Las Vegas’s crazy $1.4B retractable-roofed arena project announces groundbreaking

Holy crap, Jackie Robinson is really going ahead with his $1.4 billion arena-plus-shopping-district project for no one to play in:

Robinson plans a groundbreaking Wednesday to mark the construction start of a $1.4 billion arena, hotel and shopping project that has quietly moved ahead as a soccer stadium debate rages in Las Vegas, UNLV delayed its campus football stadium by two years and MGM Resorts International builds its $375 million, 20,000-seat arena behind New York-New York on the Strip.

Robinson’s privately funded arena will cost $690 million, and he has lined up an arena management heavyweight — Philadelphia-based Comcast-Spectacor — to schedule programming and manage the 22,000-seat retractable-roof arena.

Robinson apparently has pieced together $1.4 billion from realty financiers the Carlton Group and from the federal EB-5 program, which lets foreign nationals get expedited green cards in exchange for investing in U.S. construction projects, and which consequently has resulted in a lot of foreign money pouring into questionable U.S. projects. (“Apparently,” I say, because for now we only have Robinson’s word that this money actually exists.) In exchange, they will get a 22,000-seat arena that will compete with the existing Thomas & Mack Center and MGM-AEG’s new arena for concerts and maybe an NBA or NHL team — which probably isn’t coming anytime soon, and which in any case is certainly not going to pay any rent if it does, not with three arenas in the same town competing to be its home.

I know Vegas attract lots of concerts, but this still seems to be getting ridiculous — if anyone wants to nominate Robinson’s project as Most Likely to Be Sold in Bankruptcy Court Within Five Years, I’m right there with you. Or Most Likely to Be Permanent Vaportecture, for that matter. Though I would love to see what possible use they could come up with for a retractable arena roof in the middle of the desert…

Liverpool gets approval to expand stadium after wrecking neighborhood, crying blight

Speaking of Vice Sports, Aaron Gordon has a good piece up on Liverpool F.C. getting approval last week to expand its stadium’s capacity by 14,000 seats, and how it did so by secretly buying up houses in the neighborhood around the stadium, leaving them to rot, then getting the Liverpool city council to approve tearing them down as an anti-blight measure:

As of last year, Liverpool F.C. owned 150 homes around their historic stadium, Anfield. Almost all of them were vacant. “There are thieves ripping the lead off people’s roofs,” Chris Coyle, whose mother lived among the vacants, told the Liverpool Echo at the time. This was just the tip of the iceberg: the Guardian reported that over the past decade, miscreants lit some of the blighted houses on fire, threw bricks at the few remaining residents, and in 2001 a woman using one of the vacant homes was murdered. In what one resident called “dereliction by design,” Liverpool was accused of buying properties just to let them rot, driving prices down and residents out so they could more cheaply expand Anfield.

Gordon acknowledges that it’s not clear whether this was the original plan or just a lucky outcome — as he puts it, “t would be far too generous to credit Liverpool with carrying out a nefarious, coordinated plot across three ownership groups when it demonstrated so much incompetence on and off the field.” Either way, though, it’s a new twist on stadium shenanigans — I’ve seen a lot of crazy tactics over the years, but this is the first time I’ve seen a pro sports team accused of blockbusting.

Vegas council keeps soccer plan alive, but only if developers agree to nix subsidies

The Las Vegas city council met yesterday to decide whether to kill or keep alive Cordish Cos. and Findlay Sports’ soccer stadium plan, and ended up … doing neither, kind of? With four of the seven councilmembers ready to vote down the $3 million a year in city subsidies the developers were looking for, a compromise plan was instead offered by councilmember Ricki Barlow: Vote to keep negotiating with the soccer developers, but only if they agree to work to reduce or eliminate the public subsidy.

If that’s confusing to you — is it reduce or eliminate? and by how much? — then it’s doubly so to Cordish and Findlay, which were decidedly not in on this deal. “They worded it poorly,” Findlay advisor Dean Howes told the Las Vegas Review-Journal afterwards. “They have to come back and tell us what it means.” In particular, the developers want to know whether it’s just the $3 million a year that needs to be eliminated (or reduced), or if the council also wants to do away with $21 million to be provided by a TIF district, or $14 million in infrastructure help? Also, can they still ask for that pony?The upshot is that things are pretty much the same as before: A 4-3 majority on the council doesn’t want to give the soccer stadium all this money, and it’s up to the developers to come up with a plan that doesn’t require any, or at least enough less money that they can live with it. Cordish and Findlay now have two months to come up with a new plan. Or replace the councilmembers with robots. One of those two.

Swing vote on Vegas MLS stadium says she’s “leaning towards the no”

Tonight’s the city council decision in Las Vegas on sinking $3 million a year into a new MLS stadium (actual MLS team not included), and all eyes are on swing vote Lois Tarkanian, who has remained a mystery as to which way she will

I’m leaning towards the no,” Tarkanian said late Tuesday afternoon, with stadium studies and phone messages piled on her City Hall seventh-floor office table. “A stadium would be great for the city, but I think it’s a little too early. Either way, I will have a lot of people hating me tomorrow.”

Aw, come on, spoilers!

The two likely scenarios here are either that Tarkanian decides to stick a fork in the plan, or votes to kick the can down the road another two months, in hopes the stadium developers come up with a plan that doesn’t involve the city almost certainly losing money. Can-kicking is a time-honored local government tradition, so I’ll put my bet on that one, but it still doesn’t make the MLS plan anything better than mostly dead.

Vegas MLS stadium bonds would require general funds as backup, casting council vote into even more doubt

The Las Vegas MLS stadium plan, which is already holding on by the skin of its teeth, could face another major hurdle, with Vegas financial consultant Guy Hobbs noting that the city would almost certainly have to use general revenues as a backstop for its $3 million a year worth of stadium bond payments:

“In all likelihood, the city will pledge general tax revenues to secure those bonds because this source of revenue (collected room tax fees) can be renegotiated and theoretically go away and not be a revenue source that would a good pledge,” Hobbs said Monday.

“Bondholders want to make sure that the money they have paid for the bonds will be repaid to them without fail over the life of the 30 years,” Hobbs said. “You pledge a source of revenue to repay … What ultimately is at risk is the general tax revenues.”

In plain English, this means that nobody’s going to buy bonds if the only guarantee they’ll be paid off is some hotel tax money that may or may not exist. So instead, Las Vegas would need to promise that if the hotel taxes don’t come through, it would fill in the gap with other city funds.

This ultimately isn’t a huge deal — either way, the city is pledging $3 million a year, so it doesn’t matter all that much which pocket it comes from — but it’s certainly not going to help win any votes on a city council that is currently set 4-3 against continuing to negotiate the soccer stadium deal beyond tomorrow night’s council meeting. In fact, Lois Tarkanian — yes, she’s married to that Tarkanian — the swing vote on the council, is now saying she’ll only vote to keep the deal alive if the developers drop their demand for a city subsidy, and that won’t happen because:

Cordish/Findlay wants the $90 million subsidy from Las Vegas to build the 24,000-seat stadium on 61 acres in Symphony Park because the partnership argues its profit margins are too thin.

Yeah, don’t we all. Speaking of which, could you readers please deposit $90 million into my Supporters fund? My profit margins are way too thin.

CT prof replies on Hartford project: Yes, stadiums suck, it’s the rest of it that’s worthwhile

In the wake of my post on Friday critical of the excited media reception of University of Connecticut economist Fred Carstensen’s report on Hartford’s proposed minor-league-ballpark-plus-lots-of-other-stuff development, Carstensen weighed in with some long responses of his own, and then I responded to his response, and soon enough a whole bunch of us were having fun playing with the pencils on the bench there.

You can go read the whole comment thread now, but for those who are pressed for time, here are some of the highlights:

  • Carstensen’s analysis, he stresses, was of the combined stadium/retail/commercial/housing development, not just the stadium. The stadium itself, he notes, would likely be a bad deal for the city, as will the retail piece; however, adding office space that could bring in new jobs and apartment buildings that could bring in new residents could make it a net positive.
  • The REMI model that he used does account for displacement of other spending, though it wasn’t spelled out in the Hartford paper; I’m still reading through REMI’s FAQ to figure out how exactly it handles it.
  • It might well be more beneficial for Hartford to seek a development on the same site that doesn’t require a $60 million stadium subsidy, but that’s not what’s on the table here. So at least the city would be getting something positive back for its money, even if there’s no way of knowing whether it’s the best deal possible without putting the site back out for bids.

My concern remains not just that last bullet point, but the question of what happens if the stadium subsidy gets approved, then the office and residential space — all the good stuff, in city fiscal terms — never gets built. Carstensen writes via email that this is in fact something he pointed out in his testimony (but which didn’t make it into the papers that I could tell): Any deal would need to include some kind of provisions to cover the city’s costs if the rest of the development doesn’t happen, or else Hartford could be left holding the bag.

Anyway, my apologies for giving short shrift to Carstensen’s study of the project, which looks like was actually more comprehensive (and more mixed in findings) than what made it through into the next day’s reportage. This still looks like a risky project for Hartford, but he’s not the one trying to paper over the risk.

NFL’s tax-exempt status could be providing tax breaks to teams, not just league

Timothy Lavin of Bloomberg View had an op-ed up last week on the NFL’s tax-exempt status, which I set aside before reading at first because while the league’s tax exemption is annoying, it doesn’t really amount to all that much of a tax subsidy. (Because individual teams, which are what actually earn the revenue, are still taxed.)

Except that Lavin has found some potential loopholes that the NFL may be exploiting to use that tax exemption as a more significant tax dodge:

  • “First, the league’s primary business these days is no longer football, it’s financing.” The NFL’s stadium loan fund — which is really more of a grant fund, since the teams get to pay it back with revenue they wouldn’t keep otherwise — appears to allow the league to borrow money on lower terms than it would otherwise, and pass the savings on to the teams that are building stadiums.
  • NFL teams pay more than $300 million a year total in dues to the league. If that money is then used to help teams pay for stadium costs, the team owners get to treat it as a business expense rather than a capital expenditure, which allows them to write it off much more quickly.

Lavin cautions that without looking at NFL teams’ books (ha ha ha ha!), we don’t know how much they’re actually saving by these methods, so it still may not be a huge deal. But this does potentially explain why the NFL is holding onto its 501(c)(6) status, which MLB voluntarily ditched in 2007.

Either way, the benefits for teams almost certainly pale in comparison to those from the IRS’s continuing acceptance of the tax-exempt bond dodge, which saves sports teams around $150 million a year, at the expense of the federal treasury. Maybe someday Congress will get around to doing something about all this, beyond staging the occasional hearing.

Vegas MLS developers: Forget all that we-pay-you-for-your-debt business, just give us $3m a year

With a majority of the Las Vegas city council unconvinced by their revised financial plan, boosters of a publicly subsidized MLS stadium have come up with: a completely new financial plan! Now, instead of the city putting up $7 million a year or so in bond payments and getting (maybe, if the team turns enough profit) $4 million a year back in rent payments, the city would just kick in $3 million a year, and the team would put its $4 million a year into paying off new private loans, and pay no rent.

It’s the same deal as before, then, except for eliminating the risk that the team wouldn’t make enough money to make the rent payments and leave the city on the hook for more than its $3 million — which is a potentially big concession. No word yet on what councilmembers think of this, but we should find out soon enough: The council is set to vote next Wednesday on whether to keep negotiating or kill the deal dead.

Youth soccer group opposes Vegas soccer stadium, because irony

Journalists love irony, even those who don’t work for Slate, so this had to be irresistible:

The [Las Vegas MLS] stadium funding foes also include another unlikely group — the Nevada Youth Soccer Association, which represents 10,000 statewide soccer players, including 7,500 in Southern Nevada.

Soccer moms opposed to a soccer stadium! Now there’s man-bites-dog.

The problem with the MLS project, according to the Nevada Youth Soccer Association, is that it would use $3 million of city parks money, at the same time that Las Vegas is raising soccer field usage fees by $40 a kid to cover the parks department’s budget deficit. The city says the money that would go to the soccer stadium is from the parks capital budget, not the operating budget, and … moving money from the capital budget to the soccer stadium budget is easier than moving it to the field maintenance budget, I guess?

Anyway: Soccer moms opposed to a soccer stadium! There’s another week to go before the city council votes on whether to keep this deal alive, so we’ve got to kill time however we can.

MLB’s metal detector mandate likely to save no lives, ever

And finally, this has nothing to with stadium funding per se, but in case some of my readers might happen to be sports fans with an interest in the experience of attending games (just a hunch), I have an article up at Vice Sports today on how MLB’s new policy of requiring metal detectors at all stadiums isn’t likely to keep anyone safer from anything, ever. Key paragraph:

[Alabama economist Walter] Enders says that the main effect of tighter security at stadium entrances will likely be to drive any hypothetical attackers—and let’s remember that no actual terrorists have actually attacked sports venues in America outside of that time Bruce Dern tried it—to set off bombs outside stadiums instead, which would not be a happy outcome: “You’re trying to get in the door, there’s 20,000 people standing around outside. I could do a lot of damage there, just as easily as I could if I brought the thing inside. Maybe even more.”

Okay, but what’s the harm in added security checks? Aside from giving people a false sense of security, it diverts attention (and resources) from things that actually do kill fans, unlike so-far-mythical stadium terrorists. If you want to pick something that would be a minor inconvenience but would save lives, how about reducing speed limits on streets around sports stadiums by half? Or mandatory breathalyzer tests before anyone is allowed to check their cars out of the parking lot? Or even just MLB using the same money to chip in toward added police to enforce existing laws like speed limits and bans on texting while driving?As Bruce Schneier says in the article, the metal detector dictate is “security theater.” And yes, he says that about most everything, but that doesn’t mean he isn’t right.

(P.S. I should probably also remind you of this.)