March 12, 2005

Coming to Terms.

Filed under: Uncategorized — Jim @ 9:50 pm

I concluded that I don’t pack the gear to be one of the Big Time Bloggers when I saw that Glenn Reynolds was blogging while in a cab.


New Jersey Sues the “New York” Giants.

Filed under: Uncategorized — Jim @ 2:29 pm

Even non-football fans in New Jersey know that the “New York” Giants play their home games in the Meadowlands Stadium in New Jersey. This is the result of a deal that was made between the New Jersey Sports and Exposition Authority (the “State”) and the Giants in 1995. Under the terms of the deal, the State (i.e. the taxpayers) built a stadium for the Giants and leased it to the team.

We now know that one of the more astonishing terms of the lease provides that the State must maintain the stadium in “state of the art” condition for the term of the lease, which does not expire until 2026. Recently, the State and the Giants have been negotiating a new deal that provides for the Giants building a new stadium, thereby “relieving” New Jersey taxpayers of having to make the “state of the art” renovations, which the Giants estimate would cost $300 million, while the state is of the view that the improvements would cost $100 million.

Enlighten New Jersey has written extensively about the ongoing discussions from the point of view of the taxpayers.

As Enlighten New Jersey notes, the parties came to an impasse when the state refused to give up the option of imposing various taxes on the operation of the new stadium. As a result, the Giants (no doubt aware of New Jersey’s insatiable appetite for taxes) floated the possibility of leaving New Jersey in favor of New York City.

In response to the Giants’ suggestion that the team might leave New Jersey, the State marched off to court and sued the Giants, apparently seeking to enforce the terms of the lease and have the court to interpret the lease’s “state of the art” clause in a manner favorable to the State.

Now, as sure as the sun will come up tomorrow morning, the Giants will file a counterclaim for breach against the State, alleging a failing to maintain the stadium in “state of the art” condition as required by the “plain language” of the lease. As noted above, the Giants say the price tag will be $300 million and the State says $100 million.

At this point, it is important to note that the State still owes $117 million for the original deal. Let me repeat that. After twenty-eight years of operation of the stadium, the State still owes $117 million for the original deal!

Admittedly, I am not privy to the terms of the existing lease, nor have I read the papers filed by the state in court to commence the lawsuit, but based on what I know from “reading the newspapers,” here are a couple possible outcomes, neither of which seem particularly good for New Jersey’s taxpayers.

The court could decide that “state of the art” means what people commonly understand the term to mean. As such, the taxpayers of New Jersey will have to make renovations now and through 2026 to provide the Giants with a stadium that contains amenities equal to those in the best stadiums elsewhere in the country, in which case the initial hit will likely be close to the Giants’ $300 million figure and more as additional renovations are needed through 2026.

In the alternative, the court could decide in favor of the State and disregard the common meaning of the term “state of the art” by concluding that the parties could not have intended the term’s common meaning (i.e. “that even the State would not make such a stupid agreement”), and direct the State to make more modest renovations, if anyone can consider $100 million in improvements to be “modest.” Of course, between now and 2026, the State will undoubtedly be called upon to make additional improvements to the stadium.

So, now the State will be embroiled in an expensive lawsuit with the Giants, the sole purpose of which is to determine how much money it will cost New Jersey’s taxpayers to “keep the Giants in New Jersey,” while New Jersey still owes $117 million on the original deal.

Of course, the parties could drop the lawsuit and return to the terms of the pending deal, which would cost taxpayers $30 million to extend sewer lines and make other infrastructure improvements. And, at the end of the day, the rent that the State would receive would be $10 million less than it now receives annually from the operation of the stadium. And, don’t forget the $117 million that the State still has to pay.

Do New Jersey’s taxpayers, already being choked to death with taxes, need any of this baloney?

Enlighten New Jersey opines that the best outcome would be to simply let the Giants “break the lease” and move to New York. I agree, but such an outcome would have to be the result of a settlement, rather than an outcome of the pending lawsuit.

If both sides are willing to walk away from the existing lease without any further consequences (including mountainous legal expenses for a lawsuit), I say DO IT. There must be something the State can do with that stadium to help pay off the $117 million in outstanding debt.

As for the Giants, they would be giving the State’s taxpayers a break by moving their operation across the Hudson River where they can righteously call themselves the “New York” Giants.


Filed under: Uncategorized — Jim @ 10:24 am

Rob’s mother passed away this morning in her sleep. He had written about this strong woman lovingly and often. I wish I could have met her.

You may want to drop by Rob’s site to express your condolences.

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