Friday roundup: News outlets everywhere get pretty much everything wrong

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

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.

If Madison Square Garden sells the Liberty, where are they going to play?

The owners of the New York Liberty, one of the WNBA’s three remaining original franchises still in the same city they started off in, are putting the team up for sale. That’s of interest if you’re a WNBA fan — I’m actually a former Liberty season ticket holder, so I qualify as one of the few and the proud even if I haven’t been to see a game in the last couple of years — but also for readers of this site in general, because of what it says about the arena industry.

In brief: The Liberty are owned by James Dolan’s Madison Square Garden Co., which also owns the Knicks, the Rangers, and its namesake arena. The team, and the WNBA in general, was launched in 1997 for a bunch of overlapping reasons: to take advantage of excitement over the 1996 U.S. women’s Olympic basketball team, to fill dates in the otherwise-slow summer months (which is why the league plays outside of the traditional wintertime schedule for basketball), to make the NBA look women-friendly and provide a more affordable product to rope in fans priced out or alienated by the men’s game, and to beat down an attempt by the independent American Basketball League to horn in on the NBA’s pro hoops monopoly. The ABL was gone within a year and a half, and the Olympians were soon forgotten, but the WNBA has burbled on for another two decades, with modest attendance and revenues but remarkable longevity for a startup league, in no small thanks to the NBA’s financial backing.

That’s starting to change, though: While originally all the WNBA teams were fully owned offshoots of NBA siblings — down to teams getting sister names, like the Sacramento Monarchs to complement the Kings and the execrably named Detroit Shock to go alongside the equally-terribly-named-if-you-think-about-it Pistons — that’s starting to change, with more and more teams independently owned and operated. And the Liberty would be the biggest independent team of all once cut loose from MSG, which clearly has decided that it would rather get out of the women’s basketball game and stick to its core business of crappy men’s teams and lots and lots of concerts.

The big question for a future Liberty owner, meanwhile, is: Where are they going to play? Renting out MSG is a possibility, of course, but unless there’s some sweetheart lease deal baked into the sale agreement, it would likely be prohibitively expensive, since you’d be bidding against all those concerts. The Barclays Center in Brooklyn is another option that might come slightly cheaper, but again it’s pretty busy with concerts, even in the summer. (One problem with a basketball schedule is that it seriously restricts your flexibility for hosting concerts, which are typically booked long after a team’s home games are set in stone.) When MSG was getting renovated in the summers a few seasons back the Liberty played in Newark’s Prudential Center, but attendance was pretty bad (I picked up Stubhub seats ten rows from the court for one game for $3 apiece); Nassau Coliseum desperately needs something to fill dates, but it’s way out on Long Island.

I suppose a new Liberty owner could try to demand a new arena of their own, but that’s not going to go far when your fan base is the size of a WNBA team’s. Maybe this could all be part of the plan to build a new arena for the Islanders out by Belmont Park, something that Dolan is a part-investor in, so … I dunno, we’re deep into the tea leaves here. It’s an interesting moment, though, one that could end up revealing a lot about not only the future of women’s pro sports, but how arena managers are thinking about the relative value of sports vs. other events. I’ll have more on this soon, I hope.

Las Vegas to help fund 51s stadium by spending $80m to call it “Las Vegas Ballpark”

The owners of the Triple-A Las Vegas 51s are going to build a $150 million stadium that won’t be in Las Vegas but will get $80 million from Las Vegas so the stadium will be called “Las Vegas Ballpark.”

You know what, let’s let the Las Vegas Sun and the Las Vegas Review-Journal, both of which are probably kicking themselves now that they didn’t demand naming-rights deals with the city, explain it:

The Las Vegas Convention and Visitors Authority acquired naming rights for the stadium in a 20-year, $80 million deal approved by the organization’s board. It will be called Las Vegas Ballpark.

And:

Representatives of the Las Vegas Convention and Visitors Authority board of directors debated for 1½ hours on whether the $80 million dedicated to stadium naming rights is money well-spent…

Board members Ricki Barlow, a Las Vegas city councilman, and John Lee, the mayor of North Las Vegas, opposed the measure and Las Vegas Mayor Carolyn Goodman, who expressed concerns about the public perception of the move, and Clark County Commissioner Larry Brown, who works for the 51s, abstained. Brown, a former Major League Baseball pitcher, did not participate in the debate.

“This is public money and it comes to us by taxes that were voted on by the Legislature and that Legislature was voted in by residents of my community,” Lee said in the explanation of his vote. “And I don’t think, as their leader, that this is a very good and responsible thing to do.”

Okay, so if you read this site regularly you know that team owners can be awfully clever at finding under-the-table ways of seeking public money for their stadiums and arenas, but this, this is just weird six ways from Sunday. The argument by the tourist authority is that spending $4 million a year on naming rights to a stadium in the nearby suburb of Summerlin is a good investment, because the city is getting its name out there on not just the stadium, but advertising signage and the like. The counterargument would be, oh, lots of things:

  • For Las Vegas to spend a whole bunch of money on enabling the 51s to move out of Las Vegas — in fact, to move out of a stadium owned by the tourist authority — doesn’t exactly make a lot of sense. Sure, the economic impact of a minor-league baseball team isn’t much, but moving it beyond the city limits is a net negative, even if a small one.
  • Sure, the 51s might have been able to sell naming rights regardless, so on one level Las Vegas is just buying the name like anyone else would. But anyone else would almost certainly be paying far, far less: Minor-league naming rights deals typically top out at $1 million a year at most, meaning Vegas is overpaying here by a factor of at least 300%. Or, looked at another way, is sneaking money to the 51s owners — the Howard Hughes Corporation, a major development firm that traces its origins back to one namesake, but sadly not to a far more respected one — by writing “4 NAMING RIGHTS” in the memo field of the check.
  • Even if you grant that Las Vegas needs to buy more publicity — I’m pretty sure most people have heard of the place by now — it’s beyond ironic to do so for a team that already puts your city’s name on the front of its damn jerseys. (The 51s are currently the Triple-A affiliate of the New York Mets, incidentally, but won’t be by the time the new stadium opens, because the Mets just bought an entire team in Syracuse in order to have a team that’ll agree to be associated with the Mets.) The logic here, presumably, is that non-local TV viewers of 51s games will think, “Time to sit down to watch my team play against Las Vegas. Oh hey, the Las Vegas team plays in a stadium called ‘Las Vegas.’ I haven’t thought about Las Vegas in, oh, three or four seconds before this! I should book a vacation there!”

How the Hughes Corporation managed to pull this off I’m not clear, though to hear tourist authority president Rossi Ralenkotter talk, it was by hinting that the 51s would leave town without a new stadium, while simultaneously hinting that Las Vegas is such a great market for baseball it could get a major-league team if it played its cards right:

Ralenkotter said possibly the biggest benefit to preserving professional baseball in Las Vegas with a new stadium and superior training facilities is that Las Vegas would position itself well when Major League Baseball considers expanding or moving a franchise.

I suppose there is actually the possibility that MLB will look at this deal and think, “Man, sure are a bunch of suckers in Las Vegas. We gotta get in on that action!” Now that’s the kind of publicity you just can’t buy.

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.

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.

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.

Yep, Pistons owner is getting even more public money to move team to downtown Detroit

And we have the terms under which the Detroit Pistons will move from their 28-year-old arena in Auburn Hills to a zero-year-old arena in their namesake city, courtesy of MLive. With no further ado:

The Pistons will play all home games at the 20,000-seat Little Ceasars Arena starting with the 2017-18 season.

Right, we figured.

The team and Palace Sports & Entertainment will move its business operations, corporate headquarters, team practice and training facilities into a new practice facility, to be built north of the arena at a cost between $32 and $55 million.

That’s pricey. Who’s going to pay for that?

Detroit’s DDA has agreed to contribute $34.5 million in additional bond proceeds through refinancing to be used for redesign and construction to modify Little Caesars Arena from a hockey facility to jointly house an NHL and NBA team.

Apparently Steve Neavling was right to be suspicious when Detroit’s Downtown Development Authority scheduled a meeting for a half-hour before the Pistons announcement and wouldn’t tell anybody what it was. But is this real Detroit city money, or passthrough money that’s really coming out of state education funds, like most of the rest of the arena costs? Reply cloudy, ask again later.

No city of Detroit general fund dollars will be spent on the arena project, and any additional costs or cost overruns will be paid entirely by the Pistons, the Red Wings and associated companies.

Teams pay overruns, all the public money comes out of special segregated funds, not the precious “general fund,” blah blah. It’s still city (or state) dollars that could be used for something else otherwise.

The Pistons are responsible for all costs relating to the development, construction, operation and maintenance of the practice facility.

That’s good!

The location of the team’s practice facility may be owned by the DDA, subjection to a concession agreement with the Pistons.

That’s possibly bad, since it means the practice facility wouldn’t pay any property taxes! Unless the concession agreement involved making payments in lieu of taxes. Reply cloudy, etc.

The Pistons have agreed to a 10-point community benefits plan, including investing $2.5 million over six years for the construction, renovation and refurbishment of more than 60 basketball courts in Detroit, the employment of at least 51 percent of Detroit residents on the construction of the practice facility and provide 20,000 free tickets a year to Detroit youth and area residents.

Better than nothing, but for what the DDA is putting into this, they could have built 1,000 basketball courts.

So, wait, who’s paying for that practice arena again?

Wait, what?

Okay, phew. You know, this “rough draft of history” stuff was a lot easier before Twitter got people publishing their actual rough drafts.

Anyway, total public subsidies for the arena are now at $334.5 million at minimum, and possibly even higher than that. You can argue that it’s worth it to Detroit to throw this money at the arena in order to lure the Pistons across the border from Auburn Hills — the tax impact may not be as huge as team owners like to pretend, but it doesn’t have to be to repay just $34.5 million — or you could argue that the Red Wings are eliminating a competitor (the Palace at Auburn Hills will almost certainly be razed now) and the Pistons are getting a newer home, and they’re both owned by billionaires who clearly want to do this deal regardless, so why the hell can’t they pay for adding a basketball court instead of Detroit be giving up scarce tax revenue?

More news tomorrow morning, if the magic eight ball clears up.

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 ESPN.com 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.

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.