DePaul arena hits $110 million in cost overruns, thanks to too-soft dirt

When last we heard from Chicago Mayor Rahm Emanuel’s plan to spend $125 million on a complex of buildings that would include a new arena for private DePaul University, it had just gotten final approval. Except that “final” is always a dangerous notion in the arena biz, something Chicago is finding out now that the price tag on the arena has soared by $110 million:

A sticking point is the “dug-in” design of the 10,000-seat arena, which places its playing floor well below ground level. That feature has pushed construction costs above the $140 million that McPier and city officials optimistically projected when they announced the project in May 2013, sources said.

Although a final price has not been set, the cost of that design, by New Haven, Conn.-based Pelli Clark Pelli, could be as much as $250 million, sources said.

Yeah, that’s not good. Apparently the problem is that nobody noticed they were going to be building the arena in soft glacial soil, which tends to cave in if you don’t shore it up with retaining walls, which is pricey. From the sound of it, McPier (the totally awesome nickname for Chicago’s Metropolitan Pier and Exposition Authority) will look to redesign the arena to bring down the price tag; if that doesn’t work, Crain’s Chicago Business gives precisely zero information on how the cost overruns would be covered. This was just the bestest idea ever!

[UPDATE: At least one Crain’s Chicago Business columnist does not think it was the bestest idea ever.]

NY Post says NHL is going to give a Vegas expansion team to the Maloofs, BWAHAHAHA

The NHL gets lots of crap for being the league that lets people buy teams without bothering to check if they actually have the money to pay for them, and this is only likely to add to its legend: Yesterday’s New York Post reported that the NHL has already approved an ownership group for a not-yet-approved Las Vegas expansion team, and part of that group is the Maloof brothers. Yes, the Maloof brothers who campaigned against their own arena referendum in Sacramento, who threatened to move the Kings to Anaheim and Virginia Beach and Las Vegas before being forced to acknowledge that all those things weren’t happening, who had to be all but forcibly removed by the NBA in order to bring in an ownership group that the city of Sacramento would actually deign to give arena subsidies to. The ones who ESPN the Magazine ranked as the worst owners in all of pro sports. Those guys.

There’s still no timetable for a Vegas team, or any clear idea where it would play (though lord, will they have plenty of options), or really any confirmation of this beyond the unsourced Post report. But it looks like if and when the NHL expands, it’s extremely likely that we will have the Maloofs to kick around again. Rejoice, people.

 

St. Petersburg mayor said near deal for buyout of Rays’ “don’t even think about stadiums elsewhere” clause

“People who have talked recently” with St. Petersburg Mayor Rick Kriseman say that he is hopeful of reaching an agreement with Tampa Bay Rays owner Stuart Sternberg on a deal to allow Sternberg to talk to other local cities and counties about building a new stadium there. That’s current verboten under the terms of the Rays’ lease, but Kriseman has apparently decided that everything has its price:

[St. Petersburg council chair Bill] Dudley, who meets with the mayor weekly, said one critical element would be monetary compensation for the city if the Rays leave for Hillsborough before 2027, when their contract to play at Tropicana Field expires.

“I don’t know what the number is,” Dudley said, but added that city lawyers are working on contractual language “to protect our interests.”

That’s actually reasonable enough — as I’ve noted before, making the Rays stadium situation Hillsborough County’s problem, while getting some cash out of the deal (during negotiations with former mayor Bill Foster in 2013, Sternberg reportedly offered $2-3 million per year, or approximately one Jose Molina) and potentially freeing up the Tropicana Field site for redevelopment wouldn’t be the worst outcome for St. Petersburg. Of course, Foster tried this too and got nowhere, but supposedly Kriseman is close enough to a deal that he thinks he can present one to the council by year’s end, which is something. Then all the Rays and Hillsborough need to do is find $400 million in unmarked bills lying around somewhere, and they’re home free!

D.C. United report says city would make money on priciest MLS stadium ever, because [CALCULATIONS NOT INCLUDED]

As noted yesterday, now that the elections are safely over, the D.C. council has finally issued its report on the D.C. United stadium plan, and man, oh man, is it long. The report totals 406 pages, which I have done my best to look through and pull out the main takeaways. So, bullet points ahoy:

  • The first item of importance to note is the big logo at the top of page one, which belongs to Conventions, Sports & Leisure, one of the consultancy firms that specializes in these kind of economic impact studies. And when I say “specializes,” I mean that they do a lot of them, not that they necessarily do them well — CSL has a track record of crazy-high impact estimates, landed in hot water for conducting a stadium impact statement for the Los Angeles Angels when their parent company had recently signed a deal to run the Angels’ concessions, and is owned by the Dallas Cowboys and New York Yankees, which kind of puts a crimp in their claims to objectivity. But let’s not prejudge their work entirely based on past results — so, soldiering on…
  • Still on page 1: “All information provided to us by others was not audited or verified, and was assumed to be correct.” Given that those “others” mostly consist of D.C. United itself and the city officials who are backing the stadium plan, should we really read the other 405 pages?
  • At $286.7 million, this would be the most expensive MLS stadium ever. D.C. would  be on the hook for $131.1 million of that, plus $50 million in sales and property tax breaks, which jibes pretty well with my $178.5 million subsidy estimate from earlier this year.
  • The district would be overpaying for stadium land by $19.4 million and getting $11.2 million less for the city-owned Reeves Center than it’s worth. That’s not so much an added cost as a potential savings left on the table, but duly noted.
  • The stadium would create 1,683 full-time equivalent jobs, which would be right around the typical craptacular $100,000-per-job-created cost for most stadium projects. If the job projections are correct, of course — they appear to come not from any estimate of how many people would actually work at the stadium, but rather by plugging the total projected economic activity into a formula and calculating it that way, which is awfully dubious.
  • The stadium is expected to generate $109.4 million more over a 32-year period (why 32 years? why not?) in city revenues than it costs the city. This claims to account for both leakage (new spending that is generated outside D.C., such as when fans stay at hotels in Virginia) and substitution (spending that is just cannibalized from other local spending, say, if fans cut back on Nationals or Wizards tickets to go to more United games).
  • There are other problems, though: First off, the report doesn’t compare spending at a new stadium with current spending at RFK Stadium, instead counting all spending as new — on the grounds that “it is likely that D.C. United would relocate to another market if a new stadium is not developed in the District,” though really then you should be deducting the amount of old spending that would get redirected to other things (Nats, Wizards, whatever) in D.C. if the team were to leave.
  • Second, the report estimates that 73% of fan spending would be new to D.C. — and says this figure accounts for leakage and substitution — but doesn’t indicate where that figure comes from. If, as I suspect, it’s from D.C. United’s own figures on how many fans come from out of town, then there’s a huge problem here: Many people from out of town are already in town for other reasons and just choose to go to a sporting event while they’re already there. (I know the last time I went to a Nationals game, it was as a side trip for going to the Smithsonian and such, not the main course.) And while, as I discussed in the Nationals case, D.C. is a bit less susceptible to substitution thanks to so many people living outside the city limits in the Maryland and Virginia suburbs, they tend to come into D.C. for a night out anyway, so it’s dicey to assume that if they weren’t in town for a soccer game, they’d otherwise be spending all their hard-earned cash out beyond the Beltway.
  • D.C. will need to lay out its money before D.C. United even puts together the financing for its part of the deal, which raises “the potential risk of non-performance   by the developer.”
  • The subsidies are the only thing keeping United in the black on the deal: Even just without the tax breaks, “team/stadium operating revenue is not expected to cover debt payments until year 19 (2035).” In other words, United wouldn’t be making money on the stadium, they’d be making money on the subsidies.

There’s more — it’s 406 pages, how could there not be more? — but those appear to be the major points. The upshot is: The industry usual suspects say, using figures provided to them by the team and not otherwise checked, that D.C. should earn back a small profit on the stadium, provided all their assumptions about who’s spending what where are correct. That’s a lot more questions than answers raised, which makes it all the more unfortunate that the D.C. council has now left itself with only a month or two to make a decision on the stadium plan — unless, of course, they decide to kick it back to after January 1, with a new mayor and a new council. We shall see.

Vegas MLS plan shunts $25m to parks, asks “Now can we have our money?”

Las Vegas city officials have made their first attempt at “reducing or eliminating” public subsidies for a proposed MLS soccer stadium, as required by the city council, and it involves … spending more money, but on parks?

Las Vegas city officials are working on a plan to help deliver a new downtown soccer stadium by packaging the soccer venue with four possible park projects and a parking garage under a $45.7 million to $50.7 million bond proposal. … Parks were included in the new funding plan after many residents voiced concerns that hotel room tax revenues that were used to pay for city parks projects would be re-directed to help pay for the $200 million, 24,000-seat soccer stadium.

Okay, that can’t be it. What else did they say?

“They get to eat what they kill,” [city manager Betsy] Fretwell told council. “It becomes their risk, not ours.”

I’m sorry, what?

The city would still borrow $46 million to $50 million, by paying $3 million annually for 30 years, Council Member Bob Beers said.

“It’s a reduced public money approach, not an elimination of public money,” Beers said after the council meeting.

Translated into English, this appears to mean: The city would still borrow the same amount of money and spend $3 million a year to pay it off, but about half of that would now go to parks funding instead of stadium construction costs. Another $20 million from sales tax increment financing bonds would go to build a parking garage, which the soccer team could use, but which visitors to the Symphony Park cultural center could also use.

This is an improvement on the old plan, certainly, in that the total stadium subsidy is now  around $45 million, which is way better than the roughly $90 million that was originally floated. Whether it’s a good deal is another question — the councilmembers who were skeptical before still sound skeptical, so we’re likely to see lots more haggling before the final vote on December 17. Which is a good thing — haggling is exactly what city councilmembers are supposed to do when presented with a request like this. Keep on doing what you were elected to do, Vegas councilmembers! Show us that democracy isn’t irrevocably broken!

Missouri governor to announce task force to decide how much ransom to pay Rams not to move

After months of silence on both sides, Gov. Jay Nixon will hold a media conference call Wednesday to discuss the Rams’ stadium situation and the next step towards keeping the team in St. Louis.

Oh boy oh boy I can hardly wait—

Expectations are that there will be no specific details on the stadium plan discussed in the conference call, but according to sources familiar with the situation, such plans will be made public by the end of the calendar year.

It is expected, however, that Nixon will talk about formation of a committee or task force to deal with the stadium issue.

Aw man, St. Louis Post-Dispatch, come on, spoilers!

There’s actually been relatively little action on the Rams stadium front since the city/county/state-controlled tourism board decided to tear up the team’s old lease the summer before last rather than give the franchise $700 million in required improvements, the legacy of the worst lease ever. (You can either interpret that as team owner Stan Kroenke waiting on public officials to make him an offer, or on him biding his time until he can move to Los Angeles, take your pick.) If nothing else, Nixon’s announcement is expected to kick off the official start of stadium dickering season, marked as always by a long, pointless Ken Belson article in the New York Times.

(For those new to this site and unfamiliar with the oeuvre of Ken Belson: Here, read up.)

The latest exercise in Belsonism wanders around through the obvious (Kroenke wants a new stadium, stadiums are expensive, voters don’t like spending money on stadiums), before arriving at what could be a point, kind of, about the possibility of the Rams relocating to L.A.:

“If they do it properly, it’s hard to see how the Rams would qualify to relocate under existing league rules,” Marc Ganis, a consultant to several N.F.L. teams, said of the governor’s task force.

The league’s relocation guidelines designed to prevent teams from moving willy-nilly are extensive. When other owners consider whether to let a team move, they look at whether a team is profitable, received public financing and made credible attempts to build or refurbish its stadium. According to Forbes, the Rams are worth $930 million, the least of any N.F.L. team, yet they generated $16.2 million in operating income last year. At least three-quarters of the owners must approve any relocation.

Yes, the NFL has rules on the books saying that it has to give existing home cities a chance to keep the team, but be serious — this is mostly just an exercise in butt-covering, so that they can justify any relocations on the grounds of “The old city didn’t mount a serious offer.” (Or to help shake down cities for serious offers. Take your pick.) If the other NFL owners decide that it’d be a good thing for Kroenke to move the Rams to L.A. — which will mostly depend on whether Kroenke thinks it’s a good idea to move the Rams to L.A., which will depend on whether he can get a better stadium deal in L.A. than in St. Louis, which right now looks doubtful but it depends on what kind of St. Louis offer has to be beat — they’re not going to let any stinking bylaws get in their way. C’mon, Marc Ganis, you’re the next best thing to an official NFL economic consultant, you should know that.

If nothing else, at least this article adds to our long list of crazy things Ken Belson has put into print, with:

The owners will have to weigh many other factors, including whether a team in Los Angeles will hurt the Chargers in San Diego, and whether abandoning St. Louis, the country’s 21st-largest television market and home to several big sponsors, will hurt the league.

That’s right, the New York Times’ chief sports business writer has wondered aloud whether leaving St. Louis for Los Angeles will hurt TV contracts and sponsorships. It is truly a strange and wonderous world we live in.

Fort Worth voters approve spending $225m on a new arena for rodeo and, um, that’s about it

Forget about control of the U.S. Senate, and whether the crazy guy who tried to rig the unemployment claims process won in Maine: I know what you want to know this morning. You can’t wait to hear whether Fort Worth, Texas voted to pay half the cost of a $450 million, 14,000-seat arena for no teams in particular.

And the answer is: Do you even have to ask?

• An admission tax on each ticket to events at the venue, at a rate not to exceed 10 percent of the ticket price, was passing with 79.02 percent of the vote.

• A tax on each stall or pen used by livestock during an event at the venue, not to exceed $20 per stall or pen for any event, had 76.85 percent “for” in early results.

• A parking tax, not to exceed $5 for each vehicle, was passing with 72.22 percent.

These are actually pretty reasonable ways to fund an arena, if you have to fund one: All of them come from actual arena operations, not generally applicable tax revenues. Of course, the arena will also be funded by the local share of state hotel tax money, and if all those ticket taxes and such fall short of expectations the city will have to come up with the missing funds from somewhere, but how could an arena that’s too small for major pro sports possibly have a shortfall? I mean, think of all the concerts!

Matthew Harbor runs one of the area’s largest concert and event promoters, SPUNE. He said his company loves doing events in Fort Worth, but he isn’t sure a venue that will only have 13,000 to 14,000 seats (depending on the concert) will draw major entertainers away from established venues, like Dallas’ American Airlines Center.

“It is certainly possible, but I would not place much hope on winning that battle on an ongoing basis,” he wrote in an email to News 8.

Um. Well. That still leaves the livestock show and rodeo, and, um. Well.

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.