Four out of five invisible people now say Chargers will move to L.A.

Another week, another batch of anonymously sourced reports that the San Diego Chargers are moving to L.A.:

ESPN’s Jim Trotter, a former Union-Tribune beat writer on the Chargers, livened up the Twitter universe Thursday with two bearish forecasts about the future of the Chargers and Raiders in their respective cities.

Tweet No. 1: “I’ve never been more pessimistic about Chargers staying in SD. Based on all I’m hearing I’d be SHOCKED if team isn’t in LA next year.”

Tweet No. 2: “Barring unanticipated miracle, I expect Chargers and Raiders to announce in January their plans to relocate – Chargers to LA, Raiders to LV.”

That’s just Trotter’s opinion, really — dare I say hot take? — which is fine enough. What’s not fine is news outlet after news outlet acting like this is actual, you know, news:

NFL insider sees Chargers, Raiders on move in 2017 (San Diego Union-Tribune)
Chargers Reportedly Almost Guaranteed To Move To L.A. In 2017 (LAist)
It reportedly will take a ‘miracle’ to keep the Chargers in San Diego (Washington Post)

What we have here is still a rumor — one that could be based on what actual NFL insiders are thinking, or on what actual NFL insiders want you to think, or on what a few people around the league are talking to a couple of well-connected sportswriters about over beers. It’s certainly possible that Dean Spanos will announce a move to L.A. next month, but it’s also possible that he’ll ask for more time to keep negotiating with Rams owner Stan Kroenke and/or the city of San Diego — or even that he’ll decide the L.A. deal is too second-fiddly for his blood and reject it entirely, though that seems less likely because why not just ask for an extension then to keep his options open? But trying to guess based on what some unknown “league sources” say is going to be about as accurate as a dart board — you’d probably do just as well selling prediction shares in the Chargers leaving or staying in San Diego, and going with the wisdom of the crowd.

Cash-starved Connecticut considering $250m arena renovation because millennials or something

The state of Connecticut is considering spending $250 million to upgrade Hartford’s XL Center (formerly the Hartford Civic Center) and everybody likes it except for the part about coming up with $250 million:

Supporters of transforming downtown’s aging XL Center arena lined up at a hearing Tuesday to back the $250 million project, but the uncertainty of whether the money will be there to pay for it hung over the meeting…

There is growing resistance to using bonds — essentially the state’s credit card — for big ticket projects when funding is being cut to social services, road improvements and school construction…

“The state simply can’t afford these kinds of projects at this fiscal moment,” Sen. Joe Markley, R-Southington, said, at the hearing. “Bonding and debt service has grown dramatically and terrifyingly … And $250 million or whatever the final price tag is, we can’t afford in these times.”

I’ve been to the Hartford arena, and I’m sure renovations would be nice (though the place is hardly falling down). But Connecticut already has plenty of other concert venues (the arena in Bridgeport, the Mohegan Sun and Foxwoods casinos, there’s no major pro sports team using the Hartford arena, and while the arena is currently losing about $3 million a year, spending $250 million to save $3 million a year is beyond stupid, so what’s the urgency, exactly?

The authority has said the renovations are necessary if the city hopes to bring major league hockey back to Hartford, absent since 1997 when the Hartford Whalers left…

“If we don’t take action and we leave the thing as it is, how can we attract new businesses, new people, millennials?” said Scott St. Laurent, secretary of the Hartford Whalers Booster Club, who was wearing a Whalers jersey. “How can we attract them to downtown if we don’t give them anything to do?”

There you have it: Connecticut is considering spending $250 million on arena renovations because millennials — who are already moving to downtown Hartford in droves — won’t go downtown unless they can watch an imaginary hockey team. At least this would make everybody forget about the Yard Goats fiasco, though I’m not sure in a good way.

Coyotes get developers to drop opposition to tax-kickback plan by promising not to do it again

An Arizona commercial real estate group has dropped its opposition to the Arizona Coyotes‘ demand for $200 million in tax kickbacks for a new arena because, apparently, the team is promising not to do it more than once:

“We were initially opposed,” [NAIOP Arizona president Tim] Lawless said.

But now the group is neutral.

That comes after meetings with Coyotes President, CEO and co-owner Anthony LeBlanc and assurances an arena tax district would not be applied to other projects and sports developments.

I guess technically this means that LeBlanc gave the commercial real estate developers assurances that any authorizing legislation would be narrowly written to just give him a giant whopping tax break, and not all sports team owners, which would have potentially drained an even large share of funds from the state treasury and left existing real estate owners holding more of the bag. That’s not likely to make the owners of the Diamondbacks and Suns happy if they’re hoping to ask for tax kickbacks for their own projects, but LeBlanc can worry about fighting with them later.

Anyway, none of this immediately changes the fact that top state officials sound cool to the LeBlanc plan, and supposed partners Arizona State University still haven’t actually signed on, and so on. But getting one less semi-powerful group hating on him has to be seen as progress of a sort for LeBlanc, anyway.

New MLB CBA should help spark new A’s stadium, but maybe not why you think

Of all the small changes in the new MLB collective bargaining agreement agreed on last week (which include the end of our long national World Series home-field nightmare), one that’s getting a bunch of attention is the decision to phase out the Oakland A’s exemption that’s allowed them to be the only team to collect revenue-sharing checks despite playing in a big market. The upshot, according to most sportswriters, is that this should turn up the heat on the A’s to build a new stadium:

Q. Sure, losing $35 million is one thing, but spending $800 million or likely much more to build a privately financed stadium is in a whole other category. Why does this force the A’s hands?

A. In absolute terms, it can’t. But the A’s want and need a new stadium and its revenue generating potential, so this is a strong push in this direction. Both executive vice president Billy Beane and general manager David Forst have talked about a future in which they can dial up the payroll to fit a new stadium.

That’s … not wrong, but wrongish. The implication here is that now that the A’s won’t be cashing annual revenue-sharing checks from the rest of the league no matter how crappy their balance sheet is, they’ll have to turn a profit some other way, so time to finally get cracking on that new stadium that’ll open up the money taps!

But that’s not how sports team owners think, or at least not how they should think if they’re remotely rational economic actors. (Which they probably aren’t entirely, but let’s overlook that for the moment.) If a new stadium is going to bring in more money than it costs to build, then you’re going to do it regardless of how much money you’re currently getting from other sources; and if a new stadium is going to be a money-loser, it’s not going to help you either way.

Where the new revenue-sharing rules can change the game is in how they effect marginal tax rates. Think about it this way: If you’re considering making an investment — moving to a new city, buying a car that allows you to commute to a new job, getting an advanced degree — and trying to figure out if the extra income it will allow you is worth it, the first thing you need to know is how much your net income will change after taxes, deductions, etc. So if you’ll be earning an extra $10,000 a year, but your bank balance will only change by $6,000, that’s a 40% marginal tax rate. (We can call it this regardless of whether it’s actual extra taxes you’re paying, or, say, credits you’re no longer eligible for.)

So back to the A’s. In past years, as an exempted “small market” team under MLB’s two-tier revenue sharing system, they’ve been subject to the leaguewide 34% tax on each new dollar earned, plus a 14% “performance factor” tax where both the size of the tax and the size of the benefit is based on how much money your team brings in (or fails to). (the effective marginal tax rate impact of this is largely the same regardless of whether you’re a high-revenue team or a low-revenue team, since either you’re paying out more and more into revenue sharing as your revenue rises, or you’re receiving less and less in checks, or both.) The new system eliminates the performance factor sliding-scale tax and replaces it with more flat tax — while the math is complicated, it won’t change things drastically in terms of how much of each new dollar the A’s get to keep.

What will have a significant effect is eliminating the huge penalty the A’s were previously going to face for building a new stadium. Before, a new stadium was going to make the team ineligible for any revenue-sharing checks at all, since it would kick them into the “big market” bracket; now, with the checks already shutting off, there’s no disincentive to go ahead and build. Getting rid of this penalty — a “benefit cliff,” in economic terms — should make building a new stadium a lot more alluring to the A’s owners, which is no doubt a big reason why MLB took this measure. (Though also probably because some owners were just sick of giving the A’s any money when they weren’t spending it — though that remains a problem with some other teams that remain designated “small market.”)

In other words, while losing that $35 million a year should be a huge incentive for building a new stadium, it’s not actually the loss of the money that matters, but rather taking away the threat of losing the money if they built a new stadium. MLB could just as easily have incentivized Lew Wolff and Co. by saying, “Hey, you’re small market either way, go ahead and replicate the Miami Marlins if you feel like it,” and it would have done largely the same thing.

If all that is too much math to swallow on a Monday morning — it’s almost too much for me — just hold on to the takeaway that the A’s might be building a new stadium soon with largely private money, though there’s still concerns they may try to make a grab for public land. Just also remember that revenue sharing works in mysterious ways, so what’s sauce for the A’s may not be sauce for, say, the Arizona Diamondbacks.

Oakland’s $1.3B stadium plan for Raiders: Get NFL to reject Vegas move, figure out details later

Finally, we have some details — sort of — for Oakland Mayor Libby Schaaf and former-NFL-player-turned-developer Ronnie Lott’s stadium plan to keep the Raiders in Oakland. And it looks like this:

  • $600 million from Lott’s investment group
  • $300 million from Raiders owner Mark Davis
  • $200 million in G-4 funding from the NFL
  • $200 million in “infrastructure” spending by the city of Oakland and Alameda County

That comes to $1.3 billion, and you can certainly build a respectable stadium for that. The unanswered question, though, is: Who would get the revenues from the place? The San Francisco Chronicle report indicates that the public money “would be repaid from revenue generated by the stadium project,” and further that “the city and county would share some percentage of non-football revenues at the stadium,” though that might be targeted for paying off the remaining $95 million in debt on the Oakland Coliseum’s 1990s expansion. And what about football revenues? Would Lott’s group want some of those (probably), or be content with proceeds from building a retail development project around the stadium (probably not, since they’d have to pay for that separately from their $600 million in stadium expenses)? Is there enough money in this whole thing that everyone could possibly be made whole? (I really doubt it, since there not being enough revenues to go around is what made the previous private developer’s plan crash and burn.)

All this isn’t really any more detailed that the rough sketch that had been floating around before Schaaf announced it last week, so it’s not really clear what she had to gain from—

The hope is that the show of support will be enough for the NFL owners to block the team’s move to Nevada and open the door to the locals talking directly with Davis, which he has refused to do as long as the Las Vegas deal is on the table.

Oh, right. So take this less as actual stadium plan, and more as “Hey, NFL owners who may be having second thoughts about this whole ‘put a team in Vegas and hope that tourists buy season tickets thing,’ don’t listen to Davis when he says Oakland doesn’t care about him, we’re giving you an out if you want to vote no!” Given that NFL owner votes are known to be swung by ridiculous things, it’s not the worst gambit, really.

County official proposes diverting one-third of tourist dollars to build Cavs a glass wall

It’s been almost eight months since the Cleveland Cavaliers asked for a $140 million expansion of their arena to add more public space and give it a glass exterior wall, and Cuyahoga County Executive Armond Budish said, “Let me get half of that for you.” Now, Budish thinks he may have found some of the money, asking the local tourism agency to use hotel tax money to pay for the Cavs’ renovations.

Destination Cleveland collects about $15 million a year in hotel taxes, and paying off $70 million in Cavs expenses would cost about $4-5 million a year, so this would clearly be a hefty chunk of change, unless Budish has other revenue sources in mind as well. The Cavs are already getting a cut of the alcohol-and-cigarette-tax extension that county voters approved back in 2014 — Budish recently proposed splitting the proceeds evenly among the Cavs, Indians, and Browns, as nobody bothered to work that out beforehand — and since that amounts to about $170 million in total present value, Cavs owner Dan Gilbert is effectively asking for $70 million on top of the $60 million he just got two years ago for renovations. But really, who can put a price on the enjoyment that local sports fans get from a glass wall?

Top Arizona officials not really into this whole “give Coyotes another $200m in tax money” thing

Let’s check in on how the Arizona Coyotes owners’ proposal for a $400 million Tempe arena, half paid for by tax kickbacks, is going over with the state officials who’d need to approve it:

“I’m a big fan of the Coyotes but I haven’t heard anything about that,” Gov. Ducey told Welch.

“They’ve not talked to you?” Welch asked the governor, who replied, “No.”

Mmhm. Anyone else?

The newly-elected speaker of the House and a senior lawmaker who formerly chaired the House Appropriations Committee said they would be resistant to a TIF or a tax rebate.

“We care about the Coyotes, we also care about the taxpayers of the state,” said Speaker-elect J.D. Mesnard, R-Chandler.

Sen. John Kavanagh, R-Fountain Hills, the former chair of the House Appropriations Committee, said there just isn’t enough money to go around, especially at a time when the public is calling for more money for education.

“They’re not asking for a tax rebate, they’re asking for us to go into a budget deficit or to take on debt to build their private stadium,” Kavanagh said.

I’m going to go out on a limb and classify this as “not well.” While it’s still early and there’s obviously much haggling to go, perhaps this whole “announce an arena plan without telling anyone about it in advance, including the state university that you’re supposed to be partnering with” thing wasn’t the best idea. Though maybe the Coyotes owners are just really committed to transparency and not negotiating behind closed doors, in which case, kudos to them!

Stadiums now just big-ass billboards and public subsidy generating machines, face it

Today in sports teams sell ad rights for lots and lots of money:

The [Atlanta] Falcons organization has sold corporate sponsorships at Mercedes-Benz Stadium totaling more than $900 million in contractually obligated long-term revenue, SportsBusiness Journal reports in this week’s edition.

That’s $900 million over several decades, so not really worth $900 million toward today’s construction costs. Still, it should go a long way toward helping pay off the Falcons$1.6 billion stadium, especially when the team is already getting tax money worth nearly $700 million.

Also today in sports teams sell ad rights for lots and lots of money:

The Minnesota Timberwolves and Lynx named five new “founding partners” on Monday who will help pay for the $130 million renovation of Target Center now underway…

In exchange for its sponsorship, each founding partner will receive a customized package with the two teams. Each package will offer a yet-to-be disclosed “physical presence” inside the arena, plus outdoor and indoor digital signage and category exclusivity.

That Minneapolis Star Tribune article doesn’t mention it, but the Target Center renovation also got $48 million in public funds.

These are only two data points, obviously, but they do help explain why team owners are so eager to build new facilities despite tons of evidence that they don’t bring in all that much more money in actual arena revenues. New sports venues aren’t just new sports venues — they’re also new billboards, and corporations are more willing to throw money at slapping their names on a fresh canvas than on one that’s been written on already a bunch of times, even if it’s dubious whether there’s any real business value.

Plus, of course, it’s way easier to ask for public money for new (or renovated) buildings than it is to just ask for straight taxpayer handouts because you want to boost your profits. When future alien anthropologists try to puzzle out why we spent so much of our time building and then tearing down places to watch mass sporting spectacles, it’ll be fun to see how many tries it takes before they arrive at “it was the best way to separate people from their wallets.”

Minnesota officials defend free suites for Vikings games as needed to conduct, uh, “business”

Here we go again: The Minneapolis Star Tribune revealed yesterday that board members of the state-run Minnesota Sports Facilities Authority get use of two free luxury suites to Vikings games as part of the deal that approved more than a billion dollars in public stadium subsidies. That’s fairly common, as is outrage over the impropriety of such deals once they’re revealed.

The twist in the Minneapolis case is that even though the suites are supposed to be used for business purposes (wink, wink), nobody on the MSFA will say who’s using the tickets (and free food and parking passes), and insist that secrecy is vital to the cause of conducting government business at football games:

MSFA Chairwoman Michele Kelm-Helgen and Executive Director Ted Mondale say confidentiality is critical as they seek to book the stadium’s event spaces to cover the cost of amateur events such as high school football, baseball and soccer games, along with University of Minnesota baseball games.

“If people think they’re going to be in the newspaper, it’s not going to be effective,” Mondale said.

Or it could be because they’re bringing family members and campaign donors to games, in violation of the state’s ban on public officials accepting gifts outside of their government duties. Who can say! That’s what makes secrecy so fun!

The big question here, obviously, is whether there was some sort of quid pro quo that induced state officials to approve the stadium funding by offering them free tickets to games. Probably not directly — the people on the MSFA board aren’t the same legislators who voted to approve the deal back in 2012. But lots of stuff happens indirectly in politics, which is why there are laws against taking gifts. Plus it just looks really, really bad when taxpayers are paying the bills on a $1-billion-plus stadium plus PSL fees and higher ticket prices, and state bigwigs are getting to watch games for free.

(Also, obligatory note: Ha ha, Ted Mondale thinks people still read the newspaper! He’s so quaint.)

Sportswriter with history of citing unsourced rumors says Chargers are moving to L.A., maybe

CBS Sports’ Jason La Canfora, who two weeks ago wrote that San Diego Chargers owner Dean Spanos had little choice but to share digs with the Los Angeles Rams in Inglewood now that his request for $1.1 billion in public funds for a new stadium-convention center complex was crushed at the polls, is doubling down on that assertion, saying talks between the two teams are continuing to “improve in tenor.” His source? “League sources.”

La Canfora has a bit of a track record now of making anonymously sources predictions on NFL stadium deals, so let’s see how well he’s done in the past:

  • October 2012: NFL would rather have stadium built at Dodger Stadium than either City of Industry or the downtown “Farmers Field” site. Verdict: Hard to say, as none of the three sites ended up being approved.
  • September 2015: NFL owners can’t agree on whether to approve the Inglewood or Carson stadium plans. Verdict: Maybe at the time, though they did end up coming to an agreement just four months later.
  • October 2015: Rams owner Stan Kroenke would be willing to share his Inglewood stadium with another team. Verdict: True! Though how willing, we’re still waiting to see.
  • October 2015: St. Louis could come up with a stadium plan good enough to keep the league from approving a Rams move, but not so good that Kroenke wouldn’t refuse to take it and then move somewhere else, like maybe London. Verdict: Yeah, that didn’t happen.
  • December 2015: If denied the chance to move to L.A., Kroenke could sell the Rams to someone in St. Louis and buy the Denver Broncos instead. Verdict: We’ll never know.

Add it all up, and you get a reporter with lots of insider league contacts, and the willingness to run with any rumor that they’re telling him. Which doesn’t make the rumors wrong, necessarily, but it also doesn’t give them much predictive power.

So while it’s probably true that somebody has heard that the Spanos-Kroenke talks are going well, or at least proceeding apace, that doesn’t tell us much about whether they’ll actually come to an agreement. Or about La Canfora’s other predictions (similarly cited to “sources”) that there’s a “strong chance” the league could reduce the Chargers’ relocation fee (from what, he didn’t say) and that the Chargers “continue to investigate possibly” playing at the Los Angeles Galaxy‘s StubHub Center in Carson for two years while waiting for the Inglewood stadium to be built. La Canfora also said that Spanos asking for an extension on his January deadline to make a decision on an L.A. move “is not expected,” which is as close to a solid prediction as he gets in this article — mark it down, and we can add it to his scorecard in another few weeks.