Friday roundup: CFL calls its owners “philanthropists” who need bailout, plus actual sport with actual fans takes place in actual stadium!

And how is everyone out there? Going stir-crazy? Waking up early to watch Korean baseball? Starving to death? All good options!

I personally have been watching this 1988 game between the Philadelphia Phillies and Montreal Expos (spoiler: Randy Johnson is, as the announcers keep noting, very tall), while continuing to keep tabs on what passes for sports stadium and subsidy news these days. Let’s get to it — the news, I mean, not the Phils-Expos game, I have that paused:

 

No, seriously, what will happen in restarted sports leagues when a player tests positive?

Amidst all the so very many articles on when sports leagues may or could or are thinking of restarting, I’ve been keeping an eye out for discussion of one important question: If a league starts play, with precautions for testing players and coaches and TV crews and hotel workers and whatever, what happens when one of those tests comes up positive? And finally, one league has provided an answer:

Fans will be barred from games until the [Korea Baseball Organization] is convinced the risk of infection has been minimized. If any member of a team tests positive for the coronavirus at any point of the season, the league will be shut down for at least three weeks.

If you’re serious about using testing to prevent the spread of the coronavirus through your league, this makes total sense: Any positive test needs to be followed by quarantine of everyone who has had contact with that person in recent days, which in the case of a sports league is going to mean pretty much everyone in the league. It’s going to make for an awfully tentative schedule — not to mention a dicey ESPN programming schedule — but in a nation where they’ve been averaging only seven new cases per day over the last week in a population of 52 million people, I guess they figure it’s a gamble worth taking.

But what if you can’t reasonably expect to test everyone and have everyone test negative? That’s what we’re seeing right now in the Bundesliga in Germany — 1,000 new cases per day out of a population of 83 million — and the way it’s being managed is very different:

Two days before German government officials will announce whether the country’s top two professional soccer leagues may resume play amid the novel coronavirus pandemic, Bundesliga officials confirmed Monday that they had encountered 10 positive tests in their attempt to finish the season.

In all, the governing DFL announced Monday, 1,724 players, coaches, team physicians and other staff members have been tested. At least four of the positive tests came from players — three from Cologne and one “inconclusive result” from second-division Stuttgart on a player who has been quarantined for 14 days — and all 10 who tested positive are not believed to be displaying any symptoms of covid-19, the disease caused by the virus, according to the New York Times.

That was yesterday. Today:

The German Bundesliga season can resume this month, Chancellor Angela Merkel has confirmed.

So … what’s the point of all that testing, if not to quarantine those who’ve been in close contact with anyone who tests positive? The Bundesliga has said it will be testing everyone twice a week, but that’s still plenty of time for a player or staffer to catch and spread Covid-19 in between tests, if they’re not quarantined.

Now, there’s an argument to be made that a perfect quarantine isn’t necessary: You really only need to keep R0 (the average number of that each infected person in turn infects) below 1, and any new outbreak will fizzle out. The Bundesliga is adding a ton of other social distancing rules, from requiring that players shower and dress separately to keeping starting lineups to be kept separate from substitutes for meals and warmups, so maybe that will be enough to keep transmission rates low — maybe. You’ll have some individuals getting infected, almost surely, but if it’s only a few, on a societal level it won’t cause devastating effects. (Of course, if you’re a player who comes down with Covid and risks spreading it to your family members as a result, you may not find it quiet so reassuring that you’re statistically insignificant.)

And if R0 can’t be kept low enough to stop one Bundesliga player or staffer from turning into a superspreader? No one seems to have thought about that, or maybe no one can bear to think about it out loud. German soccer officials have previously warned that 13 teams could be on the brink of insolvency if the season doesn’t resume, so apparently not shutting down until there’s an actual out-of-control outbreak is the gamble they’re willing to take.

And for sports leagues in nations like the U.S. (27,000 new cases per day in a population of 328 million), clearly even thinking about what to do in case of a positive test result is unthinkable, because no one is mentioning it aloud. In fact, sports leagues (and the sports journalists who uncritically reprint their pronouncements) aren’t mentioning lots of things aloud right now, as witness this article from CBS Miami on contingency plans for a Miami Dolphins restart:

Masks would be required. Fans would order concessions from their seats to be picked up later rather than waiting on line.

Okay, so everyone would wear masks, and to avoid close contact with fellow fans they would stay out of concession lines and instead pick up their food one at a time, and then go back to their seats and eat it … through their masks … um, CBS Miami, I have some followup questions? Hello?

St. Louis Cardinals get $1m from big-business pandemic relief program you’ve never heard of

There are an awful lot of government programs to provide financial help to both individuals and businesses during the pandemic crash, and the nooks and crannies of the multiple relief bills passed by Congress contain even more. A bunch of these are “small business” programs, and as we’ve seen before, the feds define a whole lot of things as small businesses, including sports teams like the Los Angeles Lakers, whose owners applied for $4.6 million in refundable loans via the Payroll Protection Program before giving it back when they realized it looked bad. And now, hey look, the owners of the St. Louis Cardinals have found another program that they can get cash from!

It turns out that our beloved baseball team has also discovered a way to help itself to a share of the very same federal CARES COVID-19 relief dollars, but under a separate tax credit provision established for companies that don’t qualify for the PPP.

The tax credits portion of the CARES act has flown under the radar. Under it, a qualified company can receive taxpayer dollars indirectly through a reduction of its employer-match share of social security (FICA) payments. A company gets forgiven up to $5,000 per employee in taxes it would normally have owed, in exchange for maintaining a certain level of its workforce.

The Riverfront Times’ Ray Hartmann goes on to note that while the Cardinals wouldn’t divulge the total tax credit it was applying for, with 280 non-player employees listed on their website, they’d likely be looking at “substantially more than $1 million in CARES tax savings.” Further investigation reveals that while the Employee Retention Credit, as it’s known, is technically formulated as a “tax credit” on FICA payments (likely in order to make it non-taxable income), as a refundable tax credit it can be more than a company is actually paying in FICA — so in practice it’s just a $5,000 check for every employee earning at least $10,000 between March 12, 2020 and January 1, 2021, making “more than $1 million” a decent ballpark figure.

So, how evil is this, on scale of 1 to Sauron? From what I can tell, the ERC isn’t a set pool of money like the PPP; any employer is eligible, and it’s not first-come-first-served. So at least the Cardinals owners getting cash isn’t denying funds to some other more needy recipient. (Unless you count future Americans as a whole as needy, since we’ll be the ones ultimately paying off the trillions of dollars being borrowed to pay for all this.) And while Hartmann writes:

This is not just a case of a company taking all the normal tax breaks to which it is entitled. Everyone has a right to do that. No one needs to tip the government. This is about a professional sports franchise actively pursuing tax breaks expressly meant for folks who are suffering.

…that’s not exactly true, because this is actually a tax break expressly meant for businesses, the bigger the better. While you can make a case that this is encouraging companies to retain employees — hence the name of the provision — you could also argue that since employers are unlikely to keep on unneeded workers just to get a $5,000 tax break, it seems likely to result in a lot of businesses just getting subsidies to retain people they’d be keeping on anyway.

In fact, the bigger concern here is the construction of the Employee Retention Credit in the first place, which seems geared to benefit large corporations the most, given that it’s available to businesses of any size but not to self-employed individuals, even though the self-employed do pay the employer portion of business taxes. If a billionaire sports team owner takes advantage of a government program designed to take advantage of a global crisis to funnel money to billionaires, who is really to blame here? Crony capitalism? The Supreme Court’s Citizens United ruling? Society as a whole? This fighting evil business really would be a whole lot easier if you could just drop a magic ring into a lava vent to solve all your problems.

Friday roundup: Another Canadian sports bailout request, and everyone pretends to know when things may or may not reopen

Happy May, everybody! This crisis somehow both feels like it’s speeding into the future and making time crawl — as one friend remarked yesterday, it’s like we’ve all entered an alternate universe where nothing ever happens — and we have to hold on to the smallest glimmers of possible news and the tiniest drips of rewards to keep us going and remind us that today is not actually the same as yesterday. In particular, today is fee-free day on Bandcamp, when 100% of purchase prices goes to artists, and lots of musicians have released new albums and singles and video downloads for the occasion. Between that and historic baseball games on YouTube with no scores listed so you can be surprised at how they turn out, maybe we’ll get through the weekend, at least.

And speaking of week’s end, that’s where we are, and there’s plenty of dribs and drabs of news-like items from the week that just passed, so let’s catch up on what the sports world has been doing while not playing sports:

The only thing wrong with ESPN’s prediction of baseball resuming in 2020 is everything

Jeff Passan of ESPN has been at the forefront of “how Major League Baseball plans to return in 2020” reporting, even when that’s sometimes devolved into just repeating what wish-fulfillment fantasies MLB owners mumble to themselves so they can sleep at night. Yesterday, though, Passan went all-in on wish-fulfillment, reporting that baseball officials are “increasingly optimistic that there will be baseball this year,” something that ESPN’s web headline writers turned into “There will be MLB in 2020. It’s just a matter of when, where and how.”

Given that when last we checked in with MLB’s plans for restarting, they involved an “everyone involved in putting on games gets placed in a hermetically sealed bubble” plan that was both impractical and roundly panned by players who didn’t want to be kept away from their families for months at a time, what exactly has changed to produce this optimism? Take it away, Jeff:

It’s a contradictory existence in which the baseball world is doing everything it can to prepare for games without any firm plan in place for when or where those games will be played.

That is not actually contradictory! It’s the kind of deck-chair-reshuffling that everyone is doing right now, hoping for a world where reshuffled deck chairs can let things return to somewhat normal while also preparing for the worst if they can’t. “MLB doesn’t know what it’s going to do but is hard at work doing it” isn’t really a news story, but let’s see what else Passan has in his reportorial pocket.

Where will games be played? Well, the easy answer is Arizona, where Gov. Doug Ducey has welcomed the idea of hosting all 30 teams, but logistical issues abound. There is also a wide variety of so-called hub plans, in which baseball would station teams in a set number of cities. The Arizona-Dallas-Tampa possibility that CBS Sports reported is an option. So is a four-city plan. And five. And six.

Just look at the opportunities starting in early May: Arizona, Georgia, Florida, Texas, Colorado and Minnesota are among the states slated to have stay-at-home restrictions lifted. That means more than a quarter of MLB teams could theoretically host games without fans right now.

Okay, no, they really could not. Let’s take Minnesota for example: It indeed is allowing some manufacturing and other businesses to reopen on a trial basis, but it also explicitly excluded pro sports from this list, so just because the state won’t be on total lockdown doesn’t mean MLB can start scheduling games at the Twins‘ home stadium anytime in the future, let alone “in early May.” Plus, MLB would still have to figure out how to build a city of 10,000 people that can stay coronavirus-free for months at a time, which is easier said than done, and it’s not even that easy to say.

Passan doesn’t actually say that MLB will restart in early May, or anywhere close to it. His “timeline that a number of people in decision-making positions see as realistic” is:

Finalize a plan in May. Hash out an agreement with the players by the end of the month or early June. Give players a week to arrive at designated spring training locations. Prepare for three weeks. Start the season in July. Play around an 80- to 100-game season in July, August, September and October. Hold an expanded playoff at warm-weather, neutral sites in November.

If you’ve been following the pandemic news closely, you probably see the problem here: Even if some potential MLB stadium sites are ready to reopen by June, there’s a significant likelihood that they’ll have to re-close a couple of months later as the next wave of the coronavirus roller coaster hits. Everything that epidemiologists have learned about virus transmission predicts that any significant lifting of social distancing rules will likely result in fresh outbreaks a couple of months later, and while that’s not set in stone — there could be new treatments developed in the meantime, wearing masks could turn out to be way more effective than anyone at first thought, etc. — planning to hold six months of baseball, counting spring training and postseason, seems reckless in the extreme.

Passan’s sources have a plan for that, too, though:

If a second wave of the coronavirus arrives and threatens to shut down the country again, MLB could try to wait it out and just hold a giant playoff…

“Give us 60 days,” one official said, “and we could run an amazing tournament.”

This is actually something that occurred to me as well: If you want to have baseball and all you have is a window of a few weeks, the best way to approach it isn’t to figure out how to salvage a regular season, but what’s the best you can do in that time frame. And by far the most successful 60-day sports format is a World Cup of some kind. How you organize it is up for grabs — Passan floats 16 intradivisional games followed by the top two teams in each division entering a round-robin stage; I would go with a more traditional group stage with six division winners, six runners-up, and four wild cards followed by a Round of 16, etc. But either way, it’s something you could conceivably do in a two-month window, though you’d need to keep training camp down to a bare minimum. (One way to do this: Limit games to seven innings, so starting pitchers don’t have to be as stretched out before the season can start.)

Passan’s plan starts to go off the rails, though, when he envisions his playoff format:

Oct. 22-Oct. 31: The six American League teams that advance congregate at one hub. The six National League teams gather at another. They play each of the other five teams twice in a round-robin format with a collective day off in the middle. The four teams with the best records in each league advance. In the meantime, the nine non-advancing teams from each league meet at a hub and play one game against the rest of the teams there. The winner of that round-robin regains entry into the playoffs. In the case of a tie, hold a winner-advances one-game play-in-to-the-playoff.

That is a lot of hubs! And a lot of players, and team staffs, and TV camera operators, traveling to and from each one, and checking into new hotels, and so on. Which means either you’re going to have to quarantine everybody for 14 days before starting each new round, or you’re going to have to accept that you might get some new infections with each new round, and have a system in place for dealing with that that doesn’t involve shutting everything down again. (Taxi squads of entire substitute teams that are kept in plastic wrap somewhere?) Plus, you have to be damn sure that all of your proposed sites are going to remain virus-free (or at least at low infection levels) and not on lockdown for the whole 60 days, which is not at all a sure thing given that many states are currently reopening businesses despite Covid cases still being on the rise.

So why is Passan so dead sure that there will be baseball in 2020? Because, apparently, the alternative is too grim to imagine:

What gives Manfred and others so much confidence that there will be a season then?

Incentive. It’s not just that everyone wants a season. It’s the doom and gloom over what will happen if there isn’t one.

Okay, I get it. I really do. I don’t want to imagine an entire year without baseball, either, and so if there are straws to be grasped at, I’m eager to grasp at them as much as the next guy. But reporting this as “increasing optimism” about baseball in 2020 rather than “increasing wishful thinking” is just journalistic malpractice — after all, everyone was optimistic that there would be hockey in 2004-05, but in the end there wasn’t, and that was just over issues that were resolvable by human negotiators, without having to give not-really-alive organisms a seat at the bargaining table.

So let’s rewrite that headline for you, ESPN: “MLB wants to play in 2020. They just don’t know when, where, or how.” It’s not going to get as many clicks from baseball-hungry fans desperate for good news, and it’s not going to boost parent company Disney’s stock value in the face of cratering projected revenues, but it does have the benefit of being true.

Here’s a bunch of ways rich sports owners are looking to get pandemic bailouts

The owners of the Los Angeles Lakers have voluntarily returned $4.6 million in refundable government loans they received as part of the Payroll Protection Program—

Hold up, let’s try that again.

The owners of the Los Angeles Lakers, a sports franchise worth an estimated $4.4 billion that turns an annual $178 million profit, asked for and received $4.6 million in federal government loans as part of its Payroll Protection Program for small businesses. (The loans convert to grants if recipients keep their current employees on payroll through the end of June.) Like other prominent companies that took advantage of the PPP program — Shake Shack, Potbelly, Ruth’s Chris friggin’ Steakhouse — the Buss family that owns the Lakers chose to return the money “so that financial support would be directed to those most in need” once they realized they’d bum-rushed the subsidy line and edged out actual small businesses, and also probably realized that the PR hit from doing so would have been worth way more than a relatively piddling $4.6 million in government grants.

That a billionaire sports family got approved for small-business loans should be alarming, but not surprising: The federal government has already approved more than $2 trillion in spending to help Americans hit by the coronavirus-spawned economic crash, and it’s all but inevitable that some less-needy Americans would put in applications as well — the feds define “small businesses” based in part on how many employees they have, and sports teams don’t employ a ton of people on payroll. And it’s also inevitable that they’d also be among the first to be approved, since programs like PPP are first-come first-served and rich folks are more likely to have lawyers on staff who know how to file paperwork fast, as well as established bank connections that made them more likely to get approved.

In fact, sports team owners are working many angles to get a cut of the Covid stimulus bailout cash, just as less-deep-pocketed individuals are as they try to figure out whether to consider themselves unemployed gig workers or entrepreneurs in need of cash to keep themselves on payroll. Among the ways:

  • The Sacramento Kings owners are renting out their old empty arena in Natomas for $500,000 a month to the state of California for use as a field hospital, which is the same rent the state is paying for other temporary facilities, but maybe a tad disingenuous given that Gov. Gavin Newsom previously praised Kings owner Vivek Ranadivé as “an example of people all stepping in to meet this moment head-on” without mentioning that he’d be getting paid for his selflessness.
  • The owners of the D.C. United MLS team are part of DC2021, an advocacy group of Washington, D.C. business leaders lobbying the district for “a massive new tax relief program” to help the local restaurant, hotel, and — apparently — soccer industries survive the economic shutdown.
  • The stimulus measures approved by Congress weren’t all expanded unemployment benefits and checks with Donald Trump’s name on them; they also reestablished a tax loophole involving what are known as “pass-through entities” that will allow mostly wealthy people to save $82 billion on their tax bills this year. The biggest beneficiaries will be hedge-fund investors and owners of real estate businesses, a list that obviously includes lots of sports moguls: Just owners of hedge funds who also control sports teams include Milwaukee Bucks co-owners Marc Lasry and Wesley Edens, Los Angeles Dodgers owner Mark Walter, Tampa Bay Lightning owner Jeffrey Vinik, and a pile of others.

Now, not all of this should be considered a fiasco: In the case of the PPP in particular, Pat Garofalo notes in his Boondoggle newsletter that the money is intended to keep low- and moderate-income workers from being laid off — the reimbursements top out at $100,000 per employee — and people who work for sports teams or chain restaurants are just as deserving of keeping their jobs as those who work at genuine small businesses. The main problem with PPP is that Congress massively underfunded it, then made it first-come first-served, then left it up to banks to decide who to approve — okay, there’s actually a lot here to consider a fiasco, but sports team owners deciding to fill their wallets at the same firehose of cash as everyone else is far from the worst part of it.

As for some of the other bailout proposals, though, sports owners come off looking a lot less innocent. That DC2021 plan pushed by D.C. United owner Jason Levien, for example, includes such things as tax holidays for corporate income taxes and property taxes, which Garofalo notes won’t help most small businesses that don’t turn large profits or own land.  (Levien, you will not be surprised to learn, is not just a sports mogul but also a real estate investor.) And the pass-through tax break is almost entirely a sop to millionaires and the Congresspeople who love them, which though it doesn’t single out sports team owners, certainly helps many of them given that they’re far more likely to invest in pass-through companies than you or I.

I’ve said this before, but it really is worth harping on: The recovery from the pandemic is already involving a ton of government spending, and will unavoidably involve a ton more, since the feds are pretty much the only institution that has the power to keep food in people’s mouths during this crisis. (At least until the U.S. Mint is deemed a non-essential business.) This will invariably create winners and losers, both in terms of who gets what money and in terms of who ends up paying off the government debts that are being racked up now. There’s no way to avoid this involving subsidies — pretty much the whole idea of government spending to prevent an economic crash is about creative use of subsidies — so what you want to shoot for is fairness, where you have the most money going to companies and individuals who were most hurt by coronavirus shutdowns, and the least to companies and individuals that just were able to lawyer up the fastest.

Individuals who were most hurt except, of course, for Miami Heat and Carnival Cruises owner Micky Arison, who may have lost more than a billion dollars thanks to the collapse of the cruise industry, but who also lobbied the Trump White House to let them keep sailing even after it was clear that cruise ships were perfect Covid incubators. The cruise industry was notably left out of the stimulus bills, and while that’s more about the fact that they all registered as foreign businesses in order to duck U.S. taxes than their owners being money-grubbing jerks who prioritized profits over public health, I think we can all agree: Screw those guys.

No, sports stadiums shouldn’t rip out 80% of their seats because of coronavirus

There is an art, or rather a knack, to writing headlines for news stories that don’t quite rise to the level of news. It involves employing what might be called misdirective attribution: A headline that would otherwise be false, or at least unsupported, can magically become accurate if you add “Sources Say” or “Report:” or “According To Officials.” The burden of proof for reporters then becomes not whether what they’re reporting is true, but whether somebody says it’s true, and repeating what others are saying is what journalism is all about, right?

All of which brings us to today’s contestant in Who Wants To Be A News Article?, courtesy of CNBC:

Sports arenas could require ‘necessary renovations’ for social distancing, architect firm says

This headline actually contains a double hedge: Not only are the words put in the mouth of an “architect firm,” but it’s framed by the verb “could,” so we’re already reading about something that one person just thinks is at least a distant possibility, which would be enough to justify the news covering nothing but future civilization-ending asteroid strikes, which admittedly might be preferable to what it’s instead covering incessantly.

But I digress. What would these “necessary renovations” look like?

[The DLR Group] found that “luxe box” seating, with four seats separated by six feet in all directions from other people in the seating bowl sections, would honor distancing rules…

“In the short term, you can manage that by selling tickets to a certain number of people, identify their seats, and have fans distance,” said [DLR’s Don] Barnum, who designed the $161 million Pinnacle Bank Arena in Nebraska.

“If this becomes the new norm over two-to-five years, then I think [teams] would start removing those other seats and making that environment a fixed permanent one that creates that separation and distancing,” he said.

Here’s a picture, with available seats in blue:

So, a few things. First off, that’s an awfully big reduction in available seating: The CNBC article cites DLR as saying stadiums would be reduced to 17-20% of their normal capacity, but really it’s 13.3% in the above image. (It’s 14.8% in another image from DLR that only had 18 seats per row instead of 20, because a foolish consistency is the hobgoblin of small-minded architects and also math is hard!) This, according to CNBC, “causes revenues issues,” which hell yeah it does, only more grammatically. Would it be worth opening the gates if you could only fit 5,300 people in a 40,000-seat stadium? Would ticket prices soar thanks to scarcity? The article is mum on such questions.

Second, “if this becomes the new norm over two-to-five years” is even more pessimistic than the most pessimistic scientific forecasts of when a vaccine will likely arrive. (Okay, not the most pessimistic forecasts, because anything is possible, but now we’re back in asteroid-strike territory.) But tearing out seats (or even painting them a different color) would be silly if you’re only doing it for one or two seasons, so presumably in order to sell its vision of future sports, DLR needed to paint a doomsday scenario where we’re social distancing well into the 2020s, though not social distancing so much that we can’t go to sporting events at all.

Also, do all sports fans go to games with exactly three other people, all of whom they live with? Or is four some kind of magic number of how many people you don’t have to socially distance from if you want R0 to stay below 1.0? And how will concessions work: Will everyone on the hot dog line have to wait six feet apart, leading to lines that wrap around the entire ballpark? Will food only be available from roaming vendors who will throw items to you from a safe distance? Is it safe to drink beer through a straw while wearing a face mask? Did CNBC talk to a single public health expert for this article? (You can probably guess the answer to that last one.)

So what we have here, in the end, is “architecture firm with a small handful of sports projects under its belt puts its otherwise-idle rendering staff to work on something that might score it some media attention, finds willing sucker in CNBC.” It isn’t news, and it isn’t even really a report, but it has sports in it and pretends to make hard predictions in a world where being approximately right most of the time is considered better than being precisely right occasionally, and it has renderings with ghostly blue people in it, so hell yeah, bring it on. And don’t worry too much about the consequences of living in a world where whether something gets reported is determined by how impressive the letterhead — or PR staff — is of the organization making the claim.

Friday roundup: Sports remains mostly dead, but train subsidies and bizarre vaportecture live on

It’s been a long, long week for many reasons, so let’s get straight to the news if that’s okay:

No, plummeting tax revenues don’t pose a special threat to stadium projects, here’s why

Last week I wrote a brief aside about how teams and/or cities losing revenue they were counting on using to pay off stadiums and arenas isn’t especially bad — except inasmuch as losing revenue is always bad — but I’ve since gotten enough frantic emails about this Business Journals article from Thursday about how the pandemic economic crash will make it impossible for cities and states to pay off stadium and convention centers that this subject clearly requires a deeper exploration. So, let’s spend some quality time looking at how sports stadium debt works, and why so many people, even business journalists, too often misunderstand it.

Anytime anyone wants to buy anything — a house, a car, a $1.2 billion stadium just so you can have air-conditioning — there are two ways to pay for it: with cash, or by borrowing the money and paying it off later. Local governments almost always choose the latter, raising the money by selling bonds, which are essentially a way of taking out a loan from lots of individual bondholders instead of from a bank. They can then pay off the annual bond costs either by dipping into their general funds or by dedicating a certain chunk of future tax revenues to paying off the debt: rental car taxes or hotel taxes or sales taxes or whatever, something they often prefer because then they can claim this is new money that is only there because of the team, even though that’s almost never true.

The important thing to keep in mind here is the difference between funding (who’s on the hook for paying for something) and financing (how they’re paying for it). If you take out a mortgage or put an expense on your credit card because you don’t have enough cash in the bank to pay for it all at once, that’s financing — you’re still paying for it, you’re just also paying the bank and/or Visa to borrow the money from them temporarily. But financing decisions are separate from funding decisions: If you need a new refrigerator and an equally-priced new washing machine at the same time and don’t have enough cash for both, it doesn’t really matter which one you choose to put on your credit card; either way, you end up with the same debt, and the same appliances.

Also, all of these expenses are what economists call sunk costs: Once you’ve bought a refrigerator, or a sports stadium, that money is gone and nothing you do (or the economy does) will bring it back. So if you buy a snazzy new appliance and then lose your job, that sucks, and maybe is a sign you should have been saving that money for a rainy day just in case, but really the problem is that you’ve lost your job and now can’t pay off your Visa bill, not which particular item caused that Visa bill to get so high.

Now that we’ve established some ground rules, let’s take a look at some bits from that Business Journal article:

A Business Journal analysis identified dozens of examples of stadiums, convention centers, public infrastructure projects and cultural sites in store for precipitous declines in funding as the nation weathers the financial storm. For many cities and states, the loss of hotel-related taxes alone will blow million-dollar-plus holes in their budgets every week the pullback persists…

In Mecklenburg County, North Carolina, hotel-occupancy taxes accounted for about $1 million in revenue per week for a host of uses, namely financial support for the NASCAR Hall of Fame and Charlotte Convention Center, both in the city of Charlotte. Houston pays debt service on $75 million in convention center bonds with its hotel-tax revenue, which totaled about $90 million last year when room occupancy rates were around 65% citywide.
Nevada is home to perhaps the biggest challenge of all, as approximately $750 million in financing to build the future home of the National Football League’s Las Vegas Raiders is tied to local hotel-tax revenue. The public fund dedicated to the 65,000-seat stadium’s financing generated between $4 million and $5 million a month prior to the Covid-19 outbreak.

Okay, yeah, losing millions of dollars a year in tax revenue is a terrible thing for local governments — but it would be just as bad if that money were being counted on to pay for firefighters or schoolteachers or what have you. Maybe spending hundreds of millions of dollars on a shiny new stadium looks especially bad when tax revenue dries up — just like that fridge with the built-in icemaker looks like a dumb decision when you wish you still had the money in the bank to buy food to put in a fridge — but which money you’ve chosen to assign to pay off which debt is ultimately just bookkeeping. And that money would have been gone either way: It’s not like Nevada couldn’t have used more money for more schoolteachers before this current mess started.

(The confusion of funding and financing, incidentally, is the same kind of fallacy that causes too many journalists to write articles bemoaning how cities are still paying off debt on stadiums that have already been torn down. It may be especially galling to still be making credit card payments on an appliance that’s already broken down and sitting waiting for the garbage truck to haul it off, but it wouldn’t have been any better for your personal finances if you’d spent the same amount of money but paid it off faster.)

So what happens to sports venues and convention centers now, with their bond payments still due and far less money coming in? Nothing to the buildings themselves, obviously: They, and their construction bill payments, were all completed years ago. As for the local governments suddenly facing huge shortfalls in tax revenues, they have a choice: They can default on their debts, which never happens, because they’re too afraid of scragging their credit ratings; find money elsewhere, say by selling off a hospital or two; or refinance their debts, which effectively means taking out new loans (or selling new bonds) to pay off the old ones, pushing debt payments further into the future, when hopefully the economy will have recovered enough that slicing off a slab of tax revenues to pay for decades-old expenses doesn’t feel so onerous.

This is all terrible! Cities and states are going to need those revenues and public hospitals and credit ratings in the future, and we could be looking at years if not decades of bare-bones budgets to get out of this hole. But it would be the same if local governments had spent all this money on fixing potholes instead of building stadiums — except of course that they’d now have smooth roads to show for it, instead of just a different hunk of steel and concrete on the skyline in place of the old one.

And in the end, the scale of this crisis is so huge — an estimated half a trillion dollars in state budget losses this year alone, with tens of billions more for cities — that even a few billion-dollar stadium debts are really just a drop in the bucket. Even the Business Journal acknowledges this, late in the article:

“There just has got to be big federal block grants to save the states. If that doesn’t happen, you’re going to have 50 catastrophes plus the District of Columbia,” said Greg Sullivan, research director at Pioneer Institute, a Boston-based public-policy think tank.

Ah, but then aren’t you just transferring the debt problem from cities and states to the federal government? Yes, but there are reasons why the feds can take on debt in ways that cities and states can’t, and reasons why it may often make economic sense for it to do so during tough times; I’ve saddled you with enough economics for one day, but here’s a good explanation of the argument from Paul Krugman if you’re really interested. For now, just reassure yourself that local governments aren’t screwed because they have to figure out how to pay for stadiums per se; they’re screwed because a sudden economic crash has destroyed their budgets. Sports venue spending didn’t help with that, but it would have been money down a hole either way — it’s just easier to notice your dumb spending decisions when your bank account runs dry.

Friday roundup: Cincy official wants soccer subsidies back, Hartford mayor wants arena spending now, and why billionaires are jealous of other billionaires

Just how far have we fallen in the last few weeks? Far enough that I wrote an article on how New York City is managing to feed at least a few of its millions of suddenly hungry people, and I considered this a positive article. I promise we’ll get back to more analysis of how rich sports people are attempting to steal a few billions in taxpayer money in short order, but right now it’s a little hard to focus on run-of-the-mill horrors when there are so many new ones every day.

But there was some news this week, not all of it pandemic-related! Enjoy, if enjoying is still a thing we do:

  • Cincinnati city councilmember Chris Seelbach says that in light of crashing city budgets in the wake of the coronavirus crisis, he plans to introduce a bill asking F.C. Cincinnati to return 25% of its $33 million public stadium subsidy, the same percentage that city social service agencies are being asked to cut. The bad news: City officials say it would be up to the team to voluntarily accept the funding reduction, so maybe don’t hold your breath on that.
  • Hartford Mayor Luke Bronin says it’s a great time for a $100 million renovation of his city’s XL Center since the arena is just sitting there right now doing nothing but losing money, so it’s a great time for construction! Connecticut is currently facing a projected $1.9 billion loss of tax revenues from the pandemic, in case you were wondering.
  • The New York Yankees, Boston Red Sox, Chicago Cubs, and Los Angeles Dodgers would each lose more than $300 million in revenues if no fans were allowed to attend games in 2020, according to Forbes’ Mike Ozanian, while other teams like the Miami Marlins would lose only $47 million, since nobody goes to Marlins games anyway. But Ozanian notes tha teams would also cut back on their revenue sharing expenses, and while he doesn’t do the math on this, we can: With revenue sharing running at about 48% of local revenues (actually slightly less since even the Yankees get back a small share of the overall cut), this means those teams’ bottom-line losses will only be about half what Forbes is reporting. In other words, coronavirus will likely be only slightly more of a disaster for the Yankees than signing Jacoby Ellsbury.
  • Delaying the Tokyo Olympics for a year is expected to cost organizers $2.8 billion for things like additional rental costs on private venues and the athletes’ village — which already has private buyers who were expecting to move in in September — and the International Olympic Committee isn’t exactly saying whether it will cover these costs or the Tokyo organizing committee will be stuck with them, though you can certainly guess, based on past IOC behavior. And that’s assuming that the 2020 Olympics can take place in 2021, which is still not a sure thing.
  • And speaking of coronavirus shutdowns possibly lasting into 2021, Los Angeles Mayor Eric Garcetti has told city agencies that “large gatherings such as concerts and sporting events may not be approved in the city for at least 1 year.” That doesn’t rule out TV-only sports with no fans, and also it’s important to remember that memos like these are just contingency plans, and no one knows what things will look like this fall (or, for that matter, in fall of 2021). Maybe hold off on buying your 2020 NFL season tickets, though, just to be on the safe side.
  • Amazon is reportedly considering bidding for naming rights to Tottenham Hotspur‘s new stadium, which given that naming rights are mostly good for boosting brand recognition and Amazon is already the world’s biggest brand is kind of weird. Though given that the company is now making $11,000 in sales per second what with everyone trapped in their homes, maybe they can afford to blow some money on something stupid.
  • And speaking of Amazon, Bloomberg reports that Jeff Bezos only asked for billions of dollars in subsidies for a new second headquarters because he was jealous of Elon Musk getting billions of dollars from Nevada for a new Tesla plant. Which we pretty much knew was Bezos’s inspiration, but it’s still a worthwhile reminder that corporate barons are just as much driven by envy of the next corporate baron down the block as they are by any rational economic motivations.
  • Here are some photos of the early years of the original Yankee Stadium, which are being reported as a sign of the team’s impact on its surrounding Bronx neighborhood, which is probably wrong since it’s more likely the impact of the new elevated subway line that opened in 1918 (and helped inspired the Yankees to move to the Bronx). Though they do give a sense of how teams used to build stadiums in phases — expand by a few thousand seats, then once those sell out use the proceeds to add a few thousands more — to make them more affordable with private cash, something you usually only see now in European soccer stadiums, which is surely just coincidental to the fact that European soccer stadiums mostly don’t get huge public subsidies.
  • And speaking of European soccer stadiums, here are some photos from what is described as an “insane new video” of Real Madrid‘s proposed $625 million stadium renovation, which leads me to believe that SportsBible, whatever that is, has never seen a truly insane video.  I do like the news, though, that “the capacity of the iconic venue will be reduced by one to 80,242,” which leads me to believe that at least the stadium architects have a sense of humor.
  • Since we haven’t featured any dumb sports news articles yet this week, how about this one from the New York Post that claims the New York Islanders moving to Brooklyn worked out well because it kept the team from moving to Quebec? Asked and answered, people!
  • Superstar Los Angeles Angels outfielder Mike Trout has declared MLB’s Arizona biodome proposal to be “pretty crazy” since it would keep players away from their families for months, but the Arizona Republic’s editorial page editor says there are “scientific reasons” for doing it like “MLB players are already guinea pigs” and “there is always risk in life” and anyway baseballllllllllllll! More science to drop soon on this, I sorely hope.