Watch CBSN Live

New Lease May Keep Nets In Jersey

The New Jersey Nets will get a bigger share of concessions, parking and advertising revenue at Continental Airlines Arena under a lease agreement announced Tuesday.

The incentives, which a source said could amount to $10 million a year, are aimed at keeping the club in New Jersey -- either at the Meadowlands or at a new arena the Nets want built in Newark, according to officials of the New Jersey Sports and Exposition Authority, the club's landlord.

"We see it as a commitment of a new ownership to keep the NBA in New Jersey, which is just terrific for everybody," said John Samerjan, a spokesman for the authority. "It gives us an opportunity, along with the Nets, to work on the issues of the future of the arena."

Related Links

NBA lockout coverage:

  • Lockout Central
  • Lockout chronology

    NBA audio

    Forum: Will the Nets stay in New Jersey?

  • The lease, which took effect Oct. 27, replaces one that gave the team the option to walk away from the Meadowlands arena at the end of the 1999-2000 season.

    It contains "escape clauses" that would require the team to make payments of $5 million to $15 million if the Nets leave New Jersey within six years.

    For rent, the Nets will pay 2 percent of gross ticket receipts if they total $30 million or less. If the receipts total between $30 million and $31 million, the sports authority gets an additional $500,000 annually. If receipts exceed $31 million, the sports authority's share jumps to 5 percent.

    The lease also gives the Nets:

  • A doubled share of concession receipts, from 50 percent of the net revenue under the old contract to 100 percent under the new one.
  • A bigger percentage of the money generated by the sale of suites, from 25 percent of net revenue to 40 percent of gross revenue.
  • All revenues derived from on-site parking. Under the old contract, the Nets got 50 percent of the money.
  • A major share in new advertising to be erected in the arena. Under that provision, the Nets will get 70 percent of the first $1.3 million in net revenue generated, 60 percent of the nxt $700,000 and 30 percent of anything over $2 million. The team must underwrite any capital costs involved in new advertising signage.

    The lease also requires the sports authority to pay $2.5 million toward a practice facility about one mile from the arena.

    Samerjan said the agreement signals a commitment by the Nets to stay in New Jersey at a time when other cities would welcome them. Would-be owners in Nashville, New Orleans, San Diego and New York have expressed interest in owning an NBA team.

    "The Nets are truly getting the opportunity to do substantially better (financially) as they do better at the gate. As their attendance and ticket gross increases, and with the new locations we're creating for advertising, they'll do substantially better," he said.

    The key element is the imposition of the early termination fees, he said. The previous contract contained no such provision, he said.

    Nets officials could not be reached for comment. But in a prepared statement, president Michael Rowe said he was happy with the new agreement.

    "Ther Nets have enjoyed a successful relationship with the Sports Authority in the past, and we expect that it will continue into the future. The terms of the new licensing agreement provide for additional revenues, which will in turn help the Nets remain competitive in our quest to build a championship team," he said.

    The Nets finished 43-39 last season -- a 17-win improvement -- and made the playoffs for the first time since 1994. They were swept by the Chicago Bulls in the first round of the playoffs.

    © 1998 SportsLine USA, Inc. All rights reserved

  • View CBS News In
    CBS News App Open
    Chrome Safari Continue