Atlanta Braves now officially a “real estate business,” because they’re sure not a baseball team

Bloomberg Businessweek has a long article up this week on the Atlanta Braves‘ success at getting half a billion dollars in public subsidies for stadiums for their entire major- and minor-league chain of teams, which includes these memorable lines:

Says Joel Maxcy, a sports economist at Drexel University: “If there’s one thing the Braves know how to do, it’s how to get money out of taxpayers.”…

“The whole deal was very much behind closed doors,” says Michael Hotchkiss, a Pearl native, then an editor at the Clarion-Ledger [of the team’s deal for $28 million in public funds for a Double-A ballpark in Pearl, Mississippi]. “By the time it was public, the whole thing was done.”…

“There was no transparency,” says Lisa Cupid, one of [Cobb] county’s five commissioners [of the Atlanta Braves stadium deal]. By the time the commission got the chance to see the documents, the details had already been negotiated. Her fellow commissioners, she says, “were all just excited to be asked to the dance.”

Sense a theme here? The Braves owners may be spectacularly bad at putting together a winning baseball team (though you can make an argument that they’re following the model set by the bust-to-boom Houston Astros, though the Astros are currently in last place now as well), but they’re expert in getting stadium money approved before anyone can notice what’s going on. That’s a real skill, especially in a subsidy world where public attention only gets lawmakers thinking about what they’re doing before voting on it, and you don’t want that.

All of which leads up to the article’s impeccable last paragraph:

During a question-and-answer with shareholders in April, [team owner John] Malone shrugged off the Braves’ slow start. “Keep in mind,” he said, “the Braves now are a fairly major real estate business as opposed to just a baseball club.”

And it’s way easier and more predictable to run a baseball club as a real estate business. Plots of land never blow out their elbows.

Davis pledges $500m toward Vegas stadium, could actually ask taxpayers to pay entire $1.4B cost

Here it is, the big Oakland Raiders Las Vegas announcement you were waiting for since it was first leaked at the beginning of the week:

[Raiders owner Mark] Davis told an influential tourism committee gathered at UNLV that the Raiders would put up $500 million toward the stadium if Nevada legislators approve public funding for the project and other NFL owners allow the team to relocate…

“We do want to be your partners. We’re not coming in looking for a free handout,” Davis said. “I want to tell you what I told Gov. Sandoval a few weeks ago: Together, we can turn the Silver State into the Silver and Black State.”

That’s not exactly the catchiest slogan, but never you mind about that. Let’s take a closer look at exactly what Davis (and billionaire would-be Vegas stadium builder) Sheldon Adelson) are offering, and what they’re asking for:

  • The stadium would now cost $1.4 billion, up from $1.2 billion just a couple of months ago, presumably because if it’s hosting an NFL team it’s going to need a snazzier eternal flame.
  • Davis’s $500 million pledge would include $200 million in NFL G-4 money, plus $300 million out of his own pocket.
  • As for the other $900 million, $750 million of it would be from hotel and rental-car taxes (down slightly from $780 million in the last proposal), and the other $150 million would be in mystery “private funds.” Since we haven’t mentioned Adelson yet, and he has $150 million in loose change in a jar in his kitchen, maybe he could bring that.

That’s the deal as presented in the headlines today. What’s being largely overlooked is this, which appeared way down in the 18th paragraph of the Las Vegas Sun’s story:

The companies would also want a tax increment district in the area around the stadium. Details would still need to be ironed out, but Majestic executive Craig Cavileer said the district would help the stadium’s private backers get a return on their investment.

This is potentially huge: “tax increment financing,” for those who need a reminder, involves kicking back increased property and/or sales taxes from an area around a development project, to help pay the project’s costs. We obviously have no idea how much money it could provide — depending on how big you draw the district, it can generate an almost unlimited amount of tax revenue — but if Adelson and Davis are looking at this as a way to provide a “return on investment,” that means it’s going to go to reimburse their $650 million in costs, not state taxpayers’ $750 million. In other words, if enough TIF money can be agreed on, the private costs could be as low as zero, with the entire $1.4 billion nut either provided by tourist taxes or by TIFs.

It’s an incredible bit of media legerdemain to turn a request for potentially the largest NFL stadium subsidy in history into headlines about a promise to put up half a billion dollars in private funds — props to Davis’s (or more likely Adelson’s) PR strategist for coming up with this one. And that’s before even getting to Davis’s “commitment” to Las Vegas, which as I predicted Wednesday comes with a whopping out clause, in that if he gets an offer he likes better, he can always have the NFL vote against the move, and say, “Hey, sorry, they wouldn’t let me go to Vegas, I tried.”

Not that I expect Davis or the NFL to turn down this deal if it really includes both $750 million in cash plus additional TIF subsidies, because who would turn down a new $1.4 billion stadium essentially for free, regardless of what market it’s in? We still have to see if the Nevada legislature is crazy enough to approve it, but this is no longer merely a leverage deal: It’s an attempt at the biggest public cash grab in NFL history, which if Davis can pull it off despite currently having zero other legitimate bidders for his team’s presence would seriously move him up the rankings of evil supergeniuses with questionable haircuts.

Senators owner wins right to develop downtown Ottawa site, cost still TBD

Ottawa Senators owner Eugene Melnyk has won his battle with a rival developer for the federally owned LeBreton Flats site, the National Capital Commission awarding him exclusive negotiating rights to develop the 21.6-hectare (that’s 53 acres — you double it and add 30, or something) downtown site. If talks go well, and the federal government approves, then Melnyk would build a whole buncha stuff on the site, including a new Senators hockey arena to replace their old one, which is 20 whole years old but also in the middle of nowhere because their old owner was crazy.

If you’re ready carefully, meanwhile, you noticed that that’s just the right to negotiate to develop the site — still up in the air is how the money would work out, including how much Melnyk would pay for the development rights and whether the project would require any public cash, as he’s previously indicated. (He’s since said there would be “no government money that is going to be granted,” but that doesn’t preclude tax breaks or a discounted price on the land.) This could end being a good deal for Ottawa — if you want to develop undeveloped land, you’re going to need a developer — or a lousy one, depending on how details like that go, and also details like the development timeline, which could stretch as long as 30 years. Win-win or land grab to get a site for a new arena? They still need to talk about it. Meanwhile, are there renderings with beams of light streaming into the night sky? You betcha!

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Detroit MLS stadium isn’t a loss leader for Cavs and Pistons owners, it’s a land grab

The owners of the proposed Detroit MLS team released renderings of their proposed arena yesterday, and it looks just like a sketchily drawn soccer stadium. But more important, they revealed some of their financial and siting plans, and it’s far more revealing of just what Cleveland Cavaliers owner Dan Gilbert and Pistons owner Tom Gores are up to:

Billionaire Dan Gilbert and Pistons executive Arn Tellem announced plans today for a $1-billion investment at Wayne County’s unfinished jail site for a 25,000-seat Major League Soccer stadium and other developments, including restaurants, hotel rooms, and a commercial office tower…

If the unfinished jail site can’t be used, it’s unlikely that MLS will seriously consider Detroit, [MLS commissioner Don] Garber and Gilbert both said.

“If you have a Plan B, it distracts from Plan A,” Gilbert said. “There really is no Plan B.”

The proposed site, in other words, doesn’t involve any of the land that Gilbert already owns in downtown Detroit, but rather a prime parcel near the Tigers, Lions, and Red Wings venues that is currently home to a county jail complex that has gone way over budget. By announcing their designs on it for a soccer stadium — and getting Garber to deliver a “their way or the highway” message — Gilbert and Gores can use the desire for MLS (and for the ever popular “mixed-use development”) as a way to stage a land grab for a potentially valuable downtown property. It’s the Atlantic Yards model, in other words, though with a much cheaper sports facility as the hook.

So would it make sense for the city and county? Fortunately, county elected officials seem to be asking that question. Wayne County Executive Warren Evans said in order to do the deal, a new jail (plus courthouse) would have to be able to be built at the city and state’s Mound Road site for no more than the estimated $175 million it would cost to finish the current jail plan. Evans didn’t say anything about a fair price for the downtown land, but it’s presumably on his mind: The county recently rejected a $50 million offer from Gilbert for the land, something that the soccer-plus-the-kitchen-sink proposal is no doubt designed to get the county thinking twice about.

In theory, there’s nothing wrong with using centrally located land for sports and retail and hotels instead of for a jail — so long as there’s no huge giveaway of public assets involved. Too often, cities that have been facing a long history of disinvestment and abandonment like Detroit end up fighting the last war once there’s an uptick in interest from well-off newcomers in resettling the area, throwing money (or land and development rights that are worth money) at any developer offering a construction project rather than trying to see what its assets are really worth. (I’m just wrapped up writing a Brooklyn Wars chapter that addresses exactly this, so it’s close to my mind.) Gilbert and Gores are clearly looking to dangle that “$1 billion investment” as an enticement to get the county to give them what they want at their price; how the county responds will go a long way toward determining the next stage of Detroit’s problematic revival.

Oh, right, I promised you renderings, so let’s do those now. There are fireworks and searchlights! (There are always fireworks and searchlights.)

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Glendale council okays AEG arena management deal, hopes this one won’t suck quite as badly

The Glendale city council gave its blessing to the AEG management deal for the Arizona Coyotes‘ arena last night:

The Glendale City Council voted unanimously Tuesday night to approve a $28 million deal with the Los Angeles-bases AEG Facilities to operate the Gila River Arena.

The new deal is an effort to keep the Coyotes in Glendale beyond the 2016-2017 season.

Okay, none of that is exactly right, 12News: Whereas normally a “$28 million deal” means you get paid $28 million, here Glendale will be paying AEG $28 million over five years. Plus it’s not really an effort to keep the Coyotes in Glendale so much as an effort to reduce the fiscal bleeding that was put in place by the Coyotes’ 2013 sweetheart lease for the arena, now canceled. Plus you misspelled “based.”

As discussed here yesterday, the new lease is about $2-3 million a year cheaper for Glendale than the old Coyotes one, though it’s about on par with the temporary management contract the Coyotes signed last summer to tide everyone over until the open bidding was complete. (The Coyotes owners decided not to submit a bid, because screw that competitive-bidding crap.) AEG can renegotiate the lease if the Coyotes move, or opt out of it entirely if the two sides then can’t agree on new terms.

In all, it’s best to look at this as a compromise between putting up with the original Coyotes deal and shutting down the arena entirely: The hockey team is still there for the immediate future, after all, and AEG is really good at booking concerts, so maybe they can make a go of it. If it works out, Glendale saves itself maybe $10 million or so, and ends up with a slightly more viable arena, with or without hockey; if it doesn’t work out, the arena probably still shuts down, but Glendale still saves the $10 million. Unless some future council gets suckered into renegotiating a worse deal just because “we spent all this money on an arena, we don’t want to waste it,” but hopefully by now everyone in Glendale has learned the hard lessons about sunk costs.

Cavs, Pistons owners to seek Detroit MLS stadium, because what bankrupt city doesn’t need four new sports venues?

The owners of the Detroit Pistons and Cleveland Cavaliers have announced they’re teaming up to seek a Detroit MLS franchise:

Soccer is the most popular sport in the state, according to [Tom Gores and Dan Gilbert’s press] release, with 92,000 registered players in Michigan and “if Detroit is chosen for an MLS expansion team, it would become the most dense urban sports and entertainment district city in America with four major professional sports stadiums within a 10-15 minute walk: Ford Field, Comerica Park, the new Detroit Red Wings arena and the new MLS stadium.”

Oh, yeah, did I forget to mention this would require a new MLS stadium? Gores and Gilbert didn’t say anything about where a new stadium would go, though Gilbert’s Quicken Loans owns a ton of downtown Detroit land that would qualify as “within a 10-15 minute walk” of Mike Ilitch’s baseball-and-hockey-world.

The bigger question is how a new stadium would be paid for, since a publicly funded MLS stadium could also make Detroit the home of the most dense set of stadium subsidies in America. Gores and Gilbert might choose to go it themselves — MLS stadiums are relatively cheap as these things go, and it could be a kind of loss leader for their other downtown properties. (Not that soccer fans would buy that much from neighboring stores, but anything new in Detroit helps sell that neighborhood as “not the part of the city that’s totally burnt-out and where the streetlights don’t work.”) Best to keep a close eye on this, anyway.

Mark Davis definitely going to announce plans to use Las Vegas as Raiders move threat

We have another “Mark Davis is gonna say something about the Oakland Raiders and Las Vegas on Thursday” report, this one with sources that are, if not named, at least identified a bit beyond the earlier rumors:

Davis’ appearance Thursday – and the commitment he is expected to make – could be a difference-maker. Davis will leave no doubt his franchise will pursue relocation to Las Vegas if the stadium project is approved.

“It’s huge because the committee sees (the Raiders) as serious,” a source close to the situation, speaking on the condition of anonymity, told this newspaper. “And if (the committee) approves the funding, there will be no stopping the train.”

Meanwhile, there is growing sentiment within the NFL that fellow owners are opening up to Las Vegas and granting Davis his wish to move there should he request it.

“It would be a good home for them,” said a high-ranking NFL source.

This pair of anonymous quotes — in particular the one identified as being from the NFL — give us a bit more of a sense of what’s going on here. Davis is clearly shopping around for a better stadium deal than he has now in Oakland (which isn’t a bad stadium deal, mind you, but it’s not as good as all the other teams that have brand-new stadiums that were largely paid for by someone other than them), and if Las Vegas ends up building a stadium, he wants to shake that tree now while the tree-shaking is good. And the league office is at least tacitly giving him the go-ahead to do this, because why the hell wouldn’t they? Having stadium offers in pocket is the lifeblood of the industry, almost as much as buying the silence of brain-injured players, plus it helps out a friendly local billionaire, and you never know when you’re going to need one of those.

Now, does this mean the Raiders are actually moving to Las Vegas? Not by a longshot, at least not yet. First off, Nevada still has to approve the $780 million in subsidies that billionaire Sheldon Adelson is looking for, and that phrase right there is why it’s likely to be an uphill battle. But even if the stadium is approved, “pursuing relocation to Las Vegas” is no guarantee of relocating to Las Vegas — Davis could change his mind if he gets a better offer from elsewhere, or the NFL could change his mind for him, or (most likely) he could change his mind and then have the NFL deny him approval to move (or place an exorbitant relocation fee on it) to provide him with plausible deniability if he decides he’d rather move to Los Angeles or San Antonio or Walla Walla or wherever.

Las Vegas wouldn’t be as terrible a location for the NFL as for, say, hockey: Sure, Vegas’s TV is smaller than West Palm Beach and the only people with any spending money there are tourists, but football is the one sport where local TV deals don’t matter, and with only eight games a year maybe the Raiders could sell themselves as a destination theme vacation or something. I’m not saying it’s a good idea — staying put in Oakland, even in an older stadium, could well be better — but it’s not completely crazy. And as far as creating leverage goes, it makes perfect sense. Plus Davis can make a side trip for a haircut!

Cuomo proposes spending $1B to make Javits convention center exhibit space 11% bigger

The New York State Convention Center Development Corporation recently released a Request for Qualifications (RFQ) for a designer/builder for Gov. Andrew Cuomo’s planned expansion of the Javits Center on Manhattan’s west side. So now there are some specifics on the $1 billion boondoggle, but no real indication of where the public dollars are actually going to come from, beyond that “a State appropriation of $1 billion, bond issuance proceeds, cash on hand, and other sources as required.” It’s nice to have “cash on hand.”

The project would include a new 480,000-square-foot marshaling facility, with 27 loading docks — because what Manhattan most needs are fleets of 18-wheelers hauling stuff on city streets — roof terrace for outdoor events, and 92,000 square feet of new prime exhibit space, together with added meeting room and ballroom space. That amounts to just an 11 percent increase in exhibit space — what a deal for a billion bucks in public dollars!

Gov. Cuomo proclaimed last January that the Javits was the “busiest convention center in the United States,” with more than 2 million visitors annually. The Javits’ annual report shows attendance of 2,056,500 in 2014. But that year Chicago’s McCormick Place saw total attendance of 2.34 million. So “busiest” might be open to some question. And those Javits attendance figures include big public shows like the New York International Auto Show that sees a million attendees itself, almost entirely from the New York metro area.

The real issue with the Javits is dismal attendance at conventions and trade shows, the events that draw out-of-town visitors and fill hotel rooms. In 2000, the Javits drew 1.25 million convention and trade show attendees. For 2014, the total was just 629,500. And those attendees produced just 478,000 hotel room nights — a tiny fraction of the 31.6 million room nights filled in the city in 2014. That may be why the Cuomo administration has yet to produce any kind of market analysis or feasibility study for the expansion: It likely won’t produce any real increase in the Javits’ convention business.

Glendale’s new arena lease to require shoveling less money at AEG than city was shoveling at Coyotes

Glendale’s proposed arena lease with AEG is finally out, and ready for the city council to vote on! So who’s paying what to whom?

The city would pay AEG $5.6 million a year; one payment of $2.8 million, then two more payments of $1.4 million each.  The contract is for an initial period of five years with the possibility to renew for five additional years.

Glendale had been paying the Arizona Coyotes between $6.5 million and $8.7 million a year to run the place (the total varied depending on arena revenues), so looks like Glendale saved itself between $900,000 and $3.1 million a year by opening up the arena management contract to competitive bidding. [EDIT: A commenter notes that the city is also giving up about $900,000 a year in naming-rights and Coyotes rent revenues to AEG, so this deal is pretty much a wash with the Coyotes’ current revised stopgap lease, though still a good bit better than the long-term one that Glendale decided to terminate last spring.] Two cheers, Glendale! (The third cheer would have been if the city had included “run the arena ourselves” or “shut the damn place down instead of throwing good money after bad” as potential options, but I suppose those are still possibilities as they consider the AEG offer.)

The full proposed management contract is here; for those wondering what it says about the Coyotes, it hands over to AEG the right and responsibility to “negotiate, enter into, administer, amend and terminate all contracts relating to the use of Arena facilities and services, including the Coyotes Lease,” i.e., “you guys work it out now.” Though there’s also a clause at the very end that AEG can renegotiate the deal (or cancel it if the two sides can’t come to a new agreement) if the Coyotes were to stop playing games in Glendale, which could end up dragging the council back into negotiations if Coyotes owner Anthony LeBlanc gets serious about any of the umpteen arena plans in other towns that he’s pursuing.

All in all, the proposed AEG lease is not as awful as the old Coyotes one, but it’s not great, either — the result you’d expect after spending public money to build an arena that no one really needs for a hockey team that no one really follows and then deciding that it’s too big to fail as a way to get people to shop at the neighboring mall. I still like the idea of taking $5.6 million a year in small bills and having city staffers stand in the mall and hand them out to shoppers, but I know it’s tough for elected officials to think outside the box that way.

Flames, Calgary to discuss how neither of them wants to pay for new arena

The Calgary Flames have responded to last week’s damning city report on the projected costs of their stadium-arena proposal, and it looks like both sides are going with “everybody smile and hope things will somehow work out so that everyone is happy.” Flames CEO Ken King said that he’s “thrilled” city officials want to meet to discuss possible alternate sites, while Mayor Naheed Nenshi made a classic hey-always-willing-to-talk statement:

“Calgarians have been pretty clear that they would like to see better facilities, but they’ve also been pretty clear that public money has to go for public benefit and the real issue there is to square this circle and see if we can put those two things together,” he said.

Of course, King also ruled out putting in any more of the team’s own money (“Our financial proposal stands for CalgaryNext”), and Nenshi said that bit about how public money can only go for public benefits, so this may be less a question of squaring the circle than of getting two non-intersecting Euler diagram circles to meet. Talking is always good, though! Maybe either King will find some more money in his other coat pocket, or they’ll figure out how to build an arena out of staff — if they’re just going to replace it 20 years later, it could sort of work.