Arizona senators push to give Coyotes, Suns, D-Backs up to $1.1b for new arenas and stadium

Arizona Coyotes owner Anthony LeBlanc may not have any idea where he wants to build a new hockey arena now that Arizona State University pulled out of a planned venue in Tempe, but that’s not going to stop members of the Arizona state senate from pushing legislation to give him $170 million in sales- and hotel-tax kickbacks to help build one. And hey, while we’re at it, let’s make it easier for the Diamondbacks and Phoenix Suns to get state subsidies, too:

The bill would allow creation of “community engagement” districts of up to 30 acres. Within them, up to half of the state’s share of sales taxes generated from retail sales and hotel stays would be dedicated to paying the bond debt for new sports or entertainment facilities. It also would allow an additional 2 percent district sales tax to be applied to all purchases within the district, with those revenues also dedicated to defraying the cost of facility construction.

In the case of the Coyotes, the plan envisions public funding covering 57 percent of a new arena’s cost, with new sales taxes covering $170 million and the host city contributing $55 million. The Coyotes said the team’s portion would be $170 million, amounting to a 43 percent contribution toward the $395 million total cost.

This is a bit of a hybrid bill, combining super-TIFs (where half of existing sales and hotel taxes would be kicked back to pay teams’ construction costs) with a new sales tax surcharge in the area around the new sports venue. The math on how much of a subsidy this amounts to gets dicey — virtually all of a TIF would be cannibalized from sales and hotel tax receipts elsewhere in the state, but a slice of a sales tax surcharge could come out of a team owner’s pockets, depending on how big the surcharge area is — but the vast majority of it would be a straight-up gift to team owners, all to allow cities in one part of Arizona to steal teams from cities in another.

You’ll note that I said “teams,” not just the Coyotes. That’s because the new super-TIF districts could be applied to help build any new sports and entertainment facilities. The only limit is that state money would only be allowed to pay for half of construction costs up to $750 million — meaning that if the Coyotes, Suns, and Diamondbacks all availed themselves of the legislation, as you know they would love to do, Arizona taxpayers could potentially be on the hook for $1.125 billion. (If the Coyotes stick to their $170 million demand, the max would be only $920 million, but as we’ve seen before, sports construction costs only tend to go up, and there’s nothing stopping LeBlanc from revising his ask as time goes on.)

Now, the bill has so far only passed one committee in one branch of the Arizona legislature — Sen. Bob Worsley of Mesa used one of those “gut an unrelated bill and insert your own language” tricks to get it on the agenda of his own transportation and technology committee — and none of the teams involved have identified places where they’d like to build new facilities, or how to pay for their halves. Still, it’s a pretty remarkable response to a “crisis” started by the Coyotes’ need to leave their nearly-new arena in Glendale because … hey, Coyotes ownership, why do you need to leave again?

“It does not work in Glendale,” Ahron Cohen,the team’s general counsel, told the Senate panel. “In 2013, our ownership group bought the team. The previous ownership chose to go out there.”

Oh. Well, if it “doesn’t work,” then it doesn’t work. I thought you were going to say something about how you couldn’t bear to be forced to compete for the rights to operate the arena instead of just being handed $8 million a year by Glendale in a no-bid contract. Good thing it’s not that, because asking the state of Arizona to pay you a couple hundred mil to get you out of that pickle would be chutzpah in the Nth degree, and only complete morons in state government would actually consider it.

D-Backs owners sue to break lease, so they can escape being shackled to 19-year-old stadium

The owners of the Arizona Diamondbacks have started off 2017 with a bang as well, moving forward with until-now-idle threats by filing suit to break their lease with Maricopa County on Chase Field, on the grounds that the county owes them $187 million in repairs and upgrades:

Diamondbacks Managing General Partner Ken Kendrick said the team attempted to resolve the conflict out of court.

“We have made a promise to our fans, who have been partners with us on the building of this stadium and our franchise, to provide the best experience in all of baseball in a safe and welcoming environment,” he said in a written statement. “The inability of the Maricopa County Stadium District to fulfill its commitments has left us with no other option.”

Kendrick and his corporate overlords indeed no doubt saw this as their only option after county officials told them where to stick their stadium upgrade demands — whether than makes it a good option is another thing entirely. But given that the county report that identified the $187 million in needed (maybe “desired” is a better way of putting it) improvements in the first place also noted that $145 million of that was specifically on the team’s shoulders, it seems like the D-Backs owners are going to have an uphill battle in court, if they indeed plan to proceed to court and not just make this a negotiating gambit.

Anyway, expect the upcoming months, if not years, to now focus on questions of how to “solve the Diamondbacks stadium standoff” and where the team might try to relocate to if it successfully breaks its lease (which otherwise prohibits any move until 2028, or even talking about a move until 2024), much as we’ve seen in recent years with the Tampa Bay Rays. Which, come to think of it, is probably all the team owners want at this stage: to get people talking about replacing a 19-year-old stadium like it’s an urgent priority. There’s crazy, and then there’s crazy like a fox.

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.

Shadowy developers say they’ll build new D-Backs stadium without public funds, don’t say how

What is this, mysterious private developer interest in rebuilding sports venues week? The private group that expressed interest in buying the Arizona Diamondbacks‘ Chase Field from Maricopa County then didn’t bother showing up for any meetings to discuss the plan have instead taken their case to the Arizona Republic:

“For decades the Arizona taxpayer has funded billions of dollars for the construction and renovation of stadiums and arenas,” wrote Nick Wood, a Valley attorney for the private investors, Stadium Real Estate Partners II LLC. “Today, my client, together with real estate developer Egbert Perry, Chairman of Fannie Mae and President of Integral Group LLC, has stepped up to relieve the taxpayer of that extraordinary expense and seeks to not only purchase Chase Field, but to also construct a brand new, state-of-the-art, downtown baseball stadium for the Diamondbacks using all private money.”

What’s undisclosed: the proposed location of a new stadium in downtown Phoenix, when construction could begin and the cost, which likely would run to the hundreds of millions. Wood would not clarify any of those questions.

So, yeah. This is a complicated three-way dance between the county, the D-Backs owners, and these would-be private stadium developers, but so far we’re barely at the dueling press releases stage. Promising a brand-new stadium with all private money is certainly a great way to get attention — and hey, if it’s for real, more power to them. If anyone here thinks it’s likely to be for real, please raise your hand. Then see me after class for a remedial lesson in sports venue operations financing.

Turns out nobody actually wants to buy Diamondbacks’ stadium, oops

The crazy-ass plan for Maricopa County to sell the Arizona Diamondbacks‘ Chase Field — which the Diamondbacks owners want either upgraded or replaced or they’re threatening to move — to some out-of-state investment bankers turned out to be even more crazy-ass than anyone expected, as the potential buyers haven’t even shown up to any meetings to discuss a sale price. Apparently a used stadium with an angry tenant who has to approve your purchase and probably won’t isn’t a hot commodity among real-estate investors, who knew?

Instead, the county may hire an outside firm to appraise the stadium and its surrounding land, to see if its $60 million asking price was reasonable. Which, sure, go for it, Maricopa County. But it’s still hard to see how shifting ownership of the stadium resolves the underlying problem, which is that D-Backs owner Ken Kendrick is demanding at least $187 million in stadium upgrades, mostly for things his lease says he has to pay for, a battle that is likely to end up in court. Maybe the county should sell the stadium to a bunch of lawyers — at least they’d guarantee themselves lots of billable hours.

County okays pursuing D-Backs stadium sale, lacks only all details about everything

Going into yesterday’s Maricopa County board meeting on the possible sale of the Arizona Diamondbacks‘ stadium to a private investment firm, two of the big questions were: Could the county craft a deal that the Diamondbacks owners, who have the right to block a sale, would approve? And would any public money be required?

Coming out of the meeting, the Arizona Republic reports:

The Maricopa County Board of Supervisors voted unanimously Wednesday to move forward with negotiations to sell Chase Field, the downtown Phoenix home of the Arizona Diamondbacks, to private out-of-state investors…

But the county vote raised several key questions that went unanswered, including whether the team would support a sale and whether a taxpayer subsidy would be included.

Yeah, we’re cooking with gas now!

County supervisors told the Republic that the deal would extend the Diamondbacks’ lease through 2028, which sounds awfully presumptuous given that nobody’s actually talked to the team owners about this. The paper also reports that “the buyer would be required to reach a deal with the team within the first two years of the contract to pay for capital repairs over the life of the stadium,” which seems nuts — if the two sides just stare at each other saying, “You pay for it!” “No, you!”, what happens, do the buyers go back to the county for a refund?

On the subsidy front, supervisor Andy Kunasek, who you’ll remember from his profanity-laced “go to West Virginia” tirade in response to the D-Backs’ subsidy demands, raised the possibility of giving the private investors either a property tax exemption or a kickback of sales taxes, which apparently he doesn’t think would be “parasitic” if it’s someone other than the Diamondbacks owners getting it. (Maybe he’s still pissy over the Shelby Miller trade?)

Of course, all this is still in the very early stages, so it’s probably best not to think of anything as more than a harebrained scheme that somebody threw out there to see if it’ll stick. I mean, listen to this, from the Republic:

New shops, restaurants and hospitality services could spring up at the ballpark, as the buyer seeks to develop the site into a sports and entertainment “destination.” Among the ideas: Add retail and dining to the open plaza outside the stadium and within the stadium by reducing the seating capacity from 48,000 to 30,000.

This is for a stadium with a retractable roof, mind you, so it’s not like you can easily reduce the building’s footprint in order to jam in more steakhouses. I guess you could rip out all the seats down the left-field line and build a giant sushi bar or something, but that doesn’t seem like a much better idea. Besides, do you really want people eating raw fish before having to watch Shelby Miller?

County to D-Backs: If you’re going to be that way, maybe we’ll just sell your damn stadium

I learned long ago never to be surprised by anything that happens in the stadium world, but this is just bizarre:

The Maricopa County Board of Supervisors is contemplating selling Chase Field in downtown Phoenix to private, out-of-state investors, and will meet Wednesday to vote on initiating negotiations.

The starting point for the proposed deal, made public Tuesday, is a $60 million sales price. It would include keeping the Arizona Diamondbacks at the stadium through 2028 — the remainder of the team’s contract with the county — and potentially longer. A draft contract showed the county would retain a handful of perks like a stadium suite and premium parking, despite no longer owning the building.

Okay, let’s walk this back. Maricopa County, you may recall, is in the middle of a big-as fight over whether the public will pay for at least $187 million in improvements to the Diamondbacks‘ 18-year-old stadium, as the team owners want, or the team will pay for them if it wants them, as the county’s study that identified the wishlist spells out. Now, it appears, the county is preparing to wash its hands of the whole place and sell it to a shadowy investment group called Stadium Real Estate Partners II LLC, which has ties to investment banker Sorina Givelichian and Fannie Mae board chair Egbert Perry.

Givelichian and Perry don’t sound certifiably insane, so it’s hard to say why on earth they’d want to take on the stadium, since it’s unlikely they’d earn back even a $60 million investment, especially if the Diamondbacks make trouble with their lease, which they’re already doing. The investors issued a letter saying they hoped to create “a sports and entertainment district surrounding the facility [that] would further complement and enhance the downtown area and increase tax revenues within such sports and entertainment district,” which is a lot of nice verbiage but doesn’t exactly explain where the district would go or how big it would be — it’s a pretty tight squeeze around the ballpark, so does this mean them buying adjacent parcels or what? (The buyers’ letter of intent says the purchase would include stadium parking areas, but the page that’s supposed to show a map of the parcels is blank.) And does that “increase tax revenues” line presage a request for TIF tax kickbacks, or is it just a way to sweeten the pot for county board members voting on this?
It’s all extremely weird, and almost feels like a gambit by the county — keep threatening to sue us and we’ll just go ahead and sell your stadium — except then what’s in it for Givelichian and Perry? I really hope there’s more info after today’s county board meeting, because so far this doesn’t make a whole lot of sense.

Phoenix mayor: Don’t listen to county supervisor, we’ll “facilitate” stadium upgrade

To anyone still all excited about yesterday’s revelation that the lead elected official of Maricopa County told the Arizona Diamondbacks owners to take their subsidy demands and shove them, Phoenix Mayor Greg Stanton is here to let the world know that some Arizona politicians are still going to stand up for truth, justice, and the American way of offering whatever it takes to the local sports team owner if they please, please won’t even consider moving out of town:

Stanton said a letter to county officials from team president Derrick Hall, revealed Monday by The Arizona Republic, was a surprise and should not lead fans to believe Phoenix has lost interest in a compromise that does not cost taxpayer money…

“Any impression that was left that the City of Phoenix wasn’t interested in keeping the Diamondbacks in downtown Phoenix for the long haul is inaccurate,” Stanton said. “I’m willing to roll up my sleeves and get to work to keep the Diamondbacks.”…

Stanton said he reached out to the team Monday to offer assistance: “We stand ready now and into the future to facilitate a long-term solution to this situation if we can be helpful.”

That bit about “does not cost taxpayer money” sounds somewhat promising, though somewhat less promising when you consider that Stanton has previously said that building a new arena with tax money doesn’t count as tax money if it’s tax money that the city is already collecting. Mostly, it looks like Stanton was just reacting to D-Backs president Derrick Hall’s letter saying that the team would proceed on the assumption that neither the county nor city wanted to renegotiate the team’s stadium lease, with the mayor saying, “No, no, we’ll talk! Don’t listen to that crazy guy in county government!” Which totally undermines any attempts by the county to hold a hard line, yes, but in America that’s what we call statesmanship.

Arizona official calls baseball “parasitic,” tells D-Backs owner “go to West Virginia”

To recap briefly the Arizona Diamondbacks‘ stadium squabble: In March, team execs sent a letter to Maricopa County, saying if they didn’t get $187 million (or maybe more) to upgrade (or maybe replace) their 18-year-old stadium, they’d sue to break their lease and move. In April, county officials wrote back that most of the $187 million in proposed upgrades in a 2013 county study was for things that the lease explicitly says the team should be paying for, so seriously, guys?

That should be enough epistolary bad blood for anyone, but the Arizona Republic just turned up another letter, this one from County Supervisor Andy Kunasek to Diamondbacks president Derrick Hall in April that included some remarkably pungent language for an official missive from a public landlord to its whiny tenant:

Your slanderous public comments and attempts to rewrite history demand a response. The false narrative you are trying to sell impugns the character and competence of many dedicated people who have worked diligently to protect the interested taxpayers who paid for and own the stadium…

My instinctive concern for the taxpayer is amplified by my belief that this facility should never have been built using taxpayer funds, and to turn the music up louder, THEY WERE NEVER GIVEN THE OPPORTUNITY TO MAKE THAT DECISION AT THE BALLOT BOX. I have no intention of compounding that wrong by supporting your obscene demand that we provide another massive infusion of taxpayer money to the private business that currently employs you…

As for your business, profession baseball is evolving into a parasitic enterprise which is well on its way to destroying its host. … I suggest that you focus on your job, which should be the development of a success product (a winning team), which will improve the fan experience and in turn, will increase ticket sales and reignite a desire for people to attend and watch professional baseball in Arizona. Or, if you want, run for a seat on the Maricopa County Board of Supervisors. Maybe you can become the personal valet your owners want on the Board. Please quit trying to do both jobs.

Boom! And if that weren’t enough, the Republic reports that Kunasek hand-delivered the letter, and added a few more choice words at the time:

As Kunasek delivered the letter to the team, he directed a profanity-laced storm at Hall, calling on owner Ken Kendrick to “take your stupid baseball team and get out” and go back to “f–king West Virginia,” according to team notes that Kunasek does not dispute.

Kunasek, a fiscal-responsibility Republican who’s been in office since 1997, has already said he’s not running for re-election this year, so this was an opportune time for some venting. As for what it’ll mean for the Diamondbacks’ future, Hall wrote back with a long letter about what the Diamondbacks allegedly do for the local economy, and concluding:

Your candor with respect to this issue will cause us to move forward in a different direction from what we had anticipated and hoped, and where we had tried to find resolution in the past to no avail.

So that’s a threat, albeit probably an idle one unless Hall and Kendrick really think they can win a court case to break their lease, which seems questionable at best. More likely they’ll wait to see who’s on the county board after November, and see if they’re more willing to play ball. Kunasek certainly set the battle lines for any future stadium talks, though, which isn’t bad for a parting shot after 19 years on the job.

County to D-Backs: Most of $187m in upgrade demands is items team agreed to pay for

Maricopa County responded to the Arizona Diamondbacks owners’ demands for at least $187 million in improvements to Chase Field plus maybe additional tax subsidies with a letter of their own this week, which you can read in its entirety here. The key bit, though, is this:

Screen Shot 2016-04-12 at 3.17.25 PMTranslated, this means: Okay, you keep saying our 2013 study of possible repairs/improvements to Chase Field lists $187 million in needed work. But $55 million of that is your own operations and maintenance expenses, and another $90 million is wish-list stuff that is explicitly excluded from the county’s obligations. So, WTF?

I also asked a county representative about that “Non-Obsolescence Fund” that the Diamondbacks can draw on if they agree to extend their lease: Right now it has a whopping $460,000 in it, so that’s not really worth worrying about.

To my knowledge, D-Backs execs haven’t yet responded to this letter — but then, they wouldn’t need to, if their concern is less legal niceties than trying to drum up an urgency to fix their stadium situation out of thin air. Whether Maricopa County stadium officials see this as a crisis or not, the media certainly does, which means elected officials are likely to as well, and that can be enough to set the ball rolling on hundreds of millions of dollars shifting pockets. A contract may be a contract, but when you’re seen as a 700-pound gorilla, you don’t need to sweat the fine print.