Amazon subsidies and sports stadium subsidies are each terrible in their own special way

If you didn’t already get enough links to read from today’s weekly news roundup, and didn’t hear enough of my thoughts on Amazon’s $4 billion payday as it compares to sports subsidies, I’ve elaborated on my thoughts at length in an article that just went up this morning at Deadspin. Some sample takeaways:

  • Jeff Bezos will be getting more public cash than any single sports venue, but at least he’ll be employing actual full-time workers, so the cost-per-job ratio won’t be as dismal as in sports deals (though it’s still probably pretty bad).
  • Just like we’ve seen in sports deals, here are tons of hidden costs to the Amazon agreements, from infrastructure slush funds paid for with public tax dollars to federal tax shelters set up by Donald Trump that will cover Amazon’s New York headquarters, even though they were supposed to be for impoverished areas and Long Island City is decidedly not.
  • As in many sports deals, Amazon’s subsidies will evade most public oversight (in New York, anyway), and were arguably unnecessary at this level given that the company, like sports teams, undoubtedly ended up locating in the market that it wanted to anyway.

Or if you want to skip to the ending: “The Amazon deal is ultimately another step in the legitimization of government by extortion, where the nation’s richest men can withhold ‘job creation’ as a condition of not having to pay taxes, or commute without a helicopter.” But go read the whole thing, it’s way more entertaining than the bullet-point summary above, or at least way more packed with pop-culture references.

Amazon just walked away with maybe $4B in public cash for doing what it was going to anyway

In case you somehow missed it, Amazon made it official this morning that its new 50,000-person second headquarters was going to be split into two 25,000-person sites, one in the Long Island City section of New York City and one across the river from Washington, D.C., in Arlington, Virginia. (Nashville, Tennessee, will also get an “Operations Center of Excellence,” which is maybe not the name you want to give your corporate outpost if people are already worried your company is an Orwellian nightmare.)

Attached to its press release, Amazon included the full memoranda of understanding for the New York, Arlington, and Nashville deals — since my purpose in life somehow seems to have evolved into reading these damn things and figuring out what’s hidden in them, I sat down to write up an analysis of the New York deal for Gothamist. The upshot: Between the city and the state, Amazon will cash in at least $2.5 billion in checks from the public (and probably more like $3 billion — see update below) in the form of tax breaks and other goodies. With Jeff Bezos in line for about another $1 billion from Virginia and a pittance of $60 million from Nashville — hardly worth counting the bills, honestly — that’s about $4 billion that America’s richest man will be raking in for the trouble of holding a year-long bidding war before doing whatever he wanted anyway.

A few further notes on this, from our usual perspective of sports subsidies:

  • Damn, that is a chunk of change. Yes, an Amazon headquarters is arguably more valuable than a sports stadium — there’s no way even the busiest sports venue will employ 25,000 workers, and those it does employ only be there a few hours a day during the season of whatever sport it hosts — but even the Steinbrenners have never managed a $4 billion payday. Neither did Elon Musk. (Though Boeing did, and celebrated by laying off workers.)
  • Modern subsidies are really hard to keep count of. Amazon’s press release fessed up to $1.5 billion in subsidies from New York and $573 million from Virginia, but that didn’t count $200 million from each state for bonus jobs created over 25,000, nor a $300 million infrastructure fund in Arlington, nor about $1.3 billion in off-the-rack tax breaks from New York City (I included $900 million of those in my Gothamist article, the New York Post’s Nolan Hicks found another $386 million), nor an additional infrastructure slush fund that will be created in New York from payments in lieu of property taxes. I’ve been staring at this thing all day and I still don’t feel 100% confident there aren’t additional hidden costs lurking about — which is par for the course for both sports and non-sports subsidy deals.
  • Subsidies aren’t what determine location decisions. We’ve seen this before in sports, where team owners have used the threat of going elsewhere to shake down the cities they already want to be in for cash. But it’s especially bald-faced in this case, where other states offered as much as $8.5 billion for Amazon’s hand, only to have Bezos say, Sorry, our first love is big cities where techies want to live. At which point you have to wonder: If Amazon was going to go to NYC and D.C. anyway, why did those locales bother coughing up so much public money? As with sports venues, cities could be thinking, “These people on the other side of the table need us more than we need them” — but they’re largely not.

Anyway: New York just threw a giant wad of cash at Amazon, Arlington can comfort itself that its wad is at least a bit smaller, and all the cities that missed out don’t get the new jobs, but do get to keep their money. There’s probably a lesson in here somewhere, but given that everyone involved is steadfastly refusing to learn it, it’s hardly worth spelling it out.

Friday roundup: More MLS expansion drum beating, more wasteful non-sports subsidies, more bonkers Tottenham stadium delay stories

Getting a late start this morning after being out last night seeing Neko Case, so let’s get to this:

Friday roundup: Bucks say arena can fight racism, Rays in line for federal tax breaks, Falcons to get glowing bridge

Slow news week thanks to the holiday, but there were still a few items of note:

  • Milwaukee Bucks president Peter Feigin thinks his new publicly funded arena will help fight segregation because it’ll have a public plaza. The Chicago Tribune notes that the Bucks owners once released a strongly worded statement of support for one of their players after he was tased by Milwaukee police, so … nope, I don’t get the connection either, unless this reporter was assigned to cover Feigin and couldn’t find much else to say about his bizarro statement, so just googled “Milwaukee and race and basketball” and dumped the results into a Word file.
  • The Sacramento Kings owners are going to use computers at their arena to mine cryptocurrency for charity, which mostly serves as an excuse for the team to issue a press release mentioning themselves in the same sentence as blockchain, because we know that’s a thing. Too bad the earth is going to burn as a result, but everything’s a tradeoff, right?
  • Ybor City, where the Tampa Bay Rays want to build their new stadium (price and funding still TBD), has been tabbed as a federal “economic opportunity zone,” meaning developers can use it as a short-term tax shelter for profits that are reinvested into the area. The program is way too complicated for me to calculate at the moment just how much U.S. taxpayers would end up paying toward a Rays stadium, but suffice to say it’s one more piece of the funding puzzle that team owner Stuart Sternberg doesn’t have to worry about himself.
  • Speaking of the Rays, they’ve announced they’ll release new renderings of their stadium plans next Tuesday, which I guess makes this announcement itself vaporvaportecture?
  • The Atlanta Falcons pedestrian bridge that will now cost Atlanta residents $23 million is going to glow! And who can put a price on that, really?
  • Since it was a slow stadium news week, here’s a bonus article on how Nevada giving $1.4 billion to Tesla to open a battery factory there is looking to be a disaster, with the state ending up losing its entire budget surplus while new workers attracted to the area have driven up rents and increased local government’s police, fire, and schools costs, leaving residents with a higher cost of living and fewer services. One unemployed local who was forced to move into a motel room listed for the Guardian things she now considered unaffordable luxuries: “Ice cream. Bacon. A movie ticket.” It’s a fun weekend beach read!

Friday roundup: Tons of news, but you’ll forget it all once you see that Houston is spending public money on a pro rugby stadium

And in other news that doesn’t involve proposed Tampa Bay Rays stadium sites:

  • United Airlines is spending $69 million on naming rights to the Los Angeles Coliseum in advance of the 2028 Olympics, but IOC rules prohibit corporate names during the Olympics, oops. Hope you enjoy the most expensive college-football naming rights deal in history, United!
  • Hotel revenue fell 16% in San Diego last year after the Chargers left town, but went up 0.2% in St. Louis after the Rams left. I’m not honestly sure what if anything this means — you’d really have to look at hotel revenue on football weekends to do this right, and it doesn’t look like this study did — but feel free to speculate wildly.
  • Did I mention the Yahoo Finance article yet that compares the Amazon HQ2 chase to the competition to host the Super Bowl, and cites me saying that while Amazon will bring more jobs, “that said, there’s almost no way it’s worth the kind of money that cities are talking about”? Well, now I have, enjoy!
  • AL.com has recalculated the public costs of a proposed University of Alabama-Birmingham football stadium and come up with a total of $18.2 million a year — $10.7 million from a bunch of county taxes, $3.5 million from a new car rental tax surcharge, $1 million from other county funds, and $3 million from city funds — not the $15.7 million I had previously reported. UAB and a naming rights sponsor and other private contributors, meanwhile, would only put in $4 million a year, and only for the first ten years. Out of his goddamn mind, I tell you.
  • Norman Oder of Atlantic Yards Report filed a Freedom of Information Law request to see the competing bids for the Belmont Park site that eventually got awarded to the New York Islanders, and was shot down on the grounds that it would “impair present or imminent contract awards.” Wait, wasn’t the contract already awarded? Will it be okay to ask again once it’s too late to do anything about it?
  • The WNBA’s Chicago Sky are moving to the new DePaul basketball arena that the city of Chicago helped pay for, which I guess is marginally good for Chicago in that it gets to steal a tiny sliver of economic activity from Rosemont, screw those guys, right? (Actually, Rosemont is apparently a gated community, so maybe screw those guys.)
  • A New Orleans Pelicans game was delayed because the arena roof leaked. No one is demanding that a new arena be built just yet that I’ve heard, but given that the current one is 19 whole years old, it’s gotta to be a matter of time, even if this one does have a fire fountain.
  • The Pittsburgh Pirates are threatening to sue the city-county sports authority over who’ll pay how much for $10 million in improvements to their stadium, because apparently the people who write these stadium leases are idiots.
  • If you enjoy this site but were thinking, “Wouldn’t this be better as a YouTube video with lots of animated charts?”, Vox has got you covered.
  • The Houston city council has approved spending $3.2 million in tax dollars on a pro rugby stadium for the Houston SaberCats, who are a pro rugby team that is going to play in a pro rugby league, which councilmember Jack Christie calls “a beautiful example of public-private partnerships that we ought to look at in the future, because as far as I have heard, there’s not been one city tax dollar used for this development.” I’m done. Have a good weekend.

Friday roundup: Naming-rights woes, Austin update, and the World’s Largest Chest of Drawers

It’s Friday already? Seems like we were just doing this, but the pile of stories in my Instapaper queue says otherwise, so away we go:

  • The Florida state house has again passed a bill that would ban building or renovating private sports facilities on public land, which would potentially affect the Tampa Bay Rays, among others. This is kind of a dumb idea, as we discussed back in October, since there’s nothing wrong per se with putting stadiums on public land so long as the public gets a good deal for it; a far better plan would be a Seattle-style bill to require that local governments get a return on their investment in any sports lease project. But then, this bill already passed the Florida house last year and died in the senate, so probably not worth getting worked up over too much just yet.
  • Sports Authority agreed in 2011 to pay $6 million a year for 25 years for the naming rights to the Denver Broncos stadium, and now Sports Authority is bankrupt, and Metropolitan State University of Denver marketing professor Darrin Duber-Smith is saying I told you so: “My big warning was, ‘I’m not sure Sports Authority is a big enough or healthy enough company to commit that much money from their marketing budget each year.’ And I was right.” The Broncos are now looking for another company to pay $10 million a year for naming rights, and haven’t found any takers yet, hmm, I wonder why?
  • Chelsea F.C. will get to move ahead with its new-stadium plans after the town council used a compulsory purchase order — like eminent domain, surely you’ll remember it from that Kinks song — to clear an injunction that a nearby family had gotten on the grounds that the new stadium would block their sunlight. The purchase order isn’t actually seizing their home, but the land next to it, which is enough to invalidate the injunction; not that this doesn’t raise all kinds of interesting questions about the use of state power for private interests, I’m sure, but man, don’t you wish this were the only kind of stadium controversy we had to put up with in North America? League monopoly power over who gets a franchise is a bad, bad thing.
  • High Point, North Carolina is spending $35 million on a stadium to bring an indie minor-league Atlantic League baseball team to town, and City Manager Greg Demko says this will help the city’s commercial tax base recover, because “the construction of a stadium is like an anchor for the revitalization and development of a downtown.” Demko is going to be so disappointed, but at least he got mention of his city in a Bloomberg article as “home to the World’s Largest Chest of Drawers,” and you can’t buy publicity like that.
  • New Seattle mayor Jenny Durkan says that while it’s “a longshot,” it wouldn’t be impossible for Chris Hansen to build his Sodo arena while OVG renovates KeyArena at the same time. I’m going to interpret the tea leaves here as “Hey, if you want to spend your money to try to compete with another arena across town, be my guest,” but stranger things have happened, maybe?
  • The city of Austin has issued a report on eight possible sites for a stadium for a relocated Columbus Crew, and are now waiting on Crew owner Anthony Precourt to tell them which, if any, he likes. A consultant for Precourt has since ruled out a site or two, but it looks like nothing might be ready for the city council to vote on February 15 as planned; Austin MLS lobbyist Richard Suttle says the problem is “between the holidays, flu season and winter storms, it’s been slow going.” It’s not quite helping to spark women’s suffrage, but the flu still reminds us who’s boss from time to time.
  • Now that Amazon has announced its short list of cities that will get to bid on its new second headquarters, it’s time for another look at how to stop corporations from launching interstate bidding wars to be their homes, which once again leads us to David Minge’s 1999 bill for a federal excise tax on public subsidies. “Of all those offers [made to Amazon] there’s one obvious one that should have been made and it should have come from Congress,” University of Minnesota economist and former Minneapolis Federal Reserve research director Arthur Rolnick, who helped Minge concoct that bill, tells CityLab. “Now if that offer were on the table it would end it, it would end the bidding war. Then Amazon would simply base its decision on where location is best for business.” It’d work for sports leagues, too!

Friday roundup: Austin MLS vote, Rays demand $650m in subsidies, Islanders renderings, more!

I’m busy trying to figure out whether Congress is really going to rewrite the tax code to give a couple of trillion dollars to rich people or will melt down at the last second like it did with healthcare repeal, so this’ll be in superbrief mode this morning:

Chicago developer offers stadium to Amazon as part of HQ deal, just because, okay?

I’m sorry, what?

A Chicago developer is offering a unique perk in the all-out competition to win Amazon’s second headquarters: Amazon Stadium.

Sterling Bay’s proposal to bring as many as 50,000 Amazon headquarters workers to its Lincoln Yards development includes the potential for a sports and concert venue near the Chicago River.

The developer describes preliminary plans for “a world-class sports and entertainment stadium” in the materials obtained by the Tribune.

And look, there’s a rendering:

That is indeed a stadium, and it indeed says “Amazon” on the field, where there appears to be a soccer match going on. (The Amazon logo is going to be sideways when viewed on TV or by the vast majority of fans in the grandstand, but they can always tweak that later.) The question is: Why? Does Sterling Bay really think that Amazon would like a sports stadium as part of its corporate headquarters, for when the company is bored with dominating retail sales and streaming video and wants to monopolize sports, too? Is this part of some gambit to move the Chicago Fire out of Bridgeview, leaving the suburb with its massive stadium debt that it already can’t pay off? Is it just trying to get “Sterling Bay” associated with “stadium building” in the public mind, so that next time a stadium needs to be built, they’re the ones who get the call?

I think maybe let’s just go with “When a megacorporation like Amazon dangles jobs as a carrot, both local elected officials and local developers tend to lose their minds.” This is so going to make the Tesla subsidy shakedown look like penny-ante stuff, I’m afraid to even watch.

Friday roundup: Tampa official stonewalls, Falcons get sued, Amazon is the new Olympics

Okay, let’s do this thing:

“United States of Subsidies” just scratches the surface of corporate welfare

I’ve been asked by some readers for my thoughts on “United States of Subsidies,” the New York Times series that ran last weekend on the massive amounts of public money ($80 billion a year, by their reckoning) spent by local governments to get companies to relocate or remain in their cities.

I finally had a chance to read it last night, and briefly: I think it’s a decent primer on the problem of corporate welfare and the industry that has grown up to support it. (My favorite bit is probably the nugget buried way at the end of the second article, where a subsidy consultant actually sued computer chip manufacturer Advanced Micro Devices for not seeking a tax break the consultant had recommended. Though the bit about Michael Moore getting subsidies for his anti-corporate-welfare movie “Capitalism: A Love Story” is pretty good, too.) It’s way too focused, though, on companies that accept subsidies and then leave town, and not enough on whether those that stay put and don’t actually do anything for their communities — like the famed Minnesota Dairy Queen that listed on their subsidy form that they had used their $275,000 in public cash to create exactly one minimum-wage job. Likewise, the series gives a bit too much credence to the notion that mayors and other local officials are forced to play this game for fear of being left without any corporate presence, when studies have shown that companies make their location decisions more on the presence of infrastructure (good schools, roads, etc.) than on whether they’re being offered tax breaks — though obviously, they’re happy to take the tax breaks from a locale they want to move to anyway.

All of this has been covered at length before, largely by the pioneering subsidy watch group Good Jobs First, whose Subsidy Tracker provided the bulk of the data for the Times series, and whose director Greg LeRoy penned the original study of local-level corporate subsidies (“No More Candy Store,” available for free here) as well as an excellent book on the subject (“The Great American Jobs Scam,” available for money here). And as Good Jobs First’s Phil Mattera notes on their Clawback blog, the Times apparently screwed up its math in calculating its total subsidy figures:

After getting our raw data, the Times did not consult with us on exactly how it would be used. We thus had no opportunity to warn the paper against the perils of aggregation. Specifically, we were not aware of the paper’s plans to create what it calls its $100 Million Club. [This] ends up with numerous instances in which the totals understate the true amount the big subsidy grabbers have received.

For example, the Times lists a total of $338 million for Boeing, including $218 from South Carolina. Yet it has been estimated that the package Boeing got by locating a new Dreamliner assembly line in the Charleston area could be worth some $900 million.

Apple is said to have received a total of $119 million, yet the Times fails to include more than $60 million in subsidies the company got for a data center in North Carolina.

The Times $100 Million Club also misses some major recipients entirely, including Volkswagen, which got more than $500 million in connection with an assembly plant in Tennessee, and ThyssenKrupp, which got more than $1 billion in subsidies for a steel mill in Alabama.

I also wished the Times series had gone into more detail about proposals for reining in local-level corporate subsidies, instead of just hand-wringing about the problem. (I wrote about some of this myself for In These Times magazine, back around the dawn of time.)

So two cheers for the Times for tackling an important subject, but for anyone interested in the corporate subsidy game as it’s played and what to do about it, this should only be the start of your reading. And let’s hope that for the Times this is only the start of more vigorous coverage of this topic, and not just a one-time attempt at award bait.