Friday roundup: Long Island residents yell at cloud over Isles arena, Calgary forgets to include arena in arena district plan, plus a reader puzzle!

It’s Friday (again, already) and you know what that means:

  • New York State’s Empire State Development agency held a series of three public hearings on the plan to build an Islanders arena on public land near Belmont Park racetrack (which the team would be getting at as much as a $300 million discount), and the response was decidedly unenthused: Speakers at the first hearing Tuesday “opposed to the project outnumbered those in favor of the plan by about 40 to one,” reports Long Island Business News, with State Sen. Todd Kaminsky joining residents in worrying that the arena will bring waves of new auto traffic to the town of Elmont, that there’s no real plan for train service to the arena, and that there’s no provision for community benefits to neighbors. Also a member of the Floral Park Police Department worried that the need for police staffing and more crowded roads would strain emergency services. Empire State Development, which is not a public agency but a quasi-public corporation run by the state, is expected to take all of this feedback and use it to draft an environmental impact statement for the project, which if history is any guide will just include some clauses saying “yeah, it’ll be bad for traffic” without suggesting any ways to fix it. I still want to see this plan from the Long Island Rail Road for how to extend full-time train service there, since it should involve exciting new ideas about the nature of physical reality.
  • Meanwhile in Phoenix, the final of five public hearings was held on that city’s $168 million Suns renovation plan, and “out of nine public comments, three involved questions, five voiced support and one was against the deal,” according to KJZZ, so clearly public ferment isn’t quite at such a high boil there. One thing I’d missed previously: The city claims that if it doesn’t do the renovations now with some contribution ($70 million) from Suns owner Robert Sarver, an arbitrator could interpret an “obsolescence clause” in the Suns’ lease to force the city to make the renovations on its own dime. I can’t find the Suns’ actual lease, but I think this just means that Sarver can get out of his lease early if an arbitrator determines the arena is obsolete [UPDATE: a helpful reader directed me to the appropriate lease document, and that is indeed exactly what it means], and he can already opt out of his lease in 2022, it’s pretty meaningless, albeit probably more of the “information” that helps convince people this is a good deal when they hear it. (Also important breaking news: A renovated Suns arena will save puppies! Quick, somebody take a new poll.)
  • Speaking of leases, the Los Angeles Angels are expected to sign a one-year extension on theirs with Anaheim, through 2020, while they negotiate a longer-term deal. It’s sort of tempting to wish that new Anaheim mayor Harry Sidhu would have played hardball here — sign a long-term deal now or you can go play in the street when your lease runs out, like the Oakland Raiders — but I’m willing to give the guy the benefit of the doubt in his negotiating plans. Though if this gives Angels owner Arte Moreno time to drum up some alternate city plans (or even vague threats a la Tustin) just in time to threaten Anaheim with them before the lease extension runs out, I reserve the right to say “I told you so.”
  • The Calgary Planning Commission issued a comprehensive plan for a new entertainment district around the site of the Flames‘ Saddledome, but forgot to include either the Saddledome or a new arena in it. No, really, they forgot, according to city councillor Evan Woolley: “It should’ve been identified in this document. It absolutely should have. Hopefully those amendments and edits will be made as they bring this forward to council.” The 244-page document (it’s not as impressive as it sounds, most of them are just full-page photos of people riding bicycles and the like) also neglects to include any financial details, beyond saying the district would be “substantially” funded by siphoning off new property taxes, “substantially” being one of those favored weasel words that can mean anything from “everything” to “some.” Hopefully that’ll be clarified as this is brought forward to council, too, but I’m not exactly holding my breath.
  • Here is a Raleigh News & Observer article reporting that the Carolina Hurricanes arena has had a $4 billion “economic impact” on the region over 20 years, citing entirely the arena authority that is seeking $200 million to $300 million in public money for upgrades to the place. No attempt to contact any other economists on whether “economic impact” is a bullshit term (it is) or even what they thought of the author of the report, UNC-Charlotte economics professor John Connaughton, who once said he “questions the sincerity” of any economist who doesn’t find a positive impact from sports venues. Actually, even that quote would have been good to include in the N&O article, so readers could have a sense of the bona fides of the guy who came up with this $4 billion figure. But why take time for journalism when you can get just as many clicks for stenography?
  • The San Francisco Giants‘ stadium has another new name, which just happens to be the same as the old new name of the basketball arena the Warriors are leaving across the bay, and I’m officially giving up on trying to keep track of any of this. Hey, Paul Lukas, when are you issuing “I’m Still Calling It Pac Bell” t-shirts?
  • Indy Eleven, the USL team that really really wants somebody to build it a new stadium so it can (maybe) join MLS, still really really wants somebody to build it a new stadium, and hotels, office and retail space, an underground parking structure, and apartments, all paid for via “[Capital Improvement Board president Melina] Kennedy wasn’t available to discuss the proposed financial structure of the project.” It would definitely involve kicking back future property taxes from the development (i.e., tax increment financing), though, so maybe Indy Eleven owner Ersal Ozdemir is hoping that by generating more property taxes that his development team then wouldn’t pay but instead use to pay off his own stadium costs, that would look better, somehow? I mean, he did promise to keep asking, so at least he’s a man of his word.
  • “At some point in time, there’s going to have to be a stadium solution,” declared the president of a pro sports team that plays in a stadium that just turned 23 years old. “If we don’t start thinking about it, we’ll wake up one day and have a stadium that’s not meeting the needs of the fans or the community.” Want to try to guess which team? “All of them” is not an acceptable answer! (Click here for this week’s puzzle solution.)

Chicago USL stadium, music venues axed from Lincoln Yards plan by local alderman

Chicago Cubs owner Tom Ricketts will not be bringing a new USL soccer team to that city, after alderman Brian Hopkins issued an open email declaring his opposition to the planned Lincoln Yards redevelopment project including either a soccer stadium or a proposed series of Live Nation music venues:

“I have informed planning officials at Sterling Bay, the developer of the proposed Lincoln Yards project, that I am not in support of a major sports and entertainment arena within either of their two planned development districts now under consideration,” Hopkins wrote in an email to his constituents this morning. “I have further requested that the identified site of the proposed stadium . . . be repurposed as open and recreational park space.

“In addition, I have informed Sterling Bay that I will not support the proposed ‘entertainment district’ within the Planned Development that was intended to be co-owned by LiveNation and comprised of multiple venues with seating capacities ranging from 3,000 to 6,000. The Entertainment District will be eliminated from a revised plan, and replaced by restaurants, theaters, and smaller venues that will be scattered throughout the site. LiveNation will have no ownership interest in any of these venues.”

Developers Sterling Bay later confirmed that it would be removing the stadium and the Live Nation venues from the plan.

The project is set to get at least $800 million in tax increment financing — i.e., kickbacks of future property taxes — which has been outgoing mayor Rahm Emanuel’s favorite subsidy scheme. (Most of it is supposed to be used for “infrastructure” work, but we’ve seen before how that can easily bleed into costs that would normally be private developers’.) The big uproar over Lincoln Yards, though, has been over the soccer stadium that nobody wants, plus all those music venues run by a single corporate entity, right on the doorstep of a bunch of famed independent bars and small clubs that feared they would be driven out of business. Hopkins clearly heard those complaints, and used his power as local alderman to put the brakes on the aspects of the plan that had the most public opposition.

There’s still a long way to go to finalize revamped plans for the development project, and that’s still a hell of a lot of TIF money to be devoting to development that arguably wouldn’t do much to improve Chicago. (There would be some affordable housing, but $800 million worth?) For the purposes of this site, though, there won’t be a stadium involved, so watch your local Chicago listings — the desiccated husk of the Chicago Reader has done excellent reporting on Chicago’s TIFs — for further news of this story as it develops.

Friday roundup: The Case of the Dead Beer-Tap Inventor, and Other Stories

This was the week that was:

  • The Denver Broncos are finding it slow going getting a new naming rights sponsor for their stadium because a used stadium name loses lots of its value, thanks to everyone still calling it by the old name. Yes, this is yet another reason why teams demand new stadiums when the old ones are barely out of the cellophane.
  • Here’s a Los Angeles Times article arguing that if rich sports team owners are granted permission to evade environmental review laws, small business owners should be too. I am not entirely sure this is the best lesson to take from this, guys.
  • Pennsylvania is preparing to legalize sports gambling, and the owners of the Pittsburgh Pirates think it would be great if the state imposed a gambling fee and gave some of the money to them, the only surprising part here being that they actually said this out loud.
  • F.C. Cincinnati‘s ownership group is preparing upgrades to Nippert Stadium as the team’s temporary home while a new stadium is built, and “isn’t concerned by the cost,” according to WCPO. Yes, these are the same owners who said they couldn’t possibly build a new stadium without $63.8 million in public money. Also who said Nippert Stadium couldn’t possibly be made acceptable as an MLS venue. I’m done now.
  • Fredericksburg, Virginia has scheduled a July 10 vote on whether to build a new $35 million stadium for the single-A Potomac Nationals, and paying off the city’s costs by siphoning off property, admissions, sales, meal, personal property, and business license taxes paid at the stadium and handing them over to the team. I guess that would make it a PASMPPBLTIF?
  • And finally, a man found dead in a walk-in beer cooler in the Atlanta Braves‘ new stadium turns out to have been there to install a revolutionary new fast-pour beer tap he’d invented, and no one yet knows how he died. This is going to be the best season of True Detective yet! (No, seriously, this is a tragedy for the man and his family, and I hope that everyone involved soon finds closure, at least, by determining the true facts of what happened. But also, no, I’m not going to go back and delete the joke. If this makes me a monster, at least I’m an appropriately social-media-driven monster.)

FC Cincy mulling Kentucky tax kickbacks to pay its entire stadium cost, and other week’s news

All the news that wasn’t fit to print this week:

  • FC Cincinnati now wants the Port Authority of Greater Cincinnati to own its stadium since Hamilton County doesn’t want to. (Does “own” mean “pay for”? Reply hazy, ask again later.) Or maybe Newport, Kentucky, since, according to team president and former city council members Jeff Berding, that would allow the team to recoup its entire $100 million through tax increment financing kickbacks of property taxes paid on the property. How would it generate a whole $100 million in TIFs? Reply hazy, ask again later.
  • Would-be Seattle arena builder Chris Hansen hired University of Washington public finance professor Justin Marlowe in May to compare the economic impact of his Sodo arena proposal to that of the KeyArena renovation plan, and he has issued his report, which says that the Sodo plan would create three times as much tax revenue for Seattle ($103 million over 35 years vs. $34 million for Key). On the other hand, the Key plan would include some kind of sharing of arena revenues, though that wouldn’t kick in until the Key developers got their share, and, yeah, basically it’s a muddle. On the whole, it seems to give the edge to Hansen’s plan, if only because that arena would pay property taxes, but I’d need to sit and break down the math to say exactly by how much, and I’ve been waiting for time to do that all week, so clearly it’s not happening. Reader exercise!
  • Oakland A’s executive VP Billy Beane promised that once the team gets a new stadium, it will stop trading all its decent players once they start to get expensive: “There’s only one way to open a stadium successfully, and that’s with a good, young team. … Really what’s been missing the last 20 years is keeping these players. We need to change that narrative by creating a good team and ultimately committing to keep them around so that when people buy a ticket, they know that the team is going to be around for a few years.” Which could make sense if a new stadium draws enough fans that having a winning team boosts revenues enough to pay for player salaries, though we’ve heard this song and dance before elsewhere.
  • The Nashville Sounds‘ new stadium was supposed to cost taxpayers $37 million, but it ended up costing $91 million.
  • What does $74 million in public subsidies buy Minnesota Timberwolves fans and staff? New seats, new restrooms, new locker rooms, an ice floor that doesn’t leak, two new loading docks, and a big glass wall, because everybody’s gotta have one of those.
  • The athletes’ village from the 2016 Rio Olympics is now a wasteland of unsold condos, because everything the Olympics touches turns to trash.
  • A homeless camp has arisen on the site of the planned Las Vegas Raiders stadium. Make your own metaphors.

No, I don’t think the $38m PawSox stadium subsidy plan is a “win-win,” here’s why not

Joe Nocera, late of the New York Times op-ed page, has a new Bloomberg View opinion piece up titled “You Can Pay for a Ballpark Without Fleecing Taxpayers,” which namechecks this site and even provides a link, for which I should be grateful. Nocera and I failed to connect before it was published, though (he emailed me, I didn’t respond in time), so instead he is going to get berated here for misrepresenting my perspective, because that’s just how I like to bite the hand that feeds me clicks.

Anyway, here’s Nocera’s nut graf, where he brought me into the story:

In searching “Field of Schemes,” the go-to website for news about sports stadiums, I came across a rather different story, about the efforts of the Pawtucket Red Sox, the Triple-A minor league affiliate of the Boston Red Sox, to get a new ballpark. Although the dollars are far smaller (though not so small for Rhode Island), it does show that a team and a government can put together a deal that includes public financing but doesn’t hose the taxpayer. It’s kinda heartwarming, actually.

From there, it goes into a long, accurate description of former owner James Skeffington’s demand for $60 million in stadium subsidies, threatening to move the team out of Rhode Island if he didn’t get them. And then a long, not quite as accurate description of how after Skeffington’s death, team part-owner Larry Lucchino asked again for only $38 million in stadium subsidies, where the “city and state would receive a revenue stream that would not only cover the debt service but would probably make it a profitable venture for the government,” and “there were no threats” to move the team.

Okay, couple of things here. First off, the only revenue stream that the city and state will receive is “tax revenue generated in and around the stadium” — i.e., money that the city and state would normally collect anyway, but which would now be siphoned off to help pay for stadium construction costs via a tax increment financing district. There’s no way to reasonably project how much the TIF fund would collect — these things have failed spectacularly before — and more to the point, this is regular old tax money, not any actual revenues that the team would be giving up to help repay the public’s debt.

Secondly, about that “no threats” thing — not only did Lucchino just last week say he was going to look into moving the team out of Rhode Island, after promising two years ago not to do so until 2020, but Nocera actually linked to my post on that in his article. So, WTF, Joe?

Anyway, if Nocera wants to opine that the new PawSox deal is a better one for the city than the old one, it’s his column. (And he’s certainly right that it’s a better deal than Miami got for the Marlins stadium, though there are bank robberies that were better deals than that one, so that’s a pretty low bar.) But for the record, I would never call the new Pawtucket stadium plan a “win-win” — more of a “well, at least we got them to knock a few million dollars off their ridiculous subsidy demands, even if they’re still threatening to move Worcester.” Sadly, that’s a less grabby headline, but I’ll go with what I’ve got.

Miami to declare Marlins’ stadium “blighted” so it can spend tax money on Beckham MLS stadium next door

The public subsidy details are starting to emerge for David Beckham’s proposed MLS stadium next to the Miami Marlins‘ baseball stadium: On top of about $35 million in property tax breaks, it now looks like Miami-Dade County would be buying the land for Beckham, and doing so by creating a redevelopment agency to use city and county tax dollars to pay for the stadium land and a possible light rail station:

The agency’s boundaries are suggested to be Flagler Street to the South, Northwest 22nd Avenue to the west, and the Miami River to the north and east, though the resolution says the study being sought could expand that area if needed.

Community redevelopment agencies by statute create trust funds that retain 95% of the increase in tax revenues from their area above the taxes that were collected before the agency was born. The agency uses that money to finance or refinance any redevelopment it undertakes. In this case, it would include stadium land and Metromover construction, though it could include more.

This would be tax-increment financing, in other words, with all the attendant problems thereof. And because redevelopment agencies can only be used for areas in need of redevelopment, this would require the area to be declared “slum and blighted” — including the Marlins’ stadium that opened next door just three years ago in the last attempt at revitalization. This is not going to help get people to Marlins’ games.

Walker promises new Bucks arena plan in “next few days” that magically won’t cost anybody anything

Oh, yeah, it’s definitely racino time in Wisconsin, where Gov. Scott Walker has announced that “in the next few days” he’s going to announce a new Milwaukee Bucks arena plan to replace his old arena plan that everybody hated. And what will be in the new plan?

Walker gave no specifics of the new plan but said that the alternative plan would not siphon off any tax revenue from the state’s existing tax base or rely on any new taxes.

So that leaves revenue from existing taxes as they bring in more revenue in the future — in other words, some variant on a TIF, just as his old “kick back any future rise in NBA income taxes” plan was. Any other specifics?

“It involves not only our Legislature leadership — Senator Fitzgerald and Speaker Vos, that I typically meet with on a weekly basis, but also representatives of the city of Milwaukee, the county of Milwaukee as well as the Bucks and I believe in the end we will find a viable alternative. We`re working with members of the legislative leadership, the city of Milwaukee and the county, and we’re having meetings even this week on that and once we reach a conclusion, we’ll be announcing that fairly shortly,” Governor Walker said.

Anything else, anyone?

Kit Beyer, [an Assembly Speaker Robin] Vos spokeswoman, said Vos has consistently said that in order to keep the Bucks in Milwaukee, city and county officials “need to step up more. He looks forward to learning what they can offer when they meet this week.”…

In addition, there is an expectation that the City of Milwaukee and Milwaukee County will be asked to contribute. No specific details of what the city and county could contribute have been released, though it is expected the city’s contribution will be in the form of tax-incremental financing districts for the expected ancillary development near the new arena site.

Put all the tea leaves together, and it sounds like Walker and city and county officials are going to be scrounging around for any future taxes that can be credited to the Bucks’ presence — even if some of these taxes would be collected on other entertainment options if the Bucks left — to see if they can get to $250 million. This is where that “ancillary development” that the Bucks owners promised last week comes in handy: If you package together enough stuff, and count up all the taxes that it’ll be paying, and then pretend that nothing else that would pay taxes will ever get built if not for the Bucks’ presence, then it’s all free money to the state and city, so why not just hand it right back to the Bucks owners, right? Right?

It all sounds so reasonable, and makes me yet again sad that I can’t find a YouTube video of that “Odd Couple” episode where Oscar’s gambling buddy wins big at Felix’s opera club casino night, uses the money to repay Oscar on a debt, and then Felix insists that it’s really his money and Oscar should give it to him, because “it’s from me to him to you to me, like an isoceles triangle.” Math is tough!

Wisconsin governor’s arena plan depends on future NBA players averaging $33m/year salaries

Wisconsin Gov. Scott Walker unveiled his Milwaukee Bucks arena funding proposal yesterday, and oh man, was there ever a last-second plot twist. Walker is not, as rumored previously, proposing to raise $150 million for an arena by kicking back all state income taxes on Bucks players and other employees and also possibly some arena sales taxes as well. No, he says he’s going to raise $220 million, and only from Bucks income taxes — and only from new income tax above what team employees already pay:

“There’s absolute security for the taxpayers,” Walker said. “No new taxes, no drawing on existing revenues, no exposure to the future…”

Well, except for the uncertainty of what happens if NBA salaries don’t soar to the point where enough new money pours into state coffers that the government can use it to pay off $220 million in arena bonds. How likely is that? I was all gearing up for some painful Excel crunching, but fortunately Walker’s office has made a handy-dandy chart for us:

That red block along the bottom is how much the Bucks (and visiting teams’ players, pro-rated for the days they play in Milwaukee) pay now in state income taxes, which is $6.52 million a year. The current Bucks player payroll is $62.6 million, and the top state income tax rate is 7.65%, so about two-thirds of that figure comes from the team’s roster, with the rest presumably coming from visiting players, team execs, hot dog sales people, and the like.

How much would salaries have to rise to make the green part of the above chart come true? Walker’s projected state revenue in the year 2046 is about $45 million, meaning at a 7.65% state income tax rate, we’re looking at $588 million in payroll. If two-thirds of that is the Bucks, then for a 12-player roster, the average player salary would have to be $33 million a year in order to make these numbers work.

Is that as crazy as it sounds? The average NBA player salary 31 years ago was $330,000, and it’s $4.1 million today, so it’s on pace with historic trends. (Salaries have leveled off the last few years, but they’re expected to take a big jump in the next CBA thanks to the league’s lavish new TV deal.) But past performance doesn’t guarantee future returns, and lots of things could torpedo that assumption:

  • The cable bubble could burst. In fact, it’s a near-certainty that nobody will be watching NBA games in 2046 by turning on a cable box — broadband Internet will have replaced it decades before then — but the issue isn’t really what pipe people use to get their sports fix but how much they’re willing to pay for it. Right now, sports on TV is a loss leader for cable companies to get viewers to buy their service at all; once everybody is watching TV on the web and companies don’t have to worry about cable cutters (because everybody has to have Internet service whether they want to watch TV on it or not), the economic calculations start to change. Unless you envision a future where a huge number of people happily pay $1000 a month for the right to watch sports on TV, NBA revenue — and salary — inflation is going to have to level off sometime soon.
  • Basketball could sink in popularity. The NBA has done great at expanding its marketing in recent decades, but who knows what the future holds? Competition from leagues in other nations? Kids defecting to watching e-sports? Not that this necessarily would mean plummeting salaries — baseball has lost market share for a while now, but continues to rake in more cash — but it wouldn’t help.
  • Jon Bois could seize control of the NBA and make it die an agonizing death.

If any of that comes to pass, it’s not altogether clear what happens to Walker’s arena bonds: I haven’t been able to find any indication of what the backup revenue stream would be if income tax revenues don’t balloon as expected. (There will have to be something, though, or else nobody’s going to buy these bonds.) But this is essentially an income-tax variant on a TIF — an iTIF? — and if the increment fails to materialize as they so often do, the only possible answers would be new taxes, drawing on existing revenues, or the Bucks paying of the debt themselves … okay, ha ha, that’s not very likely.

(I should also note that I’m slightly skeptical that Walker’s green triangle would be enough to finance $220 million in bonds — it looks like about $600 million in nominal dollars, but the bulk of that is pushed way back into the future, which is going to require tons of finance charges like Miami took on for the Marlins. But a more specific accounting is going to have to wait for someone with better Excel skills than me.)

And finally — finally — keep in mind that all of this is not actually found money, but rather income tax receipts that the state of Wisconsin would otherwise be able to spend on other things if they weren’t handing it over to the Bucks owners. Unless you assume that the Bucks would definitely leave without $220 million in subsidies, and that Milwaukee sports fans wouldn’t find something else to spend their money on that would increase income tax receipts elsewhere, neither of which is anywhere close to a sure thing.

What Walker appears to have done is to come up with a way of writing a $220 million check to the Bucks that is rationalized in the most politically acceptable way possible: It’s not new taxes, it’s not existing taxes, it’s just future taxes on future imaginary super-rich basketball players who otherwise wouldn’t be playing in future Milwaukee because the future NBA will have future teams everywhere but there unless the state subsidizes a new arena. (And the city or county — Walker assumes another $50 million from those taxpayers, though he doesn’t specify how.) That still may not be enough to win over the state legislature, whose leaders were making mildly skeptical noises after Walker’s announcement yesterday, but it’s got as good a shot as anything.

And okay, really finally, I can’t let the Milwaukee Journal Sentinel article on all this pass without noting that Walker’s plan was apparently so remarkable that it stunned Journal Sentinel writer Don Walker into actually calling some economists to ask what they thought of it:

Andrew Zimbalist, a sports economist at Smith College in Massachusetts, says studies have found there is no statistically positive correlation between sports facility construction and economic development.

“Bear in mind that this is an observation about the average case,” Zimbalist said via email. “It does not mean that in a particular case that there can’t be a positive or negative effect. I would say in individual cases one has to look carefully at the financing and lease terms, as well as elements of land use and the local economy.”

The Bucks will argue that plans for ancillary development near the arena site will bring new construction jobs, new dollars and new development to a revitalized downtown Milwaukee.

Mark Rosentraub, a professor of sports management at the University of Michigan, says the key for Milwaukee and the Bucks is whether the anticipated ancillary development is successful. The new Yankee Stadium in New York, he said, was a “complete wasted opportunity. One billion dollars was spent and it had no impact at all on the south Bronx.”

This is, so far as I can tell, unprecedented in the history of Don Walker reportage, which normally lends itself to this. Maybe he’s actually starting to realize that only citing the people proposing the arena plan isn’t the best way of doing journalism—

Patrick Marley of the Journal Sentinel staff contributed to this report.

Or maybe not.

Chicago is still building that $125m arena for DePaul, in case you were wondering

Heather McCoy of KUCI, whose show I’ll be making my weekly appearance on at 8 am Pacific today, asked me yesterday what was up with Chicago Mayor Rahm Emanuel’s much-ridiculed plan to build a $125 million basketball arena for private DePaul University. The answer, it turns out: Damn the ridicule, full speed ahead.

The Metropolitan Pier and Exposition Authority board has approved the purchase of the final land for a planned entertainment district in the South Loop around McCormick Place. … The city is contributing $55 million in tax increment financing to McPier for the project, of which $26 million will go for hotel and ABC building land and $29 million toward hotel construction. McPier paid $14 million for the remaining land needed for the DePaul arena.

The state legislature approved the plan last spring, then the city council followed suit with a “very quiet” vote in favor last July. Now that the land has been acquired, construction can begin, and Chicago will at last have the 10,000-seat arena that it’s been lacking for all those concerts by bands that are too big for 5,000-seat venues but can’t fill 20,000-seat venues. In other words: Nickelback, please never retire.

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.