Las Vegas soccer stadium developer says he knows a guy who says he can get an MLS team

Justin Findlay, the guy who is working with Cordish Companies to build an MLS stadium in Las Vegas so that Cordish can keep its expiring option on downtown land open, says that he can so totally get an MLS franchise for Vegas if he only gets a stadium. How does he know? The MLS deputy commissioner totally winked at him:

He was encouraged after entertaining MLS Deputy Commissioner Mark Abbott this week in Las Vegas. Abbott met with Las Vegas Mayor Carolyn Goodman and other city officials, toured downtown and got a sense of how MLS would work in Las Vegas.

Although league officials won’t comment on expansion possibilities, you can argue the MLS brass wouldn’t have traveled to Las Vegas if it wasn’t in serious consideration.

“Hearing right from the horse’s mouth, this is really a possibility,” Findlay said. “We just have to convert on our plan. There are no reasons why these big, big dreams can’t happen.”

On the one hand, MLS brass are likely fine with touring pretty much anyplace that’s potentially going to build them a stadium, because why not? (It’s also not like anyone ever passes up a business junket to Vegas.) On the other, MLS is clearly willing to throw teams at pretty much any city with a stadium, and with only one more franchise left to be assigned in the league’s planned expansion through 2020, might as well get the bidding war heating up. Worse comes to worst, if you have too many cities (and owners) offering to throw money at you, there’s nothing stopping you from expanding beyond 24 teams — or maybe seeing if David Beckham would like to settle in Vegas instead.

Cuyahoga exec: We never said LeBron was worth $500m/year

I was traveling much of yesterday, but in the afternoon I received an email from Richard Luchette, the press spokesperson for Cuyahoga County Executive Ed FitzGerald. Luchette said that, contrary to widespread media reports, FitzGerald’s office never meant to imply that LeBron James’ return to Cleveland would add $500 million to the local economy. Rather, he said, the estimated economic benefit of LeBron’s return will be more like $53 million, bringing the team’s total impact to $500 million.

It looks like the blame here mostly goes to some terrible reporting in the initial story by Bloomberg News, which cited FitzGerald’s economic development director Nathan Kelly as saying (in its paraphrase) that “a more robust Cavaliers with James playing increases the total economic impact to about $500 million a year with direct and indirect spending,” but in its lede interpreted this as meaning “the return of the star forward to his hometown Cleveland Cavaliers will have a $500 million a year impact on the local economy” — and doubled down on the wrong with a headline stating “LeBron James’s Return to Bring Cleveland $500 Million a Year.” Though Kelly certainly could have been clearer — I haven’t been able to find a direct quote of how he brought up the $500 million figure in Monday’s press conference — and taking two days to clarify a misstatement that was all over the Internet on Monday wasn’t great work on FitzGerald’s part either.

In any event, $500 million in total annual economic impact for the Cavs is still pretty implausible: The team currently only sells $30 million worth of tickets, remember, and much of that spending would take place elsewhere in Cuyahoga County even if the Cavs played entirely before empty seats. Even if you add in spending on concessions, LeBron souvenir jerseys, hotels for fans who travel from out of town just to see Cavs games (do such people really exist?), and a multiplier for all the money that LeBron-souvenir-jersey vendors will go out and spend at local stores, it’s hard to see getting anywhere near $500 million. I’m still hopeful that Kelly will get back to me with his calculations, though, so stay tuned.

In any event, this is a great cautionary tale about economic impact statements: You can make “economic activity” numbers say just about anything you want them to, and then the press will get it wrong anyway. But at least FitzGerald got on the telly.

Ohio official says LeBron’s return worth $500m, or $50m, or something with a “5″ in it, anyway

Early yesterday, the office of Cuyahoga County Executive (and Ohio gubernatorial candidate) Ed FitzGerald, he of the “win tax,” announced that FitzGerald would be giving an afternoon press conference on just how much money LeBron James’ return to Cleveland would mean to the local economy. FitzGerald had previously claimed that county ticket tax receipts measurably went down when LeBron left four years ago — not too much of a surprise, since people stopped going to Cavs games and presumably did something else not subject to the ticket tax — so the only question was how huge a number FitzGerald was going to come up with.

The answer: $500 million. Per year.

That certainly sounds crazy, but let’s do some rough math and figure out just how crazy. The Cavs had about $145 million in total revenue last year, about $30 million of it via gate receipts, the rest from concessions, cable fees, and so on. Let’s assume that every single Cleveland fan were to double their spending as a result of LeBron’s return — buying twice as many tickets, twice as many hot dogs, twice as many cable contracts. Let’s further assume that 100% of that money would otherwise have been spent outside of Cuyahoga County if not for LeBron, because we all know how many attractions there are in the distant Cleveland suburbs. And then let’s apply a multiplier of 2x, just for the hell of it, under the assumption that all money spent on Cavs games is recirculated in the local economy, because surely NBA players cash their paychecks and immediately spend them at the local Dave’s.

This would get us a yearly impact of $290 million. Still not half a billion.

Or to look at it another way: Last year the Cavs sold 710,000 tickets, and had 132,000 go unsold. Even if the team were, let’s say, to double ticket prices next year, each of those 132,000 new attendees would have to spend $3560 apiece on their visit to a game in order to generate $500 million in economic activity.

Fortunately — or unfortunately, depending on your perspective — it’s not clear that FitzGerald himself believes that $500 million figure. Sure, his deputy chief of staff, Nate Kelly, said it at yesterday’s press conference, but the actual figures mentioned by his staff were far lower. (I’ve requested a spreadsheet or any kind of document at all detailing the economic impact data, but I’m still awaiting a promised call back from FitzGerald’s economic development aide.) From the summary published in today’s Cleveland Plain Dealer:

  • Cuyahoga County will collect about another $3.5 million in ticket taxes this year. The ticket tax rate is 8%, so that would imply an additional $43.75 million in ticket sales, which if they jack up prices to $60 a pop and go deep into the playoffs … sure, maybe.
  • Cavs fans will spend an additional $34 million a year, and the Cavs’ overall economic output would rise by $53 million. Again, that’s not unreasonable, though at least some of this spending would be cannibalized from money that would otherwise be spent on other things in Cuyahoga County, something FitzGerald’s office didn’t attempt to account for.

And … that’s it? That’s not anything close to $500 million a year, and probably not that close to $50 million a year either. The Plain Dealer called Kelly’s half-billion-a-year claim “a much more aggressive interpretation of the data,” which is a nice way of saying “we have no clue why that came out of his mouth.”

Meanwhile, the source of these numbers is in dispute as well: The initial Bloomberg News report said they came from “calculations by the Cuyahoga County Fiscal Office,” but the Plain Dealer reports that FitzGerald said his office worked with the tourism agency Positively Cleveland, drawing on a dubious study commissioned by the team in the heat of last winter’s sin tax extension battle.

In other words, this is a big-ass mess, and there’s no reason to take any of these numbers the slightest bit seriously. Yet the headlines have been written, and you know that the next time some sports team owner is looking for cash to subsidize a new arena, or tax breaks to boost his profits at an old arena, or the purchase of a new point guard, someone will point to this and say, “Keep in mind that even a single player like LeBron James can be worth $500 million a year to a local economy.” (We already went through this with the last NBA superduperstar, don’t forget.) Zombie ideas can be a dangerous thing.

Buffalo op-ed says new Bills owners could threaten selves with moving team

Yesterday’s Buffalo News had an op-ed by an economic development consultant about building a new Bills stadium, and “op-ed by an economic development consultant” should tell you all you need to know about it. But I just want to call attention to it to show how op-eds can make it into the newspaper without making a damn bit of sense. Follow the bouncing logic here:

The Bills’ new owner will likely have to come up with at least $1 billion. The average NFL team is worth $1.17 billion, according to a 2013 Forbes analysis.

Yes, NFL teams are super expensive, because they’re super valuable. Even in Buffalo.

Once a deal is struck and the NFL approves, the new owner will have to deal with the expensive – and politically sensitive – issue of a new stadium.

Okay, “need” is a bit strong, since the Bills’ current stadium is already getting $130 million in taxpayer-funded renovations, but certainly if they want a new stadium they’ll need to deal with the politics of it.

But NFL Commissioner Roger Goodell wants more. He told ESPN that without a new stadium, the Bills might leave.

Oh, okay, so if the new Bills owners don’t get a new stadium, then the team might get moved … by the new Bills owners. So they totally have to deal with this, because there’s nothing so awful as spending $1 billion on an NFL team and then having your own self threaten to move the team out from under you.

There is a teeny point here somewhere, which I suppose would go something like “Whoever buys the Bills for $1 billion is going to want to maximize their profits, and the best way to do that might be to move the team to a bigger market, even though market size in the NFL doesn’t matter much and there are no huge markets with NFL stadiums ready to go, and Roger Goodell will stand behind them on any such threat.” But that’s not what this op-ed says at all, which makes you wonder who at the Buffalo News is bothering to vet submissions for making any damn sense. Unless, I suppose, making any damn sense is less important than espousing opinions that don’t anger the powers that be. Nah, couldn’t be that.

Tokyo residents protest $1.7b freaky-looking Olympic stadium

This isn’t quite the global uprising against sports mega-events that I was wondering about, but the first major protests have hit Tokyo over planning for the 2020 Summer Olympics:

About 500 protesters took part in the demonstration while carrying signs that read “We want a compact and economical Olympics” and “Reverse the 2020 Tokyo Olympics.”

“The proposed stadium is too big,” said Kazuhisa Oriyama, one of the organizers of Saturday’s protest. “The organizers of the games need to reconsider their plans and make the public part of decision-making process.”

The new Olympic stadium, which is set to replace Tokyo’s existing 56-year-old National Stadium, would seat 80,000 people, have four times the floor space of the old stadium, cost $1.7 billion to build (down from an initially planned $3 billion), and look like yikes:

If Japan does not replace this design with one that looks less like a mammoth futuristic bicycle helmet, protestors will almost certainly continue to lock arms around the stadium and hold balloons.

Brazil’s World Cup spending could set record for least bang for buck

Last week I interviewed Holy Cross economist Victor Matheson for my article on why the World Cup is a massive money suck that doesn’t return measurable economic benefits; this weekend, Matheson himself has an article up at FiveThirtyEight analyzing which Cup-hosting nations are getting the worst back for their stadium buck, and the unfortunate champion is Brazil:

An initial estimate for Brazil shows a projected SUI [stadium use index, or pro-rated number of capacity crowds per year] that would be among the lowest of recent hosts, with stadiums in Brasília, Manaus, and Cuiabá among the least-used stadiums from any recent World Cup. This poor stadium usage, combined with the highest nominal stadium construction costs of any World Cup, leads to a projected record-high FCI [fan cost index] of over $1,000 of stadium construction costs per fan in attendance in four years.

But really, who can put a price on providing your richest, whitest citizens the ability to go watch international soccer?

The silver lining, Matheson notes, such as it is, is that Russia is already looking to spend $7 billion on stadiums for the 2018 World Cup, a number that will surely rise. And the 2022 Cup is currently scheduled for Qatar, where money (and human life) is no object. So Brazil could end up only holding the record for most money thrown down a hole for four years, or at least eight. Order those “Brazil Stadium Spending World Champions” commemorative t-shirts while you can!

If you want to sell a sports subsidy plan, state it in terms of cups of coffee

There was yet another Milwaukee Journal-Sentinel column arguing for public funding for a Bucks arena on Friday, and I wouldn’t even take notice, but columnist James E. Causey brought back the dreaded coffee analogy:

The annual cost to regional taxpayers for Miller Park is about $10, or the cost of two venti Caramel Macchiatos at the local Starbucks.

Even if the figure was $25 a year, it still would be a bargain.

Pricing stadium costs in cups of coffee has a long tradition, most notably back in 2005 when it was the Minnesota Twins seeking public subsidies, and the Minneapolis Star Tribune’s Jim Souhan wrote approvingly, “Twins owner Carl Pohlad will pay $125 million. You’ll pay less than you leave in the tip jar at Dunn Bros.” (That’s a coffee place, FYI.) The problem — other than that the annual cost of Miller Park is repeated over 30 years, so really every man, woman, and child in the Milwaukee area (Causey divides by total population, not just adult taxpayers) is out $300 — is that you can do this trick with just about any public expense you can think of and make it sound reasonable:

Anyway, the point isn’t that big expenditures spread over enough people average out to a small amount — though no doubt writers like Causey are counting on readers’ innumeracy to obscure that realization. (He also buries deep in his article the news that a Bucks arena would cost more like $25 per person per year, or five Macchiatos.) The point should be what else could you be doing with that money. For the estimated $250 million cost of a new arena, Milwaukee could open another 19 libraries, or provide financial aid to an additional 18,000 college students, or, if you prefer, cut the average Milwaukee homeowner’s property taxes by $284 a year.

Not that any of these are necessarily the best uses of $250 million. But you’re talking about how to spend public money, you need to be comparing apples to apples, not to Macchiatos.

Cowboys/Yankees-owned consultants project giant impact for UNLV stadium, because of course they do

Last week was pretty busy, so let’s check if we missed any stadium news items in all the excitement over giant impaled light switches and whether the Oakland A’s will be evicted. Okay, here we go:

Study: New UNLV stadium could pack $511 million economic punch

I should just get right back in bed, shouldn’t I? But let’s soldier on:

The study is by Conventions, Sports and Leisure International, a subsidiary of Legends Hospitality, which in turn is jointly owned by the Dallas Cowboys and New York Yankees. (Legends was set up to run concessions at their new stadiums.) CSL is also UNLV’s paid consultant on how to get a stadium built, which would seem an unprecedented conflict of interest, except that they just did pretty much the same thing for the Los Angeles Angels.

If all that doesn’t give you qualms — and it clearly doesn’t bother the Las Vegas Sun, as they never bother to mention any of these facts in their article — we can proceed to the projections, which are that an open-air stadium hosting an estimated 27 events per year would have a $231 million annual direct economic impact, whereas a domed stadium would have a $511 million annual impact. And tack on about another 50% for indirect economic impact as well.

There are a number of ways to properly convey the insanity of these figures. We could, for example, look at the stadiums projected 50,000-seat capacity and do some simple division to determine that each and every event-goer would have to spend an average of $171, mostly at games of a college football team that is currently giving tickets away for free, in order to generate that crazy money. (It’d be $378 per person in a domed stadium.) Or we could wonder how many people would really visit Las Vegas just to see a UNLV game (or stadium concert or soccer match or whatever else this place would host) as opposed to those already in tow because it’s Las Vegas who would take in a game while there. Or we could compare CSL’s figures with this handy quote from an article today in the Wisconsin Reporter on the Milwaukee Bucks arena plans:

Major League Baseball reports Miller Park generates an estimated annual economic impact of $355.7 million. Nearly 60 percent of Miller Park attendees travel from outside the metropolitan area and spend $327.3 million a year, the MLB report says.

Milwaukee Area Technical College economic instructor Michael Rosen thinks those numbers are largely exaggerated.

“This is almost double the most successful stadium, Camden Yards in Baltimore, where less than a third of the crowd at every game came from outside the area and the net gain to Baltimore’s economy was roughly $3 million a year,”  Rosen said in an opinion piece published in the Milwaukee Journal Sentinel.  “Not much of a return on a $200 million stadium investment and not close to $327 million.”

The important thing to remember here is that “economic impact” numbers are garbage: All they measure is the total number of dollars changing hands in your city, which, as Holy Cross sports economist Victor Matheson memorably put it, could be like “an airplane landing at an airport and everyone gets out and gives each other a million bucks, then gets back on the plane. That’s $200 million in economic activity, but it’s not any benefit to the local economy.”

What you want are actual revenue numbers, and CSL already gave us those last month, when it determined (through lord knows what kind of math) that a UNLV stadium would turn a $13.9 million a year operating profit, which would barely be enough to pay off a quarter of the construction cost. There would, no doubt, be some new tax revenues as well — after you filter out the people who’d be in Vegas regardless — but it’s clear we’re looking at a much smaller figure than $511 million at this point.

Still, that’s the headline that the Las Vegas Sun chose to go with. Guess they were afraid of falling behind in the local stupid article competition.

UK abandons arena renovation plan when it realizes it might have to pay for it

For more than two years now, Lexington, Kentucky has been working on a $350 million renovation of the University of Kentucky’s Rupp Arena, because the university’s basketball team said it needed new luxury seating and concession stands and bells and whistles and cupholders and whatever. Anyway, the whole plan is off, because the university says it doesn’t want any of those things now:

In meetings with Gov. Steve Beshear and [Lexington Mayor Jim] Gray over the past two weeks, university officials said they no longer were interested in those amenities. The university had agreed in principle to contribute $10.7 million annually to the project for the next 30 years. That agreement, according to letters between university and city officials, was agreed to in October.

“We designed this arena based on what UK said they needed,” Gray said. “But I understand timing and pacing are everything, especially with major projects like this. So we’ll adjust and adapt.”

What changed the university’s mind? Reading between the lines of a May 20 letter to the Lexington Convention Center from university president Eli Capilouto, it’s that “there is not sufficient public support” for the project’s funding plan. Specifically, public support from the Kentucky legislature, which Capilouto was concerned might cut off funding for new academic buildings if it had to contribute $80 million toward the arena project. Capilouto also worried about a piece of the funding plan that would raise money by selling “Team Rupp” memberships to the public for $300 each, which would earn buyers absolutely nothing, and which for some reason weren’t proving very popular.

That said, the mayor still wants to renovate Rupp Arena, the governor still wants to renovation Rupp Arena, and you can bet the university still wants to renovate Rupp Arena, so long as they’re not stuck paying most of the load. But it is a case where a sports team asked for a pile of renovation money, legislators said no, and the team backed down, so we know that can work — though admittedly, the University of Kentucky wasn’t going to threaten to move to Seattle.