STATE OF NEW JERSEY
OFFICE OF THE GOVERNOR
Governor Christie Welcomes Recommendations of New Jersey Gaming,
Sports and Entertainment Advisory Commission as Blueprint
for Economic Growth and Prosperity
For Immediate Release
Contact: Michael Drewniak
Wednesday, July 21, 2010
609-777-2600
Trenton, NJ –
Governor Chris Christie today hailed the recommendations of the New
Jersey Gaming, Sports and Entertainment Advisory Commission
as a guide for creating and sustaining a healthy economic
environment to support the long term viability of the
State’s gaming, professional sports, and entertainment
infrastructure.
“This report is a blueprint that will guide our efforts in
managing and protecting our gaming, sports and entertainment
resources more responsibly and reforming issues critical to
New Jersey’s economic future,” said Governor Christie. “I
look forward to reviewing all of the Commission’s
recommendations so that we can put these industries on a
solid foundation and path to long-term economic growth and
prosperity.”
In examining the issues confronting New Jersey’s gaming,
professional sports, and entertainment industries, the
Advisory Commission placed considerable emphasis on the
economic conditions facing the State, including high
unemployment, the fiscal crisis and realities confronted in
the FY 11 State budget, as well as privatized stadium
ownership, reduced racing revenues and support of
horseracing through purse supplements. The recommendations
focus on six key areas:
New Jersey Nets Lease at the IZOD Center
Early on, the Advisory Commission, worked to resolve the
status of the New Jersey Nets’ lease at the IZOD Center in a
way that served the needs of all involved. This encompassed:
·
A fee of $4 million dollars to be paid to the NJSEA over the next
two years for the Nets to opt out of the IZOD lease. The fee
may be offset by various credits.
·
The Nets will play home games for the 2010-2011 and 2011-2012
seasons in the Prudential Center in Newark and have agreed
to support the potential of another NBA team locating to New
Jersey, if and when the Nets leave the state.
·
The Nets will share the Prudential Center with the New Jersey
Devils organization which operates the facility leased from
the City of Newark.
Viability of the Sports and Exposition Authority
Stemming the financial losses at the New Jersey Sports and
Exposition Authority is crucial to the organization’s
continued viability. Created in 1971 to build and operate
the Meadowlands Sports Complex, including Giants Stadium the
Meadowlands Racetrack and later the Byrne Arena, the NJSEA
is now losing approximately $30 million per year.
Recommendations include:
·
Offsetting operating expenses by using current cash reserves (in
excess of $50 million) of the NJSEA and encouraging
development of a break-even budget by September 1, 2010.
·
Authorizing the State Treasurer, if necessary, to provide a
revolving credit facility of no more than $15 million to
assist in cash flow needs.
·
Divesting the NJSEA of all responsibilities related to venue
operations, including, in particular, the Meadowlands
Racetrack, the IZOD Arena and Monmouth Park Racetrack.
·
Postponing the proposed Bayonne OTW project until legislation can
be passed that permits OTWs to function without live racing.
·
Ceasing operations of the Meadowlands Racetrack and offering
standard bred owners the opportunity to lease the
Meadowlands Racetrack.
Advancement or Resolution of Xanadu Project
Located in the New Jersey Meadowlands, this three-story
entertainment and retail complex was envisioned to be one of
the largest entertainment and retail complexes in the United
States with over 2,200,000 square feet of rentable space.
Scheduled to be completed and opened in 2007, approximately
$2 billion has been invested in the unfinished Xanadu
project with an estimated $875 million is needed to complete
it. The Commission found potential benefits of the project
and recommends the State cooperate and, if needed, provide
targeted assistance to bring the project to completion.
Assistance should follow certain basic principles:
·
Any tax exempt financing should not represent a primary funding
source but should only fill a funding gap in private market
sources.
·
The development group should contribute cash equity consistent with
present market demands and must resolve and reset the
existing capital structure in a way that facilitates new
financing, which may mean substantially subordinating all
lenders’ and owners’ rights to those of any new lenders.
·
The underlying ground lease should be amended to include, among
other things, a date certain for completion and opening,
with appropriate penalties for failure to comply.
·
If the project can only be completed with tax exempt financing, the
State must be able to reasonably expect to receive some form
of upside financial return commensurate with the level of
public sector involvement.
Improving the Competitiveness of the Gaming Industry
As one of New Jersey’s largest industries, casino gaming in New
Jersey is currently at a critical crossroads. The industry
accounts for nearly $1 billion in state and local taxes and
more than $2 billion in revenues spread across more than
2,000 businesses. Since 2007, the industry has lost more
than 25% of its gross revenue base with employment dipping
below 40,000. The Commission recommends an economic
framework that focuses on job creation, capital investment,
regulatory reform and increased tax revenues. These goals
include:
·
Creating a “Clean and Safe” Tourism District with State oversight,
with the goal of making Atlantic City clean and safe by July
1, 2011.
·
Creating a Master Plan for the new Tourism District, focused on
enticing new entrants to build both gaming and non-gaming
attractions that will increase demand in the City. The Plan
should be delivered to the Governor no later than July 1,
2011.
·
Improving the financial stability of Atlantic City by attracting
other world class operators to ownership of the eleven
existing facilities as well as any new ones.
·
Increasing the meeting and convention business in the Atlantic City
market by at least 30% per year for the next five years.
·
Bringing the New Jersey regulatory structure into the 21st
century by reducing costs and redundancies and by supporting
the attraction of operators while maintaining strict
integrity.
·
Increasing visitation and spending through joint marketing efforts
on par with other national destination resorts.
·
Improving intermodal transport to Atlantic City, including
increasing air, rail and ferry options.
Creation of a Sustainable Industry Structure to Preserve Live
Horseracing
In an effort to stabilize New Jersey’s ailing horseracing industry,
the Commission recommends immediate implementation of an
experimental short term plan in 2010, that calls for the
elimination of the thoroughbred meet at the Meadowlands and
the creation of a 50-day summer meet with a $1 million a day
purse at Monmouth Park (the “50-day meet”). A 21-day weekend
fall meet is also planned at Monmouth to supplement the 6
days of turf racing at Atlantic City Race Course. These
changes were legislatively approved and signed into law by
Governor Christie in May. A number of future potential
options include:
·
Thoroughbred racing at Monmouth and Atlantic City (a 50-71-day meet
at Monmouth Park and potentially 10 days of turf racing at
Atlantic City).
·
Thoroughbred Racing at Monmouth and potentially 10 days at Atlantic
City and 70 standard bred dates at Monmouth.
·
Lease the Meadowlands Racetrack to the standard bred horsemen for
$1 dollar a year for three years with early termination
rights and an equity-based share of the Bayonne OTW parlor.
·
Convert to a commercial use one of the standard bred farms in New
Jersey that has a mile track, and build a 5,000 seat
grandstand complete with all necessary amenities.
Improving Cooperation and Coordination Among New Jersey’s Major
Entertainment Venues
The Commission recommends the development of an integrated and
cooperative policy among the four State-influenced venues
(IZOD Center, PNC Center, Historic Atlantic City Convention
Center and Rutgers Stadium) in addition to major
entertainment or sports events held at the Prudential
Center, Symphony Hall and the Meadowlands football stadium
to ensure that competition among them is mutually beneficial
and not counterproductive to their financial success. Other
recommendations include:
·
Testing the market for interest in privatizing operations of the
IZOD Center and the PNC Arts Center by issuing a request for
proposals.
·
Establishing a single point of contact for booking concerts and
other events at the taxpayer-supported facilities.
·
Formalizing and developing a plan for improving communications
among the IZOD Center, the PNC Arts Center, the Prudential
Center, the Rutgers Arena and Stadium and the Atlantic City
Boardwalk and Convention Center.
Created by Executive Order #11, the Commission was charged
with developing a comprehensive policy to repair the
unprecedented financial and structural challenges
confronting New Jersey’s gaming, professional sports and
entertainment industries
In addition to its chairman Jon Hanson, other members of the
Advisory Commission included Robert E. Mulcahy III, a former
president of the NJSEA and Athletic Director at Rutgers
University; Finn Wentworth, principal of Normandy Partners
and Founder of the YES Network; Al Leiter, the former Major
League Baseball pitcher and YES Network commentator; Wes
Lang, managing director of WML Partners, LLC, a New Jersey
private equity investment and development company; Debra P.
DiLorenzo, president and CEO of the Chamber of Commerce of
Southern New Jersey; and Robert Holmes, a law professor at
Rutgers School of Law in Newark, where he serves as Deputy
Director of Clinical Programs and Director of the Community
Law Clinic.
To view the report, go to http://www.nj.gov/governor/news/reports/pdf/20100721_state_document_final2.pdf
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