Bill would let A’s owners use tax money for Howard Terminal infrastructure they said they’d pay for themselves

Oakland A’s owner John Fisher has been trying to build a new stadium forever, and for just as long he’s been insisting he’ll do it entirely with private money. So, ruh-roh:

Legislation that would help the City of Oakland finance infrastructure and transportation projects for a new ballpark at Howard Terminal was approved Monday by the State Senate…

The bill would allow Oakland to create an infrastructure financing district for the roughly 50-acre waterfront property where the Oakland Athletics intend to build a 35,000-seat ballpark, 3,000 units of housing, in addition, to retail and office space.

“Any financing that emanates from the district would not be used for the actual stadium itself. That is going to be privately financed,” [state Sen. Nancy] Skinner said on the state senate floor. “but rather for the other transportation and other infrastructure that may be needed at the site.”

So, okay, if you’re new to this whole development subsidy thing, “transportation and other infrastructure” could mean stuff that genuinely has nothing to do with an A’s stadium, or at least only tangentially benefits it while also benefitting the whole area; or it could mean “everything about the stadium that isn’t actually holding up the seats.” It’s always tough to say until you see the actual funding plan, and we don’t have that for the A’s. The actual bill appears to leave it up to the city of Oakland how big to draw the tax increment financing district, and what to spend the money on, so that’s no help either.

(And if you’re new to tax increment financing, it’s basically kicking back taxes from a new development to help pay for part of the development’s costs. It doesn’t usually work out too good.)

The A’s planned Howard Terminal site will have lots of environmental cleanup costs, but team execs say they’re going to pay for those; in fact, team president Dave Kaval went so far as to say back in February, “There are going to be a lot of infrastructure costs on the site, whether it’s transportation, whether it’s sea level rise, whether it’s environmental mitigation. Those are all things that as part of the project, we’re willing to pay for.” And by “the site” Kaval meant the whole site, including other development, so … beats me, man.

As for how much tax could be redirected to this infrastructure fund, it depends on how big a TIF district Oakland approves. If we wild-ass-guesstimate a $1 billion development, though, and the effective property tax rate in Oakland is a little under 1.5%, then over 30 years, in present value … we could maybe be talking about $200 million or more. Probably less than that given that you’d have to deduct the current value of Howard Terminal land, but still, likely somewhere in the low nine figures. Maybe.

This is all exceeding hand-wavy, obviously, and really you’d want an Oakland City Hall reporter who’s on the scene (or at least in the right time zone) to be asking these questions. All we know for sure is that Zennie Abraham claims he gave Kaval the idea for TIFs last year, though given that 1) the A’s owners were talking about TIF-like structures way back in 2006 and 2) Zennise Abraham has claimed lots of things, probably best to keep several large grains of salt on hand for that one as well.

 

Would-be Portland MLB owner must start paying for would-be stadium land, or go back to drawing board

How’s that Portland baseball stadium with the tram and the private beer taps but no actual team or money to pay construction costs going, you’re wondering? Let’s check in on the plans, courtesy of The Oregonian, aka Portland’s city newspaper by default even if it’s mostly staffed by empty desks these days:

By the end of the month, the pro baseball boosters could have to start paying the Port of Portland hundreds of thousands of dollars each year for the exclusive negotiating rights to the Northwest Portland terminal where they hope to build a 32,000-seat stadium. The bill for the first three months will come to $375,000.

It’s definitely time to get serious, then: $750,000 a year is a chunk of change to pay just to keep dibs on a site that may or may not ever get a stadium for a team that may or may not ever exist. (Reminder: MLB commissioner Rob Manfred has said that there won’t be any expansion until the Oakland A’s and Tampa Bay Rays get new stadiums, and the latter, at least, seems unlikely before 2027ish.) So is the Portland Diamond Project — main owner, former Nike exec Craig Cheek, main names added to the group’s “leadership” page to sex it up, Russell and Ciara Wilson — ready to make a commitment?

The Diamond Project has only just begun to sort out thorny issues around transportation and zoning that could keep the field just a dream…

Marshall Runkel, chief of staff for City Commissioner Chloe Eudaly, who oversees the city’s Transportation Bureau, said there’s been little progress in addressing the challenge of getting thousands of fans to and from the games.

“It still looks very difficult or impossible from a transportation standpoint to make Terminal 2 work,” Runkel said.

That’s not so good.

There are plenty of questions still unanswered, including who would pay for the venture. The group has shown Mayor Ted Wheeler pledges from big-money investors, but it hasn’t released their names.

That’s also not so good.

Prediction here, based on no inside info other than a gut feeling about how these things usually go: As we get closer to the end of May, Cheek will try to negotiate an extension on the land option, maybe paying a smaller amount to push back the decision date by a few months. Given that nothing much is expected to happen in the next few months, though — maybe the Rays owner will make some kind of statement about where he’s hoping to build a new stadium, but that won’t make a new Rays stadium appear overnight — it’s hard to see what that would get Cheek other than delaying the inevitable. At some point, he’s going to have to decide whether being able to wave “We’ve got a stadium site!” in front of a nonexistent MLB expansion committee is worth paying $750,000 a year to reserve a site that may not even be a good one for a baseball stadium; if he punts and throws a dart at a map to pick another pretend site, I wouldn’t be entirely surprised by that either.

Friday roundup: IRS hands sports owners another tax break, A’s accused of skimping on Coliseum land price, Rays could decide this summer on … something

Happy Friday! Here is a fatberg of stadium and arena news to clog up your weekend:

  • San Jose Mercury News columnist Daniel Borenstein says the Oakland A’s owners could be getting a discount of between $15 million and $65 million on their purchase of half the Oakland Coliseum site from Alameda County, which is hard to tell without opening up the site to other bids, which Alameda County didn’t do. You could also look at comparable land sale prices and try to guess, which shows that the A’s owners’ offer is maybe closer to fair value; it’s not a tremendous subsidy either way, but still oh go ahead, just write us a check for whatever you think is fair is probably not the best way to sell off public assets, yeah.
  • St. Petersburg Mayor Rick Kriseman says he expects to hear by this summer from Tampa Bay Rays owner Stuart Sternberg whether Sternberg will seek to build a stadium in St. Pete or across the bay in Tampa. Of course, Sternberg already announced once that he was picking Tampa and then gave up when nobody in Tampa wanted to pay for his $900 million stadium, so what an announcement this summer would exactly mean, other than who Sternberg will next go to hat in hand, remains unclear.
  • Fred Lindecke, who helped get an ordinance passed in St. Louis in 2002 that requires a voter referendum before spending public sports venues, would like to remind you that the soccer stadium deal approved last December still has to clear that hurdle, not that anybody is talking about it. Since the soccer subsidies would all be tax kickbacks and discounted land, not straight-up cash, I suspect this could be headed for another lawsuit.
  • Cory Booker and James Lankford have reintroduced their bill to block the use of federal tax-exempt bonds for sports venues, but only Booker got in the headline because Lankford isn’t running for president. (Okay, also it’s from a New Jersey news site, and Booker is from New Jersey.) Meanwhile, the IRS just handed sports team owners an exemption from an obscure provision of the Trump tax law that would have forced them to pay taxes on player trades; now teams can freely trade their employees like chattel without having to worry about taxes that all other business owners have to, thank god that’s resolved.
  • Golden State Warriors star Kevin Durant, for some reason, revealed that “Seattle is having a meeting to try to bring back the Sonics,” but turns out it’s just Chris Hansen meeting with a bunch of his partners and allies from his failed Sodo arena plan, not anyone from city government at all, so everybody please calm down.
  • The rival soccer team that lost out to David Beckham’s Inter Miami for the Lockhart Stadium site in Fort Lauderdale is now suing to block Beckham’s plans for a temporary stadium and permanent practice facility there, because this is David Beckham so of course they are.
  • Publicly owned Wayne State University is helping to build a $25 million arena for the Detroit Pistons‘ minor-league affiliate, and Henderson, Nevada could pay half the cost of a $22 million Las Vegas Golden Knights practice facility, and clearly cities will just hand out money if you put “SPORTZ” on the name of your project, even if it will draw pretty much zero new tourists or spending or anything. Which, yeah, I know is the entire premise of this site, but sometimes the craziness of it all just leaps up and smacks you in the face, you know?
  • The Philadelphia Union owners have hired architects to develop a “master plan” for development around their stadium in Chester, because they promised the city development and there hasn’t been any development and maybe drawing a picture of some development will make it appear, couldn’t hurt, right?
  • Wannabe Halifax CFL owner Anthony LeBlanc insisted that “we are moving things along, yeah” on getting federal land to build a stadium on, while showing no actual evidence that things are moving along. “The only direction that council has ever given on this is ‘dear staff, please analyze the business case when it comes,’” countered Halifax regional councillor Sam Austin. “Everything else is media swirl.”
  • Never mind that bill that could have repealed the Austin F.C. stadium’s property tax break, because its sponsor has grandfathered in the stadium and any other property tax breaks that were already approved.
  • Hamilton, Ontario, could be putting its arena up for sale, if you’re in the market for an arena in Hamilton, Ontario.
  • And finally, here’s an article by the Sacramento Bee’s Tony Bizjak on how an MLS franchise would be great for Sacramento because MLS offers cheap tickets and a diverse crowd who like public transportation and MILLENNIALS!!!, plus also maybe it could help incubate the next Google, somehow! And will it cost anything or have any other negative impacts? Yes, including $33 million in public subsidies, but Tony Bizjak doesn’t worry about such trivialities. MILLENNIALS, people!!!

Saints’ latest Superdome demand to push total subsidies past $1.4b, eat that, Indiana Pacers

When I wrote on Monday that Indianapolis giving Indiana Pacers owner Herb Simon $600 million worth of renovation payments and operating subsidies to extend his lease for 25 years was setting a new standard in making sports leases the grift that keeps on giving, I figured that record would last, oh, I dunno, more that a couple of days. And yet:

State and New Orleans Saints officials are working toward an agreement that will keep the team in Louisiana through 2035 and include a transformative $450 million renovation of the Superdome, officials said this week.

The deal would extend the Saints’ current lease agreement with the state another 10 years and feature the most elaborate and expensive overhaul of the iconic stadium in its 44-year history.

It’s not quite as bad as that lede makes it sound: The Saints owners will be chipping in $150 million of the renovation cost. But still, that leaves $300 million to be paid for by the state, which for a ten-year lease extension means Louisiana taxpayers will be shelling out $30 million a year for the Saints to play in New Orleans — blowing away the Pacers’ just-established $24 million a year record.

This new agreement — which the New Orleans Times-Picayune calls “the lynchpin to a long-term agreement between the state and the team,” which is not at all how you should be spelling “linchpin” — would be, like the Pacers’ deal, just the latest in a long series of subsidies the Saints owners would be collecting from the state of Louisiana: Late Saints owner Tom Benson, in fact, pioneered the pay-to-play concept when he engineered a lease in 2001 where the state would pay him $18.6 million a year to play in the Superdome for another ten years. Then he got another $392 million in 2013, and now is set to receive another $300 million just six years later — adding in all the earlier money Louisiana spent on building and renovating the dome, the Saints’ five-decade total will come to $1.442 billion (non-inflation-adjusted dollars), which is even more than the Pacers’ $1.161 billion, though the Pacers got all their cash in the span of just 20 years, so they still take the subsidy-rate crown.

The latest Saints plan still needs to be approved by state officials — certainly the state bond commission, maybe the state legislature as well, though the Times-Picayune didn’t do any better a job reporting this than they did on their spellchecking. Gov. John Bel Edwards reportedly already “gave his blessing: to the plan, though, and given past history in Louisiana, it has to be considered likely to be approved. Some days, I feel like we’re making some headway in getting elected officials to at least check the literature on economic benefits or the lack thereof before lavishing tax dollars on the local sports team owner; other days, not so much.

Los Angeles 2028 Olympic budget rises to $6.9 billion, likely to go much higher

The estimated cost of hosting the Summer Olympics in Los Angeles has risen from $5.3 billion to $6.9 billion, partly because of inflation when the city’s hosting was shifted from 2024 to 2028, partly because these damn things always go over budget.

The good news: Olympic organizers project more in revenues as well, so the games are still expected to break even. The less good news: Olympic games almost never do — though at least L.A. is reusing lots of facilities, such as hosting athletes in college dorms instead of building a new Olympic village, so it has a better shot at earning back its costs — and the city and state have committed themselves to cover any losses, as the International Olympic Committee demands of Olympic hosts.

And really, rising cost estimates nine years out from the actual Olympics are not what you have to worry about as a host city (or state). The worst of the overruns usually come in the final years and months, as organizers scramble to complete venues in time for the events, or pour money into extra security costs when it turns out hosting a major sporting event in the 21st century requires spending a lot of money on police. If the 2028 L.A. games really only cost $7 billion, everyone should be more or less fine; if they do, though, I will eat whatever hat I’m wearing in the future.

Indiana gov approves umpteen bajillion dollars in subsidies for Pacers, Indy Eleven

Indiana Gov. Eric Holcomb signed legislation on Monday approving a steady stream of checks for the Pacers and the Indy Eleven USL team, and here’s how the Associated Press reported it:

The dedication of nearly $400 million in public subsidies toward two Indianapolis sports stadium projects has been signed into law.

Close! As discussed here last week — citing coverage in the Indianapolis Star, so it’s not like it was exactly secret information — the total is actually $712 million: $600 million in arena renovation funds and operating subsidies for Pacers owner Herb Simon, and $112 million in stadium subsidies for Eleven owner Ersal Ozdemir. In fact, the Pacers piece is actually $777 million over 25 years, but it’s fairer to call it $600 million because that’s how much it’s worth in 2019 present value since some of the payments are way in the future.

The AP seems to have left out the $12.5 million in annual operating subsidies for the Pacers (rising to $16 million by the year 2031) and $10 million a year in “technology upgrades” for ten years on the grounds that that’s not technically part of the bill Holcomb signed, but rather the lease Simon agreed to on condition of Holcomb signing the bill. (Only in the sports world does one get to say, “Okay, I’ll let you pay me more than $20 million a year to play in the arena you built for me — but only if you first give me a check for $295 million.”) Which is misleading to readers, especially readers who are stuck relying on a brief AP report, because nobody in the rest of the Indiana and national media appears to have assigned anyone to write about the bill signing.

At least one national outlet did cover the Pacers situation in depth on Monday: Deadspin, which assigned me to write about the spread of pay-to-play deals in pro sports and how local elected officials set them up by giving team owners lease opt-outs that let them demand new subsidies every few years. You can read the whole thing here, but for now I’ll just share the thoughts of two people with inside knowledge of sports negotiations — longtime sports administrator Jim Nagourney and former Anaheim Mayor Tom Tait — on why mayors keep doing this to themselves:

After one meeting, [Nagourney] recalls, he spotted Steve Hill, the chair of the [Nevada] stadium authority, and “suddenly there’s a dozen reporters sticking microphones in his face, like he’s general manager of the team. It’s a very heady feeling, for someone who’s been in the concrete business. And the teams know it.”…

“Everyone’s at the party, and you don’t really want to be the guy not at the party,” says Tait. “It’s groupthink, and you gotta really be pretty comfortable with yourself to say ‘none of this makes sense.’”

It’s a sobering notion that the main reason mayors love sports stadiums has less to do with economic consulting reports or grubbing for campaign donations or what have you, and more to do with peer pressure, but that really does look to be how it works. The main value in being very rich is that you can hire people (okay, lobbyists, but they’re sort of like people) to hang out around City Hall and talk incessantly about how these subsidies have gotta happen, you’d be crazy not to do it, like used car dealers who somehow invited themselves over for dinner night after night until you forget that they’re not your friends. American democracy is truly a strange and broken thing.

Judge okays suit against Clippers arena land sale for not considering affordable housing first

I haven’t paid much attention to the citizen lawsuit against the proposed new Los Angeles Clippers in Inglewood since it was filed last summer and Mayor James Butts abruptly ended a city council meeting and ran away when someone tried to serve him lawsuit papers, but now it might be worth perking up our ears: A Los Angeles County judge has ruled that the lawsuit can proceed, accepting the argument of plaintiffs that a state law may have required the city to first try to find an affordable housing developer for the arena land:

“Today’s ruling is a step forward for our neighbors in Inglewood who are simply asking the city of Inglewood to follow California’s affordable housing laws,” says D’artagnan Scorza of Uplift Inglewood. “It simply does not make any sense to prioritize an NBA arena over the needs of Inglewood residents. Public land should be used for the public good.”

Some background: The California Surplus Land Act of 2005 requires local governments that want to sell public land to first offer it up to either low- and moderate-income housing developers or to local parks departments, then engage in “good faith” negotiations to try to get a fair price before moving on to other buyers. Uplift Inglewood is a coalition of “residents, businesses, faith groups, and community organizations all working together to ensure the vision of Inglewood’s future includes and benefits everyone.” Inglewood is a city with lots of poor people and little affordable housing and no rent controls. Clippers owner Steve Ballmer is a multibillionaire who doesn’t like his team’s current arena because he doesn’t own it.

As for the legal details, we’ll all find out more when the suit goes to trial in September. Ballmer’s going to have to content himself for a while with his team being called “pesky” for scaring the Golden State Warriors slightly in the playoffs.

Boston Globe writes entire article about new $400m Revolution stadium based on fan’s tweet

It’s not every day that you have a story about a team’s stadium price tag going up when there’s no actual plan of what stadium to build or where, but that’s what we had this weekend with the Boston Globe’s report that New England Revolution owner and famed massage parlor enthusiast Bob Kraft is now looking to spend $400 million on a stadium … somewhere:

During a fan event last weekend, Revs team president Brian Bilello offered some reassurance that the hunt remains very much alive. Snippets from the event emerged on Twitter, including the mention of a new price tag. A spokesman confirmed that the Kraft Group is now willing to invest as much as $400 million in a roughly 20,000-seat soccer stadium. The location? Sorry, everyone. That remains a mystery.

This story was apparently entirely based on week-old tweets by Paul Foley, a “dad, oral care expert, soccer fan” and former contributor to a now-defunct sports talk radio show with a now-defunct Twitter account, who got to talk to Bilello (or at least transcribe his statements) at a pregame event. Foley responded on Twitter as one does:

I’m perfectly willing to believe that Bilello actually said “$400 million private investment supported by Krafts” as Foley says he did; what that means is another thing. Is Kraft really ready to build the most expensive MLS stadium in history on his own dime? How a new Revolution stadium would be paid for has been an official secret for even longer than where it might go — way back in 2015 he proposed paying for one with a ticket tax, which only would have worked with a ticket tax of around $40 — so you’d think Globe writer Jon Chesto would have asked the team for an official statement on this, but there’s no indication that he did beyond getting confirmation that Bilello used the $400 million figure. (Though he did get two sports economists, Victor Matheson and Andy Zimbalist, to say, in effect, “man, that sounds like a lot of money.”) As a Professional Editor of Journalism, I would have sent this back to the author with the note “needs comment from team on financial plan or indication that they refused to comment,” but I guess that’s not how the Globe rolls these days.

Friday roundup: Wild get $55m to extend lease, A’s seek to buy into Coliseum land, Calgary will own Flames arena (maybe, whatever that means)

Friday! Let’s see what else has been happening this week:

  • The owners of the Minnesota Wild have extended their lease for ten years, through 2035, in exchange for cutting their rent from $9 million a year to just over $3.5 million. That may sound like a $55 million gift (or an $88 million gift — the Pioneer Press wasn’t clear about whether the rent reduction starts now or in 2026), but St. Paul officials say it won’t cost the city any money, because they renegotiated the public arena bonds so that they can be paid off over a longer time. No, I don’t get it either, this is just what the newspaper says the unnamed city officials said, go ask them.
  • The Oakland A’s owners have a tentative agreement to buy Alameda County’s half of the Oakland Coliseum site for $85 million. (The public landowners previously turned down a purchase offer of $167 million when it looked like the Raiders might stay put there, and other indicators put the market value of the site in the same range, so the price looks reasonable, at least.) No, that doesn’t mean the A’s owners will necessarily build a stadium there — they say Howard Terminal is still their first choice for that — but they could, or they could just build other development there, or they could be prohibited from building anything, given that Oakland Mayor Libby Schaaf has been complaining that the county selling its stake without consulting the city, which owns the other half, could be illegal. Check back again in about a month, when the deal is supposed to be finalized, maybe.
  • Calgary councillor Jeff Davison, the main proponent of a new arena for the Flames, says that “the City of Calgary will own” any arena, which could mean, well, anything really: Will the city own just the deed, or the revenues from the build as well? Who will control non-hockey events? Who will pay maintenance? Will the building pay property taxes? Rent? The Calgary Herald says that “an official with the Flames said there was ‘nothing to report’ when asked for comment,” so we’re flying blind here, at least until Davison drops some more hints about what he thinks is going to be approved, if he even knows what will be approved and isn’t just trying to boost his plan’s prospects by talking it up in the press. Stenography journalism is hard!
  • Eastern Illinois University is looking at building an esports arena in a second-floor classroom, and now I really don’t get why Comcast Spectacor needs to spend $50 million to build one in Philadelphia.
  • This week in vaportecture: One of the ghostly figures projected to attend Worcester Red Sox games has now wandered onto the imaginary field’s imaginary second base and is celebrating an imaginary double; the F.C. Cincinnati stadium will now feature a “grand staircase” that is supposed to echo the Spanish Steps in Rome and the front steps of the New York Public Library, which are 174 steps and (roughly, I can’t find a count online) 25 steps respectively, whereas these look like they’ll be seven steps max, but okay; and the Tampa Bay Rays stadium in Tampa that will never be built has finally turned around its field so the giant gap in the grandstand isn’t behind home plate but is now in center field, which is more reasonable but, remember, not going to be built anyway, so never mind.
  • And speaking of Tampa, newly elected mayor Jane Castor has declared, “I will do what I can to have the Rays move to Tampa.” Rays owner Stuart Sternberg can’t move anywhere until 2027 without the permission of St. Petersburg, and the term Castor was just elected to expires in 2023, so good luck with that one, mayor.

HBO Real Sports is latest to notice that Red Wings arena development promises were a lie

I just this morning got around to watching Tuesday night’s episode of HBO’s Real Sports With Bryant Gumbel on District Detroit, the development that was supposed to spring up around the new Detroit Red Wings arena, but hasn’t — something that’s been covered by other outlets in the past. While trying to remember how to log in to HBO Go, I had already learned that the Ilitch family, owners of the Red Wings and Tigers, had called it “a self-interested, sensationalized and inaccurate report designed to attract viewers instead of a balanced report on the rebirth of Detroit and our contributions to City’s turn around,” so needless to say I had high hopes.

And I can now say that … it’s fine. It lays out all the main plot points of the District Detroit saga — rich family meets struggling city, rich family that kept property blighted for years promises city new development in exchange for public money, rich family builds parking lots for its own profit instead of new development — in that breezy eyebrows-furrowed narrative style that’s been familiar ever since 60 Minutes launched back in the late Paleozoic. Aside from a debatable dig at how the city’s literally crumbling schools were denied funding as a result of the arena subsidies (the state claims that it reimbursed the city schools, but it’s complicated), there’s nothing that hasn’t been reported many times before, let alone that could be considered “inaccurate.”

The most enlightening parts are the segments interviewing former state representative John Walsh, the sponsor of the Red Wings bill (and now president of the Downtown Detroit Partnership), who is helpfully unrepentant about helping to birth this whole mess:

Real Sports correspondent David Scott: “Did you consult any independent economists about it?”

Walsh: “I didn’t consult any, but I did plenty of research. I am known as a data-driven person.”

Scott: “The North American Association of Sports Economists — I don’t know if they came up in your research? They concluded that sports subsidies have no consistent positive impact on jobs, income, or tax revenue.”

Walsh: “If they’re only looking for dollar-for-dollar return, I agree with them—”

Scott: “But they’re not. They’re talking about job creation, they’re talking about local economic development.”

Walsh: “How do you quantify that? At some point you have to have a level of faith in a project.”

My expectations of American elected officials, especially American elected officials who immediately jump from public office to working for local business lobbying groups, couldn’t be lower, but still hearing one say “I am known as a data-driven person” immediately followed by “At some point you have to have a level of faith” is impressively horrifying. This isn’t going to displace John Oliver’s report on stadiums as my favorite YouTube video on the sports subsidy scam — especially since HBO hasn’t put it on YouTube, though I’m sure if you dig around you can find it somewhere — but if it convinces some future legislator somewhere that “hmm, maybe we should have checked to see how this worked out in other cities first, using actual math,” then it’s 17 minutes of air time well spent.