McGreevey and YankeeNets Agree on $355M Arena Deal

The city of Newark and Essex County will combine to chip in $50 million (Newark's share is $35 million), and the state will pay for infrastructure upgrades, which could amount to $45 million over and above the $355 million price tag for the arena itself. The YankeeNets, owner of the two franchises, will kick in $120 million in cash and will also spend an estimated $15 million for bond insurance. Finally, the state and YankeeNets combined will take out $20 million in loans to finance the rest.

Those are the facts that the administration of Gov. James McGreevey, along with YankeeNets officials, trotted out yesterday to jumpstart a project that had been killed during the administrations of Gov. Christie Whitman and Acting Gov. Donald DiFrancesco. The latter's proposal ended up being loaded down with "pork" involving projects all over the state, added to make it more palatable to constituencies outside of the Newark area. It didn't work, and McGreevey's deal has no such burden--yet.

But the project is far from a done deal, according to observers. For one thing, the deal has to be approved by both houses of the legislature, and McGreevey will have to put together a bipartisan coalition in the evenly divided legislature to get that accomplished. According to observers, the vote, if held today, would be too close to call.

For another, the fate of the Continental Airlines Arena, where the teams currently play, remains up in the air and a source of disagreement among politicians in Bergen County, where it's located, and the rest of North Jersey. One scenario being mentioned by McGreevey himself would be to turn it into a convention center that wouldn't compete with the new venue for events. In another scenario, the Mills Corp., which has proposed a controversial (mostly because of wetlands) $1-billion mixed-use (mostly shopping) complex for elsewhere in the Meadowlands market, would be given a crack at moving its project to the old arena site.

And because New Jersey is facing a $5-billion budget deficit, opponents of the arena question the wisdom of laying out the cash in the face of that massive shortfall. McGreevey was quick to minimize the state's financial exposure, indicating yesterday that under the terms of the deal, if tax revenues don't cover the debt service on the bond issue, "YankeeNets will clearly be responsible for any shortfall. I have fulfilled my obligation to make sure that New Jersey taxpayers will have no exposure."