Phoenix Suns owner says “we have to get a new arena built,” because old one is from 1992, already

And I guess that’s about it for this morning … wait, what?!?

“We’re definitely going to have to get a new arena built,” [Phoenix Suns owner Robert] Sarver said. “Our lease runs for another eight years maybe. Between us and the city, we’ve done a good job maintaining it despite its age but it’s starting to run out of gas. It’s like a house. It gets to be 30 years old and then you’ve got a lot of work to do. You can remodel or build a new house.”

You know, when people started asking me, about ten years ago, whether the new stadium game was going to soon run its course, because every team would already have a new building, and I said, “Nah, then the first teams that got new venues will just circle around and get back on line,” I thought I was joking, at least a little bit. But the way things are going — the Suns’ current arena opened in 1992, if you’re counting — it seems like every sports owner in the country is treating 30 years as the maximum shelf life before they can demand a new building, except for those that are using an even shorter timeline.

For reference, teams whose stadiums will turn 30 over the next eight years include the Miami Dolphins, Toronto Blue Jays, Chicago White Sox, Baltimore OriolesMilwaukee BucksDetroit PistonsMinnesota Timberwolves, and Utah Jazz, with the Anaheim Ducks and San Jose Sharks coming up right on their heels. The Dolphins are already renovating their stadium with public help, while the Bucks are angling for a whole new building; anyone care to guess which of the others on this list will be next to hop back on line?

Milwaukee business group proposes spending so much on Bucks arena and museums, they can’t even count it all

Milwaukee’s Cultural and Entertainment Capital Needs Task Force — an epic name for what’s really just a committee of the local chamber of commerce — issued its recommendations for how much the city should plan on spending for a new Bucks arena and on local museums and zoos. And the answer is, unsurprisingly: a lot. Though perhaps more surprisingly, it’s not clear exactly how much of a lot:

It will take nearly $34 million each year over a 20-year period to address deferred maintenance needs and capital improvements at four major Milwaukee cultural institutions and provide public financing for a new arena…

According to the presentation, the total estimated investment over 20 years would be $445 million, not including interest. No figure was offered for a 20-year cost that includes the cost of borrowing.

Okay, so not counting interest, $34 million a year for 20 years would come to … $445 million? Wait, that’s not how multiplication works. And adding operating costs for all the facilities would, according to the Milwaukee Journal Sentinel, mean “an estimated $44.9 million would be needed each year totaling $675 million over 20 years” … which doesn’t add up either. Come on, doesn’t anybody at the Journal Sentinel have a calculator?

Anyway, the task force also proposed a whole bunch of ways to raise public money toward these pressing needs, including a sin tax on alcohol and cigarette sales, tax increment financing, ticket taxes, or a sales tax hike. The apparent goal of all this is to muddy the waters by dumping a whole bunch of different projects into one pile, throwing out a long list of different financing plans, and then hoping people focus on deciding which option they find least distasteful instead of questioning why the chamber of commerce gets to decide city spending priorities in the first place. In fact, maybe this explains the math issues — we’ll know for sure what they’re up to if the next Journal Sentinel reader poll turns out to be “What do you think 34,000,000 times 20 equals?”

Vegas MLS stadium bonds would require general funds as backup, casting council vote into even more doubt

The Las Vegas MLS stadium plan, which is already holding on by the skin of its teeth, could face another major hurdle, with Vegas financial consultant Guy Hobbs noting that the city would almost certainly have to use general revenues as a backstop for its $3 million a year worth of stadium bond payments:

“In all likelihood, the city will pledge general tax revenues to secure those bonds because this source of revenue (collected room tax fees) can be renegotiated and theoretically go away and not be a revenue source that would a good pledge,” Hobbs said Monday.

“Bondholders want to make sure that the money they have paid for the bonds will be repaid to them without fail over the life of the 30 years,” Hobbs said. “You pledge a source of revenue to repay … What ultimately is at risk is the general tax revenues.”

In plain English, this means that nobody’s going to buy bonds if the only guarantee they’ll be paid off is some hotel tax money that may or may not exist. So instead, Las Vegas would need to promise that if the hotel taxes don’t come through, it would fill in the gap with other city funds.

This ultimately isn’t a huge deal — either way, the city is pledging $3 million a year, so it doesn’t matter all that much which pocket it comes from — but it’s certainly not going to help win any votes on a city council that is currently set 4-3 against continuing to negotiate the soccer stadium deal beyond tomorrow night’s council meeting. In fact, Lois Tarkanian — yes, she’s married to that Tarkanian — the swing vote on the council, is now saying she’ll only vote to keep the deal alive if the developers drop their demand for a city subsidy, and that won’t happen because:

Cordish/Findlay wants the $90 million subsidy from Las Vegas to build the 24,000-seat stadium on 61 acres in Symphony Park because the partnership argues its profit margins are too thin.

Yeah, don’t we all. Speaking of which, could you readers please deposit $90 million into my Supporters fund? My profit margins are way too thin.

AEG faces deadline for landing NFL team, asks for new deadline

And speaking of L.A., AEG wants another six months on its option to build an NFL stadium by the L.A. Convention Center, because it’s sure not going to do anything by the October 17 deadline. NFL VP Eric Grubman wrote to the Los Angeles Times in a statement yesterday that the league is “encouraged enough by recent progress that we share AEG’s view that continued conversations would be worthwhile,” which of course he’d say that, because what’s the downside for NFL teams in having another six months of a potential relocation target dangling out there?

Both mayor Eric Garcetti and city council president Herb Wesson say they’re happy to give AEG another six months of rope, so it looks like this will likely happen. At some point you’d think that L.A. officials would have to move on, but, you know, it isn’t always easy to spot the warning signs.

ESPN says MLS to shut down Chivas after this year, wait for new L.A. stadium of its very own

Speaking of soccer, if you’ve gotten used to referring to NYC F.C. as MLS’s 20th team, recalibrate your ordinal numbers: According to ESPN, MLS will shut down Chivas USA after this season for a two-year “hiatus,” then bring it back as a new team, with a new name. In other words, as Deadspin puts it, “MLS is contracting, with plans to expand again with a new, second team in L.A.” It’s just not calling it that, because “contracting” sounds bad, whereas “rebranding” sounds all shiny and 21st century!

And in addition to a new name, the new L.A. team will apparently be seeking a new L.A. stadium so it no longer has to share digs with the L.A. Galaxy:

The club is expected to go dark for a minimum of two years until the new ownership group can plan and build a new stadium for the team. MLS has confirmed the land in Exposition Park where the L.A. Sports Arena sits as a potential site for the new venue.

That minimum could easily end up being extended, then, given that the current arena on the site is owned by the county L.A. Memorial Coliseum Commission, and managed by USC under a long-term lease. Add in that nobody, so far as I can tell, has actually figured out how to pay for building a new stadium, let alone how any payment for the land would work out, and this could be a very long drawn-out process.

It’s even possible, of course, that MLS would just throw the former Chivas franchise back in the expansion hopper, and offer it as another team to one of the eight billion other cities angling to join MLS. It’s not Plan A, obviously — MLS would clearly rather have two teams in L.A. as in New York City, which makes sense given that both are more than twice the size of some of the smaller wannabe MLS markets — but when your sports league has a seller’s market for franchises, having one more to put on the block is never a bad option to have.

No, new DC United stadium probably wouldn’t host 46 events per year

The District of Columbia has released a transportation management plan for its proposed D.C. United soccer stadium, which is meant to plan for traffic and transit impacts if the stadium is built. Naturally enough, the Washington Business Journal has missed this entirely, and instead focused on “Lookit all the stuff that the stadium will be used for!!!”

In addition to 23 United games, with an average attendance of 19,200 fans, five international soccer matches are expected to sell out the stadium, as will three annual concerts. Five community events will draw a projected 4,000 visitors each, and 10 “other events,” such as NCAA lacrosse games, will average 6,000 fans each.

Where, exactly, did these numbers come from?

D.C. United provided the District with a preliminary estimate of how the stadium will be used.

Uh, yeah, right. So let’s start with those 23 United home games. The MLS season includes 17 home games; the report notes that United has 20 home games scheduled for 2014, but that’s only because the team made the CONCACAF Champions League, which won’t happen every year. There’s no explanation of how they got to 23, but presumably if they make the playoffs (yeah, yeah, the MLS Cup, but Americans still think of it as the playoffs) then that would amount to 23 games — as a maximum, but in a down year it could be as few as 17.

The rest of the events — international friendlies, concerts, lacrosse, etc. — those are apparently made up out of whole cloth, though they’re reasonable goals to shoot for. But again, the numbers could end being lower, depending on how badly touring acts want to play in an outdoor 20,000-seat stadium, how much competition the stadium would get from other D.C. venues, and so on.

Finally, the report notes that the United stadium hasn’t been designed yet, and might hold as few as 18,000 fans, which would make an average 19,200 attendance a bit unlikely. (United also hasn’t drawn anywhere near 19,000 fans per game in recent years, though presumably they’re hoping that will change in a new stadium.) The 19,200 figure, it’s explained, is meant as a “conservative” estimate — which, since this is a transportation document, means it’s the likely top end, since you want to account for maximum usage when you’re thinking about traffic.

All of this is fine — for a transportation report. What it is not is an actual projection of what will take place at a United stadium. So what’s the Washington Business Journal’s lede?

The proposed D.C. United stadium at Buzzard Point will be in use 46 times per year, and for much more than just soccer.

Sorry, but we have some lovely parting gifts…

Moreno officially shuts down talks with Anaheim on Angels land deal, makes goo-goo eyes at Tustin

The Los Angeles Angels‘ season is decidedly not over — they open the American League Division Series on Thursday, against either the A’s or Royals — but Angels president John Carpino still managed to upstage his own team’s division crown on Friday, by announcing that he was walking away from negotiations with Anaheim on renovating his stadium, and could instead look into moving the team to the nearby small city of Tustin:

“Our goal from day one was to ensure a high-quality fan experience well into the future,” John Carpino, the Angels president, said in a statement as his team prepares for the playoffs. “We have spent a lot of time on this memorandum of understanding, and after 12 months, we feel our best course of action is to dissolve this non-binding agreement.

And this from Angels owner Arte Moreno:

“It’s been over a year,” Moreno said. “We’ve gone backwards. We haven’t accomplished anything.”

What’s going on here, in a nutshell: Moreno declared last year that he’d be happy to renew his lease and do stadium renovations on his own dime, if the city of Anaheim would just give him the right to develop his stadium’s parking lot for one dollar Anaheim Mayor Tom Tait then conducted an appraisal of the land the Angels wanted, and determined that it was worth between $245 million and $325 million, significantly more than Moreno was planning to spend on renovations.

This was, as Deadspin aptly puts it, “how to call a team’s bluff on stadium subsidies.” Moreno, though, had more bluffs up his sleeves than that, and speculation immediately began that the team could move somewhere else in Orange County. Say, Tustin, which has a large decommissioned marine air station it could hand over for a dollar if it really wanted to. Or Irvine, which … is also in Orange County, so sure, why not?

Whether this Tustin threat is for real or just leverage is hard to say: As I told the Orange County Register, it’s conceivable that Moreno could come up with enough cash for a stadium if he were given enough free land, and maybe some property or sales tax kickbacks or something. Or it could be that he just hopes the fear of being the guy who lost the Angels to Tustin would be enough to scare Tait into capitulating. It shouldn’t be — if the Angels left, Anaheim would suddenly have $325 million worth of vacant land it could then develop, and Angels fans really wouldn’t be put out by driving a few extra miles to Tustin — but this is what brinksmanship looks like. The Tustin city council, meanwhile, has called a special closed session (preceded by public comments) for 4:45 pm tomorrow to discuss a possible land deal with Moreno.

And finally, let’s not forget this, from the Voice of OC:

The Angels’ stadium lease with Anaheim runs out in 2029. A previous clause in the lease allowed the Angels to leave in 2016. If the owners didn’t use the exit clause, the team was locked in until 2029. But last year, the city council gave the Angels three more years, until 2019, to decide whether to stay in Anaheim or go elsewhere.

Great negotiating there, Anaheim city council.

Hillsborough commissioner talks about task force to talk about Rays move talks, again

The Tampa Bay Rays‘ season ended yesterday, so it’s probably about time for more rumors about them moving across the bay:

County Commissioner Ken Hagan said he will ask his fellow board members Wednesday to designate the Tampa Sports Authority as the agency that will deal with the Rays should St. Petersburg let the team look at stadium sites outside Pinellas County.

That’s pretty deep into the subjunctive, there, but Hagan insists that he has reasons to believe that “an agreement is near which would allow the Rays to legally speak and meet … about a new stadium,” mostly that St. Petersburg Mayor Rick Kriseman has indicated he may be open to the idea. Though Kriseman immediately called Hagan’s proposal “premature” and “problematic,” so this is probably just Hagan being Hagan.

Meanwhile, Tampa Bay Lightning owner Jeff Vinik has assembled land around his team’s arena and is trying to build one of those mixed-use urban districts that are all the rage — fortunately, without asking for city money, at least. Still, people are now wondering whether this will be a good thing or a bad things for any plans to move the Rays. And then there’s Hagan, who just warns that it’s a sign that eventually “we’re going to reach a point where we’re past the point of no return” on a Rays stadium. When the hurry-up offense works for you, might as well go with what you’re comfortable with.

CT prof replies on Hartford project: Yes, stadiums suck, it’s the rest of it that’s worthwhile

In the wake of my post on Friday critical of the excited media reception of University of Connecticut economist Fred Carstensen’s report on Hartford’s proposed minor-league-ballpark-plus-lots-of-other-stuff development, Carstensen weighed in with some long responses of his own, and then I responded to his response, and soon enough a whole bunch of us were having fun playing with the pencils on the bench there.

You can go read the whole comment thread now, but for those who are pressed for time, here are some of the highlights:

  • Carstensen’s analysis, he stresses, was of the combined stadium/retail/commercial/housing development, not just the stadium. The stadium itself, he notes, would likely be a bad deal for the city, as will the retail piece; however, adding office space that could bring in new jobs and apartment buildings that could bring in new residents could make it a net positive.
  • The REMI model that he used does account for displacement of other spending, though it wasn’t spelled out in the Hartford paper; I’m still reading through REMI’s FAQ to figure out how exactly it handles it.
  • It might well be more beneficial for Hartford to seek a development on the same site that doesn’t require a $60 million stadium subsidy, but that’s not what’s on the table here. So at least the city would be getting something positive back for its money, even if there’s no way of knowing whether it’s the best deal possible without putting the site back out for bids.

My concern remains not just that last bullet point, but the question of what happens if the stadium subsidy gets approved, then the office and residential space — all the good stuff, in city fiscal terms — never gets built. Carstensen writes via email that this is in fact something he pointed out in his testimony (but which didn’t make it into the papers that I could tell): Any deal would need to include some kind of provisions to cover the city’s costs if the rest of the development doesn’t happen, or else Hartford could be left holding the bag.

Anyway, my apologies for giving short shrift to Carstensen’s study of the project, which looks like was actually more comprehensive (and more mixed in findings) than what made it through into the next day’s reportage. This still looks like a risky project for Hartford, but he’s not the one trying to paper over the risk.

NFL’s tax-exempt status could be providing tax breaks to teams, not just league

Timothy Lavin of Bloomberg View had an op-ed up last week on the NFL’s tax-exempt status, which I set aside before reading at first because while the league’s tax exemption is annoying, it doesn’t really amount to all that much of a tax subsidy. (Because individual teams, which are what actually earn the revenue, are still taxed.)

Except that Lavin has found some potential loopholes that the NFL may be exploiting to use that tax exemption as a more significant tax dodge:

  • “First, the league’s primary business these days is no longer football, it’s financing.” The NFL’s stadium loan fund — which is really more of a grant fund, since the teams get to pay it back with revenue they wouldn’t keep otherwise — appears to allow the league to borrow money on lower terms than it would otherwise, and pass the savings on to the teams that are building stadiums.
  • NFL teams pay more than $300 million a year total in dues to the league. If that money is then used to help teams pay for stadium costs, the team owners get to treat it as a business expense rather than a capital expenditure, which allows them to write it off much more quickly.

Lavin cautions that without looking at NFL teams’ books (ha ha ha ha!), we don’t know how much they’re actually saving by these methods, so it still may not be a huge deal. But this does potentially explain why the NFL is holding onto its 501(c)(6) status, which MLB voluntarily ditched in 2007.

Either way, the benefits for teams almost certainly pale in comparison to those from the IRS’s continuing acceptance of the tax-exempt bond dodge, which saves sports teams around $150 million a year, at the expense of the federal treasury. Maybe someday Congress will get around to doing something about all this, beyond staging the occasional hearing.

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