Friday roundup: Another Canadian sports bailout request, and everyone pretends to know when things may or may not reopen

Happy May, everybody! This crisis somehow both feels like it’s speeding into the future and making time crawl — as one friend remarked yesterday, it’s like we’ve all entered an alternate universe where nothing ever happens — and we have to hold on to the smallest glimmers of possible news and the tiniest drips of rewards to keep us going and remind us that today is not actually the same as yesterday. In particular, today is fee-free day on Bandcamp, when 100% of purchase prices goes to artists, and lots of musicians have released new albums and singles and video downloads for the occasion. Between that and historic baseball games on YouTube with no scores listed so you can be surprised at how they turn out, maybe we’ll get through the weekend, at least.

And speaking of week’s end, that’s where we are, and there’s plenty of dribs and drabs of news-like items from the week that just passed, so let’s catch up on what the sports world has been doing while not playing sports:

Friday roundup: Dolphins owner seeks Formula One tax break, Tacoma okays soccer subsidies, plus vaportecture from around the globe!

Happy coronavirus panic week! What with stadiums in Europe being closed to fans and stadium workers in the U.S. testing positive for the virus, it’s tough to think of much right now other than what song to wash your hands to for 20 seconds (this is my personal preference). But long after we’re done with our self-quarantines, the consequences of sports venue spending will live on, so to the week’s news we go:

  • Miami Dolphins owner Stephen Ross is seeking a sales-tax exemption for tickets to Formula One racing events at his stadium, saying that without it, Miami might not get a Grand Prix. The tax break is expected to cost the state between $1.5 million and $2 million per event, but Formula One officials say each race would generate an economic impact of more than $400 million, and what possible reason would they have to lie about a thing like that?
  • The Tacoma city council voted 8-1 on Monday to approve spending on a $60 million, 5,000-seat stadium for the Reign F.C. women’s pro soccer team. According to a letter of intent approved by the council, the city will provide $15 million, while the city parks agency will provide $7.5 million more, with perhaps another $20 million to come from federal tax credits for investing in low-income communities. The parks body still has to vote on the plan on Monday as well; given that Metro Parks commissioner Aaron Pointer — who is also a former Houston Astro and a brother of the Pointer Sisters — said he doesn’t see “really any benefits at all” for the city or its parks, it’s fair to say that the vote there will be more contentious than the one in the city council.
  • Brett Johnson, the developer behind a proposed $400 million development in Pawtucket centered around a pro soccer stadium, says he has lots of investors eager to parks their capital gains in his project tax-free under the Trump administration’s Opportunity Zone program, but it might take a while to work out all the details because reasons. But, he added, “My confidence is very high,” and confidence is what it’s all about, right?
  • Nashville’s Save Our Fairgrounds has filed for a court injunction to stop work on a new Nashville S.C. stadium, on the grounds that no redevelopment of the state fairgrounds can take place without a public voter referendum. This brings the total number of lawsuits against the project to … umpteen? I’m gonna go with umpteen.
  • There’s now an official lawsuit against the Anaheim city council for voting on a Los Angeles Angels stadium land sale without sufficient public meetings. The People’s Homeless Task Force is charging that holding most of the sale talks in private violated the state’s Brown Act on transparency; the city’s lawyers responded that “there could be a myriad of reasons” why the council was able to vote on the sale at a single meeting in December despite never discussing it in public before that, though they didn’t suggest any specific reasons.
  • Wondering what vaportecture looks like outside of North America? Here’s an article on Watford F.C.‘s proposed new stadium, though if you aren’t an Athletic subscriber you’ll be stuck with just the one image, though given that it’s an image of Watford fans stumbling zombie-like into the stadium out of what appears to be an open field, really what more do you need?
  • There are some new renderings of the St. Louis MLS team‘s proposed stadium, and once again they mostly feature people crossing the street, not anything having to do with watching soccer. Are the clip art images of people throwing their hands in the air for no reason temporarily out of stock or something?
  • Here are photos of a 31-year-old arena being demolished, because America.
  • The Minnesota Vikings‘ four-year-old stadium needs $21 million in new paneling on its exterior, because the old paneling was leaking. At least the stadium’s construction contractors will be footing the bill, but it’s still an important reminder that “state of the art” isn’t necessarily better than “outmoded,” especially when it comes to new and unproven designs.
  • And speaking of COVID-19, here’s an article on how travel restrictions thanks to the new coronavirus will cost the European tourism industry more than $1 billion per month, without wondering what else Europeans (and erstwhile travelers to Europe from other continents) will do with the money they’re saving on plane tickets and hotel rooms. Where’s my article on how pandemics are a boost to the hand sanitizer and canned soup industries?

Pawtucket soccer developers announce plans to seek Trump tax breaks for stadiums in Baltimore, Cleveland, and more

The story of the $45 million Pawtucket minor-league soccer stadium seeking upwards of $70 million in tax breaks and the story that the United Soccer League is seeking to leverage Trump’s Opportunity Zone tax-break districts for more stadiums just had a baby, and it is this:

Fortuitous Partners Brett Johnson and Berke Bakay announced that they are looking to do developments in Baltimore, Cleveland, and other cities around the country…

Johnson during the interview said that Fortuitous Partners is also looking at Baltimore, MD; Cleveland, OH; and other cities for their opportunity zone driven sports complex model.

Opportunity zones, as I’ve written before, sound simple but get fiendishly complex in their details. On the surface, they’re just like other tax-subsidized districts like “enterprise zones” and “empowerment zones,” where developers get a tax break for building in “disadvantaged” areas, which is theoretically supposed to help the disadvantaged residents. (A report by Good Jobs First notes that the results of those earlier subsidy zones have been “not encouraging,” with little in the way of new economic activity and even less in the way of new jobs for locals.)

But the tax break that an opportunity zone earns a developer is a weird one: You get exempted from paying capital gains tax, but only on businesses that are owned by a “qualified opportunity fund,” meaning developers (or soccer teams) would likely need to set up a new shell corporation to own whatever it was they wanted to dodge taxes on. How that works, and what the IRS will let investors get away with, is still being figured out — the Trump administration implemented opportunity zones without really figuring out first how they would work, which is kind of turning into its brand — but clearly these Fortuitous folks think they know how to do it, or at least are trying to get dibs on lots of opportunity zone land for soccer stadiums and then will figure out the details later. Baltimore and Cleveland journalists, you might want to get on this, if there are any of you left.

Pawtucket proposes $70m-plus in tax kickbacks for $45m USL stadium

There’s a winner in the competition to build on the riverfront site where the Pawtucket Red Sox turned up their noses at building a new stadium, and it’s … the crazy soccer stadium complex with the mountains in the background! (Helpfully blurred out in the latest rendering.) And according to the Providence Journal, while the USL stadium itself would only cost $45 million, the bigger project would stand to make a lot more than that in tax kickbacks:

The stadium would be the first piece of a larger, multi-part, mixed-use project Fortuitous is calling “Tidewater Landing,” that would take advantage of federal “Opportunity Zone” tax breaks…

The plan hinges on approximately $70 million to $90 million in public support, most of it from the state through a “tax increment financing” plan that allows the developer to use a portion of new tax revenue generated around the development to pay for construction. That total includes infrastructure like the pedestrian bridge, public parks and river walks on both banks of the Seekonk.

The bigger project includes 200 apartments, 100,000 square feet of shops and restaurants, a 200-room hotel with an “indoor sports event center,” and 200,000 square feet of office space, though it’s not clear whether all of that needs to be built in order for the tax subsidies to kick in. Also not clear: Where all of that $70-90 million would come from — the Journal says only $10 million would come from the city, so would some of it be state sales tax kickbacks? (Or maybe they mean that it would be $10 million in cash and the rest in tax increment financing, which somehow isn’t “city money” because Casino Night.) Also, why wouldn’t it require state legislative approval even if this would be a state-designated tax redirection zone. So many questions that the Journal could have answered, or at least asked!

All in all, this Pawtucket plan exemplifies a whole bunch of trends in the modern stadium game: throwing money at pro soccer because there’s a seemingly infinite number of available expansion franchises there (both in MLS and in the lower-level USL), providing public money via TIFs because it’s easier to pretend this is new money generated by the project even when it’s not, and the “kitchen sink” approach where you throw as many unrelated items into a development project as possible in order the muddy the financial waters to where everyone just throws up their hands at figuring out who’s being subsidized for what. Plus Opportunity Zones, the Trump-created tax break that is so confusing even tax experts aren’t sure how exactly it will end up working, and the ever-more-popular model of approving sports subsidies without legislative oversight. It’s the perfect crime. Er, downtown development project. I surely don’t know why I typed “crime.”

Rendering of Pawtucket soccer stadium ends up revealing USL scheme to exploit Trump opportunity zones for federal tax breaks

Journalism takes all forms in these days of vanishing budgets and vanishing newsrooms, and sometimes it’s somebody spotting something on a website and going whuh?

That is, as the Valley Breeze notes, an image of a new soccer stadium and accompanying development on the Seekonk River in downtown Pawtucket. True, as the paper notes, this version of Pawtucket is “missing some downtown features and shows mountains in the background,” but clearly somebody at least went through the trouble of Photoshopping a soccer stadium onto some alternate-reality Pawtucket, which has to mean something.

And the Valley Breeze reporting staff (actually Valley Breeze managing editor Ethan Shorey, who in the absence of a masthead I’m guessing is the entire Valley Breeze reporting staff) went to the trouble of calling developers Fortuitous Partners and asking about the picture, and got confirmation that they’re “pursuing a $400 million project” in Pawtucket. Fortuitous — whose founder Brett Johnson also owns the Phoenix Rising F.C. USL team — was previously reported to be interested in building a USL soccer stadium on the site previously rejected by the Pawtucket Red Sox for a new baseball stadium. And Johnson had more to say about the project:

He described United Soccer as the fastest-growing sports league in the world, saying the company is exploring more than 60 markets that all have the potential to bring soccer, and leveraging the opportunity zones in every case.

Now that’s some news. Not the “exploring more than 60 markets” part — that doesn’t mean we’ll actually get 60 USL teams, though we’re already getting close. No, the interesting bit is that USL apparently plans to pick its stadium sites by locating teams in “opportunity zones,” the new Trump-created districts that allow developers to defer or evade entirely paying capital gains taxes on projected in “undercapitalized” areas.

As Billionaire Boondoggle author Pat Garofalo has reported, 52 existing major-league stadiums and arenas are already in opportunity zones. But because the main benefit to an opportunity zone is placing assets in an “opportunity fund” and then letting them gain in value tax-free — the language is hideously complex and even the forms are incredibly confusing, but that’s the best I’ve been able to figure out based on reading up on OZs and talking to tax experts — it seems like it would hold special appeal to investors looking to create a whole new entity, say a USL team, and then holding it within an opportunity fund so that the inevitable gains when USL teams turn out to be worth hundreds of millions of dollars despite everybody and their sister having one would be tax-free.

If you’re hoping for a dollar figure or even a guesstimate on how much this would cost the federal treasury, we are way too early in the game for that, sorry. But it is an indicator of how obscure changes in tax policy can shift an entire industry’s approach to its business model; sort of the way the 1986 Tax Reform Act’s okaying of using tax-exempt bonds for sports facilities helped spark the torrent of new publicly funded sports venues that followed. Capitalist free markets obey rules, yes, but those rules are set down by government policy, and tweaking one or two can make a huge difference in who gets to earn money how — which is no doubt why billionaires stayed up all night phoning Congressional legislators to get OZs passed into law.