FC Cincy mulling Kentucky tax kickbacks to pay its entire stadium cost, and other week’s news

All the news that wasn’t fit to print this week:

  • FC Cincinnati now wants the Port Authority of Greater Cincinnati to own its stadium since Hamilton County doesn’t want to. (Does “own” mean “pay for”? Reply hazy, ask again later.) Or maybe Newport, Kentucky, since, according to team president and former city council members Jeff Berding, that would allow the team to recoup its entire $100 million through tax increment financing kickbacks of property taxes paid on the property. How would it generate a whole $100 million in TIFs? Reply hazy, ask again later.
  • Would-be Seattle arena builder Chris Hansen hired University of Washington public finance professor Justin Marlowe in May to compare the economic impact of his Sodo arena proposal to that of the KeyArena renovation plan, and he has issued his report, which says that the Sodo plan would create three times as much tax revenue for Seattle ($103 million over 35 years vs. $34 million for Key). On the other hand, the Key plan would include some kind of sharing of arena revenues, though that wouldn’t kick in until the Key developers got their share, and, yeah, basically it’s a muddle. On the whole, it seems to give the edge to Hansen’s plan, if only because that arena would pay property taxes, but I’d need to sit and break down the math to say exactly by how much, and I’ve been waiting for time to do that all week, so clearly it’s not happening. Reader exercise!
  • Oakland A’s executive VP Billy Beane promised that once the team gets a new stadium, it will stop trading all its decent players once they start to get expensive: “There’s only one way to open a stadium successfully, and that’s with a good, young team. … Really what’s been missing the last 20 years is keeping these players. We need to change that narrative by creating a good team and ultimately committing to keep them around so that when people buy a ticket, they know that the team is going to be around for a few years.” Which could make sense if a new stadium draws enough fans that having a winning team boosts revenues enough to pay for player salaries, though we’ve heard this song and dance before elsewhere.
  • The Nashville Sounds‘ new stadium was supposed to cost taxpayers $37 million, but it ended up costing $91 million.
  • What does $74 million in public subsidies buy Minnesota Timberwolves fans and staff? New seats, new restrooms, new locker rooms, an ice floor that doesn’t leak, two new loading docks, and a big glass wall, because everybody’s gotta have one of those.
  • The athletes’ village from the 2016 Rio Olympics is now a wasteland of unsold condos, because everything the Olympics touches turns to trash.
  • A homeless camp has arisen on the site of the planned Las Vegas Raiders stadium. Make your own metaphors.

No, there’s no reason to believe eight US cities are getting $2.4B in cricket stadiums, jeez

You know, I’ve now seen a whole string of articles reporting that San Francisco, Chicago, New York, New Jersey, Washington, DC, Atlanta, Orlando, and Dallas are all going to get new cricket stadiums as part of a $2.4 billion dollar spending spree by the organizers of a new professional cricket league, and I feel it’s my duty to say: No, they’re not, everybody chill. At least, they’re not any more than when Global Sports Ventures announced it with a press release back in January, then proceeded not to announce any actual stadium plans over the next six months. Here’s an SBNation interview where GSV chair Jay Pandya talks about how starting a pro cricket league (note for anyone who actually cares about cricket: really a T20 league, which isn’t regular cricket) is totally something that could happen because some Americans traveled to Australia to watch the cricket World Cup and there were three exhibition games in the U.S. in 2015.

Not asked in that interview, or any of the recent articles: Why on earth should we take seriously a business plan that involves trying to earn back $2.4 billion in stadium investments by selling tickets to a version of cricket that most cricket fans don’t even like? It’d be kind of rude, I know, but that’s what journalists are there for, right?

County officials: No big money for Cincy MLS or arena redo, but maybe tax breaks or something

Hamilton County commissioners continue to make unhappy noises about funding either a new FC Cincinnati stadium or a renovation of Cincinnati’s arena, saying they have a lot of priorities other than new sports facilities right now:

All three commissioners are wary of repeating the mistakes they say county and city officials made more than 20 years ago, when new stadiums for the Bengals and Reds saddled county taxpayers with huge financial obligations.

“We’ve all lived to regret that,” said Commissioner Todd Portune.

Fellow Commissioner Chris Monzel said building stadiums, including the two the county already owns, shouldn’t be the business of county government.

“We have two facilities already,” he said. “That’s two too many.”

That’s pretty cut and dried, then, and—

The commissioners did not, however, rule out the possibility of helping proponents of a new arena and soccer stadium, even if they don’t approve a large public investment. While putting a higher sales tax on the ballot is the most likely way to raise big money, the county and city could pursue more modest measures, such as donating land, granting tax breaks or seeking help from state and federal grants.

So it appears the commissioners just don’t want to own a new stadium, but they’re maybe open to giving it public money? Or, more likely, they’re sending a signal that $100 million is a lot of money, and raising the sales tax just to renovate an arena that only really needs minor upgrades is a little nuts, but maybe ask for less and we’ll consider it. Which could be a reasonable “let’s not close any doors” approach, or could be a way to tell constituents that they’re not throwing money down any more stadium holes while secretly considering doing just that, or a combination of the two.

Phoenix Rising plans MLS stadium, let’s not worry about cost or how it’ll be paid for

In the mood to read an entire article about a new stadium plan that never discusses how much it will cost or who will pay for it? Then Soccer Stadium Digest has you covered!

Phoenix Rising FC, once considered a dark horse in this race, is one of the only candidates facing none of the obstacles to stadium development that hampers other markets…

[blah blah blah]

Situated at the intersection of major Valley arterials Loop 101 and Loop 202, the complex is an easy drive from…

[blah blah blah]

In May, the club secured financing with Goldman Sachs, which recently structured both Banc of California Stadium in Los Angeles and Audi Field in Washington, DC.

[etc]

Okay, yes, Phoenix Rising FC has partnered with Goldman Sachs as “structuring agent” for its stadium plan, but that just means they’ll be the bank that they borrow stadium funds from. How much will a 25,000-seat stadium cost? Dunno. Who’ll pay for it? Team execs have previously said it won’t require “public funds,” but as we all know, there are lots of means of getting taxpayer subsidies that can be counted as not public funds. (Tax kickbacks, for starters.)

It’s entirely possible that Phoenix Rising is set to build a new stadium on its own — as Orlando City SC (mostly) did — in which case it’d be worth applauding. (As much as one should applaud a private business for doing what private businesses should do without trying to fob costs off onto the public.) But it appears that the USL club’s owners aren’t being very forthcoming about their cost or funding plans beyond “don’t worry about it,” and the Phoenix-area and soccer media isn’t pressing them on it, which, c’mon guys. It’s fine to be excited about a possible new MLS team, but try to remember to do your jobs while you’re at it.

WashPost says economists predict $100m in MLB All-Star Game impact (spoiler: they don’t)

Hey, look, it’s another headline — this one in the Washington Post — claiming that hosting a sporting event would have huge benefits for a city:

The 2018 MLB All-Star Game could bring $100 million to D.C., economists say

If you actually read the article, only one economist is cited — Anirban Basu of Sage Policy, a consulting firm — who says that the All-Star Game has averaged $60 to 100 million in “economic impact.” (Remember, “impact” isn’t actual public revenues, it’s just money that changes hands in your city.) That seemed high to me, so I checked in with College of the Holy Cross economist Victor Matheson to see if he knew of any other studies. And lo and behold, he actually co-wrote one in 2001. It’s a bit involved in terms of stats and regression analysis, but in short, it says: Once you control for all the other variables that you’d expect to cause economic growth (as seen in other comparable cities), the actual impact of the MLB All-Star Game appears to be negative:

Our detailed regression analysis reveals that during the period 1973 to 1997, All-Star Game cities had employment growth below that which would have been expected. Instead of an expected gain of around 1,000 jobs in the year a city hosts an All-Star Game, employment numbers in host cities have actually fallen more than 8,000 jobs below what would have been expected even without the promised $60 million All-Star boost.

Is this one study, which looked at All-Star Games from 1973 to 1997, absolutely conclusive? No, of course not. But if journalists are going to assert that “economists” think something, they might want to at least google for what economists think, or even put in an email to one who’s actually studied it. (Matheson replied to my query within a couple of hours. On a Saturday.) Instead, the Post’s Alex Schiffer appears to have only contact (or read a press release by) Basu, a guy who says this stuff about the All-Star Game every year, and who appears to come up with his numbers just by assuming every ticket sold is new money to the economy, and then slapping on a multiplier. But then, Schiffer appears to be on the reprinting corporate press releases beat, so maybe we should cut him some slack … nah.

No, I don’t think the $38m PawSox stadium subsidy plan is a “win-win,” here’s why not

Joe Nocera, late of the New York Times op-ed page, has a new Bloomberg View opinion piece up titled “You Can Pay for a Ballpark Without Fleecing Taxpayers,” which namechecks this site and even provides a link, for which I should be grateful. Nocera and I failed to connect before it was published, though (he emailed me, I didn’t respond in time), so instead he is going to get berated here for misrepresenting my perspective, because that’s just how I like to bite the hand that feeds me clicks.

Anyway, here’s Nocera’s nut graf, where he brought me into the story:

In searching “Field of Schemes,” the go-to website for news about sports stadiums, I came across a rather different story, about the efforts of the Pawtucket Red Sox, the Triple-A minor league affiliate of the Boston Red Sox, to get a new ballpark. Although the dollars are far smaller (though not so small for Rhode Island), it does show that a team and a government can put together a deal that includes public financing but doesn’t hose the taxpayer. It’s kinda heartwarming, actually.

From there, it goes into a long, accurate description of former owner James Skeffington’s demand for $60 million in stadium subsidies, threatening to move the team out of Rhode Island if he didn’t get them. And then a long, not quite as accurate description of how after Skeffington’s death, team part-owner Larry Lucchino asked again for only $38 million in stadium subsidies, where the “city and state would receive a revenue stream that would not only cover the debt service but would probably make it a profitable venture for the government,” and “there were no threats” to move the team.

Okay, couple of things here. First off, the only revenue stream that the city and state will receive is “tax revenue generated in and around the stadium” — i.e., money that the city and state would normally collect anyway, but which would now be siphoned off to help pay for stadium construction costs via a tax increment financing district. There’s no way to reasonably project how much the TIF fund would collect — these things have failed spectacularly before — and more to the point, this is regular old tax money, not any actual revenues that the team would be giving up to help repay the public’s debt.

Secondly, about that “no threats” thing — not only did Lucchino just last week say he was going to look into moving the team out of Rhode Island, after promising two years ago not to do so until 2020, but Nocera actually linked to my post on that in his article. So, WTF, Joe?

Anyway, if Nocera wants to opine that the new PawSox deal is a better one for the city than the old one, it’s his column. (And he’s certainly right that it’s a better deal than Miami got for the Marlins stadium, though there are bank robberies that were better deals than that one, so that’s a pretty low bar.) But for the record, I would never call the new Pawtucket stadium plan a “win-win” — more of a “well, at least we got them to knock a few million dollars off their ridiculous subsidy demands, even if they’re still threatening to move Worcester.” Sadly, that’s a less grabby headline, but I’ll go with what I’ve got.

Thanks for your patience, FoS supporters, now here’s some fresh swag

This has been a bit of an up-and-down year for this site — thanks to my Village Voice responsibilities, I’ve been more pressed for time than usual, which means the breadth of coverage here hasn’t been quite as sweeping as in the past. (If you’ve been waiting on the latest about plans for a new minor-league arena in Richmond, my apologies.) I’m tentatively hopeful for a saner work schedule in the coming months, so the posts here should be a bit more consistent going forward.

So with it being time for my biannual funding appeal, I’d like to offer supporters of this site something that is 1) special and 2) easy for me to fulfill, so you don’t end up waiting on me to find free time to learn how to silkscreen T-shirts or anything. (Brooklyn Wars Kickstarter backers, sorry about that.) And I think I’ve come up with something good: An updated version of the Field of Schemes coffee mug that I used to offer here for sale. I still need to finalize the design (CafePress redid their templates since I did this last, so I’m waiting on getting a sample first), but it’ll look something like this:

I have one of the originals in my cupboard, and I can vouch that it’s held up beautifully through hundreds of trips through the dishwasher. (If you can’t make out the quote, it’s economist Allen Sanderson’s classic “If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest in a new ballpark.”)

Since these are a bit pricier to produce and ship, they’ll only be available to those who choose the $100 one-year full supporter level. For that, you’ll also get a Field of Schemes Supporter pin, a set of Field of Schemes stadium trading cards, an e-book copy of my 2016 book The Brooklyn Wars, and one year of ad space (running in rotation with other site supporters) in the top right corner of this page — provide your own 90×250-pixel ad, or talk to me and I’ll whip something up. And, of course, the knowledge that you’re supporting the work I do here, because those Google ads don’t really pay the bills.

Don’t have $100 to spare? That’s fine — you can also do a $50 six-month membership, and get everything above except the mug. Or a $25 one-year minisupporter membership, and get everything except the mug and the ad space.

Confused? Click here for a simple list of the goodies you receive at each member level. Or just look in your wallet, see how much spare change you have, and then click the appropriate button below. I’m appreciative for anything you can give — and for those who can’t give anything, thanks for continuing to read and comment and share and give purpose to this site. I like to think it’s had at least some impact over the last — wait, has it really been almost 20 years? Crap, I’d better come up with some really cool swag for 2018…

Thanks,

Neil


Options



Yankees’ terrible “community benefits fund” is even more terrible than you imagined

After the New York Yankees and Bronx elected officials set up a charitable organization in 2006 to assuage fears that the team’s new taxpayer-subsidized stadium would be bad for the local community, the charity came under fire for being used as a slush fund by its Yankees-appointed administrator and for handing out lots of money to dubious nonprofit groups that may not actually have been nonprofit. The New York Times completed an in-depth investigation into the New Yankee Stadium Community Benefits Fund yesterday, and it turns out everything is on the up and up — ha ha, no, of course not, it’s an even worse train wreck than was suspected previously:

An examination of the fund’s public financial records and interviews with community members and a former administrator of the fund show that it has operated with little oversight or public accountability, neglecting those who live near the stadium and instead sending money to other, often wealthier parts of the Bronx that were not affected by the construction.

The fund also regularly donates to organizations with which it shares common board members. And although the Yankees provide $35,000 a year to cover operating expenses, the fund in 2011 began to allocate 10 percent of the grants it awards to cover its own “additional administrative costs.” Those costs have never been publicly explained…

Of the $6.8 million distributed by the fund between 2008 and 2015, the last year for which records are available, only 30 percent — $2 million — went to charities occupying the same ZIP code as Yankee Stadium or four bordering ZIP codes.

The best way to get money from the Yankees’ community fund, it appears, was not to be in the Yankee Stadium neighborhood that had just lost its central park space for multiple years to make way for construction of the team’s new stadium, but rather to have friends on the charity’s board: the New York Botanical Garden, which has fund chair Serafin Mariel (the same guy who was sued in 2009 over misappropriation of funds) on its board, got $20,000, and the Bronx CUNY Scholarship Fund which Mariel co-founded, got $60,000. And the organization’s annual reports have never been publicly released, going only to the Yankees, who won’t share them. Oh, and the Yankees claim 15,000 tickets a year as an “in-kind donation,” but don’t say who they’re given to.

All this leads up to the best quote in the whole article, and really one of the best quotes in any article:

[Former city councilmember Maria del Carmen] Arroyo [who helped set up the fund with then-borough president Adolfo Carrion] said she did not remember how the board was selected. When asked about some of the board members’ political ties, she said: “This is a small city. You can’t go very far without knowing anyone.”

So who’s to blame for this? The Yankees owners, for setting up a Potemkin charity just so that the city council could claim that the stadium would be good for the South Bronx before voting for it almost unanimously? Or the Bronx pols who turn every policy decision into a way to funnel money to their political donors? That’d both, I’d say, since one hand nicely washed the other here. It’s yet another reminder of the dangers of community benefits agreements — and that if you must do a CBA, for god’s sake, at least have the city government be a signatory to it, so that there’s some opportunity for oversight. Because letting a sports team owner claim credit for doing good works on the grounds of “don’t worry, I’m good for it” is a recipe for disaster.

Stadium architects dream of holographic players, and other Friday news

Hey, know what we haven’t done in a while? A Friday news roundup. Let’s do one of those now!

Happy weekend, everybody!

Bill to outlaw tax-exempt stadium bonds still wouldn’t end all subsidies, c’mon Darren Rovell

Oh, Darren!!!

Darren Rovell, ESPN Senior Writer

A group of politicians who are tired of taxpayer money being used to build sports stadiums on Tuesday will introduce a bill in the Senate to prohibit the practice.

Darren, Darren, Darren. You know that’s not what the bill would do. You say it in your very next paragraph: “Cory Booker, D-N.J., and James Lankford, R-Okla., are sponsoring a bill that would prohibit teams from using municipal bonds, whose interest is exempt from federal taxes, to help finance stadium construction.” (Actually only tax-free municipal bonds, but close enough.) So why do you perpetuate the myth that ending the use of tax-exempt bonds for stadiums would stop all sports subsidies, any more than it did when President Obama tried it two years ago?

If you want a good writeup of what the Booker-Lankford bill does and doesn’t mean, hie thee to Vice Sports, where my friend/editor (freditor?) Patrick Hruby lays it all out for you, including:

  • The $3.7 billion that the Brookings Institution calculates tax-exempt stadium bonds has cost the federal government since 2000. (Darren has this at $3.2 billion, which is what’s in Booker’s press release, but that’s just the amount of benefits that stadiums have received; $3.7 billion is the amount it’s cost taxpayers because some of the money just ends up in the pockets of bond buyers.)
  • This has been proposed before and gone nowhere, and it’s likely to fail again (though bipartisan sponsorship is nice, I guess).
  • “Booker and Lankford acknowledge that their bill won’t prevent localities and states from smashing the public piggy bank to pay for sports stadiums; in fact, they all but brag that local governments will be allowed to finance future stadium subsidies with ticket and in-stadium purchase taxes.” This is an apparent reference to a clause that would allow using targeted sales taxes on in-stadium purchases to pay off stadium costs, which Booker and Lankford seem to think they can’t do now — or maybe it would just allow cities to use targeted sales taxes to pay off tax-exempt bonds, which indeed they can’t do now thanks to the “generally applicable taxes” test. Except that if tax-exempt bonds can’t be used for stadiums at all anymore … clearly I need to find and read the actual legislation.

For more on the history of tax-exempt stadium bond ruless and how they became a money pit for federal taxpayers despite being intended to do the exact opposite, see my Vice Sports article from two years back. And while you’re reading up, check out Hruby’s article from last week on the “Death Star” federal tax proposal that would actually shut down stadium subsidies once and for all, if only anybody would seriously consider it.