Orlando officials hate bill to halt land giveaways to sports teams, for all the wrong reasons

From the Department of Maybe Well-Meaning Ideas That Probably Should’ve Been Thought Through a Little More, we have Florida House bill HB 13, which, as the Orlando Sentinel notes, would “ban teams from building or renovating stadiums on publicly owned land and also bar governments from leasing existing facilities to teams below ‘fair market value.'” The bill’s sponsor, Broward/Miami-Dade state rep Manny Diaz Jr., says he introduced it because of anger over the Miami Marlins stadium deal, and that it “aims to do is to try to curtail abuses that have gone on, where cities … are being held hostage.”

Orlando city officials are griping that the Diaz bill would make it harder for his city to lure or retain sports teams by gifting them with generous lease terms to hide from the public how big the subsidies are offering competitive deals, and that this is an unforgivable intrusion by the state on cities’ right to throw money away for no good economic reason determine their own development policies. But to note that the objections to the bill are dumb does not preclude acknowledging that the bill itself is pretty dumb, too.

As I told the Sentinel (it didn’t make the cut, though other of my quotes did), the “no leasing land below market value” bit is reasonable enough, though it’s going to be tough to enforce: If you determine “market value” by what other sports teams are paying in rent, you get into the problem that most franchises have sweetheart lease deals. And in any event, there’s nothing that I can tell in the bill that would stop a city from charging “market rent” and then handing the money back under the table through “operating subsidies” or somesuch.

The bigger problem is with the first half of the bill, which sets out to solve a problem that doesn’t exist: the unwarranted use of public land for sports facilities. Unless you’re the hardest of hard-core libertarians, there’s nothing wrong per se with government land being used for sports stadiums any more with it being used for housing developments or libraries or whatever — the public just should get some benefit from the deal, whether it’s lease payments or a cut of stadium revenues or discounted tickets or something. If “can’t renovate buildings on public land” means that the Magic, say, are restricted from paying for improvements to their arena on government property and end up using that as an excuse to demand public funds or tax breaks (which aren’t addressed at all in this bill) to build a new arena on private land, that’s not exactly a step in the right direction.

A well-written bill would have provided an ironclad prohibition on deals that directly or indirectly gift public land to teams, and maybe ruled that sports facilities run for private profits should be subject to property tax even if they’re owned by the public or on public land, to get around that subsidy loophole as well. I don’t know enough about Diaz to know whether he wrote his bill this way because of his own ideological beliefs (there are a surprising number of conservatives who consider government cash a subsidy but not government tax breaks, on the Casino Night Principle) or just because he has sloppy bill-drafters in his office. Or maybe he’s just tired of being confused with the other Manny Diaz, who was mayor of Miami when the Marlins deal was approved. Either way, before this sails through the state legislature on “sounds good enough to me!” grounds, let’s hope somebody goes in there with a red pen and does some judicious editing.

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3 comments on “Orlando officials hate bill to halt land giveaways to sports teams, for all the wrong reasons

  1. “…charging “market rent” and then handing the money back under the table through “operating subsidies””

    This is a key point in all stadium deals. There is generally enough wiggle room included in the language that it is impossible to determine with certainty what the ‘total’ public cost might be.

    Even in situations where sports franchises begin as actual rent paying tenants, the goal posts are routinely moved once the building is built and the lease is up for renewal such that the teams no longer pay rent, then that they get a cut of city owned parking, or if you are Glendale you agree to pay them to play in the building you built for them etc.

    If I were franchise owner, I would use exactly the type of end around you suggest to make my proposal look good, knowing full well that every penny I paid (and more, likely) would be returned to me through contractual agreements with the municipality. It’s shameful, but if you are dealing with absolute fools why not take their money before someone else does, I guess?

    As much as I think Hansen’s Seattle deal is a fair one for taxpayers, I would never say that it will look as good 20 years out as it does right now. Once a (single purpose) building is built, the tenant has most the power, not the municipal owner. It’s really all about sunk costs.

    Would taxpayers be better or worse off if the current “standard” was for franchise owners to own the building but be exempt from property taxes for 20-25 years? Compared to current deals, that’s not a hard question to answer.

  2. I sometimes wonder the same thing from a different angle–wonder if the desire for the public to “make a fair return” actually causes more problems than it solves. For every Seattle deal, there are 20 that use crazy economic growth expectations, borrow against impossible-to-achieve tax revenues, or use other accounting slight of hand tricks to make a stadium “profitable.”

    In reality–these are best understood as luxury purchases, not investments. Nobody makes money off buying a Porsche, and the “intrinsic”benefits are really trade offs from other things. We should encourage politicians to “lay it out there”–that to be the “home” of a particular team’s laundry will cost the city $500M over 20 years. Is that worth it? I don’t know–but that might be a fairer way to frame it than what we do now.

    1. Unfortunately, theres a substantial amount of both anecdotal and analytical evidence that shows that when you ask people if they want to spend $500m just to be home of a sports team with no economic return, a sizable majority says, “Not at that price.” So we keep getting the accounting sleight of hand to pretend that this will be a “win-win.”

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