Friday roundup: News outlets everywhere get pretty much everything wrong

On a tight deadline this week, so let’s get straight to the news:

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MLS is adding St. Louis and Sacramento franchises (maybe), demanding bigger stadiums (possibly)

Eleven months after announcing its expansion to 28 teams, Major League Soccer has decided to expand to 30 teams with new franchises in St. Louis and Sacramento … okay, has decided to invite prospective owners in St. Louis and Sacramento to apply for franchises … okay, let’s let the Associated Press try to explain it:

St. Louis and Sacramento, California, have been invited to submit formal bids for franchises as Major League Soccer’s Board of Governors formally unveiled plans Thursday to expand to 30 teams.

Commissioner Don Garber made the announcement at the board’s meeting in Los Angeles, pointing to expansion as one of the key drivers of the league’s growth in North America in recent years.

“We continue to believe that there are many, many cities across the country that could support an MLS team, with a great stadium and a great fanbase and great local ownership that will invest in the sport in their community,” he told reporters following the meeting.

So that’s really just “St. Louis and Sacramento are front-runners for the next two MLS franchises, which we’re planning to award sometime this year.” Which is exactly what Garber said last month. So this is not actually news at all, just confirmation that those two cities will get teams if all their t’s are crossed — which mostly means having stadium deals in place. Both cities have given preliminary approval for new stadiums, with St. Louis promising about $60 million in subsidies and Sacramento about $33 million; these would not be the worst deals in sports history or even MLS history, but still, you know what Everett Dirksen may or may not have said about money adding up

In completely unrelated news but not really, F.C. Arizona, a team that currently plays at a high school field in Mesa in the fourth-tier National Premier Soccer League, has announced plans to build a 10,900-seat stadium at an unspecified location in the Phoenix area, saying they’ll pay for the unspecified costs with their own unspecified private money. That’s an awful lot of seats for a team in what’s essentially a semi-pro league — not all players are paid — so you have to figure this is an attempt to get on the radar of either MLS or the second-and-third-tier USL to get a franchise. U.S. soccer may not have promotion and relegation where teams can move up to higher leagues just by winning games, but it does have a clear path by which owners can buy their way into higher leagues, and it’s clearly leading to a land rush for owners hoping to find an angle by which to enter into the major-sports ownership club without shelling out a billion for a big-four league expansion team.

If you consider MLS a major sports league on par with the big four, that is, which remains an open question. Garber also took time out to say that Minnesota United‘s new stadium is too small, asserting, “I wish the stadium wasn’t 19,000 and that it was 27,000 because I think at some point we are going to be thinking of how do we make the stadium bigger. I think we are going to be dealing with that in a number of different markets.” This is the same week that the New York Red Bulls announced that they’d begin tarping over some seats in the upper deck because they couldn’t sell them; team GM Marc de Grandpre recently remarked, “If we were to build the stadium today…we’d have built the stadium with a flexible capacity system,” meaning a way to reduce capacity from its current 25,000 seats, not increase it. Clearly there are still some bugs to be worked out of the MLS business model — those $150 million expansion fees from St. Louis and Sacramento, or whoever steps in if St. Louis or Sacramento falter, should help buy some time to figure them out.

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Arizona officials just can’t quit looking for ways to throw tax money at Coyotes

So many vague rumors and whinging going on around the Arizona Coyotes‘ attempts to get somebody else to pay for building them a new arena against the will of state residents so that they don’t have to play in their perfectly good old one, I’ve gotta go to bullet points:

  • Coyotes execs have met with Mesa City Manager Chris Brady to discuss a new arena! Twice! Mesa Mayor John Giles chimed in, “If I were the Coyotes, I know I would want to be there. But whether it’s a good deal for Mesa or not is something that we’ll have to look into.” Which seems to be code for “If the state legislature agrees to foot most of the bill with sales-tax kickbacks, sure we’ll consider it,” but way too soon to tell about any of this.
  • The city of Phoenix has extended its contract with Barrett Sports Group to explore whether to renovate the Suns‘ arena, and possibly try to make it more workable for hockey. Again, this is not a plan, or even a plan for a plan, but they’re looking into it.
  • State Senator Bob Worsley, who is behind that sales-tax kickback bill that his colleagues in the state legislature aren’t so hot on, has written an op-ed in the Arizona Republic insisting that his bill “tears up the playbook on facility deals” because it involves “no state tax increases, no risk to the state, and no existing revenue from the state General Fund,” which is only true if you think that state sales tax receipts will soar just by virtue of the Coyotes moving from one part of the state to another. Apparently if you’re a state senator, you’re not subject to newspapers’ stringent fact-checking requirements.

Upshot: Nothing, really, other than that lots of people are still trying to solve Coyotes owner Anthony LeBlanc’s problem that he doesn’t want to keep playing in Glendale unless he’s paid $8 million a year by the city to do so. It’s a tough life, being an NHL owner.

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Arizona senators push to give Coyotes, Suns, D-Backs up to $1.1b for new arenas and stadium

Arizona Coyotes owner Anthony LeBlanc may not have any idea where he wants to build a new hockey arena now that Arizona State University pulled out of a planned venue in Tempe, but that’s not going to stop members of the Arizona state senate from pushing legislation to give him $170 million in sales- and hotel-tax kickbacks to help build one. And hey, while we’re at it, let’s make it easier for the Diamondbacks and Phoenix Suns to get state subsidies, too:

The bill would allow creation of “community engagement” districts of up to 30 acres. Within them, up to half of the state’s share of sales taxes generated from retail sales and hotel stays would be dedicated to paying the bond debt for new sports or entertainment facilities. It also would allow an additional 2 percent district sales tax to be applied to all purchases within the district, with those revenues also dedicated to defraying the cost of facility construction.

In the case of the Coyotes, the plan envisions public funding covering 57 percent of a new arena’s cost, with new sales taxes covering $170 million and the host city contributing $55 million. The Coyotes said the team’s portion would be $170 million, amounting to a 43 percent contribution toward the $395 million total cost.

This is a bit of a hybrid bill, combining super-TIFs (where half of existing sales and hotel taxes would be kicked back to pay teams’ construction costs) with a new sales tax surcharge in the area around the new sports venue. The math on how much of a subsidy this amounts to gets dicey — virtually all of a TIF would be cannibalized from sales and hotel tax receipts elsewhere in the state, but a slice of a sales tax surcharge could come out of a team owner’s pockets, depending on how big the surcharge area is — but the vast majority of it would be a straight-up gift to team owners, all to allow cities in one part of Arizona to steal teams from cities in another.

You’ll note that I said “teams,” not just the Coyotes. That’s because the new super-TIF districts could be applied to help build any new sports and entertainment facilities. The only limit is that state money would only be allowed to pay for half of construction costs up to $750 million — meaning that if the Coyotes, Suns, and Diamondbacks all availed themselves of the legislation, as you know they would love to do, Arizona taxpayers could potentially be on the hook for $1.125 billion. (If the Coyotes stick to their $170 million demand, the max would be only $920 million, but as we’ve seen before, sports construction costs only tend to go up, and there’s nothing stopping LeBlanc from revising his ask as time goes on.)

Now, the bill has so far only passed one committee in one branch of the Arizona legislature — Sen. Bob Worsley of Mesa used one of those “gut an unrelated bill and insert your own language” tricks to get it on the agenda of his own transportation and technology committee — and none of the teams involved have identified places where they’d like to build new facilities, or how to pay for their halves. Still, it’s a pretty remarkable response to a “crisis” started by the Coyotes’ need to leave their nearly-new arena in Glendale because … hey, Coyotes ownership, why do you need to leave again?

“It does not work in Glendale,” Ahron Cohen,the team’s general counsel, told the Senate panel. “In 2013, our ownership group bought the team. The previous ownership chose to go out there.”

Oh. Well, if it “doesn’t work,” then it doesn’t work. I thought you were going to say something about how you couldn’t bear to be forced to compete for the rights to operate the arena instead of just being handed $8 million a year by Glendale in a no-bid contract. Good thing it’s not that, because asking the state of Arizona to pay you a couple hundred mil to get you out of that pickle would be chutzpah in the Nth degree, and only complete morons in state government would actually consider it.

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Glendale legislator: Wait, why exactly should we pay for another city to steal the Coyotes?

Hey, here’s a question you don’t see asked nearly often enough: Why the heck should a state government pay to help a pro sports team leave one part of the state for another? The state is Arizona, where even after Coyotes owner Anthony LeBlanc’s Tempe arena plans crashed and burned last week, state senator Bob Worsley (who represents Mesa, in the East Valley) is still pushing for $200 million in state sales tax kickbacks that LeBlanc could use for a new arena elsewhere in the state. State representative Anthony Kern (who represents Glendale, in the West Valley), meanwhile, is having none of that:

“This legislation comes down to a simple public-policy question: Should taxpayers be asked to pay for a new arena that will directly compete with already existing facilities that taxpayers are still paying off?” Kern said…

“We want the Coyotes to be successful on and off the ice and to do so in the publicly-funded Gila River Arena that the public built — Glendale taxpayers built — for them to play in.”

While I’m not sure “taxpayers are still paying off” is the most sensible argument — would it be okay for the state to subsidize one Arizona city stealing a team from another if Glendale’s arena were already paid for? — Kern has a point with the rest of it. The only thing stopping the Coyotes from playing in Glendale, after all, is that LeBlanc is refusing to do so unless he gets to manage the arena and get paid by the city for it, which isn’t exactly the kind of crisis that the state needs to run in and solve. Unless you think that he’s going to move the team out of state if his demands aren’t met, which he hasn’t threatened to do yet—

According to officials in Seattle and Portland, members of the Arizona Coyotes have toured arenas in both locations in the past three months. The destinations appear to have been the KeyArena in Seattle and the Moda Center in Portland, Ore...

Arizona Coyotes Executive Vice President of Communications Rich Nairn denied the rumors, when asked about the reports of members touring the two arenas.

“That is false,” Nairn said via email.

So, either this is a rumor that Seattle and Portland are spreading for unknown reasons, or it’s a non-threat threat by LeBlanc. Either way, a whole lot of sabers are being rattled, which is to be expected, but that’s no reason to panic just yet and start throwing sales tax money around.

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Coyotes schedule East Valley arena announcement for 1 pm ET, no further details available

I have to get on a train in a few hours to go talk in Connecticut tomorrow, so I really don’t have time for this breaking news:

After years of looking for a new home in the desert the Arizona Coyotes will announce Monday afternoon they have completed a deal for a new arena in the East Valley area south and east of Phoenix and Scottsdale that includes Tempe and Mesa, sources close to the deal told Monday.

Further details of a new 16,000-plus seat arena that is expected to be ready for the start of the 2019-20 National Hockey League season will be revealed at a news conference set for 1 p.m. EST.

“The East Valley area south and east of Phoenix and Scottsdale” sounds like it’s not this plan, which is sort of in Scottsdale, though it’s also just barely south and east of Scottsdale, so maybe? Either way, as of just a couple of weeks ago nobody had any idea how to actually pay for that plan yet, so one hopes that somebody at that news conference will ask tough questions about where the money will come from.

I’ll try to post a followup once details are available, though I may be hampered if there’s no WiFi on the train. If necessary, feel free to post updates in comments, and I’ll join back in when I can.

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Coyotes owners seeking up to $750m in tax kickbacks from Arizona, definitely think Arizona is stupid

We finally have a dollar figure for how much money in state sales tax kickbacks the Arizona Coyotes are looking for as part of a deal for a new arena, and holy crap:

One proposal floated at the Capitol would allow from $350 million to $750 million to be generated for an arena from sales and excise taxes imposed within a new taxing district. The plan, detailed in a 49-page draft bill obtained by The Republic, also could allow public funds to be used to build a hotel or other commercial real estate within the district, according to those who have examined the proposal…

The team would contribute $100 million to $170 million toward any project, according to Anthony LeBlanc, the team’s president and chief executive. He said the franchise is looking to build on 50 to 60 acres.

Suddenly, all of LeBlanc’s “we’re gonna build a new arena somewhere that’ll make us more money than playing in our already-built arena without that sweet $8-million-a-year subsidy we’ve been getting” talk makes sense: If they’re getting as much as $750 million in state tax money to build an arena, and maybe a whole bunch of commercial and hotel development on 50 acres of surrounding property, the team owners can put it pretty much anywhere and it’ll turn a profit. Hell, it might be a good deal even if nobody goes to Coyotes games, which is probably the business model that LeBlanc is looking at anyway.

Makes sense for the team owners, I should say, not for the state, for which a giant tax-increment financing district makes absolutely zero sense. For, say, Mesa or Glendale to devote tax dollars to a new arena is at least arguable, since they can hope to steal some consumer spending from the next town over. (This figure is usually overblown, but at least it’s non-zero.) For the state of Arizona, though, the benefits are as close to zero as possible: Hardly anybody ever travels to Arizona just to see a Coyotes game, which means any sales tax money that would be siphoned off to the team’s owners would be money that otherwise would be collected somewhere else in the state — in Glendale currently, but scattered all over  the state even in the event that the Coyotes were to leave Arizona entirely and people went back to spending their Coyotes ticket money on whatever they did before the Coyotes arrived.

The tax-subsidy bill is currently stalled in the Arizona legislature as this session runs out the clock, but LeBlanc has vowed to bring it back up in 2017. There may well be an announcement by the Coyotes in coming weeks of a preferred arena site, but make no mistake, that’s going to be the sideshow: Keep your eyes on this TIF district, because when it comes to taxpayer costs, it’s likely to be the main event.

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Coyotes ask Arizona for sales-tax kickbacks to fund new arena, because they think Arizona is stupid

We’ve gotten a hint of how the Arizona Coyotes owners want to finance a new arena, wherever it ends up, and surprise, surprise, it’s not “with that U.S. savings bond we’ve been holding onto for the right moment,” but rather a whole buncha tax subsidies:

There could be a measure introduced at the Arizona Legislature in the coming weeks to create a special taxing district possibly to capture sales tax to finance development of a new arena…
“We have had exploratory conversations with a number of different governmental entities. However, we have not reached any agreements, even in principle, with anyone,” [Coyotes CEO Anthony] LeBlanc said in a statement. “We are also exploring some legislative options. However, nothing has yet been introduced. If anything is introduced, it will be location agnostic, and therefore not focused on any one location or jurisdiction.”

Let’s step back for a moment here to consider how incredibly insane it would be for the state of Arizona to siphon off sales tax money around a new arena and hand it over to the team: Sure, sales tax receipts would go up around an arena, especially if you built the arena in what would otherwise be the middle of the desert. And overall sales tax receipts might even go up in whatever city you built it in, since people would be spending their money there instead of in Glendale now. But state sales tax revenue wouldn’t change one bit, unless the lure of a new hockey arena suddenly got additional people pouring across the New Mexico border to watch Coyotes games, which I don’t think even LeBlanc could pretend with a straight face. And even if the district were to just siphon off local sales taxes (which aren’t that much: 2% in Phoenix, 1.75% in Mesa), the state should have no interest in encouraging cities to steal sales tax revenue from each other and then hand it over to a private sports team.

There’s absolutely no way of knowing how much money is at stake here, since any sales-tax kickback district could be drawn as small or as large as you like, and so encompass any amount of sales tax receipts. But however it works out, the Coyotes are clearly looking for someone else to bail them out of their horrible deal with Glendale where LeBlanc only got a free arena and now wouldn’t get paid to run it as well because he refused to enter into a bidding process to see how much he’d get paid. This can only end stupid.

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