X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Eric Peterson is editor of Real Estate New Jersey, from which this article is excerpted.

The past few years have been challenging times for the New Jersey Sports & Exposition Authority, the state agency that operates the Meadowlands Sports Complex and several other sports and entertainment venues around New Jersey. Many of those challenges have involved the controversial Meadowlands Xanadu project and a new stadium for the Giants and Jets, and there has been plenty of discussion, pro and con, about how the issues have played out under the NJSEA’s aegis. As the chairman of the NJSEA’s 13-member board, Carl Goldberg has had a major hand in dealing with these and other issues. He’s also the chairman and co-founder of Roseland Property Co., a well-respected residential developer, and RENJ editor Eric Peterson sat down with him recently in his Short Hills, NJ office to talk about those challenges:

Q: There’s been criticism of the handling of the Meadowlands Xanadu project being developed by Mills Corp., which has had some well-publicized financial difficulties, and Mack-Cali. How do you answer the critics?

Goldberg: We felt the RFP and process to designate a redeveloper for the 104 acres around the Continental Airlines Arena was full and transparent. More than 70 firms expressed interest in being designated as the redeveloper and we had six firms that actually submitted full proposals. Those were narrowed down to a final three, and the joint venture of Mills and Mack-Cali was chosen.

Q: Why Mills/Mack-Cali?

Goldberg: I always say there were two compelling reasons–they offered us the most money and they had the most well-done land plan. The bottom line is that the state had a fidicuary obligation, and the Sports Authority had a fiduciary obligation to take the best land plan and the most money. We were looking for something that would be additive to the sports complex, that would enhance its reputation as a destination. From our perspective, Mills had the most varied land plan that not only included entertainment and retail, but also hotel and office, and it gave us an opportunity to really make the Sports Complex a place of destination.

Looking back, one of the big errors that has been made at the Sports Complex for nearly three decades was that we never really created a situation where there was a “there” there. We felt that by creating this land plan with retail, restaurants, a dynamic life, that we would be able to do something at the Sports Complex that in its own way was not dissimilar to what happened in the Inner Harbor in Baltimore.

Q: Are you satisfied with Mills at this point?

Goldberg: I’m not satisfied with Mills. Unfortunately, none of us had a crystal ball. By the way, I need to emphasize that it is a joint venture, and one of the elements that led us to designate that joint venture was Mack-Cali’s local presence and tremendous financial strength. I think Mitchell Hersh of Mack-Cali would still tell you they’re fully committed to the partnership.

That being said, of course I’m disappointed in what’s transpired with Mills. I’m a realist. When we first made this designation over three years ago, Mills’ stock was at or near an all-time high, analysts were very bullish on the company. I have no more insight into the future of this organization than the analysts did at that juncture. So we had no reason to anticipate the financial distress they’re currently dealing with.

But they are working hard to continue to secure tenants, and it’s important for the Sports Authority to maintain a balanced approach to its relationship with Mills in the sense that we don’t want to chill the leasing market by being unduly negative because then we inevitably harm our own project. We’re vigilant, and we try to make sure they fulfill their representations. We are expecting a series of important tenant announcements in the next 30 to 120 days. We will have to re-evaluate our relationship with Mills at the end of this year as to whether they have fulfilled their representation as to the amount of leases they expect to generate between now and December.

Q: Is there a worst-case scenario involving Xanadu?

Goldberg: It’s prudent for me to recognize some of the real downside risk. I don’t like to be overly public about it, because as I suggested I don’t want to have an adverse impact on their leasing activities. But we do have $160 million–we’ve received the full pre-paid ground lease–in the coffers of the Sports Authority, that’s not been spent. Some of it had to be allocated, by state law, for bond defeasances. But the vast majority of that money is still available to the Sports Authority. If at some point it becomes apparent to us that Mills is not going to be able to execute the land plan that has been approved by the Sports Authority, and has not been able to find a successor in title, the Sports Authority might have to step in and take on that responsibility.

Candidly, as best as we can tell, there’s over $600 million of equity already in the project. It’s six miles from Midtown Manhattan in some of the best demography in the United States, and we’re fairly confident there’s someone who will want to finish this project in a manner consistent with the original approved land plan.

Q: What about the Giants/Jets stadium agreement?

Goldberg: There were a lot of elements that went into the transaction. The economics of professional sports has changed dramatically over the last decade, and a lot of it focuses on revenue generated from high-end suite sales, corporate sponsorships and whole host of advertising opportunities and naming rights that drive these franchises to require more technologically advanced facilities. We had a contractual obligation to the teams to continually maintain the old facility in a “state-of-the-art” manner, and that had significant financial liability, potentially, to the State of New Jersey.

So it became apparent that there was a mutuality of interest that drove both the Authority and the teams to come up with a program to get a new stadium built. Fortuitously, both franchises were willing to form a joint venture where they’re putting in their own money and investing in excess of a billion dollars to build a new facility.

Q: Generally speaking, are you satisfied with the way the Authority is performing at this point?

Goldberg: George Zoffinger [the CEO] and I have been at the Sports Authority since March 2002. Clearly, we have issues to deal with. The Sports Authority is in a state of transition. The nature of the relationship between franchises and landlords has changed dramatically, and we have to change with the times, so one of the things both George and I recognize is the need to reshape the Sports Complex. That was one of the things that drove us to do the redevelopment proposals for the area around the Continental Airlines Arena, and one of the reasons we’re looking at ways to expand and enhance our horse racing business in a challenging environment. There are a lot of challenges, but I would say, on balance, I’m pleased with what happened with the Sports Authority for the last four years.

Q: What, in your opinion, is the biggest misperception about the Authority?

Goldberg: I think it’s that the Sports Authority is not engaged in the dialogue it needs to be with surrounding communities as it makes land plan decisions. As I mentioned earlier, we did in fact have a very open process on the designation of the redeveloper of the Continental Airlines Arena site. We created a stakeholders’ advisory group representing a variety of local elected officials, people involved in the trade unions and other constituent groups. We had many public hearings and a series of outreaches, so that all elected officials in the region could be continually updated on what we were doing.

Q: What will the Meadowlands Sports Complex look like in 20 years?

Goldberg: That’s a great question. That’s what I dream about at night. I’m hopeful that our legacy will see a completed, thriving, successful Meadowlands Xanadu that’s fully integrated with a state-of-the-art, world-class Giants/Jets stadium facility, where there’s a synergy between those two elements so that it’s genuinely become a place of destination. We’re hopeful that the Meadowlands Race Track will still be a thriving, successful part of the racing industry.

Obviously, we have some difficult decisions to make as to the future of the Continental Airlines Arena. If it becomes devoid of any sports teams, there’s a possibility, because of its attraction for family and entertainment shows, there will be additional investment in renovating it and making it part of what we hope will be recognized as one of the most important family entertainment destinations in the US.

Q: You have a substantial, successful real estate background…how to you apply that to your role with the Authority?

Goldberg: It’s very interesting…when I was first asked by then-Gov. [James] McGreevey to join the Sports Authority board, and shortly thereafter become its chairman, I think the governor recognized that a lot of the challenges the Authority would face were going to be real estate-related. In fact, Gov. McGreevey was accurate–most of the challenges have been real estate-related, in some ways as we segue from an owner/operator to a landlord. In some of the facilities such as Meadowlands Xanadu and the new stadium, we will simply be a landlord. The nature of the agreements that have been negotiated and executed with these bodies were real estate agreements–long-term ground leases, redeveloper agreements. And by the way, three or four other members of the board have real estate backgrounds.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt
Live Chat

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.