Anaheim mayor hints at ways he could lowball Angels lease payments

The Anaheim city council met last night to discuss a new lease for the Los Angeles Angels that could include a sale of city development rights to team owner Arte Moreno to fund stadium renovations, but it’s 8:30 am on the West Coast already and nobody seems to be reporting on what happened, not even Twitter. Wake up and type already, Southern California!

In the meantime, though, the Voice of OC’s Spencer Custodio noted yesterday that an op-ed penned last Thursday by Mayor Harry Sidhu contained some clues about his thinking going into lease talks:

As part of the negotiating team, I will insist that any land sales or leases be at market prices, reflecting ongoing baseball use, development we’re likely to see and any requirements we may ask for with the land. You’ll hear some argue for unrealistic prices based on what we might see if we sold all of the land for housing.

That seems to imply that whatever valuation the city places on the land, it will be for its use for the hotel-and-retail development that’s actually planned, not the “highest and best use” test that would result if the whole site were turned over to housing. That’s not necessarily unreasonable — you want to value the land on what it’ll be used for — but it does mean any appraisal should be carefully judged for its methodology, particularly what comparables it uses to get a price per acre.

Sidhu also wrote:

If we see a new lease for a city-owned stadium, it should include annual rent payments, city revenue-sharing or a combination of both. You’ll hear a lot about rent at Angel Stadium. Unfortunately, much of it is misleading.

Those who don’t want the Angels to stay, or only want a deal on their terms, will tell you the team doesn’t pay rent at the stadium. From 1996 to 1998, the team paid $87 million to fix up Angel Stadium, which then was 30 years old.

That was $87 million our residents did not have to pay to fix up our stadium.

Under the team’s current lease, $80 million of that investment counted as prepaid rent, working out to $2.5 million a year for the 33-year life of the lease. But that’s history now.

That’s considerably less reasonable: The $87 million cost wasn’t for necessary repairs to Angel Stadium, it was for stuff the Angels (then owned by Disney) wanted, mostly the removal of the outfield grandstand that had been added for the Rams in the 1970s and its replacement by some bleachers and landscaping. Counting it as “prepaid rent” assumes that these were somehow public expenses for a public benefit that the team was reimbursing the city for, which is only true if Anaheim residents were clamoring for a giant fake pile of rocks.

Anyway, this is all very much the pregame: We’re not going to know what Sidhu has in mind until he lays his cards on the table, first and foremost that land appraisal. One can only hope that it will be revealed sooner than the day of a vote on the new lease, since that seems to be the way some governments operate these days. One councilmember has requested a minimum 30-day comment period, but Sidhu and the rest of the council weren’t having it — “I will not put any timeline,” said Sidhu said, “whether it’s 30 days, 45 days, 10 days, 5 days ”— so be afraid, be very afraid.

UPDATE: Here’s Custodio’s report on the Anaheim council hearing, and it doesn’t look like much of import happened, beyond agreeing that there should be “no public subsidy or giveaway of tax dollars,” which, nobody ever admits that their plan is a “giveaway.” The land appraisal is still being called a “draft” and has no set release date, and several councilmembers said they were against making public any of the proposals before a vote, with Councilmember Lucille Kring saying, “negotiations are done in secret for a reason.” Uhhh, so no one can find out about them and object to them before you vote for them and it’s too late? It’s that one, right?

Final St. Louis soccer stadium deal is better than previous one, but not so much as to be worth getting excited about

The St. Louis Post-Dispatch business section ran a long article on Sunday about how the city got a much better deal on its MLS stadium after voters rejected the original plan in 2017. Most of the article’s evidence is that local elected officials who expressed qualms about the earlier plan seem fine with this one — though it’s worth noting that the quote in the headline, “Clearly a better deal,” appears nowhere in the actual article — but it also includes this chart:

That’s not exactly apples-to-apples, so let’s unpack it a bit:

As for the new plan, it includes:

  • $30 million in state tax credits (okayed by Missouri’s now-governor).
  • A sales-tax surcharge on in-stadium purchases (which probably mostly comes out of the team owners’ pockets like a ticket tax)
  • An abatement of the city’s 5% ticket tax, with half the money going to the team directly and the other half going into a “stadium upkeep fund.” The Post-Dispatch estimates each half as worth $28.7 million over 30 years, which is a total of $57.4 million over 30 years, which in present value comes to around $29 million, probably less if ticket prices (and taxes) rise significantly over the next three decades and make the tax more backloaded.

Also, in both cases the stadium will be exempt from property tax, which still no one knows how much of a savings that’s worth to the team owners.

So is that really better? For the city, absolutely, as it’s managed to cut its costs from $60 million to less than half that. For St. Louis taxpayers overall, maybe not so much, as the revival of the state subsidy makes up for most of the difference in city subsidies. It’s way better than the very original plan that would have stuck taxpayers with a $100 million bill, yes, but that’s not what voters rejected in April 2017, as the state tax credits were dead at the time.

In any case, yes, it appears that voters did get a marginally better deal by rejecting the 2017 plan — yay, democracy! — but the emphasis is strongly on marginal: Mostly, the city and team regrouped to fob off half the public costs on the state, while converting the other half from a sales-tax subsidy to a ticket-tax kickback. So long as local pols and media outlets are willing to celebrate victories like these, sports team owners probably won’t mind too much failing to stick the public with outright defeats.

Friday roundup: News outlets everywhere get pretty much everything wrong

On a tight deadline this week, so let’s get straight to the news:

County approves $125m tax gift to Carolina Hurricanes, city approval next up

Wake County, North Carolina yesterday approved $46.6 million a year in tourism tax spending — money from a 6% hotel tax and 1% restaurant tax imposed in 1991 — and the beneficiaries are set to include the Carolina Hurricanes and the Raleigh Convention Center, though not yet a proposed Raleigh soccer stadium:

  • The Hurricanes would get $9 million a year in tax money for the next 25 years, a present value of about $125 million. The NHL franchise has been looking at an arena renovation cost of up to $200 million, so this would pay for the bulk of that.
  • The convention center would get $3 million a year for maintenance, $2.2 million a year for parking and infrastructure, $19 million flat fee for renovations and new land acquisition, and $17.575 million a year starting in the mid-2020s for an expansion and new music venue.
  • The North Carolina FC USL team didn’t get its proposed $11 million a year stadium grant, but can still apply for part of the remaining funds, where it would compete against other arts groups.

I know that some of you are thinking about now, “But isn’t the whole point of a tourism tax to promote tourism, so the tax money should be spent on things that will bring tourists to town?” Sure, but then it’s important to ensure that the spending will bring tourists to town, and the return on sports and convention spending is historically really awful in that regard: Sports teams only bring in a tiny sliver of new spending compared to what they cost in subsidies, and conventions are equally dismal.

One solution, if you’re really determined to use tax dollars to encourage people to come to your town, would be to demand some kind of direct repayment from the beneficiaries: Sure, we’ll give you a pile of free cash, but then you need to share the resulting increased revenues with the public treasury. But that doesn’t appear to be what’s going on in Raleigh; rather, the Hurricanes and other operators will keep any windfall revenues, and local government will just sit back and hope that the rising tide lifts their fiscal boat as well.

This whole plan still needs to be signed off on by the city of Raleigh, but at this point it looks like all that’s left to decide is which private interests to funnel tax money to, not whether to do it at all. (It’s possible there are some ways that Wake County could use tourist tax dollars to displace other spending that would then be freed up for broader social goods like schools or whatever, as has been the case in other locales, but none of the coverage has addressed that.) If anyone was wondering why somebody would spend $420 million to buy an NHL team with attendance near the bottom of the league, you may have just gotten your answer.

David Beckham’s Miami stadium site is laced with arsenic, because of course it is

It’s been a while since David Beckham’s Inter Miami stadium plans have appeared cursed, with the franchise moving ahead on both a temporary new stadium in Fort Lauderdale and a permanent one in Miami. The balance of nature requires that this state of affairs cannot last, however, so it’s about time for, hmm, how about the discovery of massive toxic contamination on the Miami stadium site?

The proposed site for a Major League Soccer stadium and mall in Miami is far more toxic than previously expected, with arsenic contamination levels reaching more than twice the legal limit and surface-level soil samples containing debris that poses a “physical hazard.”…

A report by a consultant paints an ugly picture of what lies beneath the golf course — and in some spots, the contamination is right near the surface, as shallow as a half-foot deep. Nearly the entire site is sullied by ash from an old municipal incinerator that was shut down decades ago.

There’s been speculation previously that the Melreese golf course site might have pollution problems, but this report — which prompted the Miami Herald to refer to the contaminants as “crud” and “grimy,” which must’ve been fun for the reporters — still has to qualify as alarming: Miami Mayor Francis Suarez said it “obviously causes great concerns.” Inter Miami officials have promised that they won’t seek public funds for cleanup of the site, but given that the city is still negotiating the terms of the golf course lease with the team, it could conceivably affect Beckham’s proposed $3.5 million a year ground lease price for the site, which would effectively mean taking money from taxpayers’ pockets. Stay very much tuned, in other words.

Charlotte Business Journal proposes ways to raise $2B for Panthers stadium before owner has even asked for it

The Charlotte Business Journal has an article (paywalled, but you can find your way around it if you’re clever) speculating on ways that the city could help pay for a new Carolina Panthers stadium, and it comes down to:

  • Sales and property tax revenues are probably off the table, because the city needs those to fund basic services.
  • Hotel and rental car taxes are a possibility, but problematic because they’re already 8% and 16% respectively, and if you raise them much more, people might start booking their vacations (or conventions) elsewhere.
  • Doubling the restaurant tax from 1% to 2% could raise about $40 million per year, and would only hurt people who eat food, and totally wouldn’t reduce sales tax receipts because people would have less remaining spending money as a result or anything like that.
  • Tax-increment financing, because people still think tax revenues from a new project is not real tax money for some reason.

The entire article, of course, is right in line with the traditional local-newspaper tradition of treating team owner subsidy demands as a problem to be solved by looking under the sofa cushions to see where to find a few hundred million dollars, not as a proposal to be analyzed to see if it makes any damn sense. (There is exactly bupkis on what kind of economic impact if any Charlotte would see from gifting the Panthers a new stadium, though the writer did talk to the head of the local restaurateurs’ trade group, who predictably said they would fight against any restaurant tax hike.) You might think reporters should at least wait for the local team owner to actually make a specific ask beyond just saying “hey, the public really should buy me a stadium with a roof, my old one doesn’t have a roof, roofs are cool” before proposing ways to pay for it, but that’s been a problem for a long, long time.

Here’s how much money Miami taxpayers will throw at next year’s Super Bowl

Miami is hosting the Super Bowl in February, and the Miami Herald has a rundown of how much local governments are paying for the privilege:

  • $4 million from Miami-Dade County to the Dolphins for hosting the game, as required by team owner Stephen Ross’s weird lease provision.
  • $3.8 million from the city of Miami for “police, firefighters, code inspectors, public works and solid waste workers to work Super Bowl-related events.”
  • $300,000 from the city’s Downtown Development Authority for “permanent LED lighting on the Baywalk.”
  • $1.2 million in fee kickbacks and $400,000 in cash from the city of Miami Beach for, you know, stuff.

That amounts to $9.7 million, but the Herald says the total public cost will be “nearly $20 million over time,” so clearly there are some costs the paper didn’t itemize. (Either that or the Herald cut its calculator budget.) Given that previous estimates of how much new tax revenue cities get from hosting the Super Bowl have ranged from zero to $5 million, this would appear to be a bad investment for Miami’s local governments, but don’t worry, they have ideas for how to earn it back:

“It also helps us attract other events,” [Greater Miami Convention and Visitors Bureau COO Rolando Aedo] said. “We’re going to be vying for the World Cup.”

Alrighty then. At least Miami’s expense has provided us with some truly awesome renderings, including a “fireworks extravaganza in the sky,” because don’t you just hate those boring old fireworks that sit on the ground?

Most Calgary citizen feedback was opposed to Flames deal, not that anyone cared

The Calgary city council approved around $200 million in subsidies for a new Flames arena earlier this month only eight days after releasing the proposal, meaning there was no time to tell how the public felt about the idea of using tax money to help pay for a billionaire’s new sports home. There’s plenty of time now that it’s too late for it to have any impact, though, and it turns out Calgarians — at least, those who wrote in to the council during those eight days — were not so crazy about the idea:

An analysis of more than 4,000 individual public submissions found about 55 per cent of those who wrote to the City Clerk’s office did not support the deal approved by city council in an 11-4 vote on July 30.

In particular, reports the Calgary Herald, which requested the public comments — apparently in Canada public records requests move a lot more quickly than in the U.S. — people were upset about the rushed timetable (“The fact that the Flames made the timeline so tight that it disallowed for meaningful public consultation shows an utter disdain for democratic norms and should have been an absolute non-starter”) and the fact that Calgary was approving arena funding at the same time it was cutting its operating budget for things like transit and fire services (“Do not let [Calgary Sport and Entertainment Corp.] bully you into spending money that could desperately be used elsewhere”).

Sometime sports subsidy apologist Mark Rosentraub told the Herald that allowing public input vs. deciding behind closed doors each “has its ups and its downs,” and that “if people are dissatisfied, then they should vote the scoundrels out.” That’s way easier said than done — people vote on a multitude of issues, so it’s tough to punish elected officials for a single decision, especially if their opponents would have done the same thing — but given that the council’s approval ratings were already in the toilet before the arena move, this certainly isn’t going to help. Unfortunately, the next elections aren’t until 2021, by which time it’s extremely likely there will be something fresher in voters’ minds to use as a basis for their ballots — and if you suspect that that’s yet another reason why the council wanted to vote as quickly as possible, you’re probably not far off.

 

Friday roundup: Saints’ $300m subsidy moves ahead, St. Louis MLS announcement on tap, Richmond council votes no on democracy

Sometimes I feel lucky to cover a topic with so many constant absurdities, and then this happens, and I realize that constant absurdities are just the new normal. Anyway, I did get to edit this this week, which is an excellent look at how this week’s absurdity is having potentially catastrophic impacts on people’s lives, so go read it!

But not before you read these:

  • The Louisiana State Bond Commission has approved selling $450 million worth of state bonds to fund renovations to the Superdome, in exchange for the New Orleans Saints signing a 15-year lease extension. As covered back in May, Saints owner Gayle Benson would cover one-third of the bond cost, leaving Louisiana to pay off $300 million, bringing the Saints’ five-decide subsidy total to a cool $1.442 billion. In exchange, the Saints will sign a 15-year lease extension — with another 15-year option, but there’s no way they’re going to extend their lease again without more subsidies the way this gravy train is rolling — which comes to state taxpayers ponying up $20 million a year for the presence of an NFL team, which is a hell of a lot of money, though not as much as Indiana pays the Pacers, because Indiana.
  • The St. Louis Post-Dispatch reported this week that St. Louis will be announced next Tuesday as the next MLS expansion city, bringing the number of teams in the league to a cool 154. (I think it’s actually 28, but honestly the number changes so fast it’s hard to keep track.) Deadspin read the announcement that there would be no public subsidies for the as-yet-unnamed team’s stadium and excitedly reported that the deal “might not completely fleece the city”; sadly, it will actually involve about $60 million in public subsidies, but since about half of that is coming from the state, not the city, that Deadspin headline is still technically correct, right?
  • The Richmond city council has voted 5-3 against allowing a referendum on the city’s proposed new $350 million city-subsidized arena on the November ballot, because voting is for elected officials, not regular folks. Though regular folks do still get to vote on electing elected officials, something that referendum sponsor Reva Trammell clearly had in mind when she said following the no-voting vote: “I hope the citizens hold their feet to the fire. Every damn one of them that voted against it.”
  • Two-plus years after the arrival of the Hartford Yard Goats in exchange for $63 million in public stadium cash — plus a couple million dollars every year in operating losses — the Hartford Courant has noticed that stadium jobs are usually part-time and poorly paid. Not included in the article: any analysis of how many full-time jobs could have been created by spending $63 million on just about anything else.
  • New Arizona Coyotes owner Alex Meruelo said he intends to keep the NHL team in Arizona, but that keeping it in Glendale is a “difficult situation,” at which point a Glendale spokesperson said that city officials would meet with Meruelo “to see how we can help him achieve his goals of success.” Which is all fine and due diligence and all, but given that helping Meruelo “achieve his goals” is likely to mean paying him money to play in Glendale like the city used to do, it’s not exactly promising; if nothing else, Glendale officials would do well to remember that Meruelo currently has exactly zero better arena options elsewhere in the state, so he’s not exactly negotiating from a position of strength.
  • Joe Tsai, who was already set to buy the Brooklyn Nets from Mikhail Prokhorov, has officially exercised his option to purchase the team, plus the Barclays Center arena to boot, for a reported $3.5 billion. Given that the arena is currently losing about $21 million a year, this seems like an awful lot of money even if the team does employ whatever’s left of Kevin Durant. Since Tsai already owns the New York Liberty, though, maybe it at least means that WNBA franchise will finally return to the city from its exile in the suburbs.

Anaheim plans public forums on sale of stadium land to Angels, but won’t tell public how much it’s worth

The city of Anaheim finally got back its long-awaited appraisal of the Los Angeles Angels stadium parking lots that Angels owner Arte Moreno wants to develop to fund upgrades to the stadium, and is ready to open negotiations on a new lease. And that appraisal says:

The appraisal, which city officials say is an incomplete draft, has not been made public.

Say what? The city spent nine months getting the property appraised, now has in hand a report that’s good enough to start talks with the team on a development deal, but it’s not good enough to share with anyone outside the negotiating room? Are they still waiting for the soundtrack to be added?

This is, let us say, a disturbing trend. You’ll recall that the state of New York similarly negotiated a land lease to the New York Islanders as part of a development project to fund a sports venue while keeping its land value appraisals secret, only releasing them hours before the final state board vote and even then releasing only summaries that didn’t show how the appraisal figures were arrived at. As things like sweetheart land deals increasingly subsidize sports projects — since handing over piles of cash is increasingly unpopular with the public — it’s vital to know whether a city is getting fair market value or gift-wrapping development rights for a team owner, and it’s hard to do that when the government’s own assessment is kept secret.

Anaheim councilmember Jose Moreno has announced two community forums on August 21 and 29 to answer questions about the Angels’ lease renewal plan; it’s going to be interesting to see how he ducks all the inevitable questions about “So how much is this land worth that you want to give to Moreno, and how much will he be paying us?” (Assuming that the appraisal is still secret by then, that is. We can always hope!)

In related news, it turns out that when Anaheim extended the Angels’ existing lease through the end of 2019 last year, it actually extended it through 2029, while giving Moreno a new opt-out through the end of 2019. This is even stupider than the lease extension sounded at the time — hey, everybody, now that the team owner has opted out of his lease, let’s give him another year to try to extort money from us, but give ourselves no leverage because if it doesn’t work he can just stay put for a decade under the terms of his existing lease where he pays no rent — especially since Anaheim councilmembers apparently didn’t understand that that was what they were voting on at the time.

Anaheim still has some leverage here: Moreno’s only current alternative stadium option is a plan in Long Beach that no one knows how to pay for and is on too small a site to fit a major-league stadium, so if he opts out again this December, he once again will risk making his team homeless. Though if the city plans to keep responding to Moreno’s “send money or I’ll shoot my team” threats by giving him another year of rope, the threats could literally go on forever. I’m starting to think that the Anaheim council could really use some lessons in haggling.