Manfred drops R-word regarding Rays, sports world fails to freak out

I’ve picked on MLB commissioner Rob Manfred before for being really bad at levying relocation threats in order to shake loose stadium subsidies, one of the two main jobs of a sports commissioner. (The other, of course, is levying lockout threats in order to shake loose union concessions.) But maybe, just maybe, Manfred is starting to get the hang of it. When asked about the Tampa Bay Rays‘ stadium situation:

Manfred, during a Q-and-A session at the George Washington University School of Business, did not set any deadlines or issue any ultimatums, but said that at some point if there is no progress the potential of relocation would have to be raised…

“Ultimately, there has to be an end game. If in fact, there’s not a site or there’s not a financial arrangement that’s viable and we become convinced of that, our rules allow for the possibility of relocation.
“At that point of desperation, it’s possible a team would be allowed to relocate.”

That’s a little passive-voice, but not too bad otherwise! The real test, though, is whether it led to a flurry of frantic headlines about how Manfred is threatening to move the Rays if they don’t get a new stadium, stat:

screen-shot-2016-12-07-at-8-44-10-amWell, then. Maybe he should try speaking more from the diaphragm? I hear that helps.

Cleveland to Browns, Cavs, Indians: Everybody gets $57m in tax money, now play nice

And it’s official: The Cleveland Browns, Indians, and Cavaliers will get equal cuts of the “sin tax” extension voters approved back in 2014:

Each team will get $4.6 million per year for the next 20 years. The money can be used to upgrade the stadiums and arena where they play.

Via the magic of net present value calculators (even those that don’t know how to spell “principal”), we can determine that this revenue stream will be worth about $57 million in today’s dollars to each team. It shouldn’t be hard for each of them to find ways to spend that down — especially with the Cavs already asking for another $70 million to pay for a new super-spendy glass exterior wall — but if all else fails maybe they can just buy some IBM “Internet of things” gewgaws and call it “infrastructure.”

New MLB CBA should help spark new A’s stadium, but maybe not why you think

Of all the small changes in the new MLB collective bargaining agreement agreed on last week (which include the end of our long national World Series home-field nightmare), one that’s getting a bunch of attention is the decision to phase out the Oakland A’s exemption that’s allowed them to be the only team to collect revenue-sharing checks despite playing in a big market. The upshot, according to most sportswriters, is that this should turn up the heat on the A’s to build a new stadium:

Q. Sure, losing $35 million is one thing, but spending $800 million or likely much more to build a privately financed stadium is in a whole other category. Why does this force the A’s hands?

A. In absolute terms, it can’t. But the A’s want and need a new stadium and its revenue generating potential, so this is a strong push in this direction. Both executive vice president Billy Beane and general manager David Forst have talked about a future in which they can dial up the payroll to fit a new stadium.

That’s … not wrong, but wrongish. The implication here is that now that the A’s won’t be cashing annual revenue-sharing checks from the rest of the league no matter how crappy their balance sheet is, they’ll have to turn a profit some other way, so time to finally get cracking on that new stadium that’ll open up the money taps!

But that’s not how sports team owners think, or at least not how they should think if they’re remotely rational economic actors. (Which they probably aren’t entirely, but let’s overlook that for the moment.) If a new stadium is going to bring in more money than it costs to build, then you’re going to do it regardless of how much money you’re currently getting from other sources; and if a new stadium is going to be a money-loser, it’s not going to help you either way.

Where the new revenue-sharing rules can change the game is in how they effect marginal tax rates. Think about it this way: If you’re considering making an investment — moving to a new city, buying a car that allows you to commute to a new job, getting an advanced degree — and trying to figure out if the extra income it will allow you is worth it, the first thing you need to know is how much your net income will change after taxes, deductions, etc. So if you’ll be earning an extra $10,000 a year, but your bank balance will only change by $6,000, that’s a 40% marginal tax rate. (We can call it this regardless of whether it’s actual extra taxes you’re paying, or, say, credits you’re no longer eligible for.)

So back to the A’s. In past years, as an exempted “small market” team under MLB’s two-tier revenue sharing system, they’ve been subject to the leaguewide 34% tax on each new dollar earned, plus a 14% “performance factor” tax where both the size of the tax and the size of the benefit is based on how much money your team brings in (or fails to). (the effective marginal tax rate impact of this is largely the same regardless of whether you’re a high-revenue team or a low-revenue team, since either you’re paying out more and more into revenue sharing as your revenue rises, or you’re receiving less and less in checks, or both.) The new system eliminates the performance factor sliding-scale tax and replaces it with more flat tax — while the math is complicated, it won’t change things drastically in terms of how much of each new dollar the A’s get to keep.

What will have a significant effect is eliminating the huge penalty the A’s were previously going to face for building a new stadium. Before, a new stadium was going to make the team ineligible for any revenue-sharing checks at all, since it would kick them into the “big market” bracket; now, with the checks already shutting off, there’s no disincentive to go ahead and build. Getting rid of this penalty — a “benefit cliff,” in economic terms — should make building a new stadium a lot more alluring to the A’s owners, which is no doubt a big reason why MLB took this measure. (Though also probably because some owners were just sick of giving the A’s any money when they weren’t spending it — though that remains a problem with some other teams that remain designated “small market.”)

In other words, while losing that $35 million a year should be a huge incentive for building a new stadium, it’s not actually the loss of the money that matters, but rather taking away the threat of losing the money if they built a new stadium. MLB could just as easily have incentivized Lew Wolff and Co. by saying, “Hey, you’re small market either way, go ahead and replicate the Miami Marlins if you feel like it,” and it would have done largely the same thing.

If all that is too much math to swallow on a Monday morning — it’s almost too much for me — just hold on to the takeaway that the A’s might be building a new stadium soon with largely private money, though there’s still concerns they may try to make a grab for public land. Just also remember that revenue sharing works in mysterious ways, so what’s sauce for the A’s may not be sauce for, say, the Arizona Diamondbacks.

County official proposes diverting one-third of tourist dollars to build Cavs a glass wall

It’s been almost eight months since the Cleveland Cavaliers asked for a $140 million expansion of their arena to add more public space and give it a glass exterior wall, and Cuyahoga County Executive Armond Budish said, “Let me get half of that for you.” Now, Budish thinks he may have found some of the money, asking the local tourism agency to use hotel tax money to pay for the Cavs’ renovations.

Destination Cleveland collects about $15 million a year in hotel taxes, and paying off $70 million in Cavs expenses would cost about $4-5 million a year, so this would clearly be a hefty chunk of change, unless Budish has other revenue sources in mind as well. The Cavs are already getting a cut of the alcohol-and-cigarette-tax extension that county voters approved back in 2014 — Budish recently proposed splitting the proceeds evenly among the Cavs, Indians, and Browns, as nobody bothered to work that out beforehand — and since that amounts to about $170 million in total present value, Cavs owner Dan Gilbert is effectively asking for $70 million on top of the $60 million he just got two years ago for renovations. But really, who can put a price on the enjoyment that local sports fans get from a glass wall?

Private company’s stupid plan to build new D-Backs stadium falling apart, because it was stupid

The bizarro plan to have private investors buy Chase Field, home of the Arizona Diamondbacks, from Maricopa County and maybe build a new one already wasn’t going well when the putative investors never showed up to any meetings, though they did have their lawyer send a letter to the local newspaper. And now it’s really not going well, as recounted by the Arizona Republic’s Rebekah Sanders:

  • The Diamondbacks undermined investors by releasing to The Republic notes from a discussion that Stadium Real Estate Partners II had asked to remain confidential. According to notes by an attorney representing the team, attorneys representing the investors criticized the “structural integrity” of Chase Field and the anticipated high cost of repairs — as much as $180 million. Touring the ballpark “scared the s*** out of” the investors, according to the notes. “Putting money in this aging facility is a waste.”

  • The investors hoped to use the Government Property Lease Excise Tax incentive program to avoid millions of dollars in property and excise taxes on a new stadium, according to the notes. No property taxes are currently paid at Chase Field since a government entity — the county — owns the land.

That’s a lot of tea leaves to read, but it sounds like: 1) the Diamondbacks owners are more interested in making a case for their stadium upgrade demands than for a sale plan that was the county’s idea in the first place, and 2) the private investors didn’t really know what they were getting themselves into, other than “hey, let’s get a stadium and get subsidies for it somehow,” which is working the D-Backs owners’ side of the street.

The problem remains much the same one as with Donald Trump’s infrastructure privatization scheme: If a project isn’t making any money, just shifting it from public to private hands isn’t going to suddenly make it more profitable, unless there are new subsidies involved. The only real hope for this stuff is that you find a private developer who’s able to come up with an innovative way of making money that the government hadn’t thought of (not likely, but possible) or who’s dumb enough to throw money at a gamble that’s likely not going to pan out (also not likely, but possible); the danger is that either you have to subsidize the project up front, or that the private entity goes belly-up and leaves its public partner holding a half-billion-dollar bag, which is all too possible. So it might actually be easier for all concerned if these private buyers bail on the plan, and just leave the D-Backs owners and the county to keep fighting it out over who’ll spend on what — if nothing else, that kind of subsidy battle is way easier to understand.

UPDATE: The plan is now totally dead. In lieu of flowers, send ideas for fixing Shelby Miller.

Cobb County is bulldozing 30 homes to make way for road to Braves stadium

What’s worse than living in Cobb County and having to pay more than $355 million toward a new Atlanta Braves stadium, plus dealing with a traffic and transit mess because the county didn’t approve a transportation plan before agreeing to build the stadium? I’m going to go with “having to pay more than $355 million toward a new Atlanta Braves stadium, plus dealing with a traffic and transit mess because the county didn’t approve a transportation plan before agreeing to build the stadium, plus having your house torn down to make way for the whole mess“:

Tuesday night, Cobb County informed me I’d have to find a new front door, and a new house, because they’re bulldozing both to build a new road…

Why this new road? So the folks who take the new managed lanes along Interstate 75 can easily hop off the freeway at Terrell Mill Road and get to the new stadium quickly. The stadium I was so happy about.

If it wasn’t all so ironic, I would cry.

County officials say they’re seizing 16 homes by eminent domain — and possibly as many as another 15 — for a road project that had been planned for years, but was expedited because of the opening of the stadium next year. So you can’t exactly say “Cobb County is bulldozing 30 homes to make way for a road to Braves stadium” — actually, you can totally say that, even if they might have maybe done it at some point with or without the Braves. Economic development, everybody!

Man who should know better says $500m Rangers subsidy made sense because “things happening” is good

And here’s your epitaph for the Texas Rangers owners’ successful stadium campaign:

[UTA political science professor Allan Saxe] said he believes another factor that influenced voters was last month’s groundbreaking for the $250 million Texas Live! entertainment complex, being built next to Globe Life Park and the new stadium site.

“When people can see things happening, I think they’re willing to go along with other projects,” he added. “I know it impacted me.”

Read that again: A political science professor says he was swayed to vote for a half-billion-dollar subsidy to help two rich guys tear down their 22-year-old stadium so they could have one with air-conditioning because of an entertainment project next door that was already going to be built regardless.

I can see we’re going to be here awhile.

Rangers owners get $500m to tear down 22-year-old stadium for lacking a/c, oh democracy

So in those other election results:

With 100 percent of precincts reporting, the [San Diego] Chargers received only 43 percent approval on Measure C, the team’s $1.8 billion downtown stadium and convention center annex that proposed raising hotel taxes from 12.5 percent to 16.5 percent to secure $1.15 billion in bonds to help pay for the project.

We already pretty much knew that was going to happen: That the Chargers stadium plan fell so far short was a slight surprise, but it never had any hope of getting close to the required two-thirds majority, and even 50% was probably out of reach. So anyway, what about the other stadium vote, the one whose outcome was still in doubt?

On Tuesday, voters in Arlington, Texas, approved a measure to contribute up to $500 million toward the cost of a new ballpark for the Texas Rangers. … The ballot measure passed by a margin of 60 percent yes to 40 percent no.

That’s also to be expected, once you take into account that the pro side (i.e., mostly the Texas Rangers owners) was outspending the anti side (a handful of volunteer activists) by more than 200-to-1, and anything over a 100-to-1 margin usually guarantees a victory. Still, as of just a few days ago it looked like a toss-up, and … nah, nobody wins against that kind of spending firepower, especially not in Texas.

So Chargers owner Dean Spanos will now be deciding whether to accept a lease from Los Angeles Rams owner Stan Kroenke to be tenants in Inglewood, or whether to try to fight an uphill battle to somehow get stadium subsidies in San Diego. (Or to stay in San Diego without subsidies HA HA HA HA just kidding.) And Texas Rangers owners Ray Davis and Bob Simpson will be getting a half-billion-dollar check from Arlington taxpayers so they can tear down a 22-year-old stadium because it doesn’t have air-conditioning. The American experiment is going great.

Rays owner conducted study of moving to Montreal, says a guy

So on Sunday, this happened:

Sérieux!

For those of you who ne parlent pas français:

Serious! Stewart Sternberg, owner of the Tampa Bay Rays RECENTLY funded a study of viability of a stadium in Griffintown. Sternberg is the main shareholder (48%) of the Rays he wishes to move and not sell and Mtl, is top of the list. Griffintown would be the ideal site. It’s two small steps from downtown.

According to Patrice Derome (hi, Patrice!), Trudel — whose Twitter bio describes him as a “journaliste et commentateur sportif sans attache,” which is exactly what it sounds like — subsequently went on the radio and said that the study was conducted a few months back. What the study consisted of, and what it found, I couldn’t tell you.

I’d be tempted to say this is just Sternberg trying to throw a scare into Tampa Bay area cities, except that if so, you’d think he’d have leaked it to a journalist avec attache, at least. Though since, as Noah Pransky notes at Shadow of the Stadium, this would potentially be a violation of the Rays lease clause that only allows Sternberg to look at alternate stadium sites within the bay area, maybe he had to go super-stealth mode on this? Or maybe he’s really considering moving the team to Montreal, or doing due diligence to see how expensive a Tampa Bay stadium would have to be before it would be worth his while to move, or just wanted an excuse to try some of those funny bagels. We’re deep, deep into speculation here, so please no freaking out and/or getting to excited just yet, especially since the Rays can’t leave Tampa Bay until 2027 regardless, at which point the onrushing death of cable will likely have made the sports business market unrecognizable anyway.

The Rays, for their part, promptly said nothing at all:

Rangers owners hope new $1B stadium will solve attendance problem that doesn’t actually exist

This article by the Fort Worth Star-Telegram’s Mac Engel is just weird:

For the record, I am a big fan of the Rangers remaining in Arlington but a staunch opponent of public financing for places of business that are open less than one-third of the year, especially when a perfectly good space is in fine working order…

It’s your money and if you are OK with that, then bring on what must be the last time for the next 100 years that the Texas Rangers ask the city of Arlington for another thing.

If a new stadium does not fix the problem, nothing will.

The “problem” here, Engel seems to be saying, is that not enough people are going to Rangers games, ostensibly because they’re not air-conditioned, a condition that a new $1 billion stadium would remedy. Engel cites a team estimate that they “lose hundreds of thousands of potential fans every season because of our heat,” something he deems “certainly plausible.”

Is it? Let’s check the records:

screen-shot-2016-11-07-at-9-10-24-amThat all looks pretty good, except following years in which the Rangers were crappy on the field, which is as to be expected. (There’s invariably a one-year lag between win-loss record and attendance, as most tickets are sold early in the season before anyone knows whether the team will be good this year or not.) The Rangers drew 3,460,380 fans in 2012, a club record, coming off their two straight World Series appearances — a full season sellout would only have been 3,525,201, so the only way a lack of a/c could have cost the team “hundreds of thousands of fans” that year was if they’d been planning on seating them in each other’s laps.

In any event, only averaging between 2.5 million and 3 million fans a year is a “problem” that most other teams would be thrilled to have — the Rangers were 10th out of 30 teams in attendance last year, and are likely set for another ticket-sales jump following their 95-win season and first-place finish. Is it hot in Texas? It’s hot in Texas! Is the prospect of getting fans out of the heat likely to make it worth spending $1 billion to tear down a 22-year-old stadium and build a new one? Almost certainly not, which is why the Rangers owners are hoping to have the city of Arlington pay for more than half the cost. The only problem they’re looking to fix here isn’t about attendance figures or temperature numbers — it’s about having gone two decades without getting a city check with nine figures on it.