The agreement calls for Prudential Center to pay New Jersey Sports and Exposition Authority $2 million to close down and it also sets out conditions for reopening. One alternative has the Izod Center capacity trimmed to less than 10,000 and focus on smaller acts while not competing directly with Prudential Center. Alternately, Izod Center could remain closed in 2017 while a new business plan is finalized.
For Prudential Center, eliminating Izod Center as a competitor gives it leverage when negotiating with touring shows. For the state, it means shutting down a money-losing facility and saving money. From Northjersey.com:
Sports authority President Wayne Hasenbalg said the agreement reflects the acknowledement by state officials that in the “changed competitive environment” that includes the 2007 opening of the Prudential Center a dozen miles away, state officials saw little hope of improving Izod’s losing balance sheet.
“The reality is, the numbers don’t lie,” Hasenbalg said. “This administration for the first time has been really thorough in looking at the finances of the authority, and more specifically, Izod, and the numbers are what they are. The decision was made that we’ve got to stop losing $700,000 a month.”
In the letter, the sports authority agreed either to keep the Izod Center closed in 2017 and in 2018 as well, or alternatively to reopen in 2017 in a format that is not directly competitive with the Newark arena.
As we’ve noted for years: there are very few markets that can support multiple arenas, and with other large venues already in the New York City/New Jersey area, it was always a challenge to sustain two arenas in New Jersey, especially for Izod Center after the loss of the NBA’s New Jersey Nets to Brooklyn and the NHL’s New Jersey Devils to Prudential Center.