Vegas councilmember: Whoops, guess we shouldn’t have given soccer developers two extra months to lobby us

I hate to say I told you so [editor’s note: no, I actually don’t], but here’s what I wrote back in October when the Las Vegas city council agreed to give developers Cordish Cos. and Findlay Sports another two months to finalize an MLS stadium plan but only if they agreed to “work to reduce or eliminate” any public subsidy:

With four of the seven councilmembers ready to vote down the $3 million a year in city subsidies the developers were looking for, a compromise plan was instead offered by councilmember Ricki Barlow: Vote to keep negotiating with the soccer developers, but only if they agree to work to reduce or eliminate the public subsidy.

If that’s confusing to you — is it reduce or eliminate? and by how much? — then it’s doubly so to Cordish and Findlay, which were decidedly not in on this deal. “They worded it poorly,” Findlay advisor Dean Howes told the Las Vegas Review-Journal afterwards. “They have to come back and tell us what it means.”

What it meant, apparently, was exactly what it sounded like it meant: nothing at all. And less because of that “reduce or eliminate” phrase than by the words that immediately proceeded it:

Las Vegas Councilwoman Lois Tarkanian says she might have been “snookered” on the city’s controversial stadium subsidy deal approved last week. …

Mayor Carolyn Goodman told Tarkanian the motion from Oct. 1 said staff was supposed to “work toward” eliminating public money from the deal — not eliminate it completely. In the end, the approved deal shaved only $3.5 million off the $60 million public subsidy from Oct. 1. …

Tarkanian wanted to clarify [councilmember Ricki] Barlow’s motion, interjecting that staff needed to work toward eliminating, not just reducing, all public money in the proposal.

The meeting video showed [City Manager Betsy] Fretwell also trying to clarify the motion.

Councilman Bob Beers explained the wording’s confusion this way: “In that moment of interruption, everybody focused on the ‘eliminating’ of public dollars and didn’t consider the ‘work towards’ part that preceded the interruption.”

So basically, Cordish and Findlay were facing a 4-3 council vote that wasn’t going to go their way, Barlow bought them some more time by promising to see what he could do to eliminate the public subsidy, and then instead spent the next two months talking one of the four “no” votes into switching sides in exchange for some extra parks funding for his district. The total public subsidy, meanwhile, remains at $122 million, which may be marginally “reduced,” but is a long way from “eliminated.” Yeah, I’d say “snookered” may be a good word for it.

Nobody’s moving to L.A., so now can we talk about that Raiders lease extension?

This week in “Which NFL teams are moving to L.A. in 2015?” rumors, we have … nobody!

Per “sources,” yes, but Schefter is reporting it as fact, and the NFL isn’t denying it, so this certainly has the whiff at least of official leak. And the San Diego Chargers did already announce that they’re staying put for 2015, which they likely wouldn’t have done if there were any chance of teams going to L.A., and besides there’s just about zero chance of an L.A. stadium deal getting done in time for a relocation announcement by February. So, really, I’m confident we can stick a fork in this for now, and stop with all the rumor-mongering about who’s headed to—

Fox Sports 1 Insider Jay Glazer reports the NFL is waiting to get better offers for stadium sites around Los Angeles, with St. Louis Rams clear front-runner to come to city.

Yo! Jay! Stand down, already!

In related news, the Oakland Raiders are apparently set to announce a one-year extension of their lease at the Oakland Coliseum, which is a bit weird, as I’m pretty sure that the Coliseum Authority would have to sign off on that as well — and would be perfectly within their rights to tell Mark Davis to take his team and go play in the street if he doesn’t agree to a multiyear extension. This one is worth watching closely, or would be if everyone could stop playing “Who’s moving to the imaginary L.A. stadium first?”

Sternberg’s development rights on Trop could be worth as much as he’d pay St. Pete to break lease

When I reported Friday on the St. Petersburg city council refusing to go along with the Tampa Bay Rays‘ lease-breaking deal if they’d have to give Rays owner Stuart Sternberg a cut of development rights to the Tropicana Field site, I didn’t have a figure for how much those rights would be worth. Noah Pransky of Shadow of the Stadium did, however, and helpfully pointed it out:

When the team pitched a waterfront stadium in downtown St. Petersburg in 2008, a developer bid $65 million to buy the Trop property and load it up with $1.2 billion of mixed use construction. Property taxes and fees for the city were estimated at $7.5 million a year, with a like amount for county government and schools.

Okay, that’s 2008, and a lot has changed since then. Still, if we take that as a reasonable guesstimate of what the Trop property is worth, then giving half of that to Sternberg would be worth $32.5 million — or nearly as much as St. Pete would be getting from the Rays owner as a payment for breaking his lease. It’s starting to become clearer why this became a major sticking point — though when you consider that even $32.5 million is just equal to three years of James Loney and two of David DeJesus, it’s slightly possible that Sternberg got a bit greedy here.

Former Bucks owner to get giant tax writeoff for giving money to new Bucks owners for arena

Hey, remember how as part of his deal to sell the Milwaukee Bucks, former U.S. Senator and current really rich guy Herb Kohl pledged to donate $100 million to a new arena in Milwaukee? This was painted by the local media at the time as a sign of Kohl’s generosity and commitment to his home town, something that is only slightly diminished by the news that Kohl is using the gift as a tax shelter that could be worth as much as $36 million:

The [Greater Milwaukee Foundation] will simply pass-through the $100 million Kohl had already promised for a new arena to that project. And so Kohl gets a charitable write-off for money that will essentially go to benefit a private business.

“It’s a classic tax avoidance maximization approach,” says Aaron Dorfman, executive director of the Washington, D.C.-based National Committee for Responsive Philanthropy. Dorfman notes that because Kohl sold the team this year, “he needs to get the donation on the books for this tax year.” And the foundation was happy to help Kohl. “We are honored to help a dedicated philanthropist fulfill his charitable wishes,” Gilligan told Urban Milwaukee.

This is an awfully expansive definition of “charitable,” given that the money is actually earmarked to build a new arena for the private NBA team whose new owners just gave Kohl $550 million for the franchise. (The state or city will need to create a tax-exempt public authority to receive the arena gift for this to work, but that’s standard operating procedure for most new sports venues anyway.) In fact, looked at the right way, new Bucks owners Marc Lasry and Wesley Edens are effectively laundering $100 million through Kohl and the Greater Milwaukee Foundation to spend on their own arena, though it’s awfully early in the morning for me to figure out the exact tax benefits to this route vs. just spending the money and taking it as a capital expense.

Anyhoo, this has been your daily reminder that rich people don’t have to obey the same tax laws as the rest of us. Just in case you forgot.

Sounders may seek new stadium, because the turf at their current one is three years old

Now that D.C. United is getting a new stadium thanks to the generosity of the D.C. council, the list of teams without soccer-only stadiums is down to the New England Revolution, the new NYC F.C, the Vancouver Whitecaps, and the Seattle Sounders. NYC F.C.’s owners are actively looking for a new home, and the Revolution’s are at least thinking about it, but the Sounders owners have been happy to have their MLS squad sharing digs with the Seahawks — and why wouldn’t they, since they’re drawing more than 40,000 fans per game, far and away tops in the league. Why, there’s no possible reason why the Sounders would need a new stadium

The Seattle Sounders are not happy with the state of the CenturyLink Field turf and are growing frustrated with what seems to be an increasing sense that they are secondary tenants at the facility they share with the Seattle Seahawks.

How frustrated? ESPN’s Taylor Twellman seems to think it’s to the point that a new home is something the Sounders are at least considering.

“Secretly I think Adrian Hanauer needs [Real Salt Lake GM] Garth Lagerwey because I think Adrian Hanauer is going to look for a stadium,” Twellman told ESPN700 when talking to the Salt Lake City radio station about the news he broke on Monday. “I know that’s a long shot and people may find that surprising but I think Adrian Hanauer wants Seattle to have their own stadium and I wouldn’t be shocked if that’s where his focus and energy then turns.”

I’d point out that it would be a lot cheaper to replace the turf every year than to build a whole new stadium, and that a soccer-only facility that seats 40,000 is going to be crazy expensive, and that the Sounders’ coach has worried that Seattle gets too much rain for grass to be a good option there, and that complaining about being second-class citizens to the Seahawks is nuts when they’re partly owned by the same people — but you know, let’s just stick with the fact that this is just some soccer reporter speculating wildly. For now, anyway.

St. Pete council calls Rays’ bluff, rejects lease buyout unless team coughs up development rights

If yesterday’s news had you thinking that city councils were just mindless automatons who would inevitably rubber-stamp any stadium deal set before them, then the St. Petersburg city council had a surprise for you: That body voted 5-3 yesterday afternoon to reject the proposed deal in which the Tampa Bay Rays could buy their way out of their Tropicana Field lease to move to a new stadium elsewhere in the bay area for a payment of at most $42 million.

Given that as recently as a week ago, all signs were that the council was going to approve the plan that Mayor Rick Kriseman had worked out with Rays owner Stuart Sternberg, this was a bit of a shocker. But according to the Tampa Bay Times, Rays execs shot themselves in the foot with their answer to questions about whether the team would agree to forgo a split of profits from development of land on the 85-acre Tropicana Field site if they were in the process of leaving anyway:

Council member Darden Rice, who voted for the agreement, said the Rays blew the deal with their presentation.

“I think at one point we had five votes,” Rice said. “But I was very disappointed by Auld’s response to Karl Nurse’s question about development rights. It was either tone deafness or arrogance.”…

Nurse had asked Kriseman earlier in the week to change the agreement so the city could retain all development rights in that situation. But the Rays declined to make any substantive changes to Kriseman’s deal.

Nurse still voted for the deal in the end, but this did not go over well with several other members of the council:

[Councilmember Bill] Dudley said he felt like the Rays were making ultimatums. “I don’t like arrogance,” he said.

“The deal breaker for me was the idea that they want us to abide by the use agreement for redevelopment purposes, where they can benefit,” [councilmember Amy] Foster said, “but they didn’t want to abide by the use agreement” by staying at the Trop.

“This is a common strategy,” she said. “They use their mobility in order to threaten cities in order to get more.”

Yep, that they do. But in most cases they don’t have an ironclad lease like the one that the Rays are locked into in St. Pete, which currently doesn’t allow the team owners to buy their way out, or even talk about leaving, until 2027. That’s a hefty piece of leverage that the council has at its disposal, and they just used it.

For Sternberg, the logical next step in this situation is to haggle: If the council wants a bigger share of development rights, throw them a bigger share of development rights. Or kick in an extra million or two a year in lease-breaking payments. But it seems like the council isn’t opposed to the principle of the deal, just the specifics, so the usual strategy would be to pick off a couple of councilmembers and find out what their price is.

Sternberg, however, has already declared that he won’t negotiate any more changes to the lease buyout, saying last week, “If it doesn’t pass, we’re doomed to leave.” This kind of paints him into a corner, with his only obvious options being:

  • Try to pretend he never said anything about no further negotiations, and quietly resume talks in a few months. This would not only require swallowing a lot of pride at this point, but also leave him with a weakened negotiating position, since clearly his ultimatums wouldn’t be worth squat.
  • Sit tight and wait — if not 13 years, then at least for a new city council to be elected next fall. And then hope like crazy that the new folks are more willing to give you anything you want.
  • Sell the team and make it someone else’s problem. Forbes, which tends to underestimate team values, has the Rays worth $485 million, which would be a nifty 142% profit on what Sternberg bought them for in 2002. But presumably the Rays would be worth an awful lot more if they had a shiny new stadium to play in (especially if the shiny new stadium debt could be fobbed off on taxpayers), so Sternberg would be leaving a lot of hypothetical money on the hypothetical table if he took this route.
  • Call Bud Selig and ask him to threaten to blow up the team on his way out the door, and hope that the courts will protect them from the inevitable antitrust lawsuit that would result.

So far, the Rays have just responded with a generic “You’re a bunch of poopyheads” statement:

There’s still plenty of time — until 2027, really — for a deal to be worked out, so there’s no reason to start freaking out about the Rays moving to Montréal (unless you’re the Tampa Bay Times editorial board). The St. Peterburg council did send a message, though, that they’re at least aware that, as Jonah Keri puts it:

Public officials trying to negotiate better deals in the public interest. What’ll they think of next?

Would-be Minneapolis MLS owner says he might ask for public money, “depending, who knows?”

And finally, Bill McGuire, the owner of the minor-league Minnesota United soccer franchise and hopeful MLS expansion team owner, was asked yesterday if he’d be looking for public subsidies for a new stadium — I can’t even imagine why that would cross anyone’s mind — and he had this to day:

“We’ll see when we confirm in our own minds the where’s and why’s of all of that. And depending, who knows? We haven’t asked. I mean, there’s no formal ‘ask’ out there.”

According to my ownerese-to-English dictionary, that means something like: “No, don’t bring that up now! First I have to convince MLS that I’d be a better soccer owner than the Vikings, then I have to convince them to give me an expansion franchise ahead of Las Vegas and wherever else, then I have to build excitement about a soccer-only stadium somewhere, and then I can start talking about what kind of public funding I need to make this beautiful vision a reality.”

Or as Minnesota Public Radio puts it: “That’s not a ‘no’, which usually means a ‘yes’ in the lingo of sports stadium efforts.”

Vegas approves $122m for nonexistent soccer team, in second-largest MLS stadium subsidy ever

D.C. United wasn’t the only MLS franchise to win a big public stadium subsidy yesterday — or at least, not if you count wannabe MLS franchises as well: The Las Vegas city council voted 4-3 yesterday to approve $56.5 million in stadium subsidies and related infrastructure costs for a new stadium to host an as-yet-unnamed, as-yet-nonexistent MLS team that would begin play at an unspecified time. Add in $20 million for a parking garage that will be used by stadiumgoers (for which the team will get to keep parking fees for soccer matches), free land appraised at $38 million to $48 million, plus a full property tax abatement worth between $8 million and $16 million in present value, and you’re talking between $122 million and $140 million in public subsidies, or enough to be the biggest soccer stadium subsidy in U.S. history, if only D.C. United hadn’t set a new record the same day.

It’s absolutely the biggest subsidy ever for an MLS team that doesn’t exist yet, though, so Las Vegas, take a bow!

Meanwhile, it’s worth noting that though the Las Vegas Review-Journal has done some excellent reporting on this deal, it’s still prone to the kind of misunderstanding of basic financial math that plagues too much development reporting. Check this out:

To pay off a $50 million bond, the city would have to borrow $90 million to pay the interest on the loan.

If anyone can identify what that’s supposed to mean, please let me know.

D.C. council unanimously approves $183m for United, in largest MLS stadium subsidy ever

The Washington, D.C. city council made it official yesterday, voting 12-0 to approve spending $140 million in city money on a new D.C. United soccer stadium at Buzzard Point, plus a 20-year property tax abatement worth $43 million. Of that, $33 million will come from money shifted from other, unspecified capital projects, while $106 million will come in the form of new city borrowing, to be repaid via … something. See, it’s all settled!

What is officially the “District of Columbia Soccer Stadium Development Emergency Act of 2014” — presumably called so because it had to be in order to get enacted on short notice, but it still betrays a certain irony deficiency among D.C. politicians — breaks the record for the largest MLS stadium subsidy ever. (The previous record holder depends on who’s counting, though it’s likely either the Colorado Rapids stadium in Commerce City, which got $120 million according to Judith Grant Long, or the Chicago Fire stadium in Bridgeview, which collected $98 million according to Robert Baade and Victor Matheson.) Though apparently irony isn’t the only thing the bill’s authors are deficient in: One clause extends the deadline for acquiring the stadium land to “September 31, 2015,” which is a pretty neat trick.

But forget all those “numbers” and that “money” — the important thing, as the Washington Post notes, is that the soccer stadium approval gives outgoing mayor Vincent Gray a “legacy” and a “signature economic development project, one that neither of the two preceding mayors were able to accomplish.” Or, looked at another way, Gray finally gave in to the demands for $183 million in subsidies for a private soccer team that earlier mayors had refused to cough up. Isn’t it great how in politics, everything has two equally valid sides?

NY Times real estate section says exactly what it always says about everything, everywhere

The New York Times real estate section has a long piece up today about plans for a new D.C. United stadium, because … actually, I’m not sure why. The New York Times real estate section usually focuses on, you know, New York, and even if the D.C. council is voting on the United stadium plan today, it seems a bit outside the usual bounds, but, you know, whatever.

The article itself interviews the owner of D.C. United, the owner of the development company that owns the stadium land, D.C.’s planning director, D.C.’s incoming mayor, and one woman who lives in the planned stadium neighborhood, presumably for local color. My Vice Sports colleague Aaron Gordon has put together a Storify detailing all the flaws in this piece, but seriously, people, it’s a New York Times real estate section article. This is not, and never has been, journalism; it’s a service provided to realtor advertisers that dutifully identifies which neighborhoods real estate professionals are trying to hype as up-and-coming, enabling them to sell more housing there at inflated prices, and thus plow more money back into ads in the Times real estate section. It’s a win-win! Unless you 1) rent in a neighborhood thus targeted or 2) prefer to have news in your newspaper, but those people will be crushed like grapes by the tide of history, right?

Anyway, if you insist on reading the article beyond the “Real Estate” slug at the top, Gordon’s Storify is a worthwhile corrective. But really, you have better uses for your time. How about this article on how economic inequality is helping to drive the Uber economy? Or one about how ground squirrels are accelerating global warming? I never did like the look of those guys.