Friday roundup: Naming-rights woes, Austin update, and the World’s Largest Chest of Drawers

It’s Friday already? Seems like we were just doing this, but the pile of stories in my Instapaper queue says otherwise, so away we go:

  • The Florida state house has again passed a bill that would ban building or renovating private sports facilities on public land, which would potentially affect the Tampa Bay Rays, among others. This is kind of a dumb idea, as we discussed back in October, since there’s nothing wrong per se with putting stadiums on public land so long as the public gets a good deal for it; a far better plan would be a Seattle-style bill to require that local governments get a return on their investment in any sports lease project. But then, this bill already passed the Florida house last year and died in the senate, so probably not worth getting worked up over too much just yet.
  • Sports Authority agreed in 2011 to pay $6 million a year for 25 years for the naming rights to the Denver Broncos stadium, and now Sports Authority is bankrupt, and Metropolitan State University of Denver marketing professor Darrin Duber-Smith is saying I told you so: “My big warning was, ‘I’m not sure Sports Authority is a big enough or healthy enough company to commit that much money from their marketing budget each year.’ And I was right.” The Broncos are now looking for another company to pay $10 million a year for naming rights, and haven’t found any takers yet, hmm, I wonder why?
  • Chelsea F.C. will get to move ahead with its new-stadium plans after the town council used a compulsory purchase order — like eminent domain, surely you’ll remember it from that Kinks song — to clear an injunction that a nearby family had gotten on the grounds that the new stadium would block their sunlight. The purchase order isn’t actually seizing their home, but the land next to it, which is enough to invalidate the injunction; not that this doesn’t raise all kinds of interesting questions about the use of state power for private interests, I’m sure, but man, don’t you wish this were the only kind of stadium controversy we had to put up with in North America? League monopoly power over who gets a franchise is a bad, bad thing.
  • High Point, North Carolina is spending $35 million on a stadium to bring an indie minor-league Atlantic League baseball team to town, and City Manager Greg Demko says this will help the city’s commercial tax base recover, because “the construction of a stadium is like an anchor for the revitalization and development of a downtown.” Demko is going to be so disappointed, but at least he got mention of his city in a Bloomberg article as “home to the World’s Largest Chest of Drawers,” and you can’t buy publicity like that.
  • New Seattle mayor Jenny Durkan says that while it’s “a longshot,” it wouldn’t be impossible for Chris Hansen to build his Sodo arena while OVG renovates KeyArena at the same time. I’m going to interpret the tea leaves here as “Hey, if you want to spend your money to try to compete with another arena across town, be my guest,” but stranger things have happened, maybe?
  • The city of Austin has issued a report on eight possible sites for a stadium for a relocated Columbus Crew, and are now waiting on Crew owner Anthony Precourt to tell them which, if any, he likes. A consultant for Precourt has since ruled out a site or two, but it looks like nothing might be ready for the city council to vote on February 15 as planned; Austin MLS lobbyist Richard Suttle says the problem is “between the holidays, flu season and winter storms, it’s been slow going.” It’s not quite helping to spark women’s suffrage, but the flu still reminds us who’s boss from time to time.
  • Now that Amazon has announced its short list of cities that will get to bid on its new second headquarters, it’s time for another look at how to stop corporations from launching interstate bidding wars to be their homes, which once again leads us to David Minge’s 1999 bill for a federal excise tax on public subsidies. “Of all those offers [made to Amazon] there’s one obvious one that should have been made and it should have come from Congress,” University of Minnesota economist and former Minneapolis Federal Reserve research director Arthur Rolnick, who helped Minge concoct that bill, tells CityLab. “Now if that offer were on the table it would end it, it would end the bidding war. Then Amazon would simply base its decision on where location is best for business.” It’d work for sports leagues, too!

35 comments on “Friday roundup: Naming-rights woes, Austin update, and the World’s Largest Chest of Drawers

  1. It’s interesting to read through the history of the first 10 years of the NFL, all the teams making their own schedule, the Providence Steam Roller and Pottsville going in and out, random teams representing LA or Duluth, and then the Depression hitting and everything becoming a lot more streamlined.

    My theory of why one continent evolved differently from the rest of the world would be baseball’s insane scheduling requirements and travel being copied and the Depression. Has anyone else read anything on this?

    • It’s that U.S. sports leagues were from the beginning closed groups, whereas European ones were not. I don’t know enough about early European soccer history to know why that evolved that way there, but in North America it was established pre-1900 that the major sports leagues got to determine how many teams there would be and where they’d play, and that’s only solidified since. (The 1922 Supreme Court antitrust ruling for baseball didn’t hurt.)

      • TY,

        I do know a few things as a baseball fanatic, Ban Johnson (founder of the American League) along with Kenesaw Mountain Landis helped to monopolize AL/NL in the early 1900’s as a protection to their organizations. Ostensibly it was to protect their investments as it was expensive to field a team and pay for travel expenses (ie, Boston Braves to St Louis Cardinals) on trains and hotels.

        Neil,

        Would the Florida bill also include minor league team/stadium subsidies? There are only 1000 minor league stadiums in Florida and a few “baseball campuses” are abandoned already.

      • Europe has the tired system because of the way leagues developed, particularly in England.

        Initially soccer teams were technically “amateur” but at some point in the late 1800s some teams made the choice to professionalize and form regional leagues. To build a fully national English league, there wasn’t an obvious way to make a manageable league so English teams agreed on combinations of ‘election’ and moving up and down by results.

        European countries were marked by hundreds of teams in villages and cities–some associated with churches, factories, or other sports clubs. Some of these clubs long ago outgrew the founding association and have become large businesses (Everton FC, for example, was a church team before joining the Football League). In theory, your village team could be the national championship with years of the right results.

        Even now in Germany, with a couple exceptions, teams are “member associations” (and not franchises or owned entities) and clubs sponsor a variety of activities and sports besides soccer (most of the top teams now have the soccer as a limited company).

        I’m not sure what Ben Miller is talking about.

        • That’s how things went in the US up till the late 1800s as well, but then things took a more cartel-y turn. I’d love to read more about why in England they decided to go with an integrated tiered system, whereas in the US it became “We’ll form competing leagues and try to drive each other out of business,” as happened multiple times over the first 40 years of pro baseball.

          • I’d say the huge size of the US had a lot to do with it. As stated, only the biggest towns could sell enough tickets to support the travel. This meant that the wildcat leagues (Federal, American Association, American League) tended to just try to compete by starting teams in the same markets.

            The fact that teams weren’t exactly “owned” as in the US, but rather really were local sport clubs, until later is probably the other factor. In fact, until about 30 years ago a family that “owned” the club as “chairman” was more of a benevolent local rich family that dumped “extra cash” into the team for no reward. Things changed in a more American way when teams started floating shares on the stock market.

          • A staggering amount could be written on the reasons behind the different models… however, at heart the basic difference is that European sporting leagues formed under the auspices of national associations (either governmental or quasi governmental agencies – some of which were formed by the member clubs initially) that set out basic standards that clubs had to meet to be granted membership.

            In North America, once the age of “amateur” sporting associations ended (at the elite level, anyway) the leagues themselves tended to incorporate as private businesses (Raiders II formalized this for all major professional leagues in the early/mid 1990s). This gave them the sole right to determine who, what, when, where and how additional members clubs would be created and admitted.

            It’s the lifeboat principle in action, in other words. It’s why we’ve seen several leagues (NFL, NHL, MLB etc) expand to locations they didn’t really want over the last half century or so in order to reduce the chance of rival leagues from making a go of it.

          • That’s all been going on in the U.S. since the 19th century, though, at least in baseball. I’m still not clear on why the strongest American sports clubs decided to band together as leagues to screw everyone else over, while in Europe nobody really tried until the Premier League, as I understand it. (And by then it was too late to totally get rid of the “anybody can join” model.)

    • Not to over-simplify it, but the reason we have closed leagues is just because America is a freer country. UK and Euro legislators and courts don’t respect private property the same way Americans do.

      • Tell that to the property owners eminent domained right out of their condos to make way for the Nets new arena.

        Also, arguing that this country is “freer” because it restricts ownership of franchises and membership in sports leagues is one of the more outlandish uses of the concept of freedom.

        Is baseball’s long time ban on black players also an example of this nation’s commitment to freedom?

  2. Monopoly power is a bad thing. Absolutely. And seeing as there’s no other blog dedicated to rigorous reporting on sports stadium subsidies, We The People must confiscate and nationalize Field of Schemes.

  3. https://www.atlasobscura.com/places/high-point-chest-of-drawers

    Just in case you wanted to see the chest of drawers, also, posted today. Maybe some “collusion” between atlasobscura and City Manager Greg Demko

  4. “League monopoly power over who gets a franchise is a bad, bad thing.”

    Nah, the franchise model is just a thing, the rules by which a particular game is played. (Has anyone ever claimed that there’s something unconstitutional about the limits McDonald’s places on franchisees?) How communities allow themselves to be used by teams is forever the problem.

    • If McDonald’s used its control of the market to drive Burger King and Wendy’s out of business (or, to be more historically accurate, to force a merger with Burger King and then shut out Wendy’s from doing business), yes, that would be unconstitutional.

      • Sure, and if the (insert a sports league acronym here) were to do some driving out or shutting out or merge-forcing then the aggrieved parties would have recourse. If they have a valid complaint and don’t get satisfaction, that’s not a problem with the business model, it’s a problem with application of law.

        • It’s really hard to prove and enforce without government action to back it up. Pretty sure the USFL case is the only one that made it as far as trial, and as we famously know, the league won a total of $3 in that one.

  5. Yes those damn European Socialists. If only the USA practiced their form of socialism instead of whatever we currently practice. BTW the the US government officially grants a monopoly exemption to one sports league only , and it isn’t MLS.

    • That’s not entirely true: The other sports leagues than MLB have limited monopoly protections that allow them to do things like jointly negotiate TV deals. And the 1922 MLB ruling absolutely provides cover for a lot of the things other sports leagues do that might otherwise warrant antitrust scrutiny.

      • Correct, like not being able to sue the team for refusing to install protective netting before a little girl took a line drive to the skull. Oops perhaps that doesn’t fall under baseballs antitrust exemption.

        • The not suing for foul balls is under something in the US courts known as the “Baseball Rule” where buying a ticket at a game is the explicit understanding of assumption of risk, especially when they keep announcing and posting about be away or balls and bats leaving the field. I.e. getting hit and injured with the batted ball is a known risk you decided to take, it’s intrinsic to the event and you have been warned. It has non-baseball applications as well, but since it was first litigated for baseball the name stuck.

          It has nothing to do with anti-trust.

          Though that being said the courts have been slowly weakening the “Baseball Rule” fits and starts which is part of the reason MLB has been expanding the protecting netting.

          • The “forewarned” argument has more to do with insurance requirements than limiting liability. Clubs (or any business) still must take all reasonable precautions to prevent injury to spectators (as well as employees).

            A skydiving school or whitewater rafting company will require detailed waivers be signed before they let customers take part in their form of entertainment. However, the waivers are not absolute, despite their careful creation by gifted lawyers (ok, underpaid clerks or associates). Many businesses of this type have been successfully sued.

            Despite the waiver, injured parties can still file actions for legitimate negligence.

            A spectator at a NASCAR race may have reasonably expected to get sunburn, dehydration and intestinal discomfort (have you tried racetrack food?) along with their experience. They did not sign up to have a 4,200lb stock fly through a catch fence and land on them.

  6. The “or renovating” part is what I find interesting. The linked article says the law exempts current leases–meaning that presumably they’d be exempt from the entire law including the renovation section. But if that’s the case why include the renovation section at all since you obviously couldn’t renovate something that was never built in the first place? And assuming there would be cases where the renovation clause would come into play, they’d better be very specific on how they define renovations lest they doom a structure to eventual collapse by prohibiting basic upkeep measures.

  7. “A lot of the name recognition for us in the past has been ‘Coyotes, bankruptcy, ownership uncertainty, relocation.’ “We need to create a new narrative that gets away from that noise.”
    – Chief Operating Officer Ahron Cohen

    (Team president and CEO Steve) Patterson said his focus has been establishing relationships in the community that would allow the team “to have more focused conversations on arena solutions.”

    http://www.sportsbusinessdaily.com/Journal/Issues/2018/01/15/Franchises/Coyotes.aspx

  8. The Broncos’ naming rights deal is important from a public financing angle. The stadium is actually owned by the Metropolitan Football Stadium District, a quasi-public agency. The MFSD and the Broncos split naming rights 50/50, but the District has the sole responsibility to maintain the stadium.

    In August of 2016 both parties released a joint statement: “Naming rights revenue is primarily used for capital improvements extending the life of the stadium well into the future, attempting to avoid need for public funding. The District and the Denver Broncos are currently conducting a facilities conditions assessment of the stadium and surrounding campus. Preliminary numbers indicate over $300 million will be needed over the next 30 years to maintain the facility.”

    While the MFSD opened a tender in 2016 to find a company to perform an actual audit, I’ve never seen anything about their findings. So the $300mil is the number in play.

    Team CEO Joe Ellis (who has run the show since owner Pat Bowlen withdrew due to Alzheimers) kept the Sports Authority name on the stadium for two full season, hoping to find a deep-pocketed sponsor. He didn’t want fans to get used to the idea of simply calling the stadium “Mile High,” which it is required by statute to include in the name.

    What has happened to that $300mil backlog over the last two years? What are the actual long-term maintenance requirements? What are the odds of finding a sponsor that deep? What would be the pitch for further taxes in case they can’t? All part of the excitement of mile high sports!

  9. The Seattle return on investment requirement is good if it is applied but in the case of the OVG deal the city exempted that from having to comply thustly completly defeating the intiatives intent.

    • Back in Sept 2017, when Chris Daniels reported on it, that seemed to be the plan, however, the final MOU didn’t have any such language in it. It could still be exempted, but maybe they’ll try to calculate the return on the investment of getting a new arena that’s used for 38+ years from your old arena.

      http://www.king5.com/article/news/local/seattle/seattle-plans-to-exempt-keyarena-redo-from-voter-initiative/281-477151012

      City leaders, however, did not reveal the language of the ordinance for the renovation proposal, which shows the legislation “exempting the redevelopment and future operation of the Arena from the requirements of Chapter 20.47 of the Seattle Municipal Code; and ratifying and confirming certain prior acts.”

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