- Elvis Presley Enterprises is looking for property tax breaks from Memphis and Shelby County to help build a $20 million, 5,000- to 6,000-seat arena at Graceland. This could violate a non-compete clause with the Grizzlies over tax breaks for their arena, and local officials aren’t too thrilled with the request anyway: “I don’t want this body to be looked at as a pawn to sweeten the pot,” city councilmember Berlin Boyd told WMC-TV, which is a reasonable sentiment if a somewhat confusing metaphor.
- Preliminary designs for an MLB stadium in Portland look like a cross between a modernized Stade Olympique and the Jupiter 2. But there’s no reason to take these seriously as what an eventual stadium would actually look like if one is ever built, so, you know, don’t.
- The Miami Marlins and St. Louis Cardinals are seeking $100 million in public hotel-tax money from Palm Beach County to upgrade their 20-year-old spring training facility, saying they need expanded clubhouses, more batting tunnels, an expanded team store, Wi-Fi, a new scoreboard, more shaded seating areas, and “agility fields” (presumably not this kind) in order to remain “competitive.” Neither team appeared to indicate why any of this is Palm Beach County’s problem.
- North Carolina FC owner Steve Malik say that if Raleigh spends $13 million a year to build a downtown soccer stadium, it will get an MLS expansion franchise. He also said that the public will be almost entirely repaid by new tax receipts from the stadium. It is left as an exercise for the reader as to which statement is less believable.
- The Connecticut state assembly has declined to approve $100 million in renovations to Hartford’s XL Center, seeing as the place is currently up for sale. That makes sense, but it’s slightly worrisome to think that the assembly might approve $100 million in renovations after the arena is sold, unless the sale price is more than $100 million.
The May issue of Governing magazine has an article with the provocative headline, “How Cities Fell Out of Love With Sports Stadiums,” though it’s really mostly about why St. Louis balked at throwing money at an MLS stadium and fought back against paying for arena upgrades for the Blues after getting burned when the Rams got the most sweetheart lease deal in history and then used a lease loophole to move back to Los Angeles just 21 years later.
All that is good and fine, as is the article’s discussion of how “the economic impact reports singing the praises of sports development have largely been discredited.” But in the service of trying to make the story into “regular folks used to fall all over themselves to hand money to sports teams, but now they’ve smartened up,” writer Liz Farmer oversimplifies or just plain gets wrong a number of things about the stadium subsidy game and how it’s played, which is going to be a problem if any people in the business of actual governing take it as gospel. Let us count the ways:
“When [Rams owner Stan] Kroenke came along and had the gall to start making demands for a football team that hadn’t had a winning record since 2003, the city was — quite literally — spent. St. Louis was suffering under the same socioeconomic and fiscal pressures as Cleveland, Detroit and most other Rust Belt cities. Its population was declining rapidly, and it was stuck paying off debt for the existing stadium until 2022. Residents were increasingly skeptical when it came to investing in gaudy entertainment amenities the lower-income population couldn’t afford to use.”
St. Louis’s population has been declining since 1950 — if anything, it’s leveled off some in recent years — though its county population has soared as more people moved to the suburbs. And residents were pretty darned skeptical before, too: Way back in 2002, St. Louis citizens approved a referendum requiring that all public subsidies for sports facilities would need to go to a public vote. Unfortunately for voters, courts ruled that the target of that referendum — the Cardinals stadium deal that had just been approved prior to that — was grandfathered in, but it’s not like public resistance in St. Louis is anything new.
“The era of taxpayer-financed stadiums came about almost by accident. Seeking to limit the use of government bonds in stadium financing, the federal Tax Reform Act of 1986 included a provision that capped at 10 percent the direct stadium revenue — mostly from ticket sales and concessions — that could be used to pay for the cost of the facility. That meant that governments would have to raise broad-based taxes, such as on sales or business, to cover the rest of the cost.”
Not quite. What the 1986 tax reform law was attempting to do was to rein in cities’ use of federally tax exempt bonds for private projects — not just stadiums, but all kinds of development — by saying, “Look, only really public amenities, okay? Don’t just offer discounted bonds to anybody who asks and then stick federal taxpayers with the bill.”
Unfortunately, the way that Congress chose to address this was by defining public amenities as things that were paid for by the public — if more than 10% of the cost was paid off by private funds (or special taxes that were just private funds masquerading as public dollars to get eligibility), low-cost federal bonds were off the table. Unfortunately, what that did was to increase the leverage of sports team owners, who could now say, “Yeah, sorry, we would love to put in more money of our own, but then it would increase the financing costs, and we can’t have that, can we?”
This is by no means what started the era of taxpayer-financed stadiums, though: Team owners were already demanding new stadiums and arenas left and right, using the usual playbook of methods to do so (move threats, claims of economic benefits, etc.). The tax reform law further titled the scale toward bigger demands, but it didn’t create the demands in the first place — and while getting rid of tax-exempt bond subsidies would be a nice step, it wouldn’t put an end to stadium subsidies in the slightest.
“But Congress didn’t account for the fan loyalty and pride that — at the time — made raising local taxes more acceptable.”
Fan loyalty and pride are still on full display, but sports fans are taxpayers, too, and have been resisting handing their tax dollars over to sports team owners as much as anyone since the beginning. Just ask Frank Rashid.
“The boom was driven in part by demand from teams and fans for a more sophisticated sports experience than the drab concrete coliseums they were used to.”
If by “more sophisticated sports experience” you mean “more pulled-pork sandwiches and nicer cupholders,” sure. But plenty of sports venues have been torn down in recent years to make way for new facilities that are arguably even drabber than the ones they replaced.
“The Washington, D.C., soccer team, D.C. United, spent years negotiating with the nation’s capital over a new soccer-specific stadium. Those talks effectively shut down once the economic downturn hit in 2008, and the team spent another seven years shopping around in the surrounding counties — even going as far as Baltimore — trying to find a local government that would pay for the facility. None would bite. Ultimately, the team stayed in D.C. and is paying to build a stadium on land the city spent $150 million acquiring. The deal includes a non-relocation agreement.”
In addition to that free land, D.C. United is also getting $43 million in property tax breaks, making it the most expensive MLS soccer stadium subsidy in history. The tide is turning!
“Kiel Center Partners, the firm that owns the NHL Blues, had asked the St. Louis City Board of Aldermen for $64 million to finance upgrades to the Scottrade Center. Had the city’s voters not been distracted by the soccer stadium proposal and by a heated mayoral election, the financing might have met more resistance. Some aldermen did question whether the city’s 1994 lease with the team required it to pay for upgrades, but still the proposal narrowly passed. If it had been submitted to a popular vote, it most likely would have failed.”
Again, “if voters had been asked, they would have voted it down” is likely true of all of St. Louis’s past sports subsidy deals. (Possibly not the original Rams deal, though if they’d known that it would allow the team to move away by claiming their two-decade-old stadium was no longer “state of the art,” they might have balked at that, too.) And voters didn’t get to vote because the city council just up and decreed that they wouldn’t be allowed to, despite that 2002 referendum, so it’s tough to see how this is a sign of increased political resistance.
“So the hockey team got its way. Things like that still happen. But they don’t happen easily, and they don’t happen with broad public support. Several years ago, for instance, when the NFL’s Minnesota Vikings wanted a publicly funded stadium, the state legislature rejected the proposal. Eventually the team got its money, but with a state law capping public contributions to the $1 billion project at $498 million.”
OMG, the Vikings owners actually had to ask for stadium subsidies multiple times! And then they had to settle for a mere half-billion dollars in cash, except counting tax breaks and other hidden goodies it’s actually costing taxpayers more like $1.1 billion, so, uh.
In the end, the Governing article isn’t a terrible one, and it does touch on a lot of details of the stadium scam that Governing likely wouldn’t have been caught dead discussing 20 years ago. (Now there’s some progress.) But if the takeaway is that the general public loved sports stadium plans, but now have realized they were duped, that’s not the story at all: Actually it’s been a battle from the beginning between team owners trying to extract as much public money as possible, and taxpayers and some of their local representatives trying to push back. And while maybe a few more elected officials are pushing back harder, there’s pushback against the pushback, too. So this whole mess isn’t ending anytime soon, much as I wish it were so I could retire this blog and go back to treating sports as the purely apolitical, fun pastime that it never really was.
The owners of the St. Louis Cardinals announced a second phase to their “Ballpark Village” development across the street from their stadium yesterday, and blah blah, $220 million, 550,000 square feet of new construction, “mixed-use neighborhood where people live, work and play,” okay, here we go:
St. Louis Alderman Jack Cotar will introduce legislation to amend an existing development agreement that enabled the first phase of Ballpark Village on Tuesday…
According to the announcement, the “development team is proposing to use a portion of the new tax revenue generated solely within the Ballpark Village project area, including an additional self-imposed 1 percent TDD sales tax, to underwrite the bonds issued to support project infrastructure costs. Only taxes generated by the Ballpark Village project itself, as well as private equity and debt investments by the development team, will be used to finance Ballpark Village.”
This should come as no surprise, as the first phase of the Ballpark Village — a bizarro grandstand-slice-themed shopping mall with an equally bizarro racially coded dress code — got $116 million in subsidies back in 2006, mostly from tax-increment funding: i.e., kicking back property and sales taxes to the developers, who can then use them to pay off their own construction costs. It’s unclear exactly how much Cotar’s bill will propose handing over to the Cardinals owners — that “TDD” is a sales tax surcharge in the ballpark area, which if it’s narrowly drawn could just come out of the team’s pockets, but property taxes or existing sales taxes would just be a straight kickback. The original Cardinals stadium deal wasn’t too bad for the public as these things go — about two-thirds of the cost was shouldered by the team owners — but they’re making up for lost subsidy time with all the additional development across the street. Excellent job on the bait-and-switch, Bill DeWitt and friends!
The St. Louis Cardinals‘ new Ballpark Village is not only a seriously weird looking slice of entertainment-retail hell, it turns out, but the bars and restaurants there have some seriously weird dress codes. Here’s a sampling, via Deadspin:
The following is not permitted under our dress code after 9pm: sleeveless shirts on men, profanity on clothing, exposed undergarments on men, sweat pants, full sweat suits, excessively long shirts (when standing upright with arms at your side, the bottom of your shirt can not extend below the tip of your fingers), jerseys (sleeved jerseys are permitted in conjunction with a cardinals game or any other major St. Louis sporting event), athletic shorts and excessively sagging pants or shorts bandanas.
If all that sounds like code for “no black dudes,” Deadspin thinks so too, noting that Cordish Companies, the developer of Ballpark Village, also built Kansas City’s Power & Light district, and: “Two lawsuits have recently been filed alleging that Power & Light specifically discriminated against black patrons. One of the suits alleges that Power & Light employed white men who were instructed to start fights with black patrons in order to get them kicked out.”
Whether the dress code is covert racism or overt fashion policing, enjoy your tax-break-subsidized bars, St. Louis! Just not with excessively long sleeves, because That Would Be Wrong.
The St. Louis Cardinals have finally announced the opening of the first phase of their long-delayed “ballpark village” (so long-delayed that I was calling it “long-delayed” six years ago) and it’s, okay, I don’t know what this actually is:
— St. Louis Cardinals (@Cardinals) March 6, 2014
Potemkin village? Vegas baseball-themed shopping mall? Whatever it is, the Cardinals are getting $116 million in tax kickbacks to help build it. Also, Third Eye Blind will be at the grand opening, which just rockets it to the top of my list of grand openings to avoid at all costs.
In a reminder that not only old stadiums show wear and tear, a four-foot piece of metal trim fell off the outside of the St. Louis Cardinals’ Busch Stadium yesterday, closing nearby sidewalks and leading to an inspection of the rest of the stadium. After rusted bolts were found holding the decorative panels in place, the other panels are now being removed, with plans to have the work completed well before the Cards return from a road trip next Tuesday.
All of which is unusual, but hardly extraordinary. And it’s notable that no one is declaring it to be a sign that the six-year-old Busch Stadium is falling down and needs to be replaced — unlike the case when bits have fallen off of certain other stadiums I could name.
Out of St. Louis, a cautionary tale about the ever-popular gambit of requiring that taxpayers get a share of the sale of a sports team in exchange for granting stadium subsidies. (This was most recently proposed, and rejected, for the Florida Marlins deal.) The Cardinals agreed to a profit-sharing arrangement as part of their stadium deal back in 2003, but the reality isn’t quite working out that way, according to the St. Louis Post-Dispatch:
The Cardinals also agreed to give the city a cut of profits made if any portion of the team was sold.
Then, last year, owners sold a sizeable chunk of the Cardinals — more than 13 percent. Now, a group of anti-public-stadium advocates is alleging that the team owes the city hundreds of thousands of dollars.
And, despite another multimillion-dollar budget gap anticipated for the coming year, the city isn’t checking into it. City officials acknowledge that they have never really kept tabs on the agreement.
In fact, the Cardinals owners have sold about 17% of their shares since the new stadium opened, but in each case reported to the city that “there were no Ballpark-Related profits … arising from such transfer.” And city officials apparently took them at their word, with the Post-Dispatch reporting: “Several city officials, including Barb Geisman, the former deputy mayor for development, said there was no reason to double-check. They trust the Cardinals.”
Longtime Coalition Against Public Funding for Stadiums activist Fred Lindecke, who first raised questions about the profit-sharing clause (until he complained, the city wasn’t even releasing the sale affidavits it received from the Cards), wonders reasonably enough on what planet this could be true: “They were so desperate for money, they were willing to sell their ownership percentage for nothing more than the team was worth in 2002? That contradicts all logic. Even someone who’s having their home foreclosed tries to get as much as he can.”
Forbes, for what it’s worth, has the Cardinals as worth $488 million in 2010, up 80% from its $271 million value in 2002. Even at that rate, the total amount owed to the city would be only about $2 million, if I’m doing the math right. Still, it’s not exactly money that the city can afford to be turning down these days.
The St. Louis Cardinals have released their “temporary” plans for the site of the Ballpark Village on the site of their old Busch Stadium, now that the actual Ballpark Village isn’t so much happening: a parking lot and softball field:
The release also said that “once the bonds for the larger Ballpark Village project are sold, the softball field and parking lot will be taken over by the construction of the larger project.”
So when will those bonds be sold? That’s unclear. City officials earlier this year approved a revised plan that gives the Cardinals up to three years to sell bonds to start construction. At the time, team President Bill DeWitt III said the bond market was still “quiet” and “iffy” but that he still remained enthusiastic about developing the site.
Mayor Francis Slay signaled his disappointment with the news, but said the additions are “the best we can expect” given the economy and woeful credit market.
Somebody should have thought of that, perhaps, before giving the Ballpark Village $100 million in tax breaks.