Jewish World Review
Oct. 10, 2000 / 11 Tishrei, 5761
Moochers at the multiplex
GRAB A BAG of popcorn and get out your hankies. This one's a real
tear-jerker – for taxpayers, that is.
Movie theaters are shutting down all across America. The stock prices of
major multiplex chains are plummeting. Cinema companies are declaring
bankruptcy, defaulting on loans, and failing to pay their rent. So what are
city government officials doing? Raising taxes and doling out public
subsidies to lure the debt-ridden movie-theater industry to downtown retail
Proponents of cinema subsidies sing from the same dog-eared hymnbooks used
by sports arena supporters and urban economic development gurus. If you
build it, they will come, hallelujah, amen, and all that. Instead of
putting tax money into roads, bridges, and other basic public amenities,
politicians lavish public cash on private builders so they can erect deluxe
movie houses with digital sound, stadium-style seating, and up to 40
The Denver Pavilions project, a "public-private partnership," typifies the
taxpayer financing of movie palaces. The retail block with a 15-screen
multiplex, which anchors a downtown mall, was partially funded with $24
million raised by creating a local tax increment financing district. In
Washington, D.C., the always cash-strapped city council somehow scrounged
together $46 million – also through tax increment financing -- to help
private developers finance construction of a retail complex anchored by a
21-screen AMC movie theater with 4,300 stadium-style seats.
The Taj Mahal of all movie house builders, Florida-based Muvico Theaters,
will soon open an ostentatious megaplex modeled after the Paris Opera at
West Palm Beach's CityPlace. It's a half-billion-dollar, government-backed
redevelopment project backed with $80 million in public subsidies. Other
cities, such as Lincoln, Neb., give metropolitan movie theaters a boost by
outlawing megaplex construction outside of downtown.
Urban renewal advocates say the theaters will bring in foot traffic and
attract movie audiences to surrounding shops and restaurants before or
after catching their favorite flicks. All that revenue will, they promise,
leave city coffers overflowing. Movie-theater subsidies, the argument goes,
more than pay for themselves.
It's all picture-perfect in theory, but the economic reality looks more
like a scene from the hit horror movie, "Scream."
Take the Loews Theater Newark Metroplex in New Jersey. Local taxpayers in
the ailing city forked over $2.3 million to acquire the land on which the
12-screen movie house sits. Mayor Sharpe James celebrated its opening in
1993 with celebrities such as Joe Piscopo and Ruby Dee. But the promised
jobs, neighborhood improvement, and increased tax revenue never
materialized. As the Newark Star-Ledger reported last year, "the Newark
Metroplex is on the edge of financial ruin."
The theater failed to pay $100,000 in annual rent payment to the city for
three of the last four years and threatened to default on nearly $4 million
in construction bonds. Attendance at the metroplex has dropped sharply.
Public officials believe the only way to rescue the theater is to pour more
public funding into new construction of housing and a bowling alley in the
The scene is just as bleak at Regal Cinemas Inc.'s megaplex in North
Bergen, N.J. Opened just two years ago as part of a government-supported
urban renewal project, the 13-screen luxury theater now shows second-run
pictures at discounted prices. According to the Wall Street Journal,
ticket sales last year "would have scarcely supported a two-screen
Tennessee-based Regal, the world's largest movie exhibitor, has amassed
nearly $2 billion in debt as a result of overexpansion. To dig itself out
of the hole, the Los Angeles Business Journal reports, Regal will spend
almost $200 million on new movie-theater construction this year -- although
it only has $130 million available under its bank lines. Meanwhile, Loews
Cineplex Entertainment, the nation's largest publicly held theater chain,
expects to default on a $1 billion loan; No. 3 theater chain Carmike
Cinemas recently filed for bankruptcy.
Despite the industry's failure to produce promised economic benefits, I
found countless cities jumping on the movie house bandwagon -- from
Albuquerque, N.M., and Thousand Oaks, Calif., to Syracuse, N.Y., and
Pittsburgh, Pa. Chances are, this cinematic boondoggle is coming to a
neighborhood near you. When it does, don't fall for rosy reviews. Give
the multiplex moochers two thumbs
JWR contributor Michelle Malkin can be reached by clicking here.
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© 2000, Creators Syndicate