Yesterday’s Seattle Times headline “Hosting 2026 World Cup would cost Seattle millions, but almost all money would be recovered, city says” was bound to catch my eye, especially given that several North American cities had already dropped out of consideration after complaining that FIFA’s demands were too steep. So how does Mayor Jenny Durkan get to a break-even estimate for hosting the World Cup?
Providing stadium security and police escorts, arranging practice fields, holding fan festivals and covering permit fees would eat up about $7.7 million for three games and about $10.5 million for five games, say the projections by Mayor Jenny Durkan’s office…
The memo says FIFA would reimburse Seattle for the stadium, police and field costs. That expectation would appear to clash with World Cup 2026 bidding guidelines released last year, which said FIFA would ask the host governments to take responsibility for security costs.
Um, yeah, seriously. Durkan’s office implied that she received assurances directly from FIFA that security costs would be covered somehow, but didn’t provide specifics beyond saying that “the mayor has knowledge of a range of very complex contracts and projects.”
Seattle’s memo doesn’t account for potential costs related to security liability and tax breaks.
In short, it looks like Mayor Durkan’s office didn’t actually conduct a study of costs of hosting the World Cup; it merely conducted a study of costs of holding a big event like the World Cup (“These projections are preliminary and not based on information given to us by FIFA or US Soccer Federation, but rather by reviewing similar historic events using institutional knowledge and estimates for stadium game day operations”) and left it at that.
So the reassuring headline shouldn’t be very reassuring, and Seattle residents should still be concerned about being left holding a large bill for hosting the World Cup. And since Seattle, with possibly the best large stadium in North America for hosting soccer, is uniquely well equipped to be a host city, the other 22 cities on the list should still be afraid, be very afraid.
“Several dozen” Long Island residents marched in protest last week against the New York Islanders‘ proposed arena near Belmont Park, saying it would create too much traffic and construction noise. Those aren’t the best reasons to be concerned about it in my book — I’d be more upset about the crazy discount on land New York state is giving the team, if I were a New York taxpayer, which I am — but maybe the protestors are worried about that too but it didn’t fit easily on a sign.
Oklahoma City is looking for capital projects to spend the next iteration of its sales-tax hike on, and Mayor David Holt says if a maybe-MLS-caliber soccer stadium isn’t included, “the Energy won’t be here forever.” The Energy, if that name draws a blank for you, is the city’s beloved USL franchise that’s been there since … 2014? It’s only a matter of time before teams start threatening to move before they even exist, isn’t it?
Whoops, turns out Jacksonville Jaguars owner Shahid Khan isn’t buying Wembley Stadium after all, withdrawing his bid because, uh, it was probably going to get rejected anyway:
A senior FA source told BBC Sport that the board believed the odds were slightly against the purchase being backed, given the strong objections of some councillors to the home of English football being sold off.
FA chief executive [Martin] Glenn said Khan had believed his offer “would be well received by all football stakeholders”.
However, Glenn added: “At a recent meeting with Mr Khan he expressed to us that, without stronger support from within the game, his offer is being seen as more divisive than it was anticipated to be and he has decided to withdraw his proposal.”
This will likely put an end to talk of the Jaguars relocating to London, though 1) that was probably a dumb idea to begin with and 2) there’s nothing stopping Khan from still moving to London if he really wants, and just paying rent on a stadium instead of buying one.
Anyway, apparently not everything is for sale at the right price, at least in the UK. You can still buy Utah if you want, though.
A Las Vegas blogger has tweeted that the Rio hotel-casino could be demolished and replaced by a Major League Baseball stadium, so now everybody’s talking about Las Vegas getting an expansion team, along with Portland and Montreal and I forget who else. (San Antonio? Charlotte? Half of Mexico?) Just imagine how frenzied this would be if commissioner Rob Manfred were talking about expansion on a faster timetable than “in my lifetime,” or if he were older than 60 or suffering from a terminal illness or something.
Speaking of ticket taxes, a Nashville councilmember is proposing raising them at the new MLS stadium there and using the proceeds to help pay off the city’s share of construction costs. Nashville S.C. ownership is opposed, saying “this kind of after-the-fact tinkering would make the deal worse for soccer fans and set a bad precedent for the city,” neither of which is true (pssst sports teams already set prices as high as they can regardless of ticket taxes) but it’s totally what you’d expect them to say.
The projected cost of the Tokyo Olympics has now risen from $7.3 billion to $25 billion over the past five years .“It’s the most amazing thing that the Olympic games are the only type of megaproject to always exceed their budget,” Olympic finance expert Bent Flyvberg told the Associated Press. I would say that the fact that cities keep bidding for the Olympics despite this fact is even slightly more amazing, but they’re both pretty incredible.
The Oakland Raiders promised that their stadium project in Las Vegas would provide 18,700 construction jobs, but right now only about 650 workers are involved in construction at the site, and over its first year the project has employed the full-time equivalent of just 195 workers. Nevada really should have gotten that promise in writing.
The head of Mexico’s La Liga MX says that after the 2026 World Cup jointly hosted by the U.S., Canada, and Mexico, maybe the three nations’ pro soccer leagues will merge to form one mammoth soccer league. This isn’t a terrible idea on the face of it — Mexico has the soccer talent, the U.S. has the fan spending money, and Canada has, I guess, donuts — but as it would require MLS owners to share their league with a bunch of other team owners who didn’t pay the $150 million expansion fee, and probably accept some kind of tiered promotion/relegation system as well to avoid having a 50-team league, I wouldn’t hold my breath.
I’ve gotten used to newspapers running headlines that contradict not only reality but the stories they themselves head, so when I saw yesterday’s Wall Street Journal headline “Atlanta Braves Owner Says County Wins Big From Development Near New Stadium,” I assumed most of it was probably wrong. And it is, undeniably: The only thing the Braves “owner” — not specifically identified, but probably actually CEO Derek Schiller, since he’s quoted directly later in the piece — says is that (in the WSJ’s words) “taxes and other income generated by the site are helping offset some of the county’s costs incurred by the Braves’ controversial $672 million suburban stadium,” which isn’t exactly the same thing. (The article also notes that the Braves are turning a tidy profit on the sale of three apartment buildings near the new stadium, which is very much not the same thing.)
The article does, however, reference a September study from September by Georgia Tech’s Enterprise Innovation Institute, done on behalf of the Cobb County Chamber of Commerce, which claims that public debt service on SunTrust Park come to $9.5 million a year, while the stadium has generated $18.9 million a year in new tax collections and “other benefits.” That really would be winning big. So is it true?
The report (and some executive summaries) can be found here. It is, just in terms of readability, horribly written — the numbers in the charts bear no obvious relation to those discussed in the accompanying text — but here’s the best I can understand it.
In terms of public costs of the new stadium:
Debt service on Cobb County’s $300 million stadium debt is $22.5 million a year, of which the Braves owners pay $6.1 million in rent, leaving $16.4 million a year for taxpayers to pay off.
$10 million a year is paid off by two Cumberland Special Service District funds (SSDs), wherein businesses “tax themselves in order to contribute to the stadium project.”
The county is putting in $1.2 million a year to a stadium capital maintenance fund, and spending an extra $970,000 a year on public safety and other additional operational costs of the stadium.
That would seem to come to $8.6 million in remaining annual public costs, but the report says it’s $9.5 million. (The difference may be because of added cost of things like building that damn pedestrian bridge, but it’s not clear — like I said, this thing is horribly written.) This is almost exactly what the Atlanta Journal-Constitution came up with in its own calculation, so that checks out.
(There’s still one big problem here, which is that the analysis assumes that the SSD money — which is a tax surcharge on local businesses — would only come in if the stadium were built. But we’ll come back to that in a second.)
On the benefit side:
$817,000 in sales taxes on ticket and concession sales to out-of-county residents
$905,000 in hotel and sales taxes from fans who traveled more than two hours to the game, on the assumption they came specifically for the game, stayed overnight, and spent the average that an overnight Atlanta-area visitor did on food and lodging
$89,000 in sales tax on Braves employee spending (no source given for this, other than the LOCI™ computer model)
$270,000 in taxes on taxable office property in the tax-exempt stadium, including copiers and ice-making equipment
That all leaves SunTrust Park as a $7.4 million annual loss to the county, which over 30 years would be cost taxpayers about $100 million in present value — not as bad as at first feared, but also nothing like “winning big.”
Ah, but that’s just the stadium! The big benefit of the stadium, according to the report, is actually the development that the Braves owners built next to it, plus the “halo effect” of rising property values on adjacent land. This is probably best presented in a chart from the report:
In short, the Braves’ stadium remains a money pit for taxpayers, but they’re building a whole lot of other stuff that’s not a money pit, so yay, win!
The problem here isn’t one of math, but one — really two — of logic. Yes, building a stadium at a public loss next to a mixed-use development project that’s a bigger public gain is a net public gain. But who the hell said anybody had to build the stadium? If people in Cobb County are clamoring to live and work and eat in a new fake urban district in the suburbs, by all means give it to them, but unless you think they’ll only do so if there’s a baseball team playing next door 81 times a year, don’t shackle it to a money-losing stadium.
Also, if Atlanta suburbanites were indeed hankering for more places to walk around and pretend they’re in the city without actually being in the city, there’s every indication that somebody would have given it to them somewhere — just not necessarily in Cobb County. Yesterday’s WSJ article even notes that Cobb may just be benefiting by stealing economic activity from other parts of the metro area:
“We have friends in Buckhead,” one of Atlanta’s upscale neighborhoods, said Mike Plant, chief executive of the Braves Development Corp. “We hear from them. They’re not real happy.”
So basically, what we have is that the Braves owners built a stadium that is costing taxpayers lots of money, but they also held out the carrot of an accompanying development that would steal enough revenue from neighboring areas to put the final numbers in the black — if you assume that nobody ever could have been convinced to build development there without a stadium. This is indeed an exceedingly common gambit, dating way back to the Brooklyn Nets‘ money-losing-arena-plus-a-bunch-of-development plan, and dating right up to the Worcester Red Sox‘ similar minor-league stadium project. It relies on the fact that it’s nearly impossible to say if a mixed-use development would have been built “but for” the accompanying subsidies — so if you attribute all the new taxes being paid to the subsidy, any new development looks like free money.
All of this makes it very, very hard to determine exactly where the Braves stadium falls in terms of historically bad sports subsidy deals, which is precisely the point. Ancillary development projects bring in new revenues, yes, but more importantly they muddy the waters of determining who’s paying what — still nobody, including me, has a good number for how much that Nets arena is costing New Yorkers — and justify handing over public cash to a baseball team that was turning a tidy annual profit even before building new apartment buildings next to its new stadium and selling them for a 22% return on investment.
If the Braves stadium is the wave of the future, in other words, it’s less a revolution in figuring out how to absolve taxpayers of stadium costs than a revolution in how to confuse taxpayers about who’s paying for what. They’ve already succeeded in confusing the Wall Street Journal — tomorrow, the world!
[ADDENDUM: Atlanta-area sports economist J.C. Bradbury responded to this report on Twitter last month — something I missed because Twitter is but a blur passing before my eyes — and came to similar conclusions: “The report isn’t as bad as many I’ve read, but it’s estimated $18.9 mil impact isn’t correct.” He also raises questions about whether the SSD taxes are really “businesses taxing themselves” or just taxes that the county could have levied on businesses and used for other purposes, which is an excellent point that is beyond the scope of this post, because it’s long enough already, but maybe another time.]
The nonprofit that owns the Green Bay Packers is looking to get into real-estate development near Lambeau Field, something that a local real estate attorney says is part of a trend for needing to make “a destination out of the facilities” to keep people from sitting at home and watching on TV. (Bloomberg also reports that the Packers are envisioning for-sale apartments as being marketed as “second homes for Packers fans across the country,” which is either fabulously optimistic or a sign that capitalism has gone very, very wrong.) I’d say it’s more that real-estate development can be extremely lucrative, especially when your ownership of a sports team gives you a leg up on getting access to cheap land, but the “more people are sitting at home watching on TV” thing is definitely a thing — though increasingly more people are sitting at home looking at YouTube on their phones, which could present an even bigger challenge to sports marketers.
I missed it a couple of weeks ago, but the Texas Rangers have released a seating cross-section for their new stadium, and it’s somewhat misleading — as you can see, they make the new design look a bit better by moving the front row of seats closer to home plate, which doesn’t necessarily help depending on what the rest of the stadium geometry is like — but also somewhat instructive, in that the team is definitely moving the upper deck closer to the field by having it overhang the middle and lower sections more, which is a promising development. Not that this necessarily means Globe Life Field will have great cheap seats — Globe Life Park, its predecessor, has an insanely distant upper deck, at least from what I’ve been able to determine from watching games on TV — but at least it’s a move in the right direction. Of course, this is only a cross-section at one point in the stands — we still don’t know what’ll be up with the seating sections suspended in midair.
People who want an NBA franchise in Louisville say they’d consider building a new arena for it, despite Louisville already having two perfectly good basketball arenas, which is arguably even more crazy than the idea of Louisville getting an NBA franchise at all.
Just your daily reminder that the 2022 World Cup stadiums are being built by workers who aren’t getting paid, or as it’s better known historically, slave labor. From Amnesty International, via the Associated Press:
Mercury MENA worked on several projects in Qatar, including the stadium, the new Qatar National Library and a workers’ hospital and modern accommodation for labourers, Amnesty said. Workers told the human rights-focused non-governmental organisation that the firm owed them on average between $1,370 to $2,470, a huge sum for their families back home. It said one worker was owed nearly $25,000 after over a decade of work.
That’s right, math fans: One poor migrant worker spent more than ten years building stadiums and such, despite his employer stiffing him on $25,000 in pay, yet couldn’t leave because Qatari law requires an employer-signed “exit permit” before they can go home. This is the year 2018.
You can read the full Amnesty report here. Or just crawl back into bed and pull the covers over your head, both are acceptable responses.
Getting a late start this morning after being out last night seeing Neko Case, so let’s get to this:
MLS commissioner Don Garber is still beating the drum for two more expansion teams to get to a total of 28, and mentioned seven cities — Detroit, San Diego, Cincinnati, St. Louis, Charlotte, Las Vegas, and Phoenix — as possibilities, notwithstanding that Cincinnati was already picked for an expansion franchise earlier this year. Cut the man some slack, it’s gotta be hard to keep track of all the cities that do and don’t have MLS franchises yet. Maybe he could get someone to make him an app.
A $1.5 billion redevelopment of the parking lots around the Nassau Coliseum is seeking $100 million in New York state grants, despite concerns that building a $1.5 billion mixed-use development in what’s kind of the middle of nowhere without a major-league team playing there is kind of a crazy idea.
The Mobile BayBears are moving to Huntsville — as I’m sure you know, right? — and the city’s terrible lease on their 22-year-old stadium means the landowner could tear it down if the city doesn’t find a new team to move in. Don’t put all your development eggs in the basket of minor-league sports, kids, and if you do, for god’s sake get some grownups to write the lease.
Restaurateurs in Inglewood are hoping for a windfall once the new Los Angeles Rams and Chargers stadium opens in 2020. Somebody should really tell them that even with two teams, that’s only 20 games a year, so they’d better figure out how to seat 70,000 people all at once to make up for other 345 days a year when not much is going on there. (Okay, not 70,000 people at once when it’s Chargers games.)
We have new renderings of the Worcester Red Sox stadium set to open in 2021! Let’s see what one of the largest minor-league baseball stadium subsidies in history will get for the Paris of the 80s:
I’ve always assumed that people in architectural renderings come from some sort of clip art, but if so, the ones here appear to have been imported from the Wacky Poses collection. We have the kids in oversized t-shirts putting on shower caps, the woman hailing a cab on an empty street, the woman intently staring down a tree, the man with a beard down to his navel, the two guys not at all suspiciously wearing long overcoats when everyone else is dressed in shorts, and so, so much more! Really, you could make a good “Find the X things wrong with this picture” puzzle out of this image, except the answer would be “everything.” (Why are so many of the people subtly translucent, anyway?)
The stadium will have a diner! This is, I guess, one of those touches that’s supposed to show it will be a year-round economic catalyst, and not just a giant building that’s closed almost 300 days a year. I especially like how the renderers chose to add a big dorky pointer labeling the diner, rather than the way easier solution of making the diner signage say “Diner” instead of “Signage.”
They really want you to see that diner. It will, apparently, be filled with a toxic gas that will repel all potential customers and keep them at a safe distance, which is probably a good idea seeing that the customers will all be gray, featureless ghosts. (But not translucent! Only living, breathing people are translucent in WooSox world!)
WE GET IT THERE’S A DINER OKAY
Finally, the first image where we can see the inside of the stadium. Aside from being weirdly asymmetrical — is it modeled after Fenway Park, maybe, with its short porch in left and terrible right-field corner seats? — it has a rather large upper deck for a 10,000-seat Triple-A stadium. That’s not at all a bad thing, not is the fact that the upper deck appears to be cantilevered well over the lower-deck seats, but I am puzzled by what’s holding it up, since there are no columns underneath it and nothing behind it to serve as a counterweight.This image makes it ever more clear: That upper deck is just suspended off of the front of the concourse behind it by some mysterious force. Hey everybody, we may have found the location of the universe’s missing dark energy! And who can put a price on unlocking one of the fundamental puzzles of the universe?