September 5, 2001
As you know, I have in recent weeks repeatedly expressed my opposition to constructing a new sports arena in the city of Newark without asking the taxpayers to consent to increased state borrowing in a public referendum. As you prepare to consider legislation that would, in fact, facilitate the construction of such a site through this kind of public participation, I again want to express my opposition and to draw your attention to information that may be helpful to you in your deliberations.
I believe that New Jersey’s sports teams deserve state-of-the-art facilities and I believe that a new sports arena may be a significant factor in helping revitalize Newark. But there are at least five good reasons to vote against this legislation as it currently exists:
First, it’s simply wrong to put the taxpayers in the position of having to bail out bondholders if and when the projected revenues don’t materialize -- unless they’ve first had a chance to approve the issuance of the debt, as required by the State Constitution.
Second, the enacting legislation contains one of the most disturbing provisions I’ve ever seen -- the “no fingerprints” clause. Simply put, the bill says that the State Treasurer will have 60 days to approve or disapprove the plan after it is submitted - and if he doesn’t do ANYTHING for 60 days, the plan will be considered APPROVED. That’s action by INACTION! This means that if and when the taxpayers are forced to bail out bonds that would otherwise go into default, there’ll be no elected or appointed official who’s responsible. And that violates one of the fundamental precepts of our form of democracy, the notion that elected and appointed government officials are accountable to those in whose name they serve.
Third, the TRUE cost of the arena deal is FAR more than the $355 million advertised. The bill is rapidly becoming a “Christmas tree” with “ornaments” galore, as new spending is added to win the support of lawmakers all over the state. With all the “ornaments” being thrown into the bill to attract the support of various lawmakers, the final price tag of this bill is going to be north of $800 million -- more than TWICE THE PRICE of the arena itself!
Fourth, everyone knows naming rights -- that is, the ability to sell the name on the outside of the arena to a private corporation for advertising purposes (for instance, the arena in the Meadowlands is the “Continental Airlines Arena”) -- is an enormous asset. Estimates for the naming rights of a new arena in the north Jersey market run between $7 million and $10 million PER YEAR. Over the standard 25-year life of such a deal, those naming rights could be worth as much as $250 MILLION. But the enacting legislation doesn’t even mention the naming rights -- which is an indication that the YankeeNets organization will retain those rights. Why should that money go to George Steinbrenner, when it could go instead to pay off the bonds so New Jersey taxpayers wouldn’t have to foot the bill?
Finally, I note from press accounts that redevelopment contracts for the Meadowlands - which now houses the two sports teams that would move to Newark -- were given to one source with no bid from competing entities allowed. This strikes me as both a peculiar and an unacceptable way to conduct public business. The Meadowlands area remains one of the most valuable pieces of real estate in the United States. We owe it to the nearly eight million people of the state to do all we can to get the best possible return for what has been their nearly 30 year investment. For that to occur, more than one firm should be able to compete for the contract to demolish and redevelop the Continental Airlines Arena site.
So my request to you is a simple one: Please pass no sports arena legislation that does not provide for a public referendum, and let the free market system operate as it should by soliciting bids from those who may be interested in developing the sites, rather than agreeing to contracts without a public bidding process.