The Philadelphia 76ers have been scouting locations for a new training facility, and New Jersey has lobbied considerably to have the team relocate across the river to the Garden State. To sweeten the deal, the New Jersey Economic Development Authority (EDA) will cover the total cost of the new facility. The state will reimburse the team through an $8.2 million annual tax credit. The 76ers have accepted the state’s generous offer which works out to $328,000 in NJ state tax dollars per job, according to our friends at the New Jersey Policy Perspective (NJPP). But with this deal, the devil is in the details.
Philadelphia has not sat on its hands as the Sixers shopped for the best subsidy deal. Mayor Nutter said the City made a number of offers to the 76ers, including a site at the city’s Navy Yard which would have been nearly tax-free due to the Keystone Opportunity Zone and other incentives. But he was quick to note New Jersey’s tactic of “literally throwing money at the 76ers.” This form of economic “growth” fueled by cross border subsidies is not only bad Philadelphia which is losing an employer who it continues to subsidize with an arena funded in part by taxpayers, but also for New Jersey, who is now putting itself on the hook for a stream of tax-funded subsidies.
For what, practice?
While the Sixers will continue playing in Philadelphia, New Jersey’s aggressive approach in hosting their new training facility represents a flawed attempt at spurring economic growth. According to NJPP, the Garden State’s Economic Development Authority has awarded $4 billion in tax breaks to big companies, but the acclaimed benefits are not reaching the people of New Jersey, even as that state’s financial crisis worsens.
New Jersey’s deal with the 76ers was made on an economic return expectation that may never come to fruition. The state is estimating $76.6 million in economic benefit over the course of the 35-year agreement. However, the team is only required to stay in Camden for 15 years. If the 76ers choose to relocate to a new facility at the 15-year mark, the state may suffer a $14.5 million loss on its investment. (See Figure 1).
Source. New Jersey Policy Perspective
The approach taken by New Jersey is being widely criticized including an op-ed in today’s Inquirer, and rightfully so. It does not represent real economic growth, but rather luring business across state lines – triggering a race to the bottom by state and local governments only benefiting the specific businesses with enough notoriety to set off the bidding war. The long-term economic benefits of such maneuvers are difficult to measure and uncertain. Rather than take approaches to economic growth that are thinly veiled economic poaching , such as the 76ers proposal, New Jersey, Pennsylvania, and other states should seek real approaches to growing the economy that are grounded in real return prospects – like investing in early childhood programs, improving education, and strengthening infrastructure.
 Mike Soszynski, “$82 Million EDA Subsidy of 76ers Facility in Camden Spurs Debate on Tax Breaks”, New Jersey Policy Perspective, June 11, 2014, http://www.njpp.org/articles/82-million-eda-subsidy-of-76ers-facility-in....
 Kathy Matheson, “Report: 76ers to build N.J. facility”, ESPN, June 6, 2014, http://espn.go.com/nba/story/_/id/11043359/philadelphia-76ers-plan-practice-facility-new-jersey.
 Mike Soszynski, “$82 Million EDA Subsidy of 76ers Facility in Camden Spurs Debate on Tax Breaks”, New Jersey Policy Perspective, June 11, 2014,http://www.njpp.org/articles/82-million-eda-subsidy-of-76ers-facility-in-camden-spurs-debate-on-tax-breaks.
 John Whiten, “Graphic: What Happens if the 76ers Take New Jersey’s Money and Run?”, New Jersey Policy Perspective, June 13, 2014, http://www.njpp.org/blog/graphic-what-happens-if-the-76ers-take-new-jerseys-money-and-run.
 Gordon MacInnes and David Sciarra, “Invest in Camden’s students, not the Sixers,”Philadelphia Inquirer, June 17, 2014, http://www.philly.com/philly/opinion/inquirer/20140617_Invest_in_Camden_....