a capacity of 20,049 for basketball and 19,040 for hockey. It is neither outdated nor undersized. Together with Giants Stadium and the Meadowlands Racetrack, it makes up one of the most accessible and successful sports and entertainment complexes in North America.
But that’s not good enough for YankeeNets, the conglomerate that has threatened to move the Nets and the Devils out of New Jersey unless a new arena is built for them in Newark. (Mr. Steinbrenner, one of YankeeNets’ principals, has been playing the same game with the Bronx for years.) It seems no self-respecting sports entrepreneur would be caught dead these days letting his team play in a facility that doesn’t feature enough VIP lounges, luxury boxes, exploding scoreboards and other amenities to qualify as a true monument to conspicuous consumption.
So YankeeNets blackmailed the state into backing the Newark arena. The ransom, it turns out, is $165 million in tax-exempt bonds to be issued by the New Jersey Sports and Exposition Authority. (To Gov. James E. McGreevey’s credit, that’s about $25 million less than the previous administration was willing to commit.) These bonds would be issued with the explicit understanding that the debt will be guaranteed by revenue from the teams, not the state which sounds rather like that brilliant scheme the state cooked up to pay for the E-Z Pass program with the fines collected from cheaters.
On top of this, the state agrees to dedicate "incremental sales and income tax revenues generated by the new arena" to repay the bonds. One can only wonder how the term "incremental" will be defined and what kind of creative accounting will be employed to calculate the "revenues generated by the new arena" when it comes time to pay the piper.
And that’s not the half of it. Newark and Essex County are supposed to come up with another $50 million. (Where either entity is going to find that kind of money is anyone’s guess.) And the state is supposed to spend about $80 million more on infrastructure investment, mostly road and rail improvements, in the area around the Newark arena. This is the same state, mind you, that has steadily spent down, and failed to replenish, the Transportation Trust Fund that pays for potholed streets, deteriorating roadways and crumbling bridges all across New Jersey. There isn’t enough money in the new budget to keep this fund solvent but to make Mr. Steinbrenner happy, we’ll pave the streets of Newark with gold.
In the best of economic times, spending hundreds of millions of dollars to keep professional basketball and hockey teams in New Jersey might be considered an extravagance. With the state facing the largest budget deficit in its history, it is a downright disgrace.