Portland ups Timbers tax break to $5.1m, says it’ll all work out because math and stuff

The Portland city council voted unanimously yesterday to approve the proposed $50 million expansion of the Timbers‘ stadium that will be entirely paid for by the team owners except for $2 million in ticket taxes that the city will waive. Except now it’s really $5.1 million, what?

Peregrine has agreed to pay the $50 million cost of building the expansion. In exchange, the city has agreed to forfeit its share of ticket revenues, losing out on about $5.1 million between 2018 and 2025.

As this was explained previously, the city’s contribution is just kicking back its 7% ticket tax on the 4,000 new seats. There are 17 MLS home games per season, so over seven years that’s 119 games, times 4,000 is 476,000 tickets total — meaning the Timbers would have to charge $153 a ticket for this to make any sense.

The Oregonian offers a slight clue, indicating that there was a last-minute switch in the tax break, but not explaining what it was:

The city asked the soccer team to switch from a 10-year tax exemption it had granted the club in May to a seven-year exemption so that the city could ensure the team would resume tax payments by 2026. That way, the city could secure income for large debt payments on the stadium coming due then, officials said.

Okay, but how does seven years of tax kickbacks amount to more money than ten years of tax kickbacks? Unless now the city is kicking back taxes on all tickets, not just the 4,000 new ones? (Providence Park holds 22,000 seats currently, so that math would work out, sort of, if you squint.) And how does this make sense at all:

Although the new tax break is about $3 million more in the near term, it will result in the Timbers paying higher taxes after 2025, officials said.

“The exemption is basically similar value,” Portland’s Chief Administrative Officer Tom Rinehart said. “There is more money exempted up front for Peregrine” and the revenue flow is greater in later years.

But, but, exempting more money sooner is a greater cost, because present value decreases the farther you get into the future, and AAUGH!

Anyway, this is still a relatively small amount of money, albeit relatively larger than the previously reported relatively small amount of money. The question remains: Why? What possible reason does the Portland city council have for giving the Timbers owners $5.1 million just so they can have more tickets to sell? Does any large enough business get to ask for city checks just because “economic development”? If I agree to spend $50 in Portland, will the city council reimburse me $5.10? The people demand answers, already!


9 comments on “Portland ups Timbers tax break to $5.1m, says it’ll all work out because math and stuff

  1. At first blush, I’m inclined to say bravo to the Timbers for putting their own money in.

    However, as noted, the original stadium play involved evicting the long time resident of the baseball stadium that existed previously in order to turn that stadium – at great expense – into an MLS stadium. sort of.

    The fact that it might have been cheaper to build a dedicated MLS stadium and keep both tenants seems to have been lost in all this…. much like other proposals where a new arena is built and part of the contract requires the old facility to be demolished so it doesn’t compete with the new. In what way is this ‘growth’?

    Lastly, would it be wrong to point out the Merrit Paulson’s Dad saved more money on capital gains tax payable on his hefty stock option based bonuses (by virtue of ‘selflessly’ leaving the private sector to become Bush 43’s treasury secretary shortly before the options expired, as I understand it) than the entire stadium renovation project cost?

    Is this where “giving is the greatest reward” meets “charity starts at home”?

    • Didn’t Paulson also own that long time resident of that stadium. Shouldn’t a business owner be allowed to shut down a failing business to concentrate on the business that is successful.

      • He did own the Beavers, yes. If he is spending his own money on his own businesses and facilities, certainly he can do what he likes.

        He was shutting down/selling one business to make it’s (publicly owned) stadium tenantless, then demanding public funds to heavily modify it to make it suitable for one of his other businesses (which had a home before, of course).

        Let’s take the sports angle away for a moment:

        If Howard Schultz was operating one of his franchises more or less rent free in a publicly funded location (which would never happen), then demanded that the coffee shop be remodeled at public expense to allow him to move one of his non coffee shop businesses into it, would we even be having this discussion?

        Doubtful, because that would never happen.

  2. Oregon does not have a sales tax and i believe the ticket tax is kicked back towards facilities (if memory serves, and my memory is very fuzzy on this). Most of the revenue from this tax comes from Paul Allen courtesy of the Blazers (who also paid for their own stadium, except for a city owned parking garage where all parking revenue goes to the city).

    To me it should be Paul Allen who is upset over these developments, not the city which still enjoys by far the smallest public outlay for sports stadiums of any city with NFL/MLB/NBA/NHL/MLS. But they probably have the highest per capita for bike lanes and light rail so it balances out I guess.

  3. Someone whose title is “Chief Administrative Officer”, who says this:

    “The exemption is basically similar value,” Portland’sTom Rinehart said.

    Needs to be fired immediately.

    I am dead serious.

    And I work in public sector consulting where I actually recommend such things professionally. In fact I got some incompetent people “reorganized” just today.

    Maybe I should see if Portland wants to hire me? Maybe I can go get Tom too.

  4. I’m as big an MLS hater as anyone, but as best I can tell Portland is the rare case where locals actually care about the team and will spend enough money outside of the stadium (in bars & restaurants, at stores buying merch, etc.) to justify this type of kickback.

    • To be clear, the theory is that the extra seats will allow more people to attend, thus increasing the economic activity around the stadium and creating more “hardcore” fans who are likely to be active in the aforementioned ways.

      • It has to be economic activity that otherwise wouldn’t take place in Portland, though. If the new seats just get people going to more Timbers games and fewer Trailblazers games, that doesn’t help the city economy.

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