Wednesday, July 21, 2010

Gov. Christie Proposing Major Changes To Atlantic City and Meadowlands

Coming off the budget battle to start righting the New Jersey fiscal ship, Gov. Chris Christie has set his sights on the horrible governance at the Meadowlands and Atlantic City. He's proposed a state takeover of the casino and harbor gaming districts and disbanding the New Jersey Sports and Exposition Authority, which oversees the Meadowlands racetrack, IZOD Center, and the stalled Xanadu project.

The key points are as follows:
 The state would seek to transform Atlantic City into a convention and family friendly resort, including a major expansion of the boardwalk that would include amusement rides. The entertainment areas would be placed under the control of a new state authority, essentially turning it into an independent city within a city.

• Money from the Casino Reinvestment Development Authority, now shared throughout the state, would stay in Atlantic City for projects and improvements there.

• The Meadowlands Racetrack could be sold for a token $1, or turned into an off-track wagering facility without live horse racing.

• The New Jersey Sports and Exposition Authority would be all but disbanded, becoming simply a landlord for the facilities it now operates. The Izod Center arena in the Meadowlands could be privatized or sold.

• The state would help re-finance the long-stalled Xanadu project in the Meadowlands, enabling a new developer to take control of the garish, high-visibility retail and entertainment complex alongside the New Jersey Turnpike that many consider an embarrassment.
Atlantic City has fallen well behind other casino destinations, particularly Las Vegas in attracting business. It couldn't keep up with the glitz and glamor and local corruption didn't help. Mismanagement in the local government meant that money that should have gone to improving the city ended up in the pockets of bureaucrats. Yet, the fault isn't solely on the city's political structure. The casinos themselves bear culpability too. They've failed to entice customers to Atlantic City in a way that can compete with Foxwoods, Mohegan Sun and other nearby casinos. When was the last time you saw advertisements for Caesars Palace or the Borgata? Combine that with paltry comps and excessive pricing for rooms and you end up with daytrippers who aren't going to spend a whole lot of time or money on the casino floor.

The casinos themselves need to rethink how to better market themselves just as surely as the city and casino district have to clean up their act. A state takeover may help accomplish this, but it should never have come to that sorry state in the first place.

Eliminating the public authorities is a good first step to cutting down the bureaucracy and cronyism that dominates the local politics in the state. Yet, the Meadowlands portion of the proposal is troublesome because of how it might refinance the Xanadu project, leaving taxpayers on the hook for the tab even as it was a project that should have kept the risk on the developers - not taxpayers.

So, according to the Record, who wins with this proposal?
The casino industry: Casino owners believe anything that increases state investment in Atlantic City is good for business.
Gamblers: Atlantic City becomes more inviting.
State Sen. Stephen Sweeney and South Jersey legislators: Held the line on gaming outside of Atlantic City.
Xanadu: Gets a new lease on life.
Stephen Ross: New York real estate developer could get state financing.
Construction industry: Proposals could lead to massive construction in Atlantic City and Xanadu.
Prudential Center: Arena in Newark could see less competition from Izod Center.
Who loses?
Sports and Exposition Authority: To close up shop.
Atlantic City Convention and Visitors Authority: Also would close.
Harness racing: Would no longer be state-subsidized. The Meadowlands Racetrack could close.
Monmouth Park: Track attendance is up with new shortened race schedule, but state may privatize track, leaving its future uncertain.
Atlantic City municipal government: Gets a vote of no confidence. Loses control of the casino and entertainment district to the state.
Xanadu: If no deal is reached, the state will foreclose.
It isn't clear whether the Bergen County political delegation wins or loses since it depends on how much money ends up being generated from the rejiggering of the Meadowlands enterprise (the racetrack, IZOD Center, and Xanadu). While some people are critical of the racetrack venture and think it may end up shutting down the track along with the loss of jobs, the state needs to seriously consider whether horse racing is a venture that it should be spending and losing money on when there are more critical needs. Bear in mind that the NJSEA was meant to generate money for the state through investing in the sports venues in the Meadowlands and around the state. It's turned into a money-losing operation that can't sustain itself. That has to change.

To prove my point about the casinos themselves being part of the problem, note that Travelzoo has a list of hot deals. Among them is a deal to get a room at the Luxor for all of $38 bucks for a room on the Vegas Strip. That's significantly cheaper than comparable rooms in Atlantic City's casinos and it can potentially be cheaper to fly to Vegas than to drive to Atlantic City. Airfare from NYC can run $350 or so to Vegas. If you plan on going for a week, you could end up spending less for a room in Vegas. The cheapest rooms in an Atlantic City casino are from $115 a night at the Trump Marina. That doesn't compare favorably to Vegas casinos on the strip at all.

No comments: