Buffalo op-ed says new Bills owners could threaten selves with moving team

Yesterday’s Buffalo News had an op-ed by an economic development consultant about building a new Bills stadium, and “op-ed by an economic development consultant” should tell you all you need to know about it. But I just want to call attention to it to show how op-eds can make it into the newspaper without making a damn bit of sense. Follow the bouncing logic here:

The Bills’ new owner will likely have to come up with at least $1 billion. The average NFL team is worth $1.17 billion, according to a 2013 Forbes analysis.

Yes, NFL teams are super expensive, because they’re super valuable. Even in Buffalo.

Once a deal is struck and the NFL approves, the new owner will have to deal with the expensive – and politically sensitive – issue of a new stadium.

Okay, “need” is a bit strong, since the Bills’ current stadium is already getting $130 million in taxpayer-funded renovations, but certainly if they want a new stadium they’ll need to deal with the politics of it.

But NFL Commissioner Roger Goodell wants more. He told ESPN that without a new stadium, the Bills might leave.

Oh, okay, so if the new Bills owners don’t get a new stadium, then the team might get moved … by the new Bills owners. So they totally have to deal with this, because there’s nothing so awful as spending $1 billion on an NFL team and then having your own self threaten to move the team out from under you.

There is a teeny point here somewhere, which I suppose would go something like “Whoever buys the Bills for $1 billion is going to want to maximize their profits, and the best way to do that might be to move the team to a bigger market, even though market size in the NFL doesn’t matter much and there are no huge markets with NFL stadiums ready to go, and Roger Goodell will stand behind them on any such threat.” But that’s not what this op-ed says at all, which makes you wonder who at the Buffalo News is bothering to vet submissions for making any damn sense. Unless, I suppose, making any damn sense is less important than espousing opinions that don’t anger the powers that be. Nah, couldn’t be that.

If you want to sell a sports subsidy plan, state it in terms of cups of coffee

There was yet another Milwaukee Journal-Sentinel column arguing for public funding for a Bucks arena on Friday, and I wouldn’t even take notice, but columnist James E. Causey brought back the dreaded coffee analogy:

The annual cost to regional taxpayers for Miller Park is about $10, or the cost of two venti Caramel Macchiatos at the local Starbucks.

Even if the figure was $25 a year, it still would be a bargain.

Pricing stadium costs in cups of coffee has a long tradition, most notably back in 2005 when it was the Minnesota Twins seeking public subsidies, and the Minneapolis Star Tribune’s Jim Souhan wrote approvingly, “Twins owner Carl Pohlad will pay $125 million. You’ll pay less than you leave in the tip jar at Dunn Bros.” (That’s a coffee place, FYI.) The problem — other than that the annual cost of Miller Park is repeated over 30 years, so really every man, woman, and child in the Milwaukee area (Causey divides by total population, not just adult taxpayers) is out $300 — is that you can do this trick with just about any public expense you can think of and make it sound reasonable:

Anyway, the point isn’t that big expenditures spread over enough people average out to a small amount — though no doubt writers like Causey are counting on readers’ innumeracy to obscure that realization. (He also buries deep in his article the news that a Bucks arena would cost more like $25 per person per year, or five Macchiatos.) The point should be what else could you be doing with that money. For the estimated $250 million cost of a new arena, Milwaukee could open another 19 libraries, or provide financial aid to an additional 18,000 college students, or, if you prefer, cut the average Milwaukee homeowner’s property taxes by $284 a year.

Not that any of these are necessarily the best uses of $250 million. But you’re talking about how to spend public money, you need to be comparing apples to apples, not to Macchiatos.

Virginia Beach approves “private” arena plan that would use $7m/year in public money

The Virginia Beach city council voted last night on which of two arena plans to pursue, and according to the Virginian-Pilot, it “chose United States Management’s privately financed proposal” over a competing bid that would have “relied almost exclusively on taxpayer money from the city and state and would have forced the city to pay $262.5 million in debt service over the next 25 years.”

Well, that’s a no-brainer, right? So how does USM intend to pay for the arena without public money? Let’s see:

USM’s plan calls for it to spend more than $200 million of its own money to build the arena, then receive up to $7 million annually in tax revenue to pay down its debt.

Um, excuse me, what?

People, people. I understand that this whole “money” thing is hard to wrap your brains around. There’s money now, and money next week, and my money, and your money, and it can all be so confusing sometimes. But even elected officials and journalists have to understand that $7 million a year in tax revenue isn’t private money, right?

Actually, it could be more or less than $7 million a year — USM is asking to get 1% of the city’s hotel tax, plus a full kickback of all “taxes generated by the operation of the arena,” which presumably means sales, income, and property taxes, though don’t go looking in the Virginian-Pilot archives for an explanation of any of this. If tax revenues go up, USM gets more money; if they go down, USM has to cover the shortfall.

This is still likely better for the city than the competing W.M. Jordan plan, which would have required the public to pay off $10.5 million in annual bond payments, plus other costs. (The city would own the arena under the Jordan plan, but as we’ve covered here before, the last thing a city wants is to own an arena; it’s owning the arena’s revenue streams that’s the important part.) Of course, the USM plan could still fall apart — which given that it relies on getting a $200 million loan from a bank in China, seems like a pretty likely scenario — in which case the Jordan plan would be back on the table.

The important thing is, though, that whether you have the city paying to build an arena and “repaying” itself through the taxes paid by arena patrons that would normally go to the general fund, or the team paying to build an arena and repaying itself with those exact same taxes, it’s pretty much the same kind of tax subsidy. The Virginian-Pilot could have run a headline like “Council chooses less risky arena proposal,” but instead it went with “Va. Beach council picks privately funded arena plan,” which has the advantage of being more grabby, if the disadvantage of not actually being true.

Everything that’s wrong with sports stadium coverage, in one sentence

I’ve made no secret of how unimpressed I’ve been with the Milwaukee Journal Sentinel’s coverage of the Bucks arena debate, but this, from today’s column by Michael Hunt, really takes the cake:

So now it becomes a matter of trust that the extraordinary financial commitments by Kohl and the new owners toward the building won’t languish on the table in another unseemly political fight.

So, to recap: The owners of a professional sports team offering to pay for less than half of the cost of their new arena is “extraordinary.” Public officials not wanting to pay for the other half, meanwhile, is “unseemly.” Got that?

(For those who would like an alternate perspective, I have a longer piece on the Bucks situation up at Sports on Earth, hot off the presses.)

Hey, it’s a dog-bites-man story that isn’t from Sochi!

Oh, Mike Florio, what have you written now?

With cities suddenly less relucntant to cough up the cash, the looming effort to build the next generation of stadiums could be aided by the promise of a Super Bowl.

Right, because that never happens currently.

I can only assume that Florio was stuck for a column idea on a boring Friday (the Super Bowl is too far in the past to recap, and somebody else already covered the Olympic cross-country skiing stray barking dog story), and dug into the back of his desk drawer for an old story idea he stopped working on in about 1993. To be fair, he seems to be implying that the success of the New Jersey Super Bowl (it didn’t snow, and people only got stuck changing trains for two hours!) will lead more cold-weather teams seeking stadiums to dangle a Super Bowl as a carrot, but the only cold-weather NFL teams without new or newly renovated stadiums are … hmm. Buffalo, I guess, but they’re about to get a pile of renovation money from the state. Does St. Louis count as “cold-weather”? Washington? And haven’t team owners been using this promise anyway, but using it as  additional leverage to try to pry loose a roof as well? How are poor NFL owners going to get their retractable roofs now, huh, Mike Florio? There, I just wrote next Friday’s column for you. No charge.

ESPN’s profits boosted by $260m in state tax breaks

And in the stories I initially missed over the holiday break department, here’s a lovely piece from the New York Times about how ESPN has gotten $260 million in state tax breaks to remain in Connecticut over the past 12 years:

That includes $84.7 million in development tax credits because of a film and digital media program, as well as savings of about $15 million a year since the network successfully lobbied the state for a tax code change in 2000.

For Mr. Malloy and other public officials in Connecticut, the conventional wisdom is that any business with ESPN is good business. After all, ESPN is Connecticut’s most celebrated brand and a homegrown success story, employing more than 4,000 workers in the state.

“After I was elected, this was one of the first companies that I came to,” Mr. Malloy told reporters after the groundbreaking ceremony, standing next to a senior ESPN executive, according to a recording of the event. “I made it clear that ESPN’s needs were not going to be ignored by my administration.”

At $260 million (and counting) for 4,000 jobs, that’s a ratio of $65,000 per job retained, which is far from a record, but still pretty bad. And that’s assuming that ESPN was actually a risk to move — it just built a new $25 million studio in Bristol, after all. And the network also just laid off 100 employees last spring, something it’s allowed to do because the Connecticut tax breaks apparently don’t come with clawbacks. You know, people, it’s not as if no one has spelled out how to do this right or anything.

Cable companies love sports, but even love has its limits

The always-terrific Matthew Futterman has a great piece up at the Wall Street Journal laying out the details of the brewing war between sports leagues and cable carriers. (It’s behind their paywall, but if you’re not a subscriber you can go through the Google News link instead.) Among his findings:

  • Most televised sporting events bring in a relatively tiny audience, 4% or less of all households. Yet sports channels account for 19.5% of fees paid by cable and satellite operators.
  • Advertisers disproportionately love TV sports because 97% of viewers watch live (and so don’t skip commercials), as opposed to just 75% of viewers for non-sports programming.
  • Nonetheless, some cable carriers are balking at exorbitant fees. AT&T has decided not to carry a new regional sports network launched by the Houston Astros and Rockets, and networks started by the Kansas City Royals, Minnesota Twins and Charlotte Bobcats all failed to be picked up in recent years, leading those teams to give up and sell their TV rights to existing channels.
  • The number of TV households is growing, but the number with cable or satellite subscriptions is not, as more and more people choose to cut the cord. According to Nielsen, five million households in the U.S. now lack pay TV subscriptions, up from two million in 2007.

Add it all up, and it’s still not really clear where the cable price bubble is headed. But for any owners counting on ever-soaring TV revenue to fund their exorbitant purchase prices — or their pricey stadium or arena deals — it’s probably best not to bet too heavily on that.

 

U-T San Diego transcribes Chargers marketing speech, calls this “reporting”

Good morning, San Diego! Let’s see what’s in today’s local newspaper, shall we?

The San Diego Chargers are an economic driver to this region, but some potential for the offseason is left on the sidelines because Qualcomm Stadium can’t attract big-time events

Oh, no! This is indeed a crisis! Who’s reporting these findings, anyway?

said Ken Derrett, the team’s chief marketing officer Tuesday.

Oh. Well, that’s not exactly an unbiased source, but surely the reporter has called an independent economist to see whather they think Derrett’s claims are legit. Right? (Reads. Reads some more. End of article.) Oh.

I’d normally make some kind of sarcastic remark here about the shabby state of journalism, but given that the newspaper in question, U-T San Diego, is run by people who want it to be a “cheerleader” for a new stadium and call out those who don’t as “obstructionists,” it’s tough to argue that there’a any journalism involved here at all. So instead, kudos to U-T San Diego content manufacturer of the month Jonathan Horn for living up to his employer’s corporate business model! They give out Pulitzers for that, right?

Roger Goodell can get in the newspaper just by opening his mouth

From the “Newspapers will report on anything famous people say” department:

NFL Commissioner Roger Goodell said Thursday the league is willing to contribute funding to help build a stadium in Oakland to keep the Raiders in town…

”It’s our stage. It’s part of where we present our game. It’s the biggest part,” Goodell said. ”It’s also really important to the fan experience. Having full stadiums is critical for us. We want to have our fans in the stadium, we want to make sure they have the best facilities, we want to make sure the teams can generate enough revenue to be successful and competitive.”

Wait, you mean the NFL is actually willing to give the Raiders stadium money as part of its league-wide program to provide teams with stadium money? Stop the presses!