Report: Economists, team owners disagree on whether stadium subsidies are a good thing

Hey, it’s another “longform” article mulling over stadium subsidies! This time it’s in the Atlantic, headlined, “Is There a Better Way to Build a Stadium?” An excellent question, albeit one that raises suspicions of Betteridge’s Law being at work here, but let’s see what author Alana Semuels has to say:

It has become widely accepted that publicly-financed sports stadiums are a bad deal for cities.

Well, yeah. The only example given here is the St. Louis Rams deal, which was indeed bad but is by no means definitive, but subsidies are long and online attention spans are short, so let’s move on to the nut graf:

What’s different in the case of Milwaukee? Either a whole lot, or nothing, depending on who you ask.

Oh, lord, this isn’t going to be a he-said-she-said “there are opinions on both sides” article, is it?

Next up is a quote from Wisconsin Gov. Scott Walker on the Bucks deal (“we think this is a good, solid move as a good steward of the taxpayers’ money here in Wisconsin”), then a counter from economist Victor Matheson (“There is a fairly big deal of hypocrisy going on particularly in Milwaukee Bucks case”), plus a cite of studies showing bad returns on public spending on stadiums and arenas. Then a confusing discussion of tax-exempt bonds (“Public financing for stadiums came about as Congress tried to limit deals that allowed private entities to profit from tax-exempt bonds,” wait, what?), then “it’s possible that the Bucks, and other teams, have learned something from the public antipathy towards public financing of arenas.” Learned how?

The team isn’t just using public funds to build an arena for itself; it is also pledging to build a seven-story parking structure alongside the arena with mixed-use retail on the ground floor and an apartment complex on the eastern side. It has hired a design team for a block of entertainment, retail, and commercial spaces, and hopes to begin building that area next year, according to spokesman Jake Suski. The team is also the master developer for the entire 27-acre development, which may someday include bars, restaurants, a public plaza, and eventually office space, multifamily housing, and a hotel.

Yeah, that’s not new at all — team owners have been building ancillary development next to sports venues for so long that I’ve already come up with and abandoned a nickname for them. (“Kitchen-sink plans,” because they throw in everything but — you can see why I abandoned it.) Then there’s lots of back and forth about whether this can work out well (conclusion: maybe), and finally a Milwaukee law professor saying, “I remain a skeptic.” And FIN.

This isn’t even an example of Betteridge’s Law so much as an example of an article that sets out to answer a question, then throws up its hands halfway through, because hell, people disagree on the answer. Admittedly, one side is the people who stand to reap a fortune in subsidies — more than $500 million, a figure that is not even hinted at in the Atlantic article, which apparently either doesn’t consider tax breaks to be subsidies or just takes Walker’s word on how much the subsidies are worth — and the other is just about every economist and independent investigator on earth, but hey, who are we as journalists to say who’s right? One thing’s for certain: No one knows.

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Rio velodrome might not be ready in time for Olympics, feel free to panic if bike racing is your thing

Speaking of sports venues that may not be ready on time, that Rio Olympics velodrome, man:

Tecnosolo, the construction company in charge of the velodrome, declared bankruptcy on Monday, causing the city of Rio de Janeiro to cancel its contract and hand it over to a different construction firm. The city government has said that construction is 88 percent complete, which is probably an optimistic estimate, given the flood of bad press they’ve been under for the entirety of 2016.

The Olympics start in ten weeks, so this is pretty much officially a crisis. That is, assuming the Olympics don’t get moved somewhere else or delayed thanks to Zika virus or Brazil’s political crisis, which lots of people think would be a good idea but isn’t going to happen — the Olympics must go on, even if athletes are afraid to show up or have to race their bikes in the street.

Rangers stadium to cost Arlington taxpayers at least $500m, many questions remain unanswered

The Texas Rangers owners and the city of Arlington unveiled their proposal for a new retractable-roofed stadium on Friday, sketching in some more of the details that had been left out of that morning’s leak:

  • The stadium would now cost $1 billion, with Arlington taxpayers’ share at $500 million. No idea why the price tag is $100 million higher than it was on Friday morning, though the conspiracy-minded will note that even if the actual cost estimate is the same, upping the target price means the Rangers owners’ responsibility to pay for all cost overruns won’t kick in as soon now.
  • For the Rangers owners’ share, they would get to use personal seat license fees plus parking and ticket tax money, which would pay off bonds sold by the city — meaning if PSL sales fell short, say, the city could end up on the hook for more than $500 million. This, you’ll recall, was the initial concern with the San Francisco 49ers stadium in Santa Clara, and though that worked out okay in the end when the PSLs sold out, it’s still an added risk for Arlington.
  • The public’s base $500 million will come from the 0.5% sales tax surcharge, 2% hotel tax surcharge, and 5% car rental tax surcharge currently being used to pay off the Dallas Cowboys’ stadium, which the Dallas Star-Telegram calls “no new taxes.” Except that the Cowboys stadium was set to be paid off in 2021, at which point those taxes could either have been eliminated or redirected toward something else — so really this is a new extension of existing taxes for as much as an additional 30 years.
  • The Rangers will continue to pay the same $2 million a year rent to the city that they pay on their current stadium.
  • The city council will vote on a stadium agreement tomorrow — apparently Texas doesn’t believe in things like public hearings — and if approved, the project will then go before voters in November, something that the Dallas Morning News entirely left out of its ten-point rundown of the proposal, which stated the stadium plans entirely in the simple future tense (“It will be open by April 2021”). Way to go, writers on the fait accompli beat.
  • While most of the existing Globe Life Park would be torn down to make way for parking lots (the new stadium would be built on existing parking lots), there could be attempts to save “parts of the facade and other historic features” at the ballpark, which is younger than all but one player on the Rangers’ current roster.

That tells us a lot more than we knew Friday morning, but there are still a bunch of unanswered questions:

  • Nobody knows how the first few years of construction bond payments will be paid off, since the taxes involved still need to keep being used for Cowboys stadium debt through 2021.
  • Will the Rangers owners pay any property taxes on the place? Who will pay maintenance and operations costs? Will Arlington get any share at all of stadium revenues like naming rights, or will the public have to pay off its share entirely from tax revenue while the Rangers get to use actual stadium income for theirs?
  • What do Arlington residents think of the deal? (The Star-Telegram ran an article headlined “What fans, Arlington officials are saying” but then apparently forgot to interview any actual fans, since the only quotes (aside from one local sports bar owner) were from current and former elected officials who supported the deal.)

But hey, there’s still time to work all that out in the next 24 hours before the council vote, right?

Here, just look at some renderings of what the final stadium design almost certainly won’t look like, instead of worrying about all that. It’s what the Rangers owners surely want you to do:

Rangers renderingRangers3

K.C. mulls plan to redo Kemper Arena with private money, plus free land and tax breaks and (mumble mumble)

Ever since Kansas City opened the Sprint Center in 2007, it didn’t need a second arena with no sports team that was failing to pay back its construction costs. But now the city seems to have found a potential reuse for Kemper Arena, former home of the Kansas City Kings and Kansas City Scouts:

The repurposing plan Kansas City officials have chosen to pursue would span the original arena floor with a second level, adding enough new floor space for seven high school-sized athletic courts. Those would be in addition to four courts that could be positioned on the existing arena floor…

If all the needed financing details fall into place, developer Steve Foutch said, the facility could be redeveloped by the end of 2017 at an estimated cost of $25 million to $30 million.

Hey, first-class youth sports facility paid for by a private developer, and getting the city out from paying $1 million in maintenance on the place? What’s not to like? Building a second arena floor in mid-air is a bit weird and bound to present engineering challenges, but at least the taxpayer cost is limited—

None of this is a done deal unless state and federal authorities agree that Kemper Arena is worthy of placement on the National Register of Historic Places. That step is necessary to apply for historic tax credits that could cover more than one-third of the redevelopment costs.

Okay, so federal taxpayers would have to put up about $10 million to preserve a 42-year-old arena that’s “historic” mostly because its roof caved in once, but that’s still not so bad—

Foutch said Monday that he is in the middle of negotiations with the city but expects to acquire the property for a “nominal” amount, given that reusing Kemper would save the city the cost of demolition.

Give the developers the arena for nothing? And presumably let them keep all the proceeds from running it? That’s a bit more dubious, but at least then the city would collect property—

Another part of the needed financing plan involves Foutch getting approval for property tax abatement. Foutch said he will seek 100 percent abatement for 10 years through the city’s Land Clearance for Redevelopment Authority.

You are trying to make me hate this deal, Kansas City! Knock it off! Sigh.

Florida to again consider $100m in sports tax kickbacks for projects already being built regardless

It’s time again for the Florida legislature to vote on the dumbest sports subsidies ever, wherein the state gets to hand out money from sales taxes to any sports organization that asks, to pay for venue upgrades they’re doing anyway, just because Florida, man. This year’s three candidates are the Jacksonville Jaguars, the Miami Dolphins, and Daytona International Speedway, which are set to receive a total of $210 million over 30 years (about $100 million in present value); the state Department of Economic Opportunity insists that Florida taxpayers will get a return on their investment via increased economic activity, though given that the work is already underway (in the speedway’s case, actually completed) whether or not the team owners get the money, it’s hard to see how this could be true.

It’s all mind-numbingly idiotic, and should be laughed out of the legislature in a sane world. Instead, naturally, we have legislators only thinking it’s a bad idea because Miami Marlins owner Jeffrey Loria ripped them off once:

“I personally have an issue where taxpayer money is being used to fund billionaires,” [House Economic Development & Tourism Chairman Rep. Frank] Artiles said. “If [Marlins owner Jeffrey] Loria actually tries to sell the Miami Marlins, he has a major windfall on the back of taxpayers.”

That Loria, he just ruined it for everybody.

Texas building $63m high school football stadium four miles from $60m high school football stadium

Looks like the world’s most expensive high school football stadium won’t be the world’s most expensive anymore, or even the most expensive in the Dallas area, after voters in McKinney approved a $220 million bond measure that includes $63 million for a 12,000-seat high school football stadium.

Superintendent Rick McDaniel let out a sigh of relief as the vote “for” results rolled in.

“We’re visionaries,” he said of district leaders. “And we believe we have a vision for McKinney ISD that will propel us forward for a long time.”

Me, I’m not so sure I’d be willing to bet that high school football will still be a thing for “a long time,” but this is Texas, so maybe football will still be a popular regional sport there long after it’s banned everywhere else. (I mean, it’s Texas, so of course it will.) At least hopefully this one won’t have to be shut down for a year and a half after it develops giant cracks, because that’s so 2014.

Renderings! From a freaky angle, with actual cars in the parking lot!

AN ARTIST'S RENDERING depicts what McKinney ISDís new stadium could look like at the southeast corner of Hardin Boulevard and McKinney Ranch Parkway. Saturday night, McKinney voters decided in favor of a $220 million bond, which includes a new football stadium and events center. Construction of the 12,000-seat venue makes up $50.3 million of the bond with another $12.5 million for stadium infrastructure being used from the 2000 bond. Depending if you want to go by the $50.3 million base cost or combined cost of $62.8 million, the stadium would rank among the area's priciest.

West Ham owner: Be glad we’re paying anything to rent London’s “ridiculous” Olympic stadium

Here in the U.S., we’re used to sports team owners justifying public stadium subsidies as a boon to taxpayers because they will create umpteen billion dollars in economic activity or whatnot, usually backed up by studies of dubious parentage. In the case of West Ham United owner David Gold, though, stung by criticism that his lease on London’s former Olympic stadium will cost the public so much in maintenance and operations that it could eat up any rent he’ll pay, he has a somewhat different argument:

“We built a stadium that was built by a number of very arrogant people that had no foresight for the future. They built a ridiculous stadium but we have made the best of it.

“It’s just ill-informed judgments and opinions. I get that. Sometimes a newspaper will pick out and its headline will be: ‘Taxpayer paying for the flags and the goalposts.’ What a fantastic headline. It gives everybody a misinformation. It sends out the wrong information that they believe the taxpayer is paying for everything and they get nothing in exchange.

“That’s ridiculous. The taxpayer is going to make a profit. It wouldn’t make a profit if you tore down the stadium and put it into a 25,000-seater, would it? Come on, how many people are going to watch the world championship hop, skip and jump?”

What Gold seems to be saying here is that London was dumb enough to spend £701 million (a little over $1 billion) on a stadium that would only be used for three weeks, so hey, at least West Ham is letting them earn something back on it. As lessons in sunk costs go, I still prefer this one — but apparently the kids today need all the help with this that they can get.

Inside of new Bucks arena looks more and more like a dystopian sci-fi movie

It’s a bit of a slow news day, so thank goodness the Milwaukee Bucks have come through with some new interior arena renderings for us to peruse while we wait for the last dregs of the week to run out:

pano3pano1v2I don’t know exactly what’s going on with that creepy dark club with the glowy rings on the ceiling — supposedly it gives fans views of both the court and the city, though given that in real life there would be more than ten people in it at any one time, more likely it will mostly provide a view of those TV screens as you crane your neck to see the score while waiting on line for overpriced food. The “corner sponsor tower” next to it, meanwhile, is even more mysterious — presumably it should have a big sponsor logo on it, but instead it’s just three levels of blank void with more of those geometric patterns on the ceilings. The interior of the levels doesn’t appear to be raked at all, so only the people at the front railing (there is a railing, right?) will be able to see the game, from a great distance, while everyone behind them will be … dancing? Enjoying presentations from the corporate sponsor of their choosing? What the heck does any of this have to do with basketball, exactly?