Author Archives: Neil deMause

Glendale mayor seeks to overturn Coyotes lease after email shows councilmembers talked in secret

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It’s baaaaaaaaaaack!

Glendale Mayor Jerry Weiers on Monday asked the state attorney general to investigate a previously undisclosed meeting of City Council members and an Arizona Coyotes attorney last June, days before the council approved a $225 million agreement with the team…

Violations of the Open Meeting Law can rescind actions taken by elected officials, which could potentially void Glendale’s deal with the team, which was then called the Phoenix Coyotes.

It’s been just slightly over a year since the Arizona Coyotes signed a new 15-year lease where the city of Glendale will pay them $15 million a year to play hockey in the arena that Glendale built for them. (They were the Phoenix Coyotes then, but as part of the lease the team owners agreed to change its name. But not to “Glendale Coyotes,” that’d be crazy.) It was one of the most generous sports deals in history, and only passed after councilmember Sammy Chavira made a last-second switch, so if it turns out that the whole thing was illegal, that’d be kind of a big deal.

Now, Mayor Weiers opposed the lease deal, so it’s not entirely unsurprising that he’s looking into trying to undo it. But according to emails obtained by the Arizona Republic, the evidence is kind of damning: Councilmember Gary Sherwood emailed councilmember Manny Martinez that he and councilmember Yvonne Knaack “spent over an hour with [incoming Coyotes attorney] Nick Wood last night,” and that “Sammy [Chavira] is already on board as he was with us last night.” Adding self-incrimincation to injury, Sherwood added, “Manny, please delete this email after you’ve read it.”

(Asked about this by the Republic, Sherwood defended holding secret discussions outside of public view by saying that he and Knaack only spoke with Wood over the phone, then spoke with Martinez and Chavira later. Which would still likely be a violation of the state Open Meeting Law, but hey, it worked for Cobb County.)

We’re still a long way from the Coyotes deal coming close to being overturned — among other things, even if last year’s vote turns out to be illegal, the council could just vote to reaffirm the new lease, this time without any hanky-panky. But if nothing else, this means we have more Glendale craziness to look forward to, which is always fun.

NFL could build L.A. stadium itself, charge team owner fees, and wait, how does this solve anything?

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Sunday’s L.A. Times had a completely unsourced (unless you count a single quote from New England Patriots owner Robert Kraft) article speculating that the NFL could break the football logjam in Los Angeles by just building a stadium with its own money, then renting it to an NFL team. This could work, writes the Times’ Sam Farmer, in either of two ways:

  • The NFL pays for building the stadium, then earns its money back via a hefty “relocation fee” for whichever team moves in.
  • The NFL pays for building the stadium, then reimburses itself by selling naming rights, PSLs, and other goodies associated with the new building.

I’m sure you see the problem here: In the first case, any owner wishing to move to L.A. would effectively end up paying the cost of the new stadium, just funneled through the NFL. In the second, the owner would get a new stadium more or less free — but without the big revenues associated with a new stadium, which is the whole point of wanting one.

Now, paying for new NFL stadiums with PSL and naming rights revenue can work in certain situations — we’ve seen that with the San Francisco 49ers‘ Santa Clara stadium. But the 49ers had a strong incentive to remain in the Bay Area (since it’s where their fans already are), and the South Bay is an exceptionally lucrative market, and the 49ers are an exceptionally popular team, all of which makes for exceptionally big money from PSL sales. For other team owners, giving up either wads of cash or piles of future revenue streams to move to L.A. isn’t likely to seem too enticing when there’s still a chance of getting significant stadium subsidies out of their current home markets.

Really, NFL financing has the same problem as the developer-led stadium plans: Somebody has to pay the cost of a $1 billion stadium, and there’s only so much money to go around to pay construction costs and boost an owners’ profits. The only way this would be a game-changing option would be if the NFL decided it so wants to have a team in L.A. that it’s willing to take a loss on a stadium in order to get it done — but given that market size doesn’t matter much in football, I wouldn’t hold your breath.

The other possibility, of course, is that somebody leaked this “hey, we could build a stadium!” line to Farmer in an attempt to drum up articles making an L.A. stadium seem more feasible, thus putting perceived teeth into NFL teams’ move threats in order to get stadium cash out of their own cities. But naaaaah. The NFL would never be that Machiavellian, right?

 

Las Vegas soccer stadium developer says he knows a guy who says he can get an MLS team

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Justin Findlay, the guy who is working with Cordish Companies to build an MLS stadium in Las Vegas so that Cordish can keep its expiring option on downtown land open, says that he can so totally get an MLS franchise for Vegas if he only gets a stadium. How does he know? The MLS deputy commissioner totally winked at him:

He was encouraged after entertaining MLS Deputy Commissioner Mark Abbott this week in Las Vegas. Abbott met with Las Vegas Mayor Carolyn Goodman and other city officials, toured downtown and got a sense of how MLS would work in Las Vegas.

Although league officials won’t comment on expansion possibilities, you can argue the MLS brass wouldn’t have traveled to Las Vegas if it wasn’t in serious consideration.

“Hearing right from the horse’s mouth, this is really a possibility,” Findlay said. “We just have to convert on our plan. There are no reasons why these big, big dreams can’t happen.”

On the one hand, MLS brass are likely fine with touring pretty much anyplace that’s potentially going to build them a stadium, because why not? (It’s also not like anyone ever passes up a business junket to Vegas.) On the other, MLS is clearly willing to throw teams at pretty much any city with a stadium, and with only one more franchise left to be assigned in the league’s planned expansion through 2020, might as well get the bidding war heating up. Worse comes to worst, if you have too many cities (and owners) offering to throw money at you, there’s nothing stopping you from expanding beyond 24 teams — or maybe seeing if David Beckham would like to settle in Vegas instead.

Broward mayor seeks analysis of costs of letting Panthers leave, ignoring 14 years left on lease

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Well, now, this is interesting, kind of:

You might not be able to tell from her @bestmom39 handle, but Barbara Sharief is mayor of Broward County, and she here seems to be indicating that she’s asking an economic consultant to do a cost/benefit analysis of letting the Florida Panthers move out of the county rather than giving them $80 million. How much the Panthers’ presence is worth to Broward is a reasonable analysis to ask for — though given that the Panthers’ lease isn’t up until 2028, and Panthers owner Vincent Viola isn’t actually promising to stay any longer that I can tell in exchange for the $80 million, it’s worth wondering if maybe Sharief is asking the wrong question.

Red Wings promise to build “deconstructed” arena with public’s $300 million

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The Detroit Red Wings issued renderings of their planned $450 million arena yesterday, and it’s … kind of interesting-looking, I guess?

Those buildings surrounding the arena are actually part of the arena, with the space between that and the arena structure proper being the concessions concourses. (Another rendering shows what appear to be glass roofs over the concourses, maybe?) The Red Wings are calling this a “deconstructed” design, and it’s something interesting to try, anyway, if only because it would make the arena a bit less monolithic from the outside. (Setting the arena floor 32 feet below ground level would help, too.)

It’s still not necessarily worth spending $300 million in public money and free land on, of course. But since that’s now water under the bridge, at least it’ll be nice if they can avoid a major public eyesore.

A’s lease squabble continues to transition into A’s-Raiders land squabble

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The Oakland A’s lease copyediting controversy goes on, now with Oakland’s city attorney making still more “minor” changes to the document, and Alameda County officials charging that they’re anything but minor:

“The city attorney interpreted that to mean that she could go back and insert changes to the language that she had been attempting to get the A’s to agree to for weeks but they had rejected repeatedly,” Streeter said. “This is the kind of thing that we are now going to have to smooth over.”

This is all completely hilarious, but it’s the kind of thing that nobody is likely to blow up the entire lease talks over at this point. Even Streeter said Friday that a final agreement should be in place within “a day or so.”

Marginally bigger news is that A’s owner Lew Wolff has ramped up his battle with the Raiders over the Coliseum site by sending Oakland city administrator Henry Gardner a letter that, in the midst of much sniping at “mean spirited persons” who would criticize his new lease extension or his good faith, declares that once the lease extension is settled, he’ll explore “looking into the bond costs and JPA operating costs to determine if we can present an offer that would vastly reduce or even eliminate the annual City/County subsidy and allow us to develop and control our own destiny.” And Wolff adds that he has “not once said or assumed that the desired new A’s ballpark would rely on or seek public funding” — calling this a “total distortion” put forward by “some parties.”

At the risk of being cut off Wolff’s Christmas card list, this isn’t actually much of a promise: “Looking into” building a stadium while paying off the existing Coliseum bonds isn’t the same as actually doing so, and it’s been clear for a while that any subsidies Wolff would require would likely be in the form of free land and tax breaks, which sports team owners generally don’t count as “public funding,” even though it is. Really, we have no idea — and for all we know Wolff has no idea — what kind of financing and development plan an A’s stadium would require, so it’s impossible to say what kind of deal it would be for Oakland, either compared to giving the Raiders’ Coliseum City partners the rights to the Coliseum site, or compared to not handing it over to either team.

In any event, though, given the amount of verbiage in Wolff’s letter disparaging the city’s exclusive negotiations with the Coliseum City group over the site, it looks like he’s preparing to move on from fighting with Oakland over the lease to fighting with Raiders owner Mark Davis over the land, as expected. If they play their cards right, Oakland and Alameda officials could turn this into a nice bidding war for the site — though given recent events, it might be a bit much to expect those guys to even hold their cards without dropping them all over the floor.

Goodell floats Raiders move to Santa Clara, but 49ers fans’ PSL rights could be stumbling block

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The San Francisco 49ers‘ new Santa Clara stadium had its ribbon-cutting yesterday, and according to Levi’s CEO Chip Bergh, whose company bought the naming rights to the place, it is “the most amazing stadium on the face of the planet.” Though, according to SF Gate’s Ann Killion, all NFL stadiums “are big, impersonal, infrequently used and tend to be the same, depending on what era they were built in,” so maybe Bergh is grading on a curve here.

In any event, the stadium opening was slightly overshadowed by NFL commissioner Roger Goodell’s suggestion that the Oakland Raiders might want to consider moving in there as well if stadium talks in Oakland go poorly:

“They have to make that determination, whether they’re in a new stadium in Oakland or whether they feel that it’s best to join this stadium,” Goodell said, according to the Bay Area Sports Guy, who tweeted the commissioner’s remarks. “We’re working on that, and that’s one of the decisions they’ll have to make.”

Rattling move-threat sabers is, needless to say, Goodell’s job. And the 49ers owners have been open to renting to the Raiders if need be. Yet as the San Jose Mercury News’ Tim Kawakami points out, there could be a major stumbling block to the Raiders and 49ers sharing digs: the stadium builders licenses (aka personal seat licenses) that the 49ers sold, for anywhere from $2,000 to $80,000 per seat, to raise $500 million toward construction.

Part of the agreement is that SBL-holders have first dibs on most other events at the stadium…. There is no way the Raiders would agree to 49ers SBL-holders getting first look at their tickets.

Even if they did, the 49ers wouldn’t want to share any % of their precious SBL cash with the Raiders.

That’s a problem on two counts. First off, since SBLs have already been sold, the Raiders would be missing out on a source of cash that the team could otherwise collect at its own new stadium. On top of that, though, if the Raiders then sold tickets without requiring their own PSL purchases, 49ers seat license holders could scream bloody murder about being forced to put up tens of thousands of dollars for seats while Raiders fans paid nothing, and even potentially file lawsuits over the inequity. Kawakami says NFL sources have “muttered” about this problem previously, and that “nobody has a good answer for it, not practically.”

Kawakami doesn’t mention it, but this is a potential stumbling block with any proposed move of the A’s to San Francisco’s AT&T Park, which the Giants similarly sold PSLs, though only on the 15,000 priciest seats. Giants “charter seat license” holders likewise have dibs on buying tickets to other events at the stadium, which could cause major problems in the event of an A’s move. Not that the A’s are likely to move, or the Giants to okay it without usurious lease terms, but it’s an important reminder that there’s more to relocating a team than just saying, “Hey, look, that stadium is empty part of the time, let’s set up there!”

UPDATE: A 49ers SBL holder has posted language that seems to indicate that the 49ers accounted for this problem by omitting “other NFL games” from SBL rights — see comments.

Miami celebrates subsidizing suddenly-crappy Heat by laying off librarians, cops

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Now here’s a lede, courtesy of Bloomberg News:

Last month, Miami politicians approved a $19 million subsidy for the professional basketball arena. Six weeks later, they turned to a grimmer task: deciding how many police and librarians to fire.

It’s not quite fair to blame Miami-Dade County’s $64 million budget hole, which could require 700 layoffs, on the Heat arena subsidy deal, since that’s only costing the county $19 million in subsidies over 20 years (and more like $6 million in present value). Still, it’s not helping any, and does point up not only that it’s easier to get public money if you’re a rich guy with a sports team than if you’re actually working for the public, but that sports subsidies can often paint future elected officials into a budget corner. As Holy Cross sports economist Victor Matheson tells Bloomberg:

“You can’t stop your debt payments without actually declaring bankruptcy,” he said. “But you can cut the number of police officers and teachers and librarians and firefighters.”

But at least Miami fans can now rest easy that they can keep watching LeBron James for another, um, whoops. Heat owner Micky Arison sure timed that subsidy demand right, didn’t he?

Oakland council fixes dumb typos in A’s lease, everybody threatens to freak out again

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The Oakland city council approved the new Oakland A’s lease yesterday … or approved a lease, anyway. The council made a few “procedural” changes to the lease that was approved by the Coliseum Authority earlier in the month, leading team president Michael Crowley to pronounce himself “caught by surprise” and “disappointed” that the council had changed the lease terms, and refuse to commit to signing the revised lease until he’d had a chance to review the new lease.

So what are these changes? Newballpark.org ran them down late last night, and here are the main ones:

  • Clarifying that if A’s owner Lew Wolff chooses to terminate the lease by announcing it in the middle of the year, the termination goes into effect following the second full year after the termination. (So if he terminates in mid-2016, the A’s are locked in through 2018.)
  • Fixing a typo that indicated a developer payment as being both $10 million and $20 million.
  • Clauses clarifying what happens if the team is sold, or if the Coliseum Authority defaults on its part of the deal.

As Newballpark.org notes, these are all really minor changes, and nothing that Wolff would have cause to reject. The de-typoed lease does have to now go back to the Coliseum Authority for a re-vote, though (as well as to the Alameda County Board of Supervisors, which was always going to have to vote on this), so maybe Crowley was just disappointed that things are going to drag on an extra week or two? All signs point to things still getting worked out, but it wouldn’t be a week in Oakland without somebody pointing fingers angrily at somebody about something.

 

Cuyahoga exec: We never said LeBron was worth $500m/year

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I was traveling much of yesterday, but in the afternoon I received an email from Richard Luchette, the press spokesperson for Cuyahoga County Executive Ed FitzGerald. Luchette said that, contrary to widespread media reports, FitzGerald’s office never meant to imply that LeBron James’ return to Cleveland would add $500 million to the local economy. Rather, he said, the estimated economic benefit of LeBron’s return will be more like $53 million, bringing the team’s total impact to $500 million.

It looks like the blame here mostly goes to some terrible reporting in the initial story by Bloomberg News, which cited FitzGerald’s economic development director Nathan Kelly as saying (in its paraphrase) that “a more robust Cavaliers with James playing increases the total economic impact to about $500 million a year with direct and indirect spending,” but in its lede interpreted this as meaning “the return of the star forward to his hometown Cleveland Cavaliers will have a $500 million a year impact on the local economy” — and doubled down on the wrong with a headline stating “LeBron James’s Return to Bring Cleveland $500 Million a Year.” Though Kelly certainly could have been clearer — I haven’t been able to find a direct quote of how he brought up the $500 million figure in Monday’s press conference — and taking two days to clarify a misstatement that was all over the Internet on Monday wasn’t great work on FitzGerald’s part either.

In any event, $500 million in total annual economic impact for the Cavs is still pretty implausible: The team currently only sells $30 million worth of tickets, remember, and much of that spending would take place elsewhere in Cuyahoga County even if the Cavs played entirely before empty seats. Even if you add in spending on concessions, LeBron souvenir jerseys, hotels for fans who travel from out of town just to see Cavs games (do such people really exist?), and a multiplier for all the money that LeBron-souvenir-jersey vendors will go out and spend at local stores, it’s hard to see getting anywhere near $500 million. I’m still hopeful that Kelly will get back to me with his calculations, though, so stay tuned.

In any event, this is a great cautionary tale about economic impact statements: You can make “economic activity” numbers say just about anything you want them to, and then the press will get it wrong anyway. But at least FitzGerald got on the telly.