Cincy mayor offers $37m in MLS cash plus full property tax break, team says “please send more”

So Cincinnati Mayor John Cranley came out with his funding plan for an F.C. Cincinnati stadium on Friday, and while it included tax-increment financing as expected, it also included a whole lot of other proposed subsidies:

  • $9.75 million from an existing tax increment financing district in Oakley
  • $7.38 million from Blue Ash airport sale (money is currently in reserved fund)
  • Up to $1.5 M from hotel tax annually will be used to pay off a $20 million loan for the project. But that will cost up to $45 million in hotel tax over 30 years to pay down.
  • The city will also give FC Cincinnati a tax break for employees through a 50 percent job creation tax credit. Under a job creation tax credit, companies receive a certain percentage of the city earnings taxes paid by their employees back as the jobs are created.

Oh yeah, and this:

Under the plan, the Cincinnati Port Authority — a government agency — would own the stadium. That means the city, school system or county would not collect any property taxes on the entire property, including the stadium.

So that’s $37 million, plus that kickback of city income taxes on any jobs “created,” plus a full property tax break. How much that second bit will come to is tough to say without knowing how much the team would pay its employees (or players, though under the single-entity MLS model where the players are technically paid by the league, can they count as F.C. Cincinnati jobs?), but basically a 50% credit means kicking back 1.05% of team payroll, so if anyone has access to a typical MLS team’s payroll documents, we can figure that out. It’s not going to be much, though — even if the team spent $10 million a year on payroll, which is unlikely, it’d only be present value of maybe $1 million and change.

As for the property tax break, going by this example, the commercial property tax rate is about 8.6%, and the assessed value of a property is about 35% of its market value, so if a soccer stadium costs $250 million, then it would normally be paying $7.5 million a year, which would make present value of a full property-tax break worth more than $100 million. That seems high — maybe I’m wrong in assuming that “market value” equals construction price in tax assessment — but given that Minnesota United‘s $150 million stadium is getting $54 million in property tax breaks, and Cincinnati has higher property taxes than St. Paul, maybe not all that high.

In any event, as noted last week, the county is willing to put up $12-15 million for a parking garage, so at this point F.C. Cincinnati has offers of $50 million in hand (assuming the Cincinnati city council okays Cranley’s proposal), and is seeking $70-75 million. I know I probably shouldn’t be saying “Why quibble over $25 million?” when I haven’t had that much money in my entire lifetime, but you know, when you’re spending $150 million just on an MLS franchise, it does seem like less of a huge sum. Or, you know, maybe it’s a sign that MLS should lower its fees some in order to get in on a hot soccer market, but we’ve been over that one before.

UPDATE: So I wasn’t far off:

 

Friday news: Phoenix funds Brewers but not Suns, brewers float crowdfunding Crew, and more!

So, so much news this week. Or news items, anyway. How much of this is “news” is a matter of opinion, but okay, okay, I’ll get right to it:

  • Four of Phoenix’s nine city council members are opposed to the Suns‘ request for $250 million in city money for arena renovations, which helps explain why the council cut off talks with the team earlier this week. Four other councilmembers haven’t stated their position, and the ninth is Mayor Greg Stanton, who strongly supports the deal, meaning any chance Suns owner Robert Sarver has of getting his taxpayer windfall really is going to come down to when exactly Stanton quits to run for Congress.
  • Speaking of Phoenix, the Milwaukee Brewers will remain there for spring training for another 25 years under a deal where the city will pay $2 million a year for the next five years for renovations plus $1.4 million a year in operating costs over 25 years, let’s see, that comes to something like $35 million in present value? “This is a great model of how a professional sports team can work together with the city to extend their stay potentially permanently, which is amazing, and we’re doing it in a way where taxpayers are being protected,” said Daniel Valenzuela, one of the councilmembers opposed to the Suns deal, who clearly has a flexible notion of “great” and “protected.”
  • And also speaking of Phoenix (sort of), the Arizona Coyotes are under investigation by the National Labor Relations Board for allegedly having “spied on staff, engaged in union busting and fired two employees who raised concerns about pay.” None of which has anything directly to do with arenas, except that 1) this won’t make it any easier for the Coyotes owners to negotiate a place to play starting next season, when their Glendale lease runs out, and 2) #LOLCoyotes.
  • A U.S. representative from Texas is trying to get Congress to grandfather in the Texas Rangers‘ new stadium from any ban on use of tax-exempt bonds in the tax bill, saying it would otherwise cost the city of Arlington $200 million more in interest payments since the bonds haven’t been sold yet. (Reason #372 why cities really should provide fixed contributions to stadium projects, not “Hey, we’ll sell the bonds, and you pay for whatever share you feel like and we’ll cover the rest no matter how crappy the loan deal ends up being.”) Also, the NFL has come out against the whole ban on tax-exempt bonds because duh — okay, fine, they say because “You can look around the country and see the economic development that’s generated from some of these stadiums” — while other sports leagues aren’t saying anything in public, though I’m sure their lobbyists are saying a ton in private.
  • A Hamilton County commissioner said he’s being pressured to fund a stadium for F.C. Cincinnati because Cincinnati will need a sports team if the Bengals leave when their lease ends in 2026 and now newspapers are running articles about whether the Bengals are moving out of Cincinnati and saying they might do so because of “market size” even though market size really doesn’t matter to NFL franchise revenues because of national TV contracts and oh god, please make it stop.
  • MLB commissioner Rob Manfred says the proposed Oakland A’s stadium site has pros and cons. Noted!
  • NHL commissioner Gary Bettman says the Calgary Flames‘ arena “needs to be replaced” and the team can’t be “viable for the long term” without a new one. Not true according to the numbers that the team is clearing about $20 million in profits a year, but noted anyway!
  • Cincinnati Mayor John Cranley is set to announce his proposal for city subsidies for F.C. Cincinnati today, but won’t provide details. (Psst: He’s already said he’ll put up about $35 million via tax increment financing kickbacks.)
  • The Seattle Council’s Committee on Civic Arenas unanimously approved Oak View Group’s plan to renovate KeyArena yesterday, so it looks likely that this thing is going to happen soon. Though apparently the House tax bill would eliminate the Historic Preservation Tax Credit, which the project was counting on for maybe $60 million of its costs, man, I really need to read through that entire tax bill to see what else is hidden in it, don’t I?
  • The owners of the Rochester Rhinos USL club say they need $1.3 million by the end of the month to keep from folding, and want some of that to come from county hotel tax money. Given that the state of New York already paid $20 million to build their stadium, and the city of Rochester has spent $1.6 million on operating expenses over the last two seasons to help out the team, that seems a bit on the overreaching side, though maybe they’re just trying to fill all their spaces in local-government bingo.
  • There’s a crowdfunding campaign to buy the Columbus Crew and keep them from moving to Austin. You can’t kick in just yet, but you can buy beer from the beer company that is proposing to buy the team and then sell half of it to fans, and no, this whole thing is in no way an attempt to get free publicity on the part of the beer company, why do you ask?

FC Cincy cuts subsidy demand to $75m in “infrastructure,” county and city offer $50m instead

A last-minute flurry of negotiations between F.C. Cincinnati and Hamilton County yesterday over subsidies for a new soccer stadium didn’t actually end up resolving anything, but it sure was a flurry:

  • FC Cincinnati president Jeff Berding said the team was no longer asking for $100 million to pay stadium construction costs, and was instead asking for $70-75 million in “infrastructure” costs.
  • Cincinnati Mayor John Cranley said the city would cover the balance from tax increment financing kickbacks if the county would put in about $40 million via $2.8 million a year in existing hotel taxes. “There’s no way for the city to finance it by themselves,” Berding said. “This should be a layup. It’s a layup in that it’s infrastructure and it’s a layup in that it’s a source of funds that no one is currently using and doesn’t raise anyone’s taxes.”
  • The Hamilton County Commission replied with two options: Either $12-15 million from existing parking garage revenues toward building a new garage by the stadium site, or the soccer team could play in the Bengals‘ Paul Brown Stadium.
  • Berding wrote back in a public statement that while “it was good to see the County Commission come to the table,” the team “will not be funding public infrastructure routinely covered by governments” and “the financial data that we transparently shared with the County proves to us that Paul Brown Stadium would not support an MLS team.”

That’s a whole lotta public haggling, with the promise of more to come. (Berding is out of town, but promised on his return to “be back at it working with elected officials” on a stadium plan.) If nothing else, Hamilton County’s hard line has gotten F.C. Cincinnati’s owners to knock off $25 million from their demands, which isn’t nothing. And if I’m calculating right, the combination of TIF money and county garage money would now come to around $50 million, meaning the two sides are just haggling over $25 million, a gap that seems surmountable.

Whether you consider $50-75 million still too much for Cincinnati area taxpayers to spend on a team that already has multiple other stadium options that the team keeps turning down will depend on what you consider government’s responsibility to build “infrastructure” — garages, for one, are not something governments normally build for just anybody, and team execs weren’t specific on what “roads and utilities” would include. It’s still a large chunk of change to throw at a soccer team — as large as Nashville approved for its proposed MLS expansion team — but maybe at least small enough now to be out of the running for Worst Stadium Scam of the year.

Handicapping Deadspin’s “Worst Stadium Scam” Vote

Deadspin is holding its second annual Deadspin Awards, and among the categories, you will be excited to know, is Worst Stadium Scam. And it’s set to be a tight race, with these candidates, not all of which are technically from 2017, but let’s not nitpick:

  • The Raiders robbing Las Vegas
  • The Flames trying to rob Calgary
  • The Falcons robbing Atlanta
  • The Louisville Cardinals robbing Louisville
  • FC Cincinnati robbing Cincinnati
  • The Pistons and Red Wings robbing Detroit

Even though these seem mostly selected by which stories were covered by Deadspin in the last year (Nashville SC robbing Nashville didn’t make the cut, nor did the Cavaliers robbing Cleveland), that’s a pretty solid selection. The Raiders and Falcons stand out for the scale of the subsidies — the Raiders will get $750 million in state cash while paying zero rent, while the Falcons will end up getting almost that much over time — and the Falcons have the bonus scamminess of hiding $400 million of their payday in a “waterfall fund” that will keep paying out long after the stadium’s opening. The Flames and FC Cincinnati haven’t been successful in their shakedowns yet, but are notable for trying (and failing) to get a more team-friendly mayor elected in the former case, and for demanding subsidies on the grounds that their owner has never asked for them before so he’s due in the latter. The Red Wings and Pistons are getting about $350 million in public money from a bankrupt city (or from a state that is otherwise starving a bankrupt city, at least), while the Louisville basketball arena deal is just a nightmare without an end.

I’m not going to reveal how I voted, except to say that it was a tough decision, and I won’t be unhappy at all if one of my second choices takes home the prize. Go cast your ballot now, and give extortionate corporate behavior and terrible public policy the shiny trophy it so desperately deserves.

FC Cincinnati exec: Our new stadium will be mumbletaxkickbacksmumble totally awesome!

Word puzzle time! F.C. Cincinnati president Jeff Berding has hidden an important piece of information in a mound of empty rhetoric. Can you find it?

“We’re going to put up, it looks like at this point, over $300 million of our own money to bring the MLS to Cincinnati,” Berding told 700WLW. “It’s going to look nothing like what happened on the riverfront. We’re not going to institute a new tax on our residents. We’re going to use growth-related revenues. We’re very excited about where we are. We think it’s a winning plan. It’s a model plan that people can feel good about. Nashville passed their (stadium plan) last night by a vote of 31-6, and I don’t want to take a backseat to Nashville or anyone else. We’re gonna show Cincinnati can get something like this done, and get it done the right way.”

Spot it yet? No, nothing about the riverfront, that’s misdirection. Not the bit where he tries to guilt Cincinnati about “taking a backseat to Nashville,” though that’s kind of amusing on its own. Keep looking. Ready for the answer?

“We’re going to put up, it looks like at this point, over $300 million of our own money to bring the MLS to Cincinnati,” Berding told 700WLW. “It’s going to look nothing like what happened on the riverfront. We’re not going to institute a new tax on our residents. We’re going to use growth-related revenues. We’re very excited about where we are. We think it’s a winning plan. It’s a model plan that people can feel good about. Nashville passed their (stadium plan) last night by a vote of 31-6, and I don’t want to take a backseat to Nashville or anyone else. We’re gonna show Cincinnati can get something like this done, and get it done the right way.”

There it is! In stadium-demand parlance, “no new taxes” means some form of existing taxes, and “growth-related revenues” means taxes paid by (or around) a new venue — i.e., tax-increment financing. Whether this would just be a kickback of taxes (property, sales, income, who knows?) paid by the stadium itself, or would include a larger district around the stadium, who knows, though it’d need to be the latter if it would pay for any significant chunk of a stadium’s price tag.

Berding has hinted at a TIF before, especially for a stadium in Newport, Kentucky, but this is one of his stronger statements on the matter, if you can call burying it in a sea of clichés “strong.” Berding also said he hopes stadium plans to be public by the end of the week, so maybe we’ll get more details then, though if I were a gambling man I’d put my money on more poorly-scaled renderings.

Worcester hires Rhode Island consultant Zimbalist to help lure PawSox from Rhode Island

Worcester Mayor Joseph Petty has been vocal about wanting to lure the Pawtucket Red Sox to his city if they can’t get a new stadium paid for in their current home, though he’s been noncommittal on the whole “paying to build a stadium thing.” He’s putting at least some money where his mouth is now, though, hiring two consultants to help in his efforts, and look who one of them is:

Economist Andrew Zimbalist and former Massachusetts Secretary of Transportation Jeffrey Mullan have been hired by City Manager Edward M. Augustus Jr. as consultants for the city’s discussions with the Pawtucket Red Sox over that team’s possible relocation here and construction of a new ballpark in the Canal District.

That’s right, it’s Andy Zimbalist, co-author of one of the best books ever on stadium economics, who has become known for saying that public sports venue funding is a waste of money except for when he’s on payroll to say otherwise. Zimbalist has developed a lucrative ($225 an hour, according to one report) sideline in consulting on these deals, to the point where he once recycled an old report by crossing out “Anaheim” and writing in “Seattle” and then reversing his conclusions; his recent gigs include working for — hey, hang on:

House Speaker Nicholas Mattiello has hired Andrew Zimbalist, a professor in the Department of Economics at Smith College in Northampton, Mass., as a $225-an-hour consultant for the House of Representatives on the proposed relocation of the PawSox from Pawtucket to Providence.

I mean, I guess maybe this isn’t a conflict, if Zimbalist is just helping both Rhode Island and Worcester figure out whether spending money on a PawSox stadium would be worth it, not actively trying to work on their behalf to land the team? Maybe he explained exactly what he was hired to do for Worcester?

Asked about his role in the city’s bid for the Pawtucket Red Sox, Zimbalist replied, “I can’t talk about it.”

If anyone would like to help crowdfund $225 so I can hire Zimbalist for an hour to explain what’s going on here, you know where to find me.

Friday roundup: Atlanta Falcons’ non-retracting retractable roof now can’t even keep rain out

Crazed billionaires are shutting down our nation’s news media when employees try to assert their rights, so let’s enjoy journalism while we still have it with another week in news briefs:

  • The Saskatchewan Roughriders‘ old stadium got blowed up real good.
  • The developers who want to build a $15 million modular stadium for the NASL team San Diego 1904 F.C. haven’t actually filed a development plan yet with the city of Oceanside.
  • The Atlanta Falcons‘ non-retracting retractable roof has already sprung a leak.
  • Asked by the New York Post about the New York Islanders‘ bid to build a new arena on state land near Belmont Park, team owner Jonathan Ledecky replied, ““I think we’re circling the airport, just waiting to be given a landing clue,” which doesn’t actually mean anything at all that I can tell, but it sure is an evocative image. Then he pointed to the team’s new $7 million practice facility on Long Island, with a “world-class chef” for players, as “emblematic of what we can do if we were granted the right [to build] at Belmont.”
  • Sacramento city officials want to use the Kings‘ old arena, now vacant after Sacramento built the team a new arena, as a temporary convention center while the city conducts a $125 million renovation of its regular convention center. The arena is an arena, not a convention center, and it’s still owned by the Kings owners, not the city, and I’m sure this is all going to go just swimmingly, no need to be concerned at all.

Camden will be latest city to tear down its nearly new Atlantic League baseball stadium

In 2001, the state of New Jersey spent $18.5 million ($10.5 million on construction, and $7 million on environmental cleanup) to build a new waterfront minor-league baseball stadium in Camden, across the river from Philadelphia. An independent-minors Atlantic League team moved in, and was named the Riversharks, and everyone sat back and waited for the revitalization to come.

Sixteen short years later, Campbell’s Field, named for the soup company that started in Camden, is set to be demolished. The stadium never made money, and the state ate its construction debt — along with $18.3 million spent on a cross-river tram that was never built — and sold the stadium for $3.5 million in 2015 to the city of Camden, which figured it could pay that off with rent from the team. Then the Riversharks owners, not interested in trying to pay rent on revenues from just 3,000 fans a game, declined to renew their lease and instead moved to New Britain, Connecticut to replaced that city’s departed Double-A team and become the Bees. With nobody using the stadium aside from Rutgers University, it will now be torn down and replaced by athletic fields, or maybe an Amazon headquarters, or maybe something else, nobody knows.

If it feels like you’ve read this before, it’s because you have: The Atlantic League in particular now has a long and sorry history of talking cities and states into building new stadiums for its teams and then slinking out of town not long after. The Newark Bears were first demoted to an even lesser indie league and then went bankrupt in 2014 (I still have a jersey and other goodies from their going-out-of-business sale), and their riverfront stadium is now set for demolition; the Atlantic City Surf only lasted 11 seasons before giving up the ghost and leaving its ballpark as a high-school field where the scoreboard doesn’t work; the Bridgeport Bluefish are being evicted so that city can turn their stadium into a concert amphitheater.

If there’s a lesson here, it’s that minor-league baseball stadiums are incredibly risky gambles, since 1) it’s the rare team that brings in tons of fans after the initial honeymoon period and 2) it’s all too easy for a team to relocate or fold years before the stadium is paid off even if 3) the team is helping to pay off the stadium debt, which it usually isn’t. The Atlantic League particularly targeted itself at small Northeastern cities looking to reinvent themselves as baseball attractions, got a whole lot of stadiums built, and then with few exceptions (teams in Long Island and Bridgewater Township, New Jersey are still going strong, so far at least) pulled up stakes and skedaddled when things weren’t going so well.

I want to have an excuse to link to Deadspin’s Dan McQuade’s lovely remembrance of the Riversharks, so let’s quote from that here:

I liked going to Camden baseball games. Once, I took my father and he won the team’s “Best Beard” contest. He got a hot lather machine for his victory. I’ve lived in Center City Philadelphia for more than a decade now, so games were always a quick PATCO ride away. I could even walk over the bridge if I wanted to! I don’t remember much of the baseball—Von Hayes was the team’s manager one season—but I do remember enjoying my trips there…

Since December 2013, the state has handed out $1.2 billion in tax breaks to businesses to relocate to the city. Subaru is well along on its construction of a new headquarters in Camden; it got $118 million in tax credits from the state to move down the road from Cherry Hill.

The Sixers got $82 million in tax breaks for their new practice facility. When that was announced, a Camden resident asked Sixers CEO Scott O’Neil if there would be jobs for locals. “We need a shooting guard,” he replied. (This is still true.) Holtec International got $260 million in tax incentives to move to the waterfront. (That construction forced out a needle-exchange van; Camden hasn’t been signing Community Benefits Agreements with these companies.)..

The teams of the late-’90s New Jersey minor league stadium boom—the Camden Riversharks, the Atlantic City Surf, the Newark Bears, the Somerset Patriots—are mostly gone. Only Somerset, in Bridgewater, still exists. The promises of economic revitalization by baseball have failed. Now we’ll see how Camden fares under this next plan. Hmm.

 

RI house speaker: PawSox deal sucks, let’s negotiate a better one

Opposition to the Pawtucket Red Sox‘ $38 million stadium subsidy request is starting to snowball: First the chair of the state senate finance committee said he’d kill the bill if the PawSox owners didn’t provide more details on their team finances, and now House Speaker Nicholas Mattiello says he wants the team to go back to the drawing board entirely, because his constituents hate stadium subsidies:

Mattiello, a Cranston Democrat, told The Providence Journal in a podcast posted Friday that he’s been knocking on doors in his district and the overwhelming majority of people are telling him “no public money” for the project. The cost of the $83 million deal lawmakers are considering shares the costs among the state, Pawtucket and the team, the Triple-A affiliate of the Boston Red Sox.

“What I’m hearing right now is, the public is not necessarily buying in to the proposition of putting public money, or a large amount of public money, into this project. So I think it’s incumbent upon the governor and the Commerce Corp. to listen to what I’m saying,” he said, adding, “I think the governor and the PawSox and the Commerce Corp. should roll up their sleeves, renegotiate this thing.”

Mattiello wasn’t specific about how much more he’d like to see the PawSox owners put in (other than “perhaps a lot of the backstop should come from the PawSox and the owners of the PawSox and take the risk away from the taxpayers”), but clearly there is sentiment in the state legislature that the current deal kinda sucks — which, when the state could just buy the team for less than the public cost of a new stadium, it kinda does. Rattling the Worcester saber just doesn’t work the way it used to, I guess.

Friday roundup: New soccer stadiums, yet another Vegas arena, Falcons roof still not done

Happy fifth anniversary of Hurricane Sandy, everybody! While you get ready to go to your anniversary parties and dress up as, um, hurricanes, and you know what, this riff isn’t going anywhere, let’s get to the news:

  • Had you forgotten about former UNLV basketball star Jackie Robinson’s $1.4 billion retractable-roofed-arena-plus-hotel-plus-other-stuff project just because Las Vegas already has one new arena, he hasn’t — and now says it’s a $2.7 billion project that will include a 63-story hotel, a conference center, a 24-lane bowling alley, and a wedding chapel. No construction has begun yet, but Robinson says it will all be completed by 2020, or else maybe by then it will cost $5.2 billion and include a space elevator.
  • Chris Hansen is trying a new gambit to turn attention away from Oak View Group’s KeyArena renovation plan and toward his SoDo new-arena plan, and it involves declaring the OVG plan a “public” and not a “private” process, which would require a longer environmental review process, and if your eyes are glazing over already I don’t blame you, skip to the next item, it’s got juicy if unproven allegations of political corruption in it.
  • New York Mets owner Fred Wilpon has given Gov. Andrew Cuomo’s 2017 re-election campaign a $65,000 donation that’s twice as large as all other donations he’s previously given the governor combined, and with Wilpon in the midst of looking to get approval from the state for a new soccer stadium Islanders arena (sorry, had a brain fart on this one while typing) next to Belmont Park racetrack … well, you connect the dots. (Or don’t: An Empire State Development spokesperson snapped, “Participation in the political process has zero bearing on any of this and any of these ‘sources’ with questions are free to contact us instead of trafficking in conspiracy theories.”) Bigger question: Fred Wilpon has $65,000 to spare?
  • The Atlanta Falcons‘ retractable roof is now set to finally work by March 2018. Probably.
  • Nashville held a hearing on its proposed $75 million soccer stadium subsidy deal, and if you guessed that a self-proclaimed soccer mom said it would be a “feather in our cap” while a non-soccer-fan local resident said “you’re asking me to help fund a quarter-of-a-billion-dollar project for another sports team that most likely will not benefit me,” then you’re right on the money.
  • The prospective NASL team San Diego 1904 F.C. is planning a stadium that will cost only $15 million because it will be built modularly elsewhere and shipped to the stadium site in Oceanside, but at least they didn’t skimp on the searchlight renderings.
  • The chair of Rhode Island’s senate finance committee says he’ll put a halt to the Pawtucket Red Sox‘ $38 million stadium subsidy request if the team owners don’t provide more financial information. It sounds like this is over the team’s internal finances, and could be resolved with a non-disclosure agreement, but still, it’s something to keep an eye on, since projects have succeeded or fallen over pettier things.
  • Louisville approved $30 million in bonds to help pay for a new Louisville City F.C. soccer stadium, in exchange for which the team will repay $14.5 million over 10 years, which comes to about $11 million in present value, so the city will only lose $19 million on the deal, unless there’s still plans for as much as $35 million in state property-tax kickbacks via a TIF, in which case this is really a $54 million subsidy for a minor-league soccer stadium. Maybe they should go with one of those modular dealies instead? Just a thought.