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Jewish World Review
June 27, 2006
/ 1 Tamuz, 5766
Newark takes a hard lesson in the pro stadium game
By
Evan Weiner
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http://www.JewishWorldReview.com |
It seems Newark Mayor-elect Cory Booker never did make it to those sports business management classes during his days as
a Rhodes scholar or at Yale's law school. It might have saved him some aggravation in dealing with major league sports
owners.
Booker, who takes office on Saturday, is thinking about backing out of the agreement that outgoing Mayor Sharpe James cut
with New Jersey Devils owner Jeffrey Vanderbeek to build a Newark arena for the hockey team. Why not welcome the
Devils to Newark with open arms? Because James bought the city a major league franchise that won't have the word Newark
in its name or on its arena, and he did it for a questionable price.
Vanderbeek is putting up $100 million for the stadium, which will cost at least $300 million in total, but Booker isn't sure that's
enough to relieve Newark of the financial burden that comes with building an arena for a private business. Booker is probably
right that Newark has been saddled with a bad deal, but pulling the plug on the construction of a building that broke ground last
fall sends a bad message to captains of industry like Vanderbeek: Newark simply doesn't want their business.
That's something that Richard Monteihl doesn't want to hear. Monteihl is the city's business administrator and executive
director of the nonprofit group overseeing redevelopment in the arena. Monteihl said Newark has spent at least $80 million on
the arena so far, and another $210 million in public funding as been committed.
"The arena is under contract, and based on those contracts people have invested huge amounts of money," Monteihl told New
Jersey press outlets. "It would be inadvisable to damage the project. It would leave the city with substantial legal exposure
because everyone entered into these contracts in good faith."
It seems Booker may get an education in sports business after all. When dealing with major sports leagues, whether it's the
NHL, NBA, NFL, Major League Baseball, or Major League Soccer, you are dealing with the most influential businessmen in
the United States, and they don't take kindly to a mayor reneging on a deal. If Booker pulls the plug on the Devils, he'll be
telling Vanderbeek and his colleagues that Newark cannot be trusted to live up to contractual obligations.
James finally signed a deal with the Devils last fall after years of negotiating with New Jersey Nets ownership to move the NBA
team to Newark. When Bruce Ratner decided to move his Nets to a proposed arena in Brooklyn, James turned to
Vanderbeek, who still expects the building to open its doors in the fall of 2007. It's unknown what would happen to the Devils
if Booker terminates the deal.

That may seem a bit melodramatic, but owners and politicians with any experience know how the game is played. The best
example may be Senator Herb Kohl of Wisconsin, who also owns the Milwaukee Bucks. Kohl knows enough to not ask for a
new arena for his Bucks because he's running for re-election and it wouldn't win him any helpful constituents if he threatened to
move his team out of Milwaukee for greener pastures. It would tell business people - Kohl's sports colleagues, who are among
the richest people on the planet - that Wisconsin is a bad place to do business.
You might think a city as rich with business opportunities as New York would be immune to this sort of predicament. But at
the height of the West Side Stadium battle last year, Mayor Bloomberg said that if the city failed to build the stadium, it would
deter businesspeople who want to invest with the city. The West Side stadium was killed by Assemblyman Sheldon Silver
about a year ago, but life went on, and Bloomberg quickly announced that the city would partner with George Steinbrenner to
build a new stadium for the Yankees and with Fred Wilpon to construct a new Mets facility.
It would not be surprising to see Bloomberg and New Jersey Nets owner Bruce Ratner use the same mantra in boosting the
Ratner-proposed Brooklyn Arena project at the Atlantic Yards. If Ratner's plans to build an arena for his Nets is eventually
shot down, it will send out a bad message to those who want to do business in New York: You can't trust New York to follow
through.
For some reason, politicians think having a sports franchise in their city somehow makes the city better. The reasoning
throughout the late 1980s and 1990s was that stadiums and arenas were economic engines that could spur business growth.
The theory was that people would want to open businesses around the new arena and that the city/state investments into
building sports palaces for major league teams would be worth the cost because the communities would get back in investment
from not only the teams through rent and taxes on tickets and goods sold in the stadium/arena but from businesses that would
open near the facilities.
But the theory has failed in numerous cities, where businesses have not flocked into newly built stadium areas. Additionally,
NBA Commissioner David Stern recently told Seattle politicians that the shelf life of new arenas is no more than 10-12 years.
Stern has had experience in that area; the Miami Arena, for one example, opened in 1988 and was effectively done as a facility
in 1999 when the Heat and the Florida Panthers moved to separate facilities loaded with luxury boxes and club seats. The
Charlotte Coliseum, for another, closed its doors last summer after a 17-year run. The building lacked luxury boxes and club
seats. George Shinn's Hornets moved to New Orleans and the NBA put a new franchise in the city only after a taxpayer
funded arena was built. Seattle spent about $70 million to renovate the city's arena in 1995. A decade later, the owners of the
SuperSonics want a new arena because the renovated building is not a state-of-the-art structure.
No matter how many perks a city gives a team owner, it's never enough and the deal is never as sweet as it originally
appeared.
Booker may be correct to think of pulling the plug on the Newark arena, but it's too late. He is stuck with a bad contract and,
worse yet, if he cuts off the construction, there will be lawsuits and Newark will be branded by captains of industry as a place
where business deals go to die. It's something Booker never learned in school, but he'll probably be forced to figure it out as
part of his on-the-job training.
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
JWR contributor Evan Weiner is a syndicated radio commentator. Comment by clicking here.
Previously:
06/16/06: Don't Believe the Gripe: The NHL Is Back
06/05/06: As Bonds Hogs the Spotlight, Selig Goes 3-for-3 at the Plate
05/30/06: State of the NBA Nation Is Strong
05/22/06: NFL owners gather to play stadium game
05/15/06: A legal groundswell builds beneath baseball
05/05/06: Four Years Later, Baseball Finds an Owner in D.C.
05/01/06: Turmoil brews beneath NFL's newfound tranquility
04/24/06: NFL and small town America wherewithal
04/21/06: The Two Scariest Words in Baseball: Salary Cap
04/18/06: Why the major leagues succeed
04/17/06: Fans welcome new stadiums; will stadiums welcome fans?
04/10/06: Fans welcome new stadiums; will stadiums welcome fans?
04/07/06: Don't mess with a congressman/sports fanatic
04/05/06: Los Angles loses yet again
04/04/06: NCAA's highest stakes are first beginning
04/03/06: The real reason Major League Baseball is worried about cheating
03/31/06: Baseball buoyant, better than ever
03/30/06: Affording to be in the big leagues
© 2006, Evan Weiner
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