The Mayor Goes to War

Cory Booker has had it up to here with the New Jersey Devils organization.
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Cory Booker is pissed off. “Being nice is over,” he says. “I can only be pushed so far.” Standing in front of the Prudential Center in Newark on April 4, Mayor Booker lashed out at the owner of the arena’s tenant, New Jersey Devils managing partner and chairman Jeffrey Vanderbeek. “He is a highfalutin’, high-class huckster and hustler,” Booker said. “And now, it’s on.”

What got Booker so riled up is a dispute with Vanderbeek over money. In 2004, when Mayor Booker was merely Councilman Booker (and mayoral candidate Booker), Vanderbeek was merely an executive vice president at Lehman Brothers and a minority owner in the Devils. That year, the Jersey native banking exec purchased the Devils outright and promised to move the team to Newark, proclaiming that a pro sports franchise in a new arena had the potential to revitalize the struggling city. It’s more likely more interested Vanderbeek was keen to take a sweetheart deal he was offered by then-mayor, now-disgraced Sharpe James, one that committed over $300 million in public money to finance the arena.

The Prudential Center deal, which was approved by the city council, isn’t at all good for a city as broke as Newark, but it isn’t the worst arena deal, either. The team still has to pay rent to the city, which seems obvious—you live in a building that someone else owns, you pay them rent, right? But actually, getting rent from a tenant sports franchise is a pretty good condition, compared to other shitty arena deals.

But the Devils haven’t paid a lick of rent to the city. They claim Newark owes them money for parking revenues. Sharpe James’s business administrator, Richard Monteilh, signed a side-letter separate from the financing deal guaranteeing Vanderbeek a $2.7 million a year from parking revenues. The yearly rent the Devils owe the city? $3 million. The city is also required to kick in cash toward a “capital fund” for the club—which means Newark owes the Devils money as a consequence of the team playing in an arena that was built and is maintained with tax dollars.

Since becoming mayor, Booker has asked the Devils to renegotiate the rent/parking/capital deal, arguing that a signed letter from a city business administrator did not constitute a binding agreement with the city government. He had an opinion from a state Superior Court judge saying the letter was not constitutional to back up his argument. But that same court referred the case to a panel of arbitrators per the language in the arena financing contract. The arbitrators ruled that the letter was binding and that Newark’s bill was due. That’s what prompted Booker’s tirade outside of the arena two weeks ago.

Shitty arrangements like these (literally, a deal with the Devils) are the rule, not the exception, in the world of big-league sports: Cash-strapped communities routinely pay through the nose to keep a pro-sports franchise in town. The justification has always been that a pro team brings other business and economic development. Studies have shown that this argument is false.Places like Newark want a professional sports team because it offers them a source of civic pride. But is big-league status a compulsory aspiration? Or, more to the point: can Newark and similar cities afford sports?

There’s another story that is unfortunately too common. A heroic city government stands up to the greedy team owners and refuses to cut these sweetheart deals. They almost always lose, either losing the team to another city that is more willing to hand over the keys to the public treasury, or back down and pay the ransom. Once upon a time, when Booker was still celebrating the Devils’ move to Newark, and the community was having a heated debate about the amount of public money that would be spent on the deal, Booker often held up a planned recreation center to be built by the Devils as evidence of Vanderbeek’s commitment to the community.

Vanderbeek promised to build the recreation center during the public debate. After the deal was done, he convinced the city to sign a letter releasing him from his obligation to build it, under threat of moving the team to Kansas City. According to Booker, the city has seen two Boys and Girls Clubs close down since the recreation center was promised.

It’s easy to understand and sympathize with Cory Booker’s anger. This was clearly a smash-and-grab job cooked up between Vanderbeek, a man who made a career working for one of the biggest criminal enterprises in America, and Sharpe James, a crooked public servant who ended up in prison. But it’s also tempting to think that Booker, smart guy that he is, should have known better than to trust the team in the first place.

The cautionary tales are plentiful. Providing public funding for a big-league sports franchise is a terrible deal for a struggling community. It is arguably a terrible deal even for a city with money in the bank. Just ask the citizens of Cincinnati, where the costs for the construction of the Bengals’ Paul Brown Stadium still eats up 16.4 percent of the county budget more than ten years after the stadium was built.  Since 1989, over 80 major league sports arenas have been built. Only eight of them were built without public money.

The sulfur-smelling Prudential Center deal was initially hatched by Booker’s predecessor. The political and economic realities that Cory Booker has to operate under are immensely constricting and challenging. It is rare that Booker shows the kind of anger that he has shown in this situation. I imagine that is because the anger is very real, not at all calculated or for show. I also imagine that the reality that the legal system has little sympathy for Newark’s situation and zero room for moral arguments has probably sunk in for Booker. The only strategy that Booker has left is to publicly shame Vanderbeek.

History suggests that shaming won’t work, though. While the public has little tolerance for multi-millionaires demanding corporate welfare to fund their businesses, the public also has very little power to do anything about it. Fans in Seattle stood up and fought back against Clayton Bennett when he demanded the government buy him a new arena or say good-bye to the Sonics. When he made good on his promise, the mayor of Seattle tried in vain to shame Bennett into doing the right thing. But rich guys like Bennett and Vanderbeek don’t give a fuck what the public thinks about them. They know that fans have no trouble at all separating the team from the owners. And no matter how disgusted we are with the owners, there is virtually nothing we won’t do for the home team.  

There is always another city out there who will give the owners everything they want. There is little room for leverage when negotiating with them, and little hope for their better angels to prevail. It is unthinkable that a major sports team would “go out of business.” Their fans either pony up public money, the owners move the team to a city that will offer a better deal, or the league steps in and bails out the team. Unike Lehman Brothers, which was forced into bankruptcy by the Federal Government prior to the financial collapse in 2008, the Devils are a relatively risk-free venture. There is no “moral hazard” for sports franchises. They are too big too fail.

I wouldn’t bet against Booker, though. This is the same guy who, as a councilmember, moved into the worst housing project in his district. The same one who lived in a tent on one of the worst drug corners in town to personally ward off dealers. The same mayor who rides around town with cops at 2 a.m. patrolling for criminals. In 2006, shortly after he was elected mayor, he chased down an armed robber on foot. Two weeks ago Mayor Booker literally saved a woman from a burning building by carrying her on his shoulder through the flames. Cory Booker is no bullshit, in short, and dude is into walking the walk.

Booker says he won’t set foot back in the Prudential Center until they renegotiate the parking agreement and make good on their promises. He recently reduced the city police detail from the Devils game. When asked about it, he said: "It would be nice to have more revenue from the arena so we could have hired more cops … We believe that the Devils should be stepping up like other arenas in the region to provide security for their fans." After Booker pulled the cops from their game-day detail, a Newark resident tweeted at Booker that “it’s on you now” if anyone were to be injured at the arena. Booker responded “If someone gets hurt ANYWHERE in Newark it’s on me.”

Meanwhile Vanderbeek has said that Booker is misleading everyone about who is really at fault for the wheels coming off the wagon. He argues that he has presented several compromises over the years and that the Mayor’s Office and the Housing Authority can’t agree on what they want to accept.

Vanderbeek has said that despite the rancor, he intends to keep the Devils in Newark. In an op-ed in the Star Ledger, Vanderbeek tried to pander to Devils fans in making his case. In addition to saying “I get my Jersey on every day,” he said that “being a true product of New Jersey means standing up for your friends for life and understanding what telling the truth means. On that, I choose the company of Devils fans.” He may have learned that lesson at Lehman Brothers, where the CEO tried to pay out $20 million bonuses to top executives even as they asked the government for a taxpayer bailout. Of course, he neglected to mention that when it comes to constructing community centers for poor kids, Vanderbeek is willing to act as if he might choose the company of Kansas City fans.

Booker’s critics contend that he is hurting Newark by fighting Vanderbeek. Steve Politi argued in his Star Ledger column that the Prudential Center was holding up its end of the deal not by paying the city parking revenue but by improving Newark’s image. “This is about millions of people coming into Newark and, for the many of them, leaving with a strikingly different opinion of the city than when they arrived.”

It isn’t difficult calculus for the mayor or anyone else who lives in Newark to do in their heads. The fact that suburban Devils fans are stoked that they didn’t get murdered after bravely venturing into downtown Newark for a game means little to the hundreds of city workers who have been laid off in the last two years. Those hardworking Newark residents, some of whom had served the city for decades, lost a decent salary, health insurance, pensions, and now face a job search in a city with a 14% unemployment rate. The fact that white people from out of town have an excuse to come to Newark and make the startling discovery that it isn’t Hell on Earth doesn’t make up for the scarce and valuable public revenue that will now go to Vanderbeek.

Of course it is possible that some of these former city workers found work at the Prudential Center. After all, according to Vanderbeek, “almost half” of the 1,400 jobs the Prudential Center provides are held by Newark residents. If the Devils manage to keep winning, the Prudential Center’s vendors, foodservice workers, cleaners and cashiers may get a few more hours this month. Everybody wins. Everybody gets their Jersey on.

The fight isn’t over. Booker is probably running for a third term as mayor, despite the fact that the budget crisis has meant that almost every decision he has been forced to make in his second term has been unpopular. He is no stranger to conflict. He is also no stranger to winning. Booker has enlisted Oprah Winfrey, Mark Zuckerberg, Mike Bloomberg, and many other wealthy firms and individuals to invest in the city’s future without sweetheart deals or tax money bonanzas. Even Shaq, who has already invested heavily in a movie theater in Newark, has vowed to bring an NBA team to town to replace the Nets after they move to Brooklyn. Booker is considered the main rival to Chris Christie for the governorship. He has started his own PAC. He is close to President Obama. If it were not the case that the Devils, much like Lehman Brothers, were deeply in debt and being bailed out by the NHL, you’d think Vanderbeek would think better of picking a fight with such a politically powerful and ambitious leader over a few million bucks in parking receipts.

But it could be that those parking lots are as crucial to Newark’s well-being as they are to Vanderbeek’s future as an NHL owner. If Vanderbeek can’t cut more “Devils deals” like the one he cut with Newark, he may find himself facing bankruptcy in the off-season and forced to sell his money-losing franchise. Just like tomorrow night’s game between the Devils and the Panthers, both sides are playing for their lives. The question is, in a matchup between the citizens of Newark and the wealthy Wall Street tycoon, which side are we rooting for?

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What's even sadder is how sports franchises are just the tip of the iceberg in terms of shitty public/private deals that in theory "attract job creators", but in reality sink the public further into debt. I wish the Association of Mayors and Governors would show some solidarity and refuse to let these corporate entities pick them apart and stiff arm individual municipalities.