Hansen offers Seattle arena with no public money, fine print means he’d still get public money

Well, huh: Would-be Seattle NBA owner Chris Hansen, apparently realizing his plans were going nowhere since the city council’s May vote to disallow closing a street to make way for his proposed new arena, has upped the ante by saying he will now build the project entirely with private money if it’s approved. Sort of, anyway:

We have concluded that a changed economic climate makes possible the private financing of the arena. For that reason, and to address concerns expressed by city council members, we would consider revising the street vacation petition to eliminate public financing of the arena. In such a case the MOU would be terminated and the rights and obligations of the parties under the MOU would end. The City and County would recoup the $200 million in debt capacity, and tax revenue streams generated by the arena would cease to be encumbered for arena debt service.
For our part, we have very few requests to make this possible:
  • Approval of the street vacation
  • Granting of a waiver of the City’s admissions tax for the arena, just as similar waivers have been granted for the other sports venues
  • Adjustment of the City’s B&O tax rate for revenue generated out-of-town

So how much money would this save taxpayers compared to the original deal? To determine that, we need to revisit the prior arena funding plan, which I don’t appear to have ever totaled up in one post — let’s start with this summary of the not-quite-final plan, plus this update, and see how we can do:

  • The city and county were going to take out $200 million in bonds, which would be repaid by Hansen in the form of rent and kickbacks of arena-related taxes. These bonds would now be eliminated, but so, presumably, would be the rent payments.
  • The first tax that would have been redirected was $71.8 million worth of arena admissions taxes. Now, instead of being collected by the city and then used to pay off public bonds, this money would be not collected by the city and then could be used by Hansen to pay off his private stadium costs. So, a wash.
  • Hansen was to get an additional $15.7 million in reimbursed business taxes. Without knowing exactly what “adjustment” he now wants to the business tax, it’s impossible to say if he’d still get this full amount, but he’d certainly get some of it.
  • Hansen would get to keep $15.1 million in incremental property taxes on the arena site, plus $5.8 million in arena sales taxes. He’s no longer asking for these tax breaks, so far as I can tell.
  • Hansen would put up $40 million to pay for road improvements for the Port of Seattle, which has been griping that its trucks would face more traffic from games at the arena. This is presumably still on the table.

So most of the public money that Hansen was asking for, he’s still asking for — it just would go to pay off his private loans instead of city arena bonds. The good news is that this wasn’t a terrible deal for taxpayers to begin with: The tax breaks were small enough that Seattle was going to come reasonably close to breaking even anyway, and still would if enough consumers chose to spend money in Seattle rather than the surrounding area as a result of the new arena. (This would mostly cannibalize spending from elsewhere in Washington state, of course, but taxpayers in the city itself at least wouldn’t lose out much.) The less-good news is that Hansen’s new proposal is mostly just reshuffling the bookkeeping deck chairs, so if you hated the old plan, there’s little reason to like the new one any better.

Guess we’ll see what the Seattle city council thinks, since their opinion is the only one that matters. Or, since the new proposal would dispense with Hansen’s soon-to-expire MOU, giving him more time to cut a deal, maybe the next city council after the 2017 elections. Give Hansen credit for persistence: He really really wants to own a new Seattle Sonics basketball team, and he’s clearly not going to go home until the fat lady has sung her last note.

Unapproved Braves vendors will still face arrest but maybe not jail, now quit your griping

The Cobb County Commission, having somewhat walked back plans to arrest anyone near the new Atlanta Braves stadium who offers parking spaces to Braves fans, is now backing away from restrictions on unapproved vendors around the stadium, too, saying they won’t necessarily face jail time:

Earlier this year, the county amended its anti-peddling ordinance to essentially grant an exemption for the Braves to control vending at the stadium and The Battery, a mixed-use development under construction next to SunTrust Park. It included what the county described as “standard misdemeanor language,” including fines and jail time for violators.

Following pushback, the county suspended the ordinance to remove references to specific penalties, effectively leaving the matter in the hands of the magistrate court.

Braves fans who want to buy peanuts for less than eight dollars, rejoice! Vendors will now be free to sell them to you and maybe escape jail time if they can talk a judge into a lesser penalty! That’ll be something to celebrate while running across the highway next year to watch the National League’s best last-place team.

Yankees try to get more fans to games by ripping out worst seats, adding “patio bars”

The owners of the New York Yankees, facing slipping attendance during the team’s 4th-place finish and a growing acknowledgement that their new stadium is kind of crappy in many ways for watching baseball, have announced some tweaks to the building for next year, including replacing some of the notorious obstructed-view bleacher seats with new “patio bars” and adding a kids’ play area in right field similar to what the Mets have:

Three other lounge and patio areas will also be built. All the additions will be open to all ticket-holders.

The team also said it would make available about 2,500 seats per game at $15 or less.

This wouldn’t normally be big news — offering some discounted seats and additional amenities is common for a team seeking to boost attendance during a rebuilding phase on the field — except that it’s the Yankees, who have traditionally stuck to the line that such niceties as entertainment areas and being able to see the game from your seat are amenities that are beneath them. (The last major change at the stadium prior to this was to remove seats and add tables for rich fans to rest their beers on.) There was no immediate clarification as to which seats will be available for $15 (I wouldn’t hold your breath about “for less”), but at least some of the crappiest views will now come without quite such crappy price tags.

The Steinbrenners will presumably be paying for the renovations out of their own pockets, though again given that it’s the Yankees, we can’t entirely rule out them somehow trying to wheedle a tax break of some kind out of this. More news if and when it becomes available.

St. Louis Cardinals owners to build more “ballpark village,” demand tax kickbacks to pay for it

The owners of the St. Louis Cardinals announced a second phase to their “Ballpark Village” development across the street from their stadium yesterday, and blah blah, $220 million, 550,000 square feet of new construction, “mixed-use neighborhood where people live, work and play,” okay, here we go:

St. Louis Alderman Jack Cotar will introduce legislation to amend an existing development agreement that enabled the first phase of Ballpark Village on Tuesday…

According to the announcement, the “development team is proposing to use a portion of the new tax revenue generated solely within the Ballpark Village project area, including an additional self-imposed 1 percent TDD sales tax, to underwrite the bonds issued to support project infrastructure costs. Only taxes generated by the Ballpark Village project itself, as well as private equity and debt investments by the development team, will be used to finance Ballpark Village.”

This should come as no surprise, as the first phase of the Ballpark Village — a bizarro grandstand-slice-themed shopping mall with an equally bizarro racially coded dress code — got $116 million in subsidies back in 2006, mostly from tax-increment funding: i.e., kicking back property and sales taxes to the developers, who can then use them to pay off their own construction costs. It’s unclear exactly how much Cotar’s bill will propose handing over to the Cardinals owners — that “TDD” is a sales tax surcharge in the ballpark area, which if it’s narrowly drawn could just come out of the team’s pockets, but property taxes or existing sales taxes would just be a straight kickback. The original Cardinals stadium deal wasn’t too bad for the public as these things go — about two-thirds of the cost was shouldered by the team owners — but they’re making up for lost subsidy time with all the additional development across the street. Excellent job on the bait-and-switch, Bill DeWitt and friends!

With casino taxes falling short, Columbus could bail on $44m of Blue Jackets bailout

Back in June, I discussed how Columbus and Franklin County taxpayers are doing on their public bailout of the Columbus Blue Jackets‘ arena, which is not well: Thanks to local casino taxes falling far short of projections, the arena is barely managing to pay its operating costs, meaning there’s no money left over to repay $10 million in debt to the state of Ohio and $44 million to former arena owners Nationwide Realty Investors. It turns out that may be good news for Columbus residents, though, since the terms of the deal are that if the casino money falls short, taxpayers can simply skip out on the debt:

The deal was structured so that casino tax revenue would be used to fund part of the arena management company operations, pay for capital expenses and repay the loans — in that order.

So far, casino taxes are generating only enough revenue to supplement management and operating costs at the arena.

The way the deal is constructed, Nationwide would assume the debt if there is not enough money to cover the arena purchase. The city and the county are not obligated to provide any other sources of revenue from their budgets to make up for the shortfall. That means their own budgets aren’t at risk, and without the prospect of an empty or dilapidated arena neither has an incentive now to reopen the deal.

“As far as I am concerned, Nationwide is carrying bad debt,” said City Auditor Hugh J. Dorrian. “ The contract will not be rewritten.”

This doesn’t make the bailout a good deal, mind you: The city and county are still sending $4 million a year in casino taxes to cover operating costs, plus have an estimated $2 million a year in deferred maintenance expenses that it has to pay off somehow. And defaulting on a $10 million loan from the state would just shift the burden from city taxpayers to state taxpayers in general, which isn’t really a net gain for the Ohio public.

That said, kudos to whoever on the Columbus side of things negotiated this “we’ll owe the private arena developers who we’re bailing out $44 million, unless we don’t have it in which case you’re out of luck, suckers” clause. At least it’s prevented a bad deal from going to worse.

San Diego paper says to vote no on Chargers subsidy, then negotiate new Chargers subsidy

In a move that’s sort of surprising, sort of not — more on that in a second — the San Diego Union-Tribune editorial board on Friday came out against the Chargers stadium ballot measure:

Could [San Diego Mayor Kevin] Faulconer, [Chargers owner Dean] Spanos and others negotiate a better deal than either measure on the ballot now? Clearly.

To earn our support, that deal must be negotiated with all sides, including hoteliers if it involves hotel taxes, with a specific design so San Diegans know what the venue would actually look like and, of course, with a public financial contribution spelled out and capped.

This board chooses to be optimistic, and it urges San Diegans to reject C and D and send everyone back to the bargaining table.

It’s indeed unusual for a city’s major paper to editorialize against a measure that’s backed by both the mayor and the owners of the local sports team, but this is an unusual ballot measure: The local hotel industry, which would be taxed to pay for the project, is dead-set against it, and even the project’s proponents aren’t holding out much hope that it will win a necessary two-thirds victory. So really, there isn’t too much political risk here for the U-T: It can call a crappy deal a crappy deal, and at worst it might get a few phone calls saying, “Jeez, we know we’re down, did you really have to kick us too?”

If you want to be really conspiracy-minded, you could even see the editorial as a backdoor way for Spanos to come up with a Plan B once the ballot measure loses: If everyone goes back to the negotiating table, that at least gives him a San Diego option to keep from having to slink north to Los Angeles and accept whatever Los Angeles Rams owner Stan Kroenke will offer for the Chargers to be his tenant. This is a long, multi-sided game of chicken being played here, and it’s not yet clear who’s going to go off the cliff. At least it’s not likely to be San Diego taxpayers next month, anyway, so thank goodness for small favors?

Louisville arena bleeding even more public money than before, could go bankrupt

When we checked in on Louisville’s KFC Yum! Center three years ago, the University of Louisville was turning an annual $26.9 million profit on the arena, while the city of Louisville was losing $9.8 million a year. According to two researchers who testified before a state legislative committee last week, that’s changed now — in that the city is doing much, much worse:

Louisville entrepreneur Denis Frankenberger and J. Bruce Miller, senior partner in J. Bruce Miller Law Group of Louisville, told the Kentucky General Assembly’s joint Capital Projects and Bond Oversight Committee on Tuesday that the center lost more than $17 million in 2015 and is losing $1.4 million a month…

[Frankenberger] cited an initial [tax increment financing] revenue stream projected at about $4.5 million the facility opened actually came in at about $615,000. A second-year TIF revenue projection of $6.6 million came in at about $2.1 million…

“The University of Louisville makes $20 million a year on events,” Frankenberger told the committee. “It’s a taxpayer scam.”

A bit of context here: When the city built the arena for the state university for $339 million in 2010, the bonds were supposed to be paid off roughly evenly from city general fund money, luxury suites and arena advertising, and cash from that TIF district (i.e., any increased property taxes collected in the area right around the arena). The university, meanwhile, would collect almost all other revenues from the arena. With the TIF revenue falling short, the city now needs to come up with another way to pay off its share of the bonds (about $13 million a year) plus operating costs, or else let the place go bankrupt.

The good news is that this is mostly just a bookkeeping problem: The city vastly overestimated its future TIF revenue, so now needs to dip into one of its other pockets if it wants to keep up with its arena bond payments. The bad news is that this was going to be city money either way — since even according to the city’s own figures the TIF district was just cannibalizing property taxes that otherwise would have been paid elsewhere in the city, taxpayers were going to be on the hook for more than $200 million worth of bonds regardless. So now it’s just a question of how else to pay off the debt.

State legislators are now demanding that the city renegotiate its lease with the U of L, which sounds great except it’s not clear the city has any leverage to do so, which could result in the university saying, “Yeah, tough break about those TIFs, but we have a contract.” This was a horrible, horrible deal for Louisville residents in the first place, and the TIF shortfall is making that more obvious. But unless the threat of arena bankruptcy somehow gets the U of L to the bargaining table, it’s hard to see how this is much more than posturing.

Massachusetts governor on Dorchester stadium for Revolution: “Think of the children!”

Massachusetts Gov. Charlie Baker says he’d consider a proposal by New England Revolution owner Robert Kraft to build a soccer stadium in Dorchester in southern Boston, which, you know, that’s what governors say, so it’s to be expected. But then Baker went and said this:

“A facility like that could be used by kids and by UMass Boston and by the community at large,” he said. “If the rest of it could get worked out, I think it could be a plus.”

Um, what? The stadium, if built, would be on land owned by UMass-Boston, so they could certainly try to work out a deal by which their soccer team could use the stadium when the Revolution isn’t home. But “kids” and “the community at large”? Has Baker ever seen a pro soccer stadium? Unless it’s going to be surrounded by practice pitches (it won’t), no local kids are going to get to play on its field except maybe as halftime entertainment. While a Dorchester stadium wouldn’t necessarily be a terrible idea — it all depends on how much Kraft would pay for the site and who’d pay for construction, something that at last report was still being left to the magic funding fairy — building it under the pretense that it will benefit youth soccer is just daft.

Not to be left out, Boston Globe columnist Shirley Leung added: “Some may say I have never met a stadium I didn’t like. But I really like this one. What’s most exciting is the opportunity to build something different in a part of the city that could use an economic jolt. It’s not another strip mall, big-box retailer, or luxury condo tower — and that’s a good thing.” Except that at least strip malls are open 365 days a year, whereas soccer stadiums are big dark boxes 90% of the time. Maybe Dorchester should just build a strip mall with a youth soccer field in the parking lot?

Angels owner okays development next to stadium, doesn’t even have to sue anybody first

After complaining about the new development project proposed for next door and threatening to sue to stop it, Los Angeles Angels owner Arte Moreno gave his blessing to LT Global’s mixed-use project this week. This happened because they were … bought off? I’m going with bought off:

“We are pleased that LT Global worked with us in a timely and collaborative effort to address the impacts of their development on our fan experience,” Angels President John Carpino said in a statement. “We look forward to working with the city to finalize details on important transportation improvements for the Platinum Triangle in the coming weeks.”

LT Global spokesman Steve Greyshock wouldn’t elaborate on how the company and the Angels were able to amicably resolve their differences but did say the company looks forward to working with the team.

“We spoke. It was neighbors talking with neighbors,” Greyshock said. “They had some operational concerns, but overall the goal is to have a long, constructive relationship with the Angels.”

That’s playing it extremely close to the vest in terms of what the price was for the Angels ownership’s cooperation — it could have been anything from cash to a parking-sharing agreement to promising to buy the Angels’ stock of leftover Josh Hamilton jerseys — but the point is, they worked it out. And without Moreno being able to demand that Anaheim give him a huge swath of development rights for cheap, as was his original plan.

In all, Moreno seems to be following a new tactic of playing good cop, backing away from threats to opt out of his lease early and reopening lease extension talks with Anaheim. This is what you can make happen when you have a mayor who is a tough negotiator, a team that reaps huge benefits from playing in a major metro area, and city officials in other nearby locales also not willing to throw money at a stadium. Not saying it’ll work every time, but it is a little glimpse into a happier world where move threats are met with “Ha, yeah, that’s a good one” rather than “How many zeroes should we put on the check, Mr. Moreno?”

Mark Davis: Oakland doesn’t love me, I’m gonna go eat $750m in worms

When you’re a sports team owner trying to get your fellow owners to okay your move to a new city that’s waving a $750 million check in your face, it’s not so bad a strategy to try to burn your bridges with your old city, just in case. And Oakland Raiders owner Mark Davis is clearly a man who knows his way around a can of lighter fluid:

“Oakland was in the driver’s seat if they could’ve put together anything,” Davis said Wednesday at the NFL’s fall meetings, after updating his fellow owners on his desire to relocate to the gambling capital. “They came up with nothing.

“Las Vegas has already done what it is supposed to do and we have to bring it up to the National Football League and get permission to move to Las Vegas.”

Yeah, screw you, Oakland! You didn’t offer Mark Davis a $750 million check, instead only saying you’d pay for maybe $200 million worth of infrastructure! Who wants a measly $200 million, amirite, guys?

(For her part, Oakland Mayor Libby Schaaf issued a statement following Davis’s press conference: “If Oakland is going to be successful in offering the Raiders and the NFL a viable alternative to moving to Las Vegas, I have to stay clearheaded. I cannot afford for us to be thrown off our game because Nevada lawmakers have deemed it appropriate to put $750M in public money towards a private sports facility. While I’m committed to keeping the Raiders, I will not enter into a bidding war with Nevada using public funds.”)

Anyhoo, no NFL owners tipped their hand following the meeting on how they plan to vote — Houston Texans owner Robert McNair said, “These things are still so fluid until they nail everything down we don’t know what we’re looking at. We’ll wait until we have a full package,” which is a really long way of saying “Reply cloudy, ask again later” — so we may well be waiting a few months while everyone hashes out their positions here. (Plus what everyone can agree on as a relocation fee.) Davis has said he plans to have the Raiders play in Oakland the next two seasons anyway, which is going to go oh so well after he just announced he’s moving the team and gave the middle finger to his old city. How is Sports Twitter responding to this?

Wait, what? Mark Davis made his presentation to his fellow owners in a long-sleeved white t-shirt? Maybe how he’s perceived by Oakland fans isn’t this guy’s biggest worry.