Can NJ lure the Philadelphia 76ers to Camden with massive tax breaks?

New Jersey officials are betting big that they can attract a major sports team to Camden, possibly the state’s poorest city.

Business magazine ROI-NJ reported that the state would put two tax subsidies — each worth $400 million — on the table for the Philadelphia 76ers to build a massive, multibillion-dollar facility north of the Ben Franklin Bridge. That letter has since been obtained by NorthJersey.com.

Sports economists said there would be little if any economic benefit for New Jersey, and that New Jersey's proposal is essentially part of a bidding war by the 76ers to get the most lucrative subsidy package from either New Jersey or Pennsylvania.

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Proponents have argued that the move would be another win for Camden, which has seen decades of decline in its economy and public safety.

One of the subsidies would support the arena and “ancillary infrastructure” such as parking and open space. The second subsidy would go toward mixed-use residential, retail and office development, the letter said. The move has the backing of several powerful state lawmakers, ROI-NJ reported.

"We envision a multi-billion dollar privately-led comprehensive mixed-use development north of the Ben Franklin Bridge that would serve as a transformative catalyst for Camden and New Jersey," wrote Tim Sullivan, chief executive officer of the New Jersey Economic Development Authority, which would oversee the potential tax breaks.

On top of that, the state is offering to establish $500 million in “special-purpose bonds supported by fees and surcharges on tickets, concessions and parking,” pending approval by the New Jersey Legislature, the letter said.

The 76ers already have their headquarters and practice facilities Camden, a move that came in exchange for an $82 million tax break in 2014. State officials have scrutinized the tax break and cut roughly $2.5 million of the basketball team's award. The team plays its games at the Wells Fargo Center in Philadelphia.

The prospect of the 76ers leaving Philadelphia and hopping across the Delaware River has been talked about for months . The 76ers are proposing the construction of an arena adjacent to Philadelphia's Chinatown, in what would be called "76 Place," though there is major pushback from local residents.

History of tax subsidies for sports arenas

The idea of using taxpayer subsidies for a sports arena is nothing new.

Between 1970 and 2020, state and local governments have forked over $33 billion in public funds to construct major-league sports venues across the United States and Canada, said a joint study by Kennesaw State University, West Virginia University and the University of Maryland-Baltimore County.

“They do incur costs. They’re not free money. They are a state investment in a thing,” said Peter Chen, an analyst with the progressive think tank New Jersey Policy Perspective.

Victor Matheson, a sports economist with the College of the Holy Cross in Massachusetts, suggested that the 76ers could essentially spark a bidding war between neighboring states.

"New Jersey is one of these states that could easily be used as a pawn against the big city, in that you could say if New York or Philadelphia [isn't] giving you the subsidies you want, you use Newark or you use Camden as a pawn to try to grab those economic subsidies," he said. "You want to get into a bidding war" between Pennsylvania and New Jersey.

'Not likely to be an economic positive'

Andrew Zimbalist, a sports economist based at Smith College in Massachusetts, said such a tax break and move to Camden is “not likely to be an economic positive.”

But the devil is in the details, he noted, and many of those details have yet to be hashed out, from financing to cost overruns, maintenance and capital expenditures.

“When you spend money on an NBA team, a lot of it goes to the owner, who doesn’t live in Camden," Zimbalist said. "Fifty percent of the money goes to the players, who also don’t live in Camden.”

Most of the jobs generated at sports arenas are lower-paying service positions, Matheson said.

History of bouncing between cities

The Phoenix Coyotes NHL team announced in April that it was leaving Arizona for Salt Lake City, Utah, ending a 27-year stint in the Valley.

The decision to leave Phoenix came after a years-long bitter feud by local officials over whether hundreds of millions of dollars in taxpayer funds should be used for the stadium.

“The team has no loyalty. They’ll just pack up and leave,” said Chen, of New Jersey Policy Perspective.

U.S. Bank Stadium was built in 2016 for the Minnesota Vikings with nearly half a billion dollars in state and local subsidies.

In June last year, Nevada lawmakers approved $380 million in public funding for a 30,000-seat ballpark for the Oakland A’s.

But earlier this year in Missouri, voters overwhelmingly voted down an extension of the sales tax that would have financed stadium projects for the Chiefs and Royals.

"There's no credible threat in Philadelphia," said Matheson, of Holy Cross. "The 76ers are playing in one of the 10 biggest media markets in the U.S."

Did moving venues work before?

The 76ers’ owner, Harris Blitzer Sports and Entertainment, already has a Garden State presence with the New Jersey Devils hockey team at Prudential Center in Newark. The Devils were previously at the now-closed Izod Center in the Meadowlands.

Those plans to move the Devils south to New Jersey’s largest city had been in the works for several years before coming to fruition in 2007.

By 2010, the move generated $15 million in local economic activity in the city and employed more than 700 additional people, on top of the 1,400 already staffing the arena, The New York Times reported.

In the long run, the travel of sports fans from Philadelphia to Camden could ultimately benefit New Jersey, said Zimbalist, the Smith College sports economist.

"Even if this isn't good for residents of the area overall, it might be good for a politician, because the mayor who gets that billion dollars of subsidy for the 76ers all of a sudden has a billionaire friend," Matheson said.

Trying to curtail tax breaks for stadiums

Congress tried in 1986 with the Tax Reform Act to cut off public financing for private construction of stadiums.

But the law essentially created a loophole, The Atlantic reported, by enabling state and local governments to finance private construction by issuing tax-exempt bonds.

As cities found themselves cash-strapped in the 1980s, local leaders pushed stadiums as a way to breathe new life into local economies.

Lawmakers and members of the public have remained unconvinced.

Sens. Cory Booker of New Jersey and James Lankford of Oklahoma introduced a measure in 2017 that would remove the federal tax-exempt status for certain bonds used to finance the construction of sports arenas, but the measure never moved forward.

“Professional sports teams generate billions of dollars in revenue,” Booker said that year. “There’s no reason why we should give these multimillion-dollar businesses a federal tax break to build new stadiums.”

In 2019, 2022 and 2023, Rep. Earl Blumenauer, D-Ore., introduced the similarly intended No Tax Subsidies for Stadiums Act, which also has not moved forward.

The Trump administration proposed removing the tax-exempt status in 2017 as part of a landmark federal tax bill, according to CNBC , but that did not advance.

How serious is the state?

Gov. Phil Murphy has been open about his desire to draw the 76ers to New Jersey. He said in July that it was a “serious conversation” and that the state was “going at this with seriousness and conviction.”

“We’re blessed with a good relationship with these guys, both the owners and the professionals,” he said. “We’ve been observing the lack of progress in Philadelphia, and we said, ‘You know what? We’re going to raise this with them,’ and we’re serious about it. They appear to be serious about it.”

That relationship is due to the company’s ties to Newark, the Devils and Prudential Center.

The New Jersey Sports and Exposition Authority has also funded “marquee events” at the arena, such as $5 million last year for a mixed martial arts fight, as well as funding for another fight and an outdoor Devils game held at MetLife Stadium this year.

Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.

Email: munozd@northjersey.com ; Twitter: @danielmunoz100 and Facebook

Katie Sobko covers the New Jersey Statehouse. Email: sobko@northjersey.com

This article originally appeared on NorthJersey.com: Can NJ lure the Philadelphia 76ers to Camden with massive tax breaks?