May 14, 2012
Newark's Prudential Center: How much "spurt"?
The Wall Street Journal ran an article last week on the "spurt of activity" in downtown Newark near the New Jersey Devils' Prudential Center, including two new hotels and several restaurants. This contrasts with my own reporting, in which I referred to the arena existing in "a wasteland of half-shuttered stores."
My last trip to the Prudential Center was last September, and I don't recall seeing an overwhelming change in the surrounding neighborhood, which is dominated by the largely delapidated Market Street and Broad Street shopping strips. That said, I didn't walk the entire neighborhood, and with the Prudential Center being very active, it's certainly conceivable that some more businesses might have sprung up to capitalize on the visitors. (It's long been noted that arenas, which can operate 200+ nights a year, can provide at least a small local economic boost, especially compared to stadiums that are dark all winter.)
Any Devils fans out there who do more than walk from their cars to the game who can comment on how much of the Journal's description is real and how much real estate hype? (Note that this appeared in the real estate section.) If not, guess it's time for me to go take in a Liberty game...
August 18, 2010
Could Newark sell arena to recoup costs?
Newark city officials are debating selling the Prudential Center, home of the Devils (and, for the next two seasons, the Nets), to help close the city's budget gap. Two city councillors say a sale could bring in between $80 million and $200 million, plus put the building back on the property tax rolls, while Mayor Cory Booker says a sale is "not feasible" until the Devils' ongoing rent dispute is resolved.
While in the abstract a sale sounds like a great idea, you have to wonder why, if the arena currently isn't making any money (thanks in part to that Devils lease), any private investor would want to pay $80 million to buy it and agree to pay property taxes to boot. That may be a sad statement about a building that cost more than $500 million to build just three years ago, but there it is.
December 20, 2009
Newark: If Devils won't pay rent, tax 'em
The New Jersey Nets may or may not relocate temporarily to Newark on their way to Brooklyn, but apparently there could still be an increased ticket tax at that city's Prudential Center. The Newark city council voted last Wednesday to explore a 5% ticket surcharge on all events at the Rock, which would raise an estimated $3.9 million a year for the city treasury.
Teams signing leases on new buildings typically include a clause ruling out such after-the-fact tax increases, precisely because it's such an easy back-door way for local governments to try to recoup some of their costs once concrete has been poured — and indeed, the Devils' lease says it can deduct any ticket taxes from its rent. However, as Joan Whitlow notes in the Newark Star-Ledger, the Devils have been withholding rent for their entire three years at the Prudential Center:
Newark ponied up more than $300 million to build the arena. The Devils have not paid rent for two years, going on three. The first year the team said the arena was not ready in time. Yes, the city was slow on some of its road and infrastructure work, but those things were ready for opening night. The Devils, however, were in charge of arena construction and Newark spent extra on fire patrols and other safety measures because of work the Devils did not get done. In any case, "not finished" certainly didn't apply to the second year's rent.
A ticket tax, then, could at least be a way of breaking the rent deadlock. (And for fans who are worried: Most economists agree that ticket taxes come mostly out of teams' pockets, not fans', since ticket buyers are only willing to pay a certain face value, taxes included.) Given the Newark city council some credit: They learn from their mistakes.