Author Archives: Neil deMause

Friday roundup: How Kansas City evicted a team for rent non-payment and ended up costing itself $1m, and other stories

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This week’s recommended reading: Girl to City, Amy Rigby’s just-published memoir of the two decades that took her from newly arrived art student in 1970s New York to divorced single mom and creator of the acclaimed debut album Diary of a Mod Housewife. (Disclosure, I guess: I edited an early version of one chapter for the Village Voice last year.) I picked up my copy last week at the launch of Rigby’s fall book tour, and whether you love her music or her long-running blog (guilty as charged on both counts) or enjoy tales of CBGB-era proto-gentrifying New York or coming-of-age-stories about women balancing self-doubt and determination or just a perfectly turned punchline, I highly recommend it: Like her best songs, it made me laugh and cry and think, often at the same time, and that’s all I can ask for in great art.

But first, read this news roundup post, because man, is there a lot of news to be rounded up:

NFL owners trying to get L.A. stadium funding inserted into union talks, says Dan Patrick

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I’m not sure what to do with this story because it’s so sketchily reported, but it’s also so damn weird that I can’t let it pass unremarked: Dan Patrick has said on his nationally syndicated radio show that with the cost of Los Angeles Rams owner Stan Kroenke’s new stadium having soared from $2.5 billion to $5 billion, the NFL is trying to use collective bargaining talks with the union to find a way to make the players help pay for it, sorta:

“The league is proposing that maybe they give players 49 percent of the revenue, but they want to use the extra money they get—a percentage [point] is about $150 million I was told—they want the players to then help finance the Los Angeles stadium. We’ll give you 49 percent of the revenue, but we want to use 2 percent of that revenue—so $300 million for the next couple years—to help finance the stadium.”

If you want to watch video of the relevant section of the radio show, as one does, it’s here:

The backdrop to all this is that NFL player payrolls are currently set at 47% of league revenues, and the players’ union wants to bump that up to perhaps 50%, but in exchange the owners want to play a longer regular season. If Patrick’s source is to be believed, though, there’s a proposal on the table to require that for the first couple of years, the players’ additional cut would be diverted to pay for Kroenke’s Folly, or at least a $300 million sliver of it.

This isn’t quite “getting players to pay for the Rams stadium,” but more like “okay, we’ll give you an additional couple percent of revenues like you’re asking for, but we want to keep it the first couple of years because man, that stadium sure is turning out to be expensive.” Which is effectively the same as giving the players a slightly smaller cut, or giving them a 49% cut but delaying its start for a couple of years, or any of a number of other asks that then reduce their ability to demand other things, like a longer season schedule.

Why would the other 31 NFL owners want to take a hard-won collective bargaining concession and use it to subsidize the Rams’ new stadium? It’s almost certainly not because it’s their only way of raising cash: Both the NFL and Kroenke have so much money flowing through their hands that skimming off $300 million (or using the revenue as collateral to borrow $300 million) would be trivially easy. Besides, even if the L.A. stadium is wildly over budget and in danger of never earning back its cost, that just hurts Kroenke, not the rest of the league — other owners will still get the same cut of any stadium revenue even if the construction debt hits $5 trillion — so what the hell?

Right now all we have to go on is Patrick’s statement, attributed to an unnamed source, so it’s pretty much at the wild rumor stage of verification. But if there’s actually been any attempt to insert L.A. stadium funding into league-wide collective bargaining talks, something very, very odd is going on, so it’s worth keeping an eye on.

UPDATE: A sharp-eyed reader (see comments below) points out that an NFL.com article from earlier this month noted: “Sources say one important issue within a complicated economic discussion is how to divide revenue from the new SoFi Stadium in Inglewood, California, which will be home to the Rams and the Chargers. The roughly $5 billion price tag for the L.A. stadium project is much higher than others; by owners’ calculations, it also will bring in much more revenue than other stadiums and they want the new CBA to reflect that investment, while players have pushed back at the idea of altering the revenue-sharing calculation based on one project they had no role in approving.”

That would imply that the league is trying to argue that L.A. revenues shouldn’t really count toward the league salary cap, because they’re already committed to paying off that exorbitant price tag. Which I can see why they’d want to do that, but I can also see why the union would be responding: Hey, you’re the ones who set the cap based on gross revenues, if you’re not turning enough profit on your crazy-expensive stadium that’s not our problem.

It would also explain why the NFL labor negotiators are pushing this angle: It’s not that they’re really trying to help pay off Kroenke’s stadium debt, so much as they’re trying to carve out a bunch of Kroenke revenues and say “These don’t count.” You could actually make a decent case that all revenue sharing should be based on net revenues, not gross, but then you get into questions of net of what (owners’ failed real estate investments? Caribbean island getaways? massage parlor bills?), which would make for some tricky negotiations, as well as tricky audits down the line.

Sacramento to get MLS team now that city tax kickbacks will help pay for rising MLS expansion fee

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The Sacramento Bee is reporting that Sacramento Republic F.C. will finally be officially named the latest MLS expansion team on Monday, after five years of haggling. And the Bee also makes clear what it took to shake loose an expansion approval:

The City Council this year agreed to offer the soccer investment group a $33 million incentive package to help it seal the deal with MLS. That included setting up an infrastructure financing district that would use future increased property tax to reimburse the soccer development group for building an estimated $27 million worth of streets, sewers and other new infrastructure on land near the stadium. The deal also includes $2.4 million worth of building permit fee waivers and other tax rebates, and up to $3 million worth of traffic control and policing on city streets adjacent to the stadium during soccer matches.

The city also will rewrite its signage ordinance to give the team rights to install five digital billboards around town.

As discussed here last month, this is a better deal than many cities are getting for their new MLS stadiums; as also discussed, $33 million plus some free billboards isn’t nothing, and it does seem like the league held out on an announcement in order to get these concessions from the city. (And Sacramento Mayor Darrell Steinberg says he will ask the city council for additional concessions to “give the development group more financial flexibility,” as the Bee puts it, like loaning the money to team owner Ron Burkle and letting him “repay” it later with property tax payments on his other developments nearby.)

The most telling sentence in the whole article, though, may be this one:

The mayor said the proposed loan makes it easier for the Burkle group to finance its $200 million league expansion fee, as well as pay for increased construction costs. The league has bumped that fee up in recent years from $70 million to $150 million to the $200 million level this year.

So if we’re taking the mayor at his word, the city of Sacramento is having to chip in $33 million–plus from future tax receipts plus other goodies, because otherwise the local sports team’s billionaire owner wouldn’t be able to afford the $200 million expansion fee that the league set based on the notion that cities will help subsidize any new expansion teams. Maybe it’s time to consider switching MLS’s designation from “Ponzi scheme” to “extortion racket”?

 

Inglewood legislators say forcing Clippers arena to go through clean-air review is racist

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The Los Angeles Clippers arena squabble has already gotten plenty ridiculous, what with Madison Square Garden’s owners suing because they don’t want a new arena to compete with his arena nearby, and the mayor of Inglewood canceling a public meeting and running away to avoid being served papers in another lawsuit. But this really ups the ante for ridiculousness:

Two legislators have accused the California Air Resources Board of racism over delays in approving a proposed Clippers arena, alleging the agency has put the Inglewood project at risk while expediting approval for other sports complexes in more affluent communities….

In the Oct. 1 letter, [Sen. Steven] Bradford and [Assemblymember Sydney] Kamlager-Dove wrote that CARB’s “inaction poses an imminent threat to the viability of the project” and could jeopardize several community benefits offered by the Clippers, including a proposal to pay $75 million toward affordable housing.

“Why put more roadblocks in front of them than any other community?” Bradford asked in an interview. “I think its an implicit bias related to race. This is a minority-majority city and, again, they’re being treated differently.”

The theory here goes, as I understand it, that while California is generally fairly tough on new-sports-venue requests, thanks to laws allowing voters to have a say and stringent environmental review requirements, the state has also been very lenient about fast-tracking sports projects through the environmental review. Which the Clippers project has received as well, but the review has dragged on for longer than the usual nine-month limit, which is what has Bradford crying racial discrimination: If you really wanted to be fair, you’d just glance briefly at our environmental impact materials like you do for majority-white cities!

Even aside from the weirdness of claiming equal civil rights to evade environmental laws, there’s a way easier explanation for why the state agency might be doing more due diligence in the Clippers case, which is that MSG’s owners are making a big public stink about how the arena will encourage more people to drive to events and thereby increase emissions of greenhouse gases. Which may or may not be true — I don’t envy the CARB having to try to project how many Clippers fans will simply be driving to the new arena instead of the old one — but it’s almost always the case that objections to a big development project get more attention when you have a giant corporation and its lobbyists making them. So while racism could conceivably play a role here — this is America, after all — there are probably several simpler explanations for why the state is trying to actually do its job for once.

Could visiting fans taking over Rams and Chargers home games be good news for Las Vegas? (Yeah, no, probably not)

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They played football again on Sunday — nobody seems to be getting on that idea of banning the sport for being hazardous to human health, nor even the idea of replacing human players with digital avatars — which included home games for both the Los Angeles Rams and Chargers. And, as has become commonplace for L.A.’s new teams, most locals seem not to have gotten the message that the sport is still being played:

All of which is embarrassing news for the Rams and Chargers owners who moved their teams to L.A. on the premise that they’d sell lots of tickets in America’s second-biggest market, and slightly worrisome for when the two teams move into their new Inglewood stadium next year. But could it be good news for the Las Vegas Raiders, who are building their entire business model on selling tickets to tons of visiting fans?

That question was discussed Monday in an article in the San Francisco Chronicle that asked, among other things, if projections by the Southern Nevada Tourism Infrastructure Committee are correct that the Raiders’ presence will bring in tons of new visitors to Vegas:

An early study by the Southern Nevada Tourism Infrastructure Committee forecast the stadium would generate $620 million in annual economic impact and bring in 450,000 visitors who otherwise would not have come to in Las Vegas. Officials said just under half of attendees at all stadium events are expected to be non-resident consumers, with about 23% in town specifically for that event.

Those projections, as they pertain to Raiders games, are a sticking point for Stanford economist Roger Noll.

“There is no NFL team in the country that has more than about 3 or 4% of tourists in the stands,” Noll said. “So it would have to be the case that this would be more than an order of magnitude increase.”

But also!

Stephen Miller, director of UNLV’s Center for Business and Economic Research, said while Las Vegas quickly adopted the [Golden] Knights, many out-of-town fans also go to games.

“They come specifically to attend the game,” Miller said, “and then they stick around and have fun in Las Vegas.”

I reached out to both economists for their sources on these stats, and while I’m still waiting on Miller, Noll got right back to me. He said that he’s gotten peeks at proprietary data from team surveys of fans and addresses of ticket buyers on the resale market, and what he’s seen supports his conclusion: Very few NFL fans travel for games. He also clarified that his 3-4% estimate is for fans traveling specifically in order to see football — if a Pittsburgh Steelers fan happens to be in L.A. (either for a trip or because they’ve relocated there, as people are known to do) and decides to take in a Steelers road game while in town, that’s not additional spending that can be credited to the presence of the NFL.

Noll does add that the number of visiting fans typically rises when the home team is terrible, and season ticket holders start dumping their tickets on the secondary market — “For example, when the 49ers were having bad years, empty seats at the last couple of home games were one-fourth to half of the total seats, and sometimes a quarter or so of attendance was fans of the other team.” Which brings up an interesting question: Would it be in Nevada’s best interest for the Raiders to suck, so that more seats will go to out-of-towners looking to cheer on their teams to stomp on the Raiders, who will then “stick around and have fun in Las Vegas”? Modern economic development strategy has gotten very, very weird.

Become a Field of Schemes Supporter to help keep the stadium news flowing, this is how journalism works now

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Hey, FoS readers, it’s that time again — the one (or two per year, tops) where I ask you to become a Field of Schemes Supporter so that I can continue to devote time to this website every day. I’ve considered switching to a Patreon or setting up a members-only newsletter like all the kids are doing these days, but for now I’m sticking with the tried-and-true membership system for a couple of reasons: One, you all seem to like it well enough, and two, I want all the information here reaching the widest possible audience, not reserved for a special few.

As for you special few who help make this site possible for the others to freeload on, you do get some exclusive rewards. First off, refrigerator magnets!

If you’re thinking, “Big deal, I already got two of these the last time I donated,” understand that there are three more variations that your fridge is currently bereft of, and they will wing their way to you upon receipt of your donation, whether Mini-Supporter or regular Supporter size. Make your kitchen the envy of other kitchens!

Second, as always, full Supporters get to place an ad of their choice in the top-right banner space on every page of this site. If you don’t have an ad but have an idea for an ad, I’ll help design one; if you don’t have anything to advertise but want to promote a worthy cause, that’s fine too.

And finally, you will get my heartfelt thanks, and, I hope, the heartfelt thanks of all those who read this site and can’t or don’t choose to donate. I continue to be amazed at how many people value the news and analysis on offer here, more than two decades after this site started, and there is absolutely no way I would have been able to keep it going without your financial support. To all present, past, and future supporters: You are the best, and you can tell your friends that I said so.

Thanks, and donate early and donate often!

Neil


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Friday roundup: Team owners rework tax bills and leases, Twins CEO claims team is winning (?) thanks to new stadium, and other privileges of the very rich

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Tons more stadium and arena news to get to this week, so let’s dive right in without preamble:

New Tampa mayor wants to reopen Rays stadium talks, not cost herself any money, this should go great

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New Tampa mayor Jane Castor attended the Tampa Bay Rays‘ not-quite-sold-out Game 4 of their Division Series on Tuesday night, and as she said when she was elected in April, was very enthusiastic about building the Rays a stadium in her city:

“I really feel like we should probably maybe just start over again,” Castor said as she greeted people behind home plate at Tropicana Field on Tuesday. “Everybody just come back to the table and start over again. Finding out what the Rays want and need, and then which community can best fulfill those needs.”

We already know what Rays owner Stuart Sternberg wants and needs, and it’s somebody to build him a $900 million stadium without him having to pay much toward it. That’s what crashed and burned last December, after Hillsborough County proposed going halfsies on a stadium but without even really having the money identified to do that; going back to the table and starting over again is a nice idea, but it still leaves everyone staring at a table with a “place $900 million here” sign.

And, because why be an elected official if you can’t promise all things to all people, Castor added this:

“If a decision was made to build a stadium in Tampa, I have said from the beginning that taxpayer dollars would not be used to build a new stadium, and I stand by that,” Castor said. “There are many ways to get a stadium built.”

I mean, not really? There is only one way to get a stadium built, and that is by paying a construction company to build a stadium, which requires somebody writing a check. Sternberg has made very clear that he is not going to be the one to write the largest check — if he’d wanted to do that, he could have built a stadium four or five times over by now — so if taxpayer dollars won’t be involved, then that leaves, I guess, a GoFundMe?

The other possibility, of course, is that Castor intends to use taxpayer dollars, but taxpayer dollars that she can pretend aren’t taxpayer dollars: free land grants, property tax breaks, tax increment financing districts that funnel only “new” taxes to the stadium, etc. Or maybe she thinks that telling Sternberg, “You can have your stadium, but you have to pay for it” will work better now than it did the past few years? Either way, she’s coming off as either naive or disingenuous, which is not a great start for the next round of Tampa stadium talks.

St. Pete may have traded Rays “don’t talk about moving” guarantee for a ticket fee it’ll never collect

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Yesterday I noted that St. Petersburg Mayor Rick Kriseman had unexpectedly granted Tampa Bay Rays owner Stuart Sternberg the right to negotiate with Tampa about a new stadium, several months after declining to declare Sternberg in violation of his use agreement with St. Pete when he openly discussed the possibility of playing home games in Montreal. Since it’s been widely reported that the Rays’ agreement forbids even mentioning the idea of a move until 2027, I noted that this seemed like a big concession for Kriseman to grant in exchange for nothing, but Rays stadium reporter extraordinaire Noah Pransky set me straight:

This seemed wrong to me, so after some back and forth with Pransky on Twitter, I checked out the use agreement itself, which says:

That’s pretty cut and dried: During the term of the agreement (i.e., through 2027), the club can’t engage in any negotiations to play home games anywhere other than the Trop. It says nothing about allowing negotiations now to move the team in 2028 or later. (Section 2.04 doesn’t either, before you ask.)

Except! There have been a series of amendments to the use agreement, some before the Rays even moved in in 1998. And one of those, the Second Amendment signed on May 18, 1995, says this:

You’ll notice that this just inserts the clause “to be played during Term.” Which effectively created a loophole: Rays execs can talk to other cities about moving there, but they must limit their talks to being about a move after 2027.

What did St. Pete get in exchange for this 24-year-old concession? The only obvious item in the Second Amendment that was a concession to the city is an increase in the city’s fee for tickets sold over 3.3 million per year, from 25 cents per ticket to 50 cents per ticket. Which amounts to a value of, let’s see, absolutely nothing because the Rays have never come close to drawing 3.3 million fans, and in fact since the seating at the Trop was reduced in 2007, couldn’t draw 3.3 million fans now even if they sold out the entire season.

In other words, unless there was something else going on around that 1995 negotiating table other than the changes we can see in the resulting amendment, St. Petersburg is now stuck with eight years of Sternberg being able to talk all he wants about hightailing it out of town in 2028, all because somebody back then thought it would be nice to collect some extra cash from tickets that will never, ever be sold. (Or, more likely, then-Rays owner Vince Naimoli noticed that he’d signed an extra-restrictive no-relocation-talks clause, and asked the city nicely to revise it, and the city said, Sure, give us some worthless trinket in exchange.) That’s probably not the worst example of someone getting fleeced by the Rays, but it’s still not great.

Pimlico upgrade money would come from Maryland schools budget, why wasn’t this the headline in the first place?

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Finally, there’s an answer to the burning question of whether the casino tax money that the owners of Pimlico racetrack want to use to pay for renovations would come from additional casino taxes or money diverted from education funding. It’s hidden halfway down through a followup article in the Baltimore Sun, but there it is:

Under current law, when the 16-year window ends, the casinos would keep paying the money, but it would go to the state’s Education Trust Fund.

Supporters of the plan say they aren’t worried about diverting money to the tracks that otherwise would go to education.

“There are any number of significant policy issues a state has to wrestle with. Education is among them,” Rifkin said. He noted the plan has support from Baltimore’s mayor and county executives in Anne Arundel and Baltimore counties, who are all pushing for more money for schools.

Well, that’s just splendid! The state of Maryland is looking at shifting $375 million from future schools funding to subsidizing horse racing tracks, but you know, it’s a big state and there are a lot of things to be funded, so why worry about what money is exactly being siphoned off from where?

Sean Johnson, a lobbyist for the Maryland State Education Association, did say that he’s “confident there’s enough space to accomplish both our goals on fully funding our schools and the General Assembly’s goals on any number of things,” which implies that he’s maybe been promised the state legislature will backfill the lost casino tax revenue somehow. (Or else he’s just very, very bad at his job of trying to ensure that state money is spent on education.) But even if the money will be replaced from somewhere else, it still has to come from somewhere — and it’s either going to be a new tax or reduced spending on something else, because those are the only two ways that budgets work.

This is something you might think would be important to call out for Sun readers, but instead it comes up in paragraph #16 of an article titled “Before deal to keep Preakness in Baltimore reaches finish line, it will face jostling in the General Assembly.” Because why mention anything about schools funding when there’s a racing metaphor to be had! Clearly that plan of laying off newsroom staff to pay for the cost of their colleagues being murdered is working out just great for the Sun.