FC Cincy mulling Kentucky tax kickbacks to pay its entire stadium cost, and other week’s news

All the news that wasn’t fit to print this week:

  • FC Cincinnati now wants the Port Authority of Greater Cincinnati to own its stadium since Hamilton County doesn’t want to. (Does “own” mean “pay for”? Reply hazy, ask again later.) Or maybe Newport, Kentucky, since, according to team president and former city council members Jeff Berding, that would allow the team to recoup its entire $100 million through tax increment financing kickbacks of property taxes paid on the property. How would it generate a whole $100 million in TIFs? Reply hazy, ask again later.
  • Would-be Seattle arena builder Chris Hansen hired University of Washington public finance professor Justin Marlowe in May to compare the economic impact of his Sodo arena proposal to that of the KeyArena renovation plan, and he has issued his report, which says that the Sodo plan would create three times as much tax revenue for Seattle ($103 million over 35 years vs. $34 million for Key). On the other hand, the Key plan would include some kind of sharing of arena revenues, though that wouldn’t kick in until the Key developers got their share, and, yeah, basically it’s a muddle. On the whole, it seems to give the edge to Hansen’s plan, if only because that arena would pay property taxes, but I’d need to sit and break down the math to say exactly by how much, and I’ve been waiting for time to do that all week, so clearly it’s not happening. Reader exercise!
  • Oakland A’s executive VP Billy Beane promised that once the team gets a new stadium, it will stop trading all its decent players once they start to get expensive: “There’s only one way to open a stadium successfully, and that’s with a good, young team. … Really what’s been missing the last 20 years is keeping these players. We need to change that narrative by creating a good team and ultimately committing to keep them around so that when people buy a ticket, they know that the team is going to be around for a few years.” Which could make sense if a new stadium draws enough fans that having a winning team boosts revenues enough to pay for player salaries, though we’ve heard this song and dance before elsewhere.
  • The Nashville Sounds‘ new stadium was supposed to cost taxpayers $37 million, but it ended up costing $91 million.
  • What does $74 million in public subsidies buy Minnesota Timberwolves fans and staff? New seats, new restrooms, new locker rooms, an ice floor that doesn’t leak, two new loading docks, and a big glass wall, because everybody’s gotta have one of those.
  • The athletes’ village from the 2016 Rio Olympics is now a wasteland of unsold condos, because everything the Olympics touches turns to trash.
  • A homeless camp has arisen on the site of the planned Las Vegas Raiders stadium. Make your own metaphors.

5 comments on “FC Cincy mulling Kentucky tax kickbacks to pay its entire stadium cost, and other week’s news

  1. A little more venue news: the Warriors are gonna be the first NBA team to use PSL’s for their new arena. But they don’t want you to call them PSL’s because they’ll give the money back – after 30 years. Resellable via team-operated “marketplace”. If you resell at a loss, you’ll get difference back at the end of those 30 years. Speculators need not apply: no resale at a profit.

    http://www.sfchronicle.com/sports/article/Warriors-new-offer-Season-tickets-for-30-years-11300137.php

  2. The excel spreadsheet is up there, but it’s not exactly easy to convert from one scenario to another to double-check things. The “revenue projections” tab sheet opens up with three values calculated based on the OVG base scenario, but only one of the three values actually matches the values in the “scenario analysis” tab. They also state in the report they used a 35 year model but then the “revenue projections” labels say they used net present value over 30 years, which is confusing.

    I also noticed that they modeled the acquisition of a NBA team and paid the 3.6% city sales tax on the team being valued at $2 billion, which seems a bit generous to me, but Ballmer paid that in LA. For $7.5 million in savings, you’d think there’d be some way to have the team owned by an LLC based in a tax haven, once you’re not constrained by an MOU saying it must be based in Seattle.

    evans.uw.edu/policy-impact/seattle-arena-public-finance-analysis

    • And I could be wrong about what that $7.5 million comes from, since I just presumed based on it being a large, random “sales tax” entry that comes around when they start selling NBA tickets. The assumptions and parameters callouts for sales tax have an 8.5% rate, which, if used, would include what the state is getting.

      I can’t really tell if that number actually got included in any calculations, though.

      I do see that the labels were wrong, though, and the present value calculations for all 35 years in the spreadsheet, with a 3% discount rate.

      • I’m not sure any of that is going to matter in the end, Joe. The bottom line is that the City already owns the facility at Seattle Center (which it also owns) and the Powers That Be don’t want their Coliseum to be even more of a white elephant if Hansen’s arena became reality.

        This is Seattle, where leaders want to create places for the “safe” use of heroin even though heroin was still illegal at last check…it’s about politics, not practicality.

  3. Loriation: {lore-ee-a-shun) {noun}; the process by which team owners use their own business decisions as justification for a massive public subsidy on the basis that the subsidy would remove the “need” to sell off sometimes prized playing assets in order to lower operating costs, then continue to sell off playing staff at an increased rate after receiving the subsidy.

    see also ‘fraudulent misrepresentation’

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