Friday roundup: Fact-checking Suns arena impact claims, the hidden cost of hosting the NCAA Final Four, and everybody gets a soccer team!

Thanks to everyone who became a Field of Schemes supporter this week in order to get a pair of my goofy refrigerator magnets! If you want to hop on the magnet train, you can still do so now, or you can first stop and read the rest of the news of a wacky week in stadium and arena developments:

  • The Arizona Republic has been full of both articles and op-eds this week asserting that giving $168 million to the Phoenix Suns for arena renovations is a good thing (sample reasoning: “The arena is old and needs updated. The Suns are young and need direction.”), but then it also ran an excellent fact-check that concluded that claims of the arena having a significant impact on the city’s economy are “mostly false,” citing the umpteen economic studies showing exactly that (sample conclusion, from Temple economist Michael Leeds: “A baseball team has about the same impact on a community as a midsize department store”). On balance, good enough work that I hope the Republic can avoid being bought by an evil hedge fund that is trying to buy up newspapers and strip-mine them for any assets; what would really be nice would be if they can be bought by someone who can afford copy editors (“is old and needs updated”?), but I know it’s 2019 and we can’t have everything.
  • Where the Oakland Raiders are rumored to be playing the 2019 season this week: San Francisco, Santa Clara, and Oakland. These are all disappointingly old ideas — am I going to have to be the one to suggest Rio de Janeiro?
  • And speaking of me, I wrote a long essay for Deadspin this week on how changes in baseball economic structure are incentivizing owners to cut player salaries without illegally colluding to do so. This is at best tangential to the stadium business, except inasmuch as it’s about “how sports team owners make their money and what affects their profits,” so it’s good to know even if you don’t especially care about who signs Manny Machado or Bryce Harper.
  • The president of the USL wants to expand the soccer league’s two tiers to 80 teams total, which is getting awfully close to the ABA’s “bring a check and you can have a team” model.
  • The new Austin F.C. MLS team was approved to start play in 2021, and celebrated by proposing a chant to memorialize the city council vote that approved its stadium funding: “7-Fooour, 7-Fooour/It’s not the score, it was the vote/That got us all our brand new home.” I am not making this up. (If I were making this up, I would at least try to get it to rhyme.)
  • Los Angeles Angels owner Arte Moreno signed a one-year lease extension on the team’s stadium through 2020, which is disappointing in that I really thought the city should have used this leverage to demand a longer-term lease extension (what’s Moreno going to do otherwise, go play in Rio de Janeiro?). But Craig Calcaterra’s summary of the situation (sample description: this will give time to resolve “a long-term solution for what, at least from the Angels’ perspective, is a stadium problem”) is so on point and such a good model for how to report stadium controversies fairly and accurately that I’m not in the mood to complain.
  • Hosting the NCAA Final Four will cost Minnesota $10 million, because there are lots of curtains to be hung and temporary seating to be put in place, and the NCAA sure as hell isn’t going to pay for it. But Minnesota will surely earn it back in new tax revenues, because economic studies show … oh wait.
  • Some billionaire in St. Louis thinks the city should have an NBA team, and some writer for something called the St. Louis American thinks the city should try to steal the New Orleans Pelicans. Now let us never speak of this again.

15 comments on “Friday roundup: Fact-checking Suns arena impact claims, the hidden cost of hosting the NCAA Final Four, and everybody gets a soccer team!

  1. A full-court press: Phoenix Suns, city go all out to push arena renovations

    In his 2016 State of the City address, former Phoenix Mayor Greg Stanton said he wanted to bring the Arizona Coyotes NHL franchise back downtown, so hockey became part of the negotiations. But that option never materialized, mainly because of an additional $100 million price tag and the potential of having to close the arena for two to three years while the renovations were made, Zuercher said.

    “I think everyone would agree that in an ideal world, we’d be like Boston and Philadelphia where both [basketball and hockey] teams played in the same building,” City Manager Ed Zuercher said.

    https://www.bizjournals.com/phoenix/news/2019/01/18/afull-court-press-phoenix-suns-city-go-all-out-to.html

  2. Some alternative chants and a friend came up with
    Enrichen the rich,
    On the backs of the poor,
    Democracy, is a dollar bill wh**e
    Come on austin,
    Get a soccer score

    Well the futbols they are flying,
    Just like acorns from el tree,
    Austin futbol club is playing, wild naked free

  3. Proposed Talking Stick Resort Arena Renovation
    Preliminary Cost Estimates

    $234.9 million

    www.phoenix.gov/piosite/Documents/Arena/Arena_Preliminary_Cost_Estimates_Jan_17.pdf

  4. Y’know, Melbourne, Sydney, and Tokyo have hosted NFL games, and Beijing really wants to.

    Just sayin’ – I mean, once you leave North America, it’s all in play, right?

  5. At least travel to Rio would be inexpensive. All I need to get there is for baby to smile at me, then I go to Rio. De Janeiro… Background singers, take it!

  6. At least St Louis won’t have to build a new arena for any potential NBA team…..so I guess good luck to any crazy billionaire who wants to do that I guess.

    Happy Friday.

    • When Bill Laurie bought the Blues and their arena he was hoping to add a basketball team to the mix. When that didn’t work out, he bailed on both. I have a hard time believing STL could support two winter teams. That’s a lot of sports dates for a city of that size.

    • You’re likely completely wrong, since any team that moves or thinks about moving will want a new stadium where they control all the revenues and then the Blues will ask for the same.

  7. Well, when the NBA adds a new Sonics… they might be looking to add a partner expansion team as well (unless someone moves, which at the moment doesn’t look all that likely).

    If the prospective owner(s) can come up with, what $750M (?), expansion fee, I would imagine the NBA will selflessly agree to take it.

  8. As Kinja appeared to just summarily delete my comments on your Deadspin piece, I will reproduce a small portion of them here. So many stupid questions in that thread.

    Q: Why is this happening in the MLB and not the NFL?
    1) It is happening a little in the NFL.
    2) In the MLB it is the easiest to measure value and they are the furthest ahead with analytics. In the past teams simply didn’t know the math for sure. I mean to outsiders it always seemed odd that some player might get a contract that was worth 1/3 the value of the team. There is no way that was the players actual value. But without access to the numbers it was easier for the more emotive/competitive elements to win out.
    3) In the NFL the labor “floor” so to speak is higher relative to the top, the revenues are higher, and the rules more favorable to owners.
    4) All this aside I am surprised and concerned that once again there is discussion about how to fairly split up the new revenue (a lot of which is from MLB advanced media), between the owners and “labor”, but only includes the MLBPA members in “labor”, who really have almost nothing to do with say the owners selling technology other non-player employees developed to streaming sites.

    Why is it better if the players get their hands on that money rather than the actual laborers who produced it? If anything the Union has made the players into a secondary owner class “oppressing” the rest of mlb staff (including minor leaguers and future players) to their benefit in exactly the same way the nefarious owners do.

  9. Isn’t part of the current “windfall” owners are experiencing related to a technology sale (one time revenue) of part of MLBAM?

    MLB may well also have seen “peak rights fees” from regional sports networks (many of which are losing money on the product they resell) and/or the networks. Streaming services may make up some or all of this, but at the moment no-one knows where baseball fans 10-20 years from now will be getting their MLB broadcasts from.

    None of this was the case when some of the more ridiculous “the sky’s the limit” deals were signed 10-15 years ago.

    Whether the owners are specifically colluding to hold down salaries cannot be known with certainty. However, even if the MLBPA’s attorneys can find information that looks and smells like collusion, a review of the net outcome of the 10+ year deals issued in the past decade or more will clearly show that they are a bad idea from both a financial and competitiveness (IE: wins) perspective.

    Go ahead and make a list of all the 10yr $20m+ a year contracts you can recall in MLB since ARod signed the first. Was the team that ‘lost’ the free agent better or worse off than the team that signed them to the deal?

    Agents have been saying of late that “Harper and Machado unsigned” is clear evidence of collusion. I’ve no doubt they genuinely believe that… but it’s just not true. Both are great players, but both come with significant baggage and behavioural histories that likely reduce their overall value to a team.

    The fact that they are not signed in mid January means nothing… we do not know (and the agents do, of course) what they have been offered. If both are still out of work come June and have only been offered 1yr $5m contracts (a modern equivalent of Andre Dawson’s fate in 1986), then yes, we can discuss why that is happening… but if they have been offered 7yr $200m deals and turn them down?

    But let’s not look at just two players (each of which expects a ten year deal probably in the $40m AAV range…). The Yankees just signed a utility infielder for $24m/2yrs and a middling pitcher for $27m/3yrs. And Josh Donaldson, a multiple AL MVP who has pretty much missed two seasons with injury, just received a $20m one year deal. Two years ago he was worth that and more. But today? Very much in question….

    Yes, the Dodgers are dumping payroll…. but they are doing so because they are well into the luxury tax escalator… and definitely don’t want to be paying 100% (much less 200%) luxury tax on their excess spending. Once that escalator has reset (possibly next year), they’ll be back spending. Count on it.

    In any discussion about the apparent disinterest some 20 of MLB’s 30 teams have in spending to compete, we need to look at the entire spectrum of baseball economics. While many GMs and presidents loved the additional playoff spot as it gave them “a chance”, the fact is there is no economic rationale for signing two players for $50m annually just to put your team in the running for 4th or 5th place in each league. If you are already a top 6 team in your league and those two guys might put you into the top 2 or 3, sure, it makes sense. But not to move from 9th to 6th or 7th.

    If a team owner decides that, because of MLB’s economic platform, it does not make sense for his team to try to win one of four playoff spots (one of the 4th/5th place teams gets just one game…) I don’t see how that is any one else’s business.

    If fans don’t like that reality (and it is a reality in most professional sports, to be blunt), they don’t have to support the team that makes that decision, or the league that maintains the supposedly broken economic system. As a fan, if I love baseball but live in a city/cheer for a team for which the owner is simply farming the subsidy, I can find a minor or independent league team to support instead.

    We are paying fans, not hostages.

    • Another factor that could be influencing the owners is fanbase demographics. It’s no secret that baseball’s core fanbase is significantly older than those of other major sports leagues in the U.S. Younger generations are simply more interested in watching MLS and NBA than MLB. I would be surprised if the owners don’t already see the writing on the wall, despite the healthy revenue numbers they currently enjoy, and are planning in advance for a future where viewership and attendance numbers stagnate or even shrink.

      • It’s certainly possible. However, MLB has known it’s fanbase is significantly older than most other sports since, what, the 1970s? And people have been making the a similar argument (that it is a ‘dying 19th century sport’, look at the demos people!) since more or less that time.

        At least so far, the decrepit fans seem to be getting replaced by slightly less grey ones as they, um, depart. It is possible that this will be the generation in which that doesn’t happen (there are many more options for young fans to follow now, as you say).

        In this era, baseball has been able to monetize its fan base in a way that owners from the 70s and 80s could only dream of (through RSN fees and BAM, as well as the free stadium gambit). Maybe they’ll find a way to do so even more effectively in future, but with the sale of (most of) BAM’s technology platform to Disney, a cooling in the free stadium push, and RSN fees seemingly (but long term, who knows) reaching the wall, it is difficult for me to see how they take their annual total revenue from $10Bn to $15Bn, lets say.

  10. Professional sports deals are wildly unpopular. Will that impact Phoenix Suns decision?

    When teams are trying to sell a city on a sports arena, they paint the facilities as economic drivers, and data shows that a professional stadium or arena does typically draw more spending and investment to an area.

    However, that spending is hardly ever enough to recoup the funds that local governments spend.

    For example, Phoenix spent about $50 million on the original construction of Talking Stick Resort Arena. But after interest, the true cost has been $124.6 million over 30 years.

    The city boasts that the arena drives $335 million annually in “direct, indirect and induced revenue” for Phoenix, Maricopa County and the state of Arizona.

    But only about $12.8 million is direct revenue for the city. And only about $3.8 million of that is directly attributable to the arena, in the form of rent payments from the Suns and taxes from the arena.

    www.azcentral.com/story/news/local/phoenix/2019/01/22/pro-sports-deals-unpopular-what-does-mean-phoenix-suns/2501711002/

    • Kudos to our local paper for actually doing some reporting, even going so far as extensively quoting our illustrious host and exalted expert Neil. But then the editors say never mind all those silly numbers and stuff, it’s a good deal anyway and the council should pass it. Which it will.