St. Pete council calls Rays’ bluff, rejects lease buyout unless team coughs up development rights

If yesterday’s news had you thinking that city councils were just mindless automatons who would inevitably rubber-stamp any stadium deal set before them, then the St. Petersburg city council had a surprise for you: That body voted 5-3 yesterday afternoon to reject the proposed deal in which the Tampa Bay Rays could buy their way out of their Tropicana Field lease to move to a new stadium elsewhere in the bay area for a payment of at most $42 million.

Given that as recently as a week ago, all signs were that the council was going to approve the plan that Mayor Rick Kriseman had worked out with Rays owner Stuart Sternberg, this was a bit of a shocker. But according to the Tampa Bay Times, Rays execs shot themselves in the foot with their answer to questions about whether the team would agree to forgo a split of profits from development of land on the 85-acre Tropicana Field site if they were in the process of leaving anyway:

Council member Darden Rice, who voted for the agreement, said the Rays blew the deal with their presentation.

“I think at one point we had five votes,” Rice said. “But I was very disappointed by Auld’s response to Karl Nurse’s question about development rights. It was either tone deafness or arrogance.”…

Nurse had asked Kriseman earlier in the week to change the agreement so the city could retain all development rights in that situation. But the Rays declined to make any substantive changes to Kriseman’s deal.

Nurse still voted for the deal in the end, but this did not go over well with several other members of the council:

[Councilmember Bill] Dudley said he felt like the Rays were making ultimatums. “I don’t like arrogance,” he said.

“The deal breaker for me was the idea that they want us to abide by the use agreement for redevelopment purposes, where they can benefit,” [councilmember Amy] Foster said, “but they didn’t want to abide by the use agreement” by staying at the Trop.

“This is a common strategy,” she said. “They use their mobility in order to threaten cities in order to get more.”

Yep, that they do. But in most cases they don’t have an ironclad lease like the one that the Rays are locked into in St. Pete, which currently doesn’t allow the team owners to buy their way out, or even talk about leaving, until 2027. That’s a hefty piece of leverage that the council has at its disposal, and they just used it.

For Sternberg, the logical next step in this situation is to haggle: If the council wants a bigger share of development rights, throw them a bigger share of development rights. Or kick in an extra million or two a year in lease-breaking payments. But it seems like the council isn’t opposed to the principle of the deal, just the specifics, so the usual strategy would be to pick off a couple of councilmembers and find out what their price is.

Sternberg, however, has already declared that he won’t negotiate any more changes to the lease buyout, saying last week, “If it doesn’t pass, we’re doomed to leave.” This kind of paints him into a corner, with his only obvious options being:

  • Try to pretend he never said anything about no further negotiations, and quietly resume talks in a few months. This would not only require swallowing a lot of pride at this point, but also leave him with a weakened negotiating position, since clearly his ultimatums wouldn’t be worth squat.
  • Sit tight and wait — if not 13 years, then at least for a new city council to be elected next fall. And then hope like crazy that the new folks are more willing to give you anything you want.
  • Sell the team and make it someone else’s problem. Forbes, which tends to underestimate team values, has the Rays worth $485 million, which would be a nifty 142% profit on what Sternberg bought them for in 2002. But presumably the Rays would be worth an awful lot more if they had a shiny new stadium to play in (especially if the shiny new stadium debt could be fobbed off on taxpayers), so Sternberg would be leaving a lot of hypothetical money on the hypothetical table if he took this route.
  • Call Bud Selig and ask him to threaten to blow up the team on his way out the door, and hope that the courts will protect them from the inevitable antitrust lawsuit that would result.

So far, the Rays have just responded with a generic “You’re a bunch of poopyheads” statement:

There’s still plenty of time — until 2027, really — for a deal to be worked out, so there’s no reason to start freaking out about the Rays moving to Montréal (unless you’re the Tampa Bay Times editorial board). The St. Peterburg council did send a message, though, that they’re at least aware that, as Jonah Keri puts it:

Public officials trying to negotiate better deals in the public interest. What’ll they think of next?

Would-be Minneapolis MLS owner says he might ask for public money, “depending, who knows?”

And finally, Bill McGuire, the owner of the minor-league Minnesota United soccer franchise and hopeful MLS expansion team owner, was asked yesterday if he’d be looking for public subsidies for a new stadium — I can’t even imagine why that would cross anyone’s mind — and he had this to day:

“We’ll see when we confirm in our own minds the where’s and why’s of all of that. And depending, who knows? We haven’t asked. I mean, there’s no formal ‘ask’ out there.”

According to my ownerese-to-English dictionary, that means something like: “No, don’t bring that up now! First I have to convince MLS that I’d be a better soccer owner than the Vikings, then I have to convince them to give me an expansion franchise ahead of Las Vegas and wherever else, then I have to build excitement about a soccer-only stadium somewhere, and then I can start talking about what kind of public funding I need to make this beautiful vision a reality.”

Or as Minnesota Public Radio puts it: “That’s not a ‘no’, which usually means a ‘yes’ in the lingo of sports stadium efforts.”

Vegas approves $122m for nonexistent soccer team, in second-largest MLS stadium subsidy ever

D.C. United wasn’t the only MLS franchise to win a big public stadium subsidy yesterday — or at least, not if you count wannabe MLS franchises as well: The Las Vegas city council voted 4-3 yesterday to approve $56.5 million in stadium subsidies and related infrastructure costs for a new stadium to host an as-yet-unnamed, as-yet-nonexistent MLS team that would begin play at an unspecified time. Add in $20 million for a parking garage that will be used by stadiumgoers (for which the team will get to keep parking fees for soccer matches), free land appraised at $38 million to $48 million, plus a full property tax abatement worth between $8 million and $16 million in present value, and you’re talking between $122 million and $140 million in public subsidies, or enough to be the biggest soccer stadium subsidy in U.S. history, if only D.C. United hadn’t set a new record the same day.

It’s absolutely the biggest subsidy ever for an MLS team that doesn’t exist yet, though, so Las Vegas, take a bow!

Meanwhile, it’s worth noting that though the Las Vegas Review-Journal has done some excellent reporting on this deal, it’s still prone to the kind of misunderstanding of basic financial math that plagues too much development reporting. Check this out:

To pay off a $50 million bond, the city would have to borrow $90 million to pay the interest on the loan.

If anyone can identify what that’s supposed to mean, please let me know.

D.C. council unanimously approves $183m for United, in largest MLS stadium subsidy ever

The Washington, D.C. city council made it official yesterday, voting 12-0 to approve spending $140 million in city money on a new D.C. United soccer stadium at Buzzard Point, plus a 20-year property tax abatement worth $43 million. Of that, $33 million will come from money shifted from other, unspecified capital projects, while $106 million will come in the form of new city borrowing, to be repaid via … something. See, it’s all settled!

What is officially the “District of Columbia Soccer Stadium Development Emergency Act of 2014” — presumably called so because it had to be in order to get enacted on short notice, but it still betrays a certain irony deficiency among D.C. politicians — breaks the record for the largest MLS stadium subsidy ever. (The previous record holder depends on who’s counting, though it’s likely either the Colorado Rapids stadium in Commerce City, which got $120 million according to Judith Grant Long, or the Chicago Fire stadium in Bridgeview, which collected $98 million according to Robert Baade and Victor Matheson.) Though apparently irony isn’t the only thing the bill’s authors are deficient in: One clause extends the deadline for acquiring the stadium land to “September 31, 2015,” which is a pretty neat trick.

But forget all those “numbers” and that “money” — the important thing, as the Washington Post notes, is that the soccer stadium approval gives outgoing mayor Vincent Gray a “legacy” and a “signature economic development project, one that neither of the two preceding mayors were able to accomplish.” Or, looked at another way, Gray finally gave in to the demands for $183 million in subsidies for a private soccer team that earlier mayors had refused to cough up. Isn’t it great how in politics, everything has two equally valid sides?

NY Times real estate section says exactly what it always says about everything, everywhere

The New York Times real estate section has a long piece up today about plans for a new D.C. United stadium, because … actually, I’m not sure why. The New York Times real estate section usually focuses on, you know, New York, and even if the D.C. council is voting on the United stadium plan today, it seems a bit outside the usual bounds, but, you know, whatever.

The article itself interviews the owner of D.C. United, the owner of the development company that owns the stadium land, D.C.’s planning director, D.C.’s incoming mayor, and one woman who lives in the planned stadium neighborhood, presumably for local color. My Vice Sports colleague Aaron Gordon has put together a Storify detailing all the flaws in this piece, but seriously, people, it’s a New York Times real estate section article. This is not, and never has been, journalism; it’s a service provided to realtor advertisers that dutifully identifies which neighborhoods real estate professionals are trying to hype as up-and-coming, enabling them to sell more housing there at inflated prices, and thus plow more money back into ads in the Times real estate section. It’s a win-win! Unless you 1) rent in a neighborhood thus targeted or 2) prefer to have news in your newspaper, but those people will be crushed like grapes by the tide of history, right?

Anyway, if you insist on reading the article beyond the “Real Estate” slug at the top, Gordon’s Storify is a worthwhile corrective. But really, you have better uses for your time. How about this article on how economic inequality is helping to drive the Uber economy? Or one about how ground squirrels are accelerating global warming? I never did like the look of those guys.

Hamilton County spending $1.3m to buy Reds new seats, because they broke all the old ones

Hamilton County’s sweetheart deals with its sports teams doesn’t stop at having to build a new scoreboard for the Cincinnati Bengals: The county also has to replace all the seats at the Reds‘ stadium, just 11 years after it opened, because the old ones all broke and they were out of warranty. (Yes, apparently Hamilton County couldn’t even buy seats that were guaranteed to last a decade. Yes, apparently Hamilton County around the turn of the millennium had the worst contract negotiators ever.)

This will all cost county taxpayers $1.3 million, but on the bright side I guess at least it’ll create some decent local jobs for seat installers—

County officials say they saved more than $3 million by hiring a local company to design new seats and hiring former jail inmates – participants in a county work re-entry program – to install them.

Pay for this seat installation work? $10 an hour. Okay, so Hamilton County knows how to play hardball with some people — just not so much sports team owners.

Chargers staying in San Diego another year, Raiders still rumored to be moving everywhere and its sister

Today in people who used to be famous talking about where the Oakland Raiders might move, it’s former San Antonio mayor Henry Cisneros, who says that the team could be taking his city seriously as — hey, wait a minute! This is a repeat!

In newsier NFL maybe-relocation news, the San Diego Chargers owners have announced that they’re not opting out of their lease for 2015, which means they’re not moving to Los Angeles to play in a stadium that hasn’t even been planned yet, either. The Los Angeles Times’ Sam Farmer takes this as a sign that no NFL teams are moving to L.A. next year, on the theory that if somebody were, then the Chargers would want in too to avoid being left stuck in San Diego with an old stadium and two other teams on their doorstep. I’d stick with the theory that nobody’s moving to L.A. because there’s nowhere to play there that’s any better than teams’ old stadium back home, though.

Detroit signs developer to preserve Tiger Stadium field, surround it with buildings

The city of Detroit has picked Larson Realty as its developer for the site of Tiger Stadium (and hey, shoutout from Crain’s reporter Amy Haimerl to FoS correspondent David Dyte!), which means we get more renderings of the plan to preserve the old ballfield and surround it with low-rise buildings. Not necessarily better than the last set of renderings, but more:

(There’s also an image showing the new Police Athletic League building surrounded by what appear to be Cybermen ghosts, but that’s too disturbing to include here.)

Anyway, still many details to go, but it’s looking promising that the old Tiger Stadium field will be preserved, anyway, even if it’s too late for the stadium itself. (Though it’s marginally worrisome that the flagpole isn’t visible on these.) Which is good, because I still need to get out there for a softball game.

 

Senators owner says new arena needed because 18-year-old one “was not built to last”

Ottawa Senators owner Eugene Melnyk is moving ahead with a full-court press (I know, I know, mixed sports metaphor, but I don’t actually know if there’s a hockey term for this) for a new downtown arena for his team, which he says would be a “game-changer” that “impacts the city in a huge way; it impacts the organization in a huge way.” And for those  wondering about why anyone needs to replace an arena that was just opened in 1996, Melnyk has this to say:

“This building, believe it or not, was not built to last 30 to 40 years like people think. We spent a lot of money to keep this building looking the way it is, but … you have to build a new one eventually. I hope in my lifetime,” Melnyk said.

That’s right: The Senators owner (not Melnyk at the time, but his predecessor Rod Bryden) may have spent $188 million and gotten a controversial rezoning of farmland and collected federal money and loan guarantees for a highway interchange and then dumped all its debt through bankruptcy, but he didn’t do that because he wanted an arena that would last! Everybody knows that arenas don’t last 30 or 40 years these days. Or even 20, apparently.

The backstory, of course, is that Bryden wanted to use the arena as the anchor of a suburban retail district, and then that didn’t work so well (see: bankruptcy), so it makes some sense that they’d be interested in moving downtown. Why Ottawa itself would want to chip in to make that happen — and devote municipally publicly owned land to the project as well, instead of dedicating it to another development project that might not require subsidies — is less clear, but Melnyk is sure to keep saying “impacts the city in a huge way” over and over until somebody starts to believe it.

Nothing doing on Seattle arena until 2016, at least

In case you were wondering what’s up with Chris Hansen’s Seattle arena plans, the Seattle Times’ Geoff Baker had an article yesterday confirming that nothing is happening anytime soon. In short:

  • The final environmental impact study isn’t due until February, then there will be appeals, then the city council will need to vote on it. By the time all this is done, it will likely be 2016.
  • Not that that matters much, because Hansen won’t start building until he has a team, and he doesn’t have one. Conceivably the Milwaukee Bucks might become available if they can’t get their arena demands met in Wisconsin, but as Baker notes, “that’s theoretical.” An NHL team is more likely, but the current arena deal requires basketball, and neither Hansen nor Seattle Mayor Ed Murray seems excited about changing it to be hockey-first.

In other words, same as it ever was. But bookmark this for the next time sportswriters speculate about any number of teams relocating to Seattle.

pirmind.com