Des Moines could spend $45m on tax kickbacks for minor-league soccer stadium

With the explosive growth of pro soccer leagues in the United States has come an explosive growth in new soccer stadium demands, and the latest city to be hit is Des Moines, home to the Des Moines Menace of the semi-pro USL League 2 (the fourth tier of pro soccer) but hoping to move up to USL Championship (the second tier). And where in most of the world the team would need to earn promotion by winning games, in the U.S. there’s an easy shortcut: spend a bunch of tax money to build a soccer stadium and surrounding development complex.

Pro Iowa, a campaign to bring profession soccer to Iowa, along with the real estate arm of Krause Group and the city of Des Moines, plan to use sales and hotel-motel taxes generated from the Iowa Reinvestment Act to help pay for the $535 million project that would include 29 separate projects.

There’s lots of gibberish about “activated plaza space” and “heritage festivals,” but mostly what you need to know is that the Iowa Reinvestment Act allows cities to create special districts where hotel/motel and sales taxes are kicked back to developers to fund the cost of new construction. (Yep, that’s a TIF.) Des Moines city officials aren’t yet revealing exactly how much tax money would be siphoned off and given to the stadium developers, but the Des Moines Register reports that “early discussions” were in the $40-45 million range; deputy city manager Matt Anderson told the paper that “we are still working on the final amount, but it will be much less than $45 million.” (The total cost of a stadium was previously reported at around $60 million.)

The Des Moines city council is set to discuss the project on Monday, at which point maybe we’ll have more details. For now, here’s a rendering of people standing in a combined pedestrian plaza and parking lot — does that make it a woonerf? I’m calling it a woonerf until somebody tells me otherwise:

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Winston-Salem Dash get $7m rent break from city to keep mean ol’ MLB from disappearing them

The Double-A Winston-Salem Dash have renegotiated their lease with the city on 11-year-old Truist Stadium to reduce their annual lease payments, and you’ll never believe why the city council went along with it. Okay, you’ll totally believe it:

In the short term at least, the amount of the annual lease will drop dramatically: from about $1.6 million per year to $750,000 per year, and that lower payment also comes with the elimination of an annual ticket surcharge the city collects to the tune of $175,000 per year.

The new lease emerged in negotiations last fall, when team owners told the city they need a lower lease payment to secure the presence of the team here.

Under a downsizing announced last year, some 40 cities are losing their minor-league teams as Major League Baseball reduces its number of farm teams from around 160 to around 120 teams.

City and team officials said the new lease arrangement would bolster the team’s chances of staying.

I hate to say I told you so, but — okay, I love to say I told you so:

Going forward, it will be up to the league office in New York to determine which teams live or die, which means central-office functionaries can deny your city a team by fiat if local officials don’t cough up sufficient protection money for some new scoreboards and upgraded clubhouses.

It’s a little tricky to figure out exactly how much the Dash owners will be saving under the revised lease, since they’ll be making lower lease payments at first, but they’ll rise each year and last longer. By my calculations, the old lease payments of $1.775 million per year through 2039 would have been worth about $21.45 million in present value; $750,000 a year scaling up to $1.2 million a year by 2045 is worth a little under $14 million in present value, so the team owners are saving about $7 million via the new deal.

That’s not a huge amount of money, on the one hand — not compared to the $48.7 million in taxpayer cash Winston-Salem poured into building the stadium in the first place, an outlay that left city officials promising to do better oversight in the future, ha ha ha — but it is $7 million that the owners wouldn’t have gotten without the leverage that MLB’s minor-league contraction plan gave them. If enough teams can renegotiate their leases, soon you’re talking real money, which is a pretty nice side benefit to reducing hundreds of players to unpaid intern status.

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New Mexico United seeks $40m in state cash, walks back giant soccer robots

New Mexico United owner Peter Trevisani is back on the hustings pushing for a new stadium for his USL team, with the hustings in this case a phone call with the local TV station talking about “public-private partnerships” and how those giant soccer robot renderings weren’t really his idea after all:

“The vision for the stadium was always part of a broader vision before we ever announced the first team. A lot of the early renderings— they didn’t come from New Mexico United. They just came to us. People were having fun. They created drawings, ‘This is what it could look like,’” said New Mexico United’s CEO and owner Peter Trevisani.

Trevisani said right now they’re in the process of securing funds of the project.

“A really fragile delicate stage. A stage that’s so important that if people who want this get behind it, and voice their opinion. There has been a request from the city of Albuquerque for $40 million as far is a capital outlay program,” he said.

As a reminder, one of those early renderings looked like this:

That’s a rendering from FBT Architects, provided by Trevisani himself last February. So if by “people having fun” and “creating drawings” means people who were hired by the team to do so, then yup, all checks out!

The more interesting part, if not necessarily the more hilarious part, is that $40 million figure, which appears to be a request from Albuquerque to the state of New Mexico for funding toward a stadium. When numbers were last thrown around back in November 2019, it was $30 million in state money toward a $100 million stadium, so clearly Trevisani has decided that the onset of a global pandemic and associated public costs has made it a good time to ask for an extra $10 million, because Albuquerque deserves it:

“The communities that have been devastated by the pandemic. These are the communities that want this more than ever, so really now is the time to leave in lean in and not turn on her back on who really needs it the most,” he added…

“We have to build a bridge to hope. Yes, we need to take care of the issues we have today, but we need longer-term projects that don’t build a bridge of destitution, but build a bridge of hope. I think the state and the city have done a great job of providing relief and focusing on recovery, and now we’re at the stage that we are hopefully on the backside of this pandemic that we can focus on the resiliency of New Mexicans,” Trevisani added.

KOB-TV didn’t bother to call any state officials to see how they feel about spending $40 million on a bridge of hope, though Albuquerque Mayor Tim Keller, unsurprisingly, is not opposed to somebody who’s not him doing so. This is a really fragile delicate stage, so probably best not to bother them with questions when they’re busy trying not to turn on her back on who really needs it the most.

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World’s most expensive minor-league stadium may cost Worcester taxpayers $150m+ now, who can even keep track

I’m not exactly sure how something called the Worcester Airport Blog ended up closely covering the Worcester Red Sox‘ stadium subsidy controversy, but on Saturday it posted this:

Go to page 21 of the lease, section 4.5(b). It outlines who is responsible for cost overruns. The important sentence begins with “Notwithstanding … exceeds $18,000,000, the parties will work cooperatively to find alternative funding sources.” 

This says to us that the City may have to renegotiate with the Team if cost overruns exceed $18,000,000. Exhibit F states the cost overruns are currently $17,304,793 (as of 1/8/21) so the likelihood of there being cost overruns over $18,000,000 are probably high.

Backing up a minute: The new stadium being built to lure the Pawtucket Red Sox Triple-A baseball team to Worcester has been reported to cost a minor-league record $172 million, counting $157 million for actual stadium construction plus $15 million in “infrastructure” (mostly road work). The costs so far are broken down as follows:

  • $100.8 million in initial costs from the city of Worcester, of which WooSox owner Larry Lucchino and his partners are repaying $6 million in cash upfront, plus a little over $1 million a year via rent payments for the next 35 years. That’s been portrayed as worth $35 million, but getting $1 million in the year 2056 isn’t the same as getting it now (not just because of inflation, but because of the interest rate on bonds), so really it’s worth only, let’s go to the Present Value Calculator, use a low 3% interest rate because money is cheap right now, and we get $21.5 million. So the other $73.3 million is on the city.
  • $35 million for parking garages and other “infrastructure,” plus $3.5 million for a ballpark entryway, from the state of Massachusetts.
  • $20 million extra from the city for additional costs of acquiring and preparing the site (in part because the city neglected to account for hills requiring retaining walls so they don’t fall down).
  • Another $15 million from the city for that latest batch of road work.
  • Lucchino & Co., meanwhile, will be on the hook for the $6 million in cash, that $21.5 million worth of future rent payments, $9.5 million in added construction costs from January 2020, plus $17.3 million in new overruns this past year.

That comes to $146.8 million in public costs, and $54.3 million in team costs, which totals $201.1 million. A sizable chunk of that isn’t technically “stadium costs” — it’s costs for things like roads and garages that are needed by the stadium, but not the stadium proper — but the total cost of the project is now right around the $200 million mark.

Which, finally, brings us to that section 4.5(b) of the WooSox’ lease:

(b) Tenant shall be responsible for all Ballpark Design and Construction Costs that exceed the Cost Estimate (“Additional Ballpark Costs”) except for those that are caused, directly or indirectly, by (i) the delay or negligence of, or failure to act by, Landlord, City, or any of their representatives or contractors, including the failure to comply with the applicable Commonwealth public procurement laws, for which the Landlord shall be solely responsible; (ii) Excusable Tenant Delay; or (iii) Excusable Landlord Delay. Notwithstanding the foregoing, in the event that Additional Ballpark Costs exceed $18,000,000, the Parties will work cooperatively to find other, alternative funding sources. The foregoing cap applies to and includes any Ballpark Design and Construction Costs that are necessary in order for the Ballpark to meet the Comparable Facilities Standard.

I am, as usual, not a lawyer, but that language seems clear as mud: The team is on the hook for all overruns, but notwithstanding that, for any overruns above $18 million the city will help find “alternative funding sources” (knocking over a liquor store?) to cover the rest. If the cost overruns go up by more than that — and as noted at the top, they’re already within $700,000 of the cap — and no alternative funding sources are available, the lease is all ¯_(ツ)_/¯ about what happens then.

That’s bad, but those earlier clauses in 4.5(b) aren’t great either, since they leave open the possibility of the team claiming that overruns are due to “delay” by the city, and there’s certainly been a ton of delays and likely to be more given, you know, everything. So the total public cost of this project is probably best described as “$150 million plus or minus ¯_(ツ)_/¯” — it’s almost certainly the most expensive minor-league baseball stadium in history either way, though, so at least they can start designing the historical plaque now.

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Friday roundup: Tokyo Olympics back on, NFL doesn’t understand vaccines, and other hygiene theater stories

It was yet another one of those weeks, where you finally look up from the news that’s obsessing everybody only to find that while you weren’t looking, monarch butterflies had moved to the verge of extinction. There doesn’t seem to be an end to this anytime soon — which is pretty much the motto of this website, so let’s get on with it:

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Friday roundup: OKC Thunder want their subsidies sooner, Indy Eleven want theirs later, let me repeat back your orders to make sure I have it right

I’ve already thanked everyone individually, but I’d like to give a collective shoutout to all the readers who signed up as FoS Supporters this membership cycle. The money you send translates directly into time I can spend covering stadium and arena news for you, and I remain extremely heartened by your support. If you sent me your mailing address, your magnets should be en route; if you didn’t, send me your mailing address already, these magnets aren’t going to ship themselves!

And speaking of covering stadium and arena news, let’s cover some stadium and arena news, why don’t we:

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Could an indy league revive Hagerstown’s stadium after MLB consigned the Suns to oblivion?

Reporting on plans for what to do with stadiums in the 18 cities that were completely jettisoned from minor-league baseball (separate from the 25 additional cities that are having their paid players replaced by college interns) has been sadly lacking since last months’ hit list announcement, likely because most news media in 2021 has the attention span of a gnat and the budget of one as well. But yesterday there was some news from Hagerstown, where the Suns have been dematerialized after 40 years, leaving behind a stadium that has hosted pro ball on and off since 1930, with several renovations along the way.

The Hagerstown city council held a work session on Tuesday to explore the options, and they are, in order of appearance in the Herald-Mail, the newspaper of the Maryland-Pennsylvania-West Virginia conjunction:

  • Host some “cost-neutral local events, such as high school baseball games” or concerts.
  • Build an indoor turf facility there (likely looking something like this), so locals don’t have to travel elsewhere for sports like youth soccer.
  • Bring in a baseball team in an independent league, two of which have contacted city officials already about using its existing stadium.

All these are reasonable ideas, as is surveying local residents about their preference before moving ahead with any of them. Mayor Emily Keller said that she doesn’t want to cost local residents more money, which also sounds good; there’s also the issue of who would staff games or concerts, since the city doesn’t have staff available. (Hopefully event organizers could either bring their own staff or pay enough of a fee for the city to hire some workers.)

The indy-league baseball option is especially interesting, not so much because it’s necessarily the best one, but because there’s been so much speculation that running unaffiliated minor-league teams wouldn’t be sustainable; one exec of an eliminated minor-league team told me his organization’s research showed it would take a guaranteed 3,000 tickets sold per game just to break even. If two independent leagues are at least sniffing around — the Atlantic League has to be one, thanks to its geography and the fact that it only has six teams currently including the newly created Gastonia Honey Hunters — that’s a good sign that maybe indy leagues will fill some of the vacuum left by the contraction of the affiliated minors.

All this would be significantly easier if North American baseball ran more like European soccer, with promotion and relegation, so that Hagerstown could just find some local willing to sponsor a semi-pro team and then watch it try to win its way back up to the professional ranks. That still wouldn’t be perfect, though — somebody has to buy enough tickets to pay the ticket takers and pay for turning the lights on — so if indy leagues can fill a similar role, that’s better than nothing. It will be very interesting to see how this unfolds as the season approaches, depending on when and if coronavirus levels decline enough for that to even happen.

 

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Worcester stadium hits $157m, is now the most expensive minor-league park of all time

The city of Worcester issued an update on Friday (actually dated tomorrow, but whatever) on its new Red Sox Triple-A stadium, which is full of small-type charts and lists and generally pretty dry. But Grant Welker of the Worcester Business Journal got out his abacus and went to work on the numbers, and was able to report this:

The cost of building Polar Park, the new home of the minor league Worcester Red Sox, has risen to $157 million, Worcester officials said Friday afternoon, reflecting cost increases stemming largely from the coronavirus pandemic.

With the increase, the public facility will become the most expensive minor league baseball stadium ever built, surpassing the inflation adjusted $153-million home of the Las Vegas Aviators.

May I be the first to say: Yikes!

The WooSox owners are paying for the latest $17.3 million in cost overruns, so at least this won’t cost Worcester more than the $100 million or so in subsidies that were approved back in 2018. Still, how on earth did this project’s costs balloon so rapidly?

The last time the stadium ran into overruns, it was $30 million in added costs that, according to Welker, mostly stemmed from “unexpected costs borne by the city for obtaining adjacent parcels, moving businesses and knocking down buildings to make way for the ballpark.” (Also because Worcester officials forgot how hills work. Let us never forget that.) This time it’s undefined pandemic-related costs: Some this appears to be “we had to stop work for seven weeks and still need to finish by spring 2021 (assuming there’s baseball in spring 2021)” and some of it something about supply chains mumble mumble, but still, $17.3 million seems like a lot for that.

The WooSox also have agreed to a lease, which is good because nobody remembered to do that before approving the subsidies and starting construction; I haven’t read through it fully yet, but it looks unremarkable. And the update also includes a whole bunch of new renderings, so let’s enjoy some of those now:

That’s unremarkable enough, though it’s amusing that some ad sponsors have been specified (Shaw’s grocery store) while others still just say “SPONSOR.” (Where the first-base coaching box should be. I’m not sure that’s allowable under baseball rules.) Also the team logo appears to be a smiley face with arms and legs. And Red Sox two-time All-Star shortstop Xander Bogaerts appears to have been demoted to the minors, or maybe is there on a rehab assignment. Otherwise, nothing too alarming.

Now it’s getting alarming. Why are there giant statues of Red Sox championship rings, and what does that small child and his mom find so fascinating about them? Other than that, looks like a pleasant enough plaza, though I’m not sure it’s advisable for the couple at the far right to walk through it barefoot.

What the hell? As a parent, I know something about what kids want in a baseball-themed playground, and it would either be 1) a miniature ballpark where you can play wiffle ball or 2) a big-ass slide. Baseball-themed boulders and a basepath covered in giant golf tees seem like odd design choices, and that’s even before we get to the smiley-face mascot (which must be inhabited by either a person with an abnormally short torso or with no head) playing keepaway with a baseball bat with a small child. We are well on our way to Boschian hellscape here.

This image, of a grassy hill outside the ballpark called Home Plate Hill because it’s kind of adjacent to the home plate grandstand, I guess, is unremarkable except for the woman at left who appears to be taking a photo of her dog using a large cinnamon roll as a camera.

Big Blue Bug Solutions is, as you might expect, a pest control service. It has apparently contracted to show off its solutions for pest removal by sponsoring an area where a select few fans can enjoy close-up views of the game without any protective netting, the better to be squashed like bugs by any foul balls.

Okay, it turns out Xander Bogaerts hasn’t been demoted — or rather, he’s been demoted to an unearthly realm where various Red Sox players of the last 50 years are all consigned to play out their declining years in a minor-league ballpark. Also Jim Rice has to play first base which he never once did in real life, even though Carl Yastrzemski, who did play lots of first base, could easily be moved there from Rice’s preferred position of left field. Clearly whoever constructed this image really has it in for Jim Rice — look, he’s even batting 9th, while the unheralded Jarrod Saltalamacchia bats cleanup — which is fair, Jim Rice was one of the most overrated players in baseball history.

Finally, we have the Ecotarium, Museum of Science and Nature, which seems to consist entirely of an exhibit on pitch speed, which you would think would at least include a radar gun and a place where kids could try out their feeble throwing arms and learn something about how radar works or something. But no! It’s just a cardboard cutout of a kid throwing a ball, at a distance of maybe ten feet from a photograph of a catcher. I’m almost willing to believe that this is supposed to be a real kid but the colorist screwed up, but if so why is he being forced to deliver his pitch over a counter? And won’t errant throws grievously injure those two older kids nearby admiring the ceiling? Oh wait, I get it — the science here is medical science, and kids will be able to see it in action up close and personal when EMTs have to rush to the aid of someone who’s just been concussed by a baseball delivered to their noggin at close range! I take it back, these people totally know what will entertain a small child — can’t wait to make my first visit!

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Hartford hopes spending $100m on new restrooms and coffee bars will make arena profitable (it won’t)

A hearing on Connecticut’s planned $100 million renovation of Hartford’s sports arena has been pushed back to February so that the city can hold more talks with the owner of neighboring retail space, which, whatever, unless you’re really so bored under lockdown that you’ve resorted to watching arena renovation hearings. But the Hartford Courant article on the delay does provide an opportunity to see exactly what the state is planning to spend the money on, and why.

The state already spent $35 million on renovations in 2014 and $18 million more in 2017. Initial plans for a $250 million renovation that would have added new concessions concourses on both the upper and lower levels were rejected because $250 million, and also because hardly anybody ever sits in the upper level what with the arena mostly only hosting minor-league hockey and the occasional college basketball game. So instead the state is focusing on redoing just the lower level concourse:

The renovation will include industry standards restrooms, concessions, premium seating and other systems for the average 12,000 seats that events typically draw rather than the arena’s full 16,000-seat capacity.

The premium seating includes bunker suites at center court, a club with seating for 100 or more — both on floor level close to the action. More loge seating would be added elsewhere in the arena.

State officials hope the renovation will increase revenue with more premium seating and amenities; push the venue to make a profit, which it traditionally has not done; and reduce expenses, eliminating costly repairs to outdated equipment for which parts are difficult to find.

So, some math: The arena has previously been reported to be losing about $1 million a year in recent years. Interest rates are low right now, but even if $100 million in renovation bonds can be sold at a low rate like 3%, that’s still going to add $5 million a year in red ink to the arena’s books. So just to get the arena back to break-even, it will take at least $6 million a year in new revenues from the added concessions and luxury seating. I haven’t been able to find current concessions revenue numbers, but this article indicates that premium seating currently only generates $1.4 million a year currently, so this would require Hartford Wolf Pack and UConn basketball fans to be willing to increase their spending a whole lot to be able to sit and go on their laptops while the game plays on a screen somewhere in the background, which seems speculative, to say the least.

About that earlier article, by the way: It’s about a study from last February by everyone’s favorite dysfunctional stadium consultant, Convention Sports & Leisure, which projected that the Hartford arena renovations would indeed increase annual revenues, but would still leave the arena running about a $500,000 annual loss. The study also indicated that the arena is currently running a $2-3 million loss, not the $1 million previously reported, and that the new luxury seating would generate $3.6 million in new gross revenues, and — you know, honestly, trying to do math on CSL reports is hopeless, because they’re just number salad. But “even a consultant who’s paid to make arena renovations seem worthwhile can’t figure out how to make this one look profitable” is a perfectly legit takeaway here, if “people will spend millions of dollars more at the arena if you give them nicer bathrooms and coffee bars” wasn’t doing it for you.

 

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How MLB’s war on the minor leagues screws over both players and taxpayers

Speaking of the impacts of MLB’s minor-league putsch and downsizing plan, I have an article up at Defector today that runs down the history and strategy of the move, from its origins in the brain of Astros GM Jeff “Trash-Can-Banging” Luhnow to the ways in which it will enable big-league owners to convert entire leagues into work-for-exposure internships and turn up the heat on cities to cough up for minor-league stadium improvements. Two brief excerpts for those who don’t want to read the whole thing (though you should, I spent long enough writing it):

The nine-team Pioneer League would become an independent “partner league,” with MLB providing some seed money and a bunch of radar guns; the 109-year-old Appalachian League, meanwhile, was converted to a “college wood-bat league,” of which there are already several throughout the U.S. Though the name sounds like a training service—you young’uns come learn how to hit with real lumber, and keep your NCAA eligibility too!—in practice it means that the 10 Appalachian League teams will be replacing paid employees with unpaid ones.

And:

Shaking down bush-league cities has traditionally offered both advantages and drawbacks for baseball owners. Sure, teams had more places to threaten to decamp to—hello, Worcester!—but there were also enough teams out there that cities could hold out reasonable hope of digging up a replacement elsewhere.

With each farm system limited to no more than four affiliates, that hope fizzles, tightening the remaining teams’ monopoly on pro ball.

As noted this morning in relation to the Tennessee Smokies‘ stadium plans, reducing the number of minor-league teams — and placing the decision over which teams survive solely in the hands of MLB league office functionaries — increases team owners’ leverage in shaking down cities for new or upgraded stadiums. But while that may be the more lucrative benefit to MLB from its minor-league takeover, possibly even more alarming is that hundreds of ballplayers will now be expected to play for free, either as college students on summer break or, in the case of the new “MLB Draft League,” as college (or just high school) graduates seeking to showcase their skills to earn a spot in the MLB summer draft. As a former NLRB chair told me, this is kind of a gray area in labor law: Normally if someone tells you when and where and how to work, you’re an employee and subject to laws about minimum wage and overtime and the like; but labor law has traditionally looked the other way when it comes to college athletes, so it may well do the same in the case of college-graduates-but-still-amateurs-until-MLB-says-they’re-not.

Anyway, hopefully this is just the start of a longer discussion about baseball’s cartel power — maybe the 2020s will be the decade that antitrust action finally makes its long-awaited comeback? Plus the start of a longer relationship with Defector, which has hit the ground running after its September emergence from the ashes of Deadspin and is even offering its freelance writers decent wages and rights, against the tide of modern news (and sports) industry practice; consider throwing them some money for a subscription and a tote bag, journalism will be glad you did.

 

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