D.C. CFO director says United can fund own stadium without tax breaks

While I was finishing reading Conventions, Sports, and Leisure’s 406-page economic impact study of the proposed D.C. United stadium that was commissioned by the city council, the Washington Post was posting a late-morning report on the council hearing that took place on Wednesday, just a couple of hours after the study was released. And apparently at least one city staffer had had time to digest the study in that time, and issued some not-entirely glowing reviews:

In his testimony at the hearing,  John P. Ross, the director of the city’s office of the chief financial officer, raised two concerns. First he said the administration had not identified where it would get the money to fill financial gaps in the deal, including an estimated $75.6 million needed this fiscal year.

The second, and potentially more serious issue, is that the CFO determined the tax breaks requested by the team weren’t needed to finance construction of the stadium. Although D.C. United — like other MLS teams — loses money on an operating basis, its value doubled between 2007 and 2012, according to estimates by Forbes.

Last year the team’s principal owner, Indonesian businessman Erick Thohir, bought a 70 percent stake in the Italian club Inter Milan for an estimated $340 million. Ross said the team didn’t need tax breaks to finance the stadium.

“I don’t want to sound real negative. All I want to say is this is what we’re getting into,” Ross told the council.

We’re back to parsing the meaning of “need” again: The CSL report makes clear that D.C. United would likely lose money on the stadium without the tax breaks, but of course Thohir & Co. have plenty of money to lose. If D.C. refused to provide tax breaks — or, for that matter, the rest of the $180 million in city subsidies — then the United owners would have no financial incentive to do the deal; but then, if the only way a new stadium would benefit United would be if it came with a $180 million check, this raises the question of why a new stadium is considered a boon to the franchise in the first place.

The bigger question, of course, involves not so much finances as politics: Mayor Vincent Gray, who concocted the D.C. United deal, was voted out of office on Tuesday (he actually lost months ago in the primary) and councilmember Muriel Bowser was voted in. Bowser is more lukewarm on the stadium, so the council could push to get it done before the mayoral changeover to avoid having to renegotiate it, or could push to delay it until afterwards to allow time to renegotiate it, or could even push to get it done now just so that Bowser doesn’t have to have it on her plate when she takes office. But while D.C. news outlets usually eat this “who’s on which side?” stuff up with a spoon, the head counting among councilmembers has been pretty meager, aside from a handful of knowns on each side (council president Phil Mendelson, David Grosso, Kenyan McDuffie, lame ducks Tommy Wells and Jim Graham: against quick approval; Jack Evans: just get it done already).

Of course, Mendelson specifically delayed releasing the stadium report until Wednesday so no one would have a position on it, so there’s some explanation for that. Still, it would be nice if somebody had at least assigned an intern to look around the room on Wednesday and see who was nodding their heads and who was gritting their teeth. Though given D.C. councilmembers’ historic propensity for sudden about-faces, maybe the local press corps has just given up on trying to figure out how anyone will vote before all the backroom negotiations are completed.


3 comments on “D.C. CFO director says United can fund own stadium without tax breaks

  1. Off topic from the United but still here in DC, the Wizards are asking the city for $30-40 million to build a new practice facility to be paid for by taxes on Wizards tickets. No explanation for why Ted Leonsis can’t just raise prices and pay for the facility himself or even what benefit the team gets from training in a 5,000 seat gym over their current practice court in the Verizon Center. But on the bright side they’re sure to host more fans per year than the United at a fifth of the price.

    http://washington.cbslocal.com/2014/11/07/wizards-closing-in-on-deal-for-new-training-facility/

  2. Attendance is not an issue for DC United. We support our team despite the decrepit stadium. DC United averaged 17,030 a game this year while the Wizards averaged 16,630.

    I think Ted is trying to model the Wizards after the Caps and the Caps have a nice practice facility out in Arlington.

  3. The United play less than half the home games of the Wizards, they charge less than half as much for lower level tickets, and they greatly inflate their attendance numbers. The only reasons they outdrew the Wizards on average is because the Wizards arena is smaller, capping their top number, and the United include the 55,000 that attended the double header to see El Salvador (most leaving before the DCU game even started). This is a great example of how the shady ownership group is cooking the numbers they’re touting in their quest for government money.

    The United drew 28K for their home playoff game with $30 tickets. That’s the absolute best they can do, terrible compared to the other local teams.

    The Caps were training up near Baltimore, the Verizon Center has a practice court but not a practice rink. The Caps had a legitimate need for a closer facility. They also have a sponsor covering much of the cost, certainly the Wizards could do the same. (In the latest news the Wizards are claiming that players like Kevin Durant will move into DC if the city builds the new practice facility, getting ahead of themselves a bit, maybe even tampering.)