Post by jamiebez on Jan 12, 2006 11:58:06 GMT -5
Long story short, the Devils need to come up with their $100M, or the city is threatening to pull the plug on the new arena in Newark. Apparently, excavation has already started, so it may be an empty threat, IMO.
Skip down to the last 2 paragraphs, though. Those attendance numbers are pretty scary.
www.nj.com/search/index.ssf?/base/news-4/1137044710180090.xml?starledger?ntop&coll=1&thispage=1
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Cash crisis puts arena on thin ice in Newark
City wants $100M guarantee from Devils
Thursday, January 12, 2006
BY MATTHEW FUTTERMAN AND JEFFERY C. MAYS
Star-Ledger Staff
For more than 10 hours Tuesday, city officials and owners of the Devils sat in a conference room at Seton Hall Law School trying to figure out if they could continue their partnership and actually build a hockey arena in downtown Newark.
With the future of the city at stake, two of the state's top civic leaders, Prudential Chief Executive Art Ryan and Seton Hall Law School Dean Patrick Hobbs, hunkered down with Newark and Devils officials for a meeting that dragged on late into the night. It was a desperate attempt to salvage a dream nearly a decade in the making.
Although they made some progress, the two sides remained at odds yesterday, with the city refusing to allow the Devils to begin the next phase of construction on the $310 million arena unless the team can guarantee its $100 million contribution.
"Maybe all of this should have been done six or eight months ago," Hobbs said yesterday. "What you have now is what you often have in partnerships -- two partners that are trying to figure out a way to proceed with a clear understanding of what each other's obligations are going forward so that everyone's interests are protected."
After months of letting the Devils spend tens of millions of dollars in taxpayers' money to acquire and clear land for the project, city officials now insist no further work can be done until there is a clear understanding of when and how the Devils will come up with the cash -- something critics of the project have been insisting on for months.
That Hobbs and Ryan are involved shows how bitter relations between the city and the Devils have grown in recent weeks. Without the $100 million commitment, city officials threatened to declare the Devils in default of their development agreement. The Devils, in turn, threatened to abandon the project, because the team said the city had not supplied all the land needed for the arena or moved nearby utilities.
Should the Devils back out, the city said it would proceed with other proposals to develop the 24-acre site at Broad, Market, Lafayette and Mulberry streets. The two sides hope to resume discussions by the end of the week.
With the arena in jeopardy, Hobbs, who in 2004 chaired a blue-ribbon panel that approved the city's plan to invest in the arena, said Ryan called him and requested his help.
"We were brought in because there was a sense of mistrust between the parties and also in the public about the process," Hobbs said. "The hope was that we could help come up with something that we could all stand behind."
City Business Administrator Richard Monteilh said the Devils need to follow through on their promise to produce an irrevocable document guaranteeing their $100 million contribution.
Monteilh said the city either wants cash or a letter of credit from a bank backed by the Devils' assets. The letter has to state that the city would have unrestricted access to the $100 million once construction on the arena itself gets under way.
Previous letters of credit from the Devils provided clauses that allowed the Devils to bail out, Monteilh said, and the city rejected them.
"The Devils have to provide a letter with no conditions," said Monteilh. "The city has to have unencumbered access to the money."
Devils principal owner Jeff Vanderbeek did not return several phone calls seeking comment during the past two days, but Monteilh said both sides have made concessions. He said the Devils agreed not to pursue breach-of-contract claims and would toss out a clause allowing them to walk away if the cost of the arena were to go above $310 million.
Industry experts said the last-minute bickering could have been avoided if the city had followed standard procedures that require all the money to be in place before any significant demolition or construction work begins.
Marc Ganis, a sports industry consultant who specializes in stadium and arena construction deals, said in some cases, a city will acquire land and prepare a site for an arena before all the funding is in place if a team is trying to meet deadlines. That is the case in Newark, where the Devils hope to begin playing in October 2007.
"But building construction doesn't start until the funding commitments are all in place to complete the project," Ganis said. "Actual construction and the foundation work are not typically done."
In Newark, numerous buildings have been torn down and the outline of the arena foundation is now clear.
Under their development deal, the city committed $210 million for the project, with the Devils covering the remaining $100 million. The Devils were originally supposed to deliver the $100 million payment by July 1, according to the contract.
But various delays -- including the discovery of human remains in an historic graveyard -- meant the city could not keep its end of the bargain and deliver a clear site on time. Under the contract, the deadline for the Devils' payment was pushed back to Sept. 1. The date came and went without the $100 million, but that didn't get in the way of a gala groundbreaking ceremony in October.
Richard Cammarieri, a community activist and outspoken opponent of the arena, said the Devils should have put their $100 million in escrow before a single building was demolished.
"You would think the money would be nailed down before anything else, but it wasn't," Cammarieri said.
For the Devils, the city's demand for cash could not come at a worse time. The team is coming off the National Hockey League lockout that cost the league the entire 2004-05 season and cut off cash flow for the 30 franchises.
After the lockout, fans have been slow to return to the games, and the Devils are suffering as much as any team in the league. Through 22 home games this season, the Devils averaged just 9,820 fans a game at the Continental Airlines Arena, which holds 19,040 for hockey.
A recent game against Florida drew just 5,251 fans. In 2003-04, the last season the team played, the Devils averaged 11,921 fans in their first 22 games.