Public subsidies for Rangers stadium to be at least $519m, could go higher

The Dallas Morning News has provided more details of the scale of hidden subsidies for the Texas Rangers‘ new $1 billion stadium plan, to where we can finally estimate an actual public price tag for the project, which, remember, would replace a 22-year-old stadium with an even newer one so that the games can have air-conditioning. The full package of goodies now includes:

  • The city would still be providing $500 million in cash, bonded out and then repaid over time by the 0.5% sales tax surcharge, 2% hotel tax surcharge, and 5% car rental tax surcharge currently being used to pay off the Dallas Cowboys’ stadium. This much the city of Arlington revealed at the start, presenting it as a “50/50 split” of costs between the Rangers owners and the public.
  • As revealed previously, Arlington would buy the Rangers’ 48.6 acres of parking lots for nothing, then lease them back to the team in perpetuity for no money. This would have the effect of exempting the Rangers from property taxes on their parking lots, which the News estimates would save the $481,000 a year in property taxes. In present value, that’s worth about $7 million to the team owners.
  • As also revealed previously, Arlington would build a new 2,000-space parking lot on land similarly given by the team to the city and then leased back as a property-tax dodge. That would save the Rangers owners about $145,000 a year in property taxes (present value: around $2 million), plus city officials estimate building the lot will cost around $4 million, for a total of $6 million.
  • Rangers owners Ray Davis and Bob Simpson would get to use new ticket and parking tax surcharges to help fund their share of construction, which is worth about $150 million in present value, but as I’ve noted before, most of the cost of ticket and parking surcharges ultimately ends up coming out of the team owners’ pockets. So I’m inclined to dismiss this one as a public subsidy.
  • The Rangers owners are getting $100 million in cash and tax breaks for Texas Live!, an entertainment district near the stadium that was previously approved by the city, and which is supposed to break ground later this year. That’s not a subsidy for the stadium per se, in other words, but it is money that the city is giving to Davis and Simpson.
  • Once the city’s stadium bonds are paid off, the Rangers owners would get to stop paying the city their $2 million a year in rent and instead put it into a fund for future stadium improvements. The value of this will depend on when the bonds get paid off — the News notes that the Cowboys’ stadium bonds were retired ten years early, but it’ll all depend on what future tourist tax receipts look like, which is inherently unpredictable. If we use that as a best guesstimate, $20 million in rent rebates 20 years in the future would come to $6 million in present value.
  • Not discussed by the News piece is the fact that the Rangers’ share of stadium payments would actually pay off bonds being sold by the city, meaning if their own revenues (from PSL sales, naming rights revenue, etc.) fell short, the public could be on the hook for more. No way to put a price tag on this, but it’s an added risk of a blank check added to everything above.

Add it all up, and we’re at a minimum of $519 million in public subsidies for the Rangers stadium project, plus another $100 million for Texas Live!, with the possibility that the final price tag could ultimately go higher. And, more to the point, Davis and Simpson would get all the revenues from the new place, while the public “partners” would get just a thin trickle from new sales tax receipts, which even if you bend over backwards to assume the best-case scenario would only amount to $31 million over the next 40 years. That’s a vastly inequitable deal no matter how you slice it, but I guess when your baseline is “How big a check do we have to write the Rangers to be absolutely sure they won’t even think about moving to Dallas never ever?“, this is the kind of deal you get. Arlington voters, the ball’s in your court now.

Yes, Arlington would pay for more than 50% of Rangers stadium, but not because of ticket tax

So I was sitting around yesterday, waiting for NHL commissioner Gary Bettman to go on TV and announce the new Las Vegas expansion franchise, when this story from WFAA-TV in Dallas about the new $1 billion Texas Rangers stadium plans suddenly blew up all over the Twitterverse:

City of Arlington officials have touted a “50-50” private-public partnership to build a proposed $1 billion retractable roof stadium for the Texas Rangers.

A WFAA-TV investigation, however, has found taxpayers may instead pick up to 80 percent of the tab, which amounts to hundreds of millions of dollars more than initially promised by city leaders…

Tucked in the agreement is a clause called the “admissions and parking tax” that allows for a 10 percent surcharge on event tickets and up to $3 additional surcharge on parking. State law allows cities to collect and use the taxes to build their stadiums. Arlington’s agreement, however, allows the Rangers to use the admissions and parking tax revenues to help pay their half of the construction costs.

“If it really is a tax and could be used by the municipality, then in essence it’s just transferring revenue from the public sector to the private sector,” said Rick Eckstein, a Villanova University professor who studies sports stadium economics.

“There’s a sleight of hand here. There’s verbal gymnastics going on,” Eckstein added. “It’s relatively unprecedented in terms of stadiums I’ve studied over the last 20 years.”

Not to disagree too strongly with Eckstein (co-author of one of the best stadium books out there), especially since he’s right that tax money is fungible and shifting it from public to private pockets amounts to siphoning it off from the public treasury. But these particular tax surcharges are kind of special, to the point where we arguably shouldn’t consider them an additional public subsidy.

What it comes down to is the difference between existing taxes and tax surcharges, especially on items that are under the monopoly control of team owners. Think of it this way: When a sports team owner sets ticket prices, they do so with an eye toward maximizing the amount of total revenue they’ll bring in — basically, they set prices as high as the market will bear without driving fans to stay home and watch on TV. (Technically we’re talking net revenue rather than gross revenue here, but since the marginal cost of selling an additional ticket is close to zero — you might have to hire an additional tiny fraction of a hot dog vendor, but the players are all being paid to play regardless — we can ignore it for our purposes.) That means if that break point is $50, they’ll charge $50 — regardless of whether that’s $50 they get to put in their pocket or $45 in actual ticket value plus a $5 surcharge.

A similar effect is at work regarding parking, which is why most economists consider surcharges like these to come out of the owners’ pockets, even though they’re technically taxes. The owners could accomplish the same thing just by “taxing” themselves, in other words, though there are likely some tax benefits they get from paying this via the tax system rather than voluntarily out of their own pockets.

There are additional problems with the WFAA analysis, starting with the fact that the station’s reporters estimated $300 million in admissions and parking surcharges over 30 years, and added that on to the city’s existing $500 million obligation — but $300 million over 30 years doesn’t cost $300 million now, but rather more like half that in present value. (It’s like figuring a house mortgage: You count how much you need to borrow from the bank now, you don’t add up all your mortgage payments into the future.) So we’re already down to $650 million, and much of that $150 million added cost would really come out of the Rangers owners’ pockets, so really this is much ado about not all that much.

Which isn’t to say that the proposed Rangers stadium doesn’t have hidden costs: It has tons of them, from about $15 million in future rent rebates to free land and property tax breaks for parking lots to the city being on the hook for any of the Rangers’ share of bonds if team revenues fell short of covering them. Whether this gets the public share up as high as 80%, I couldn’t tell you, but it’s worth investigating. Get to it, WFAA investigative team!

Rangers stadium to cost Arlington well over $500m, local paper more concerned about its code name

The Dallas Morning News has published a “six things you didn’t know” listicle about the proposed new $1 billion Texas Rangers stadium, most of which are more “six things you didn’t care about.” (Its secret code name, really?) Item #1, though, could be a moderately big deal:

The city announced that the Rangers would continue paying $2 million rent annually under this new agreement. But after the baseball stadium bonds are paid off, the $2 million annual rent would be diverted to pay for stadium improvements. Rangers had originally wanted that cutoff point to be 11 years or when the bonds were paid, whichever came first.

How much is this worth, potentially? Let’s say the bonds are paid off in 10 years, and the Rangers stay at their new stadium for another 20. That’d bring the rent rebates (which is what they are) to a net present value of $15 million, which, okay, when you’re already giving the team owners $500 million isn’t a huge difference, but money is money.

Add in the city’s costs from providing free (and property-tax-free) parking lots for the new stadium, plus possible costs from any shortfall in revenues that the Rangers would use to pay off their own share of stadium bonds (which will actually be sold by the city, presumably to get around paying income tax on things like naming rights and PSL sales), and the projected public cost is headed well north of half a billion dollars, though how far north is hard to say. When I have more time I’ll dig through the fine print of the stadium agreement to see if there’s anything in there to help clarify things; if you want to do the same, you can now find it here.

Arlington council unanimously okays Rangers stadium vote, unveils worst. FAQ. Ever.

The Arlington city council unanimously approved the Texas Rangers‘ $1 billion stadium plan yesterday, sending it to a November referendum of city voters, just four days after it was first made public, which has to be some kind of record. (Even Cobb County commissioners took two whole weeks before approving the new Atlanta Braves stadium, and they had to hide in hallways to evade open meetings laws — guess Texas doesn’t believe in those?)

And the deal, it turns out, could be even worse than last report: In addition to the city providing $500 million in construction cash, it would buy 49 acres of land and lease them back to the team in a deal where “no significant money would change hands,” according to the Dallas Morning News’s Jeff Mosier, but which would allow the Rangers to get out of paying property taxes on their parking lots. The city would also pay to build a new 2,000-space parking lot to make up for the parking that would be lost to the new stadium. Taken together, the public cost would now be well over half a billion dollars.

How much over, there’s no way of knowing, because the Arlington city website doesn’t provide any details of the deal or of what was voted on last night. It does, however, provide a “Frequently Asked Questions” document on the Rangers stadium plan that is a hilarious masterpiece of obfuscation. Let us count the ways:

  • If your personal frequently asked question is “How much will this cost taxpayers?” then you won’t find the answer here. The FAQ says construction and infrastructure cost is “estimated at $1 billion” and the deal “calls for a 50-50 split between the Texas Rangers and the City of Arlington,” but there’s nothing at all on the cost of property tax breaks or new parking lots, so the actual public price tag is anybody’s guess.
  • It does, however, answer (as its very first question!) the pressing query “When did the Texas Rangers move to Arlington?” Also “Will Arlington’s name be placed on the new ballpark?”, to which the FAQ mumbles a definitive “Yeah, in some way.”
  • “Why do the Rangers need a new ballpark?” is actually a good question, and no doubt a frequently asked one. “The team has indicated a desire to have a new ballpark with a retractable roof, which will provide protection from the Texas weather, as well as state-of-the-art amenities to provide a premiere baseball experience” does not actually answer it, any more than a valid answer from a teenager to the question “Why should I buy you a new video game system?” is “Because I really want one!”
  • The FAQ cites a study by consultants HR&A Advisors as showing that “the annual economic impact of the Rangers with a new ballpark is estimated to be $77.5 million for Arlington and $137.6 million for Tarrant County,” which it translates as “the net present value of the Rangers continued presence between 2016-2054 with a new ballpark would be $2.53 billion for Arlington and $4.49 billion for Tarrant County.” There’s no link provided to an actual study to show how HR&A came up with these numbers (best guess would be just adding up all the local spending by Rangers fans and applying some multiplier provided by an off-the-shelf statistical model, since that’s what their website says they do) — but more to the point, the description confuses economic activity (all spending taking place in a locality) with fiscal impact (actual tax revenue that results), making it sound like Arlington will see $2.53 billion in cash in exchange for its $500-million-plus expense, when it would actually be a small fraction of that. The share of sales tax that goes to city coffers, for example, is 1.25%, which even if all the economic activity were new and taxable would result in only about $31 million in new sales tax receipts over the next 40 years.

This is a PR document, pure and simple, and a damaging one — none more so than that last item, which makes it sound like this is a reasonable investment for Arlington taxpayers by massively bait-and-switching the actual monetary returns. John Hibb, a board member of the Arlington Independent School District, told yesterday’s hearing that “the loss of the Rangers means the loss of $77 million [annually],” and while it’s not immediately clear whether he was duped by the Rangers or is one of the dupers, the point is that this is what the public is hearing, and it’s somewhere between a massive misrepresentation of the truth and an outright lie.

Under normal circumstances, these kinds of funny numbers would get vetted in a public debate in the media and in public hearings, where critics could introduce other information from more disinterested sources. Instead, any actual discussion will now take place during a six-month referendum campaign, one where the Rangers owners, if they have a brain in their heads, will be pouring millions of dollars into advertising to push their message in hopes of landing more than half a billion dollars in exchange. This is a textbook case of “How to game a stadium vote,” and kudos to Rangers owners Ray Davis and Bob Simpson for pulling it off — though the Arlington council really deserves an assist for making it as easy as possible for them to do so. Next time you’re wondering if the real cause of the sports subsidy scam is greedy owners or craven politicians, the answer is: yes.

Rangers stadium to cost Arlington taxpayers at least $500m, many questions remain unanswered

The Texas Rangers owners and the city of Arlington unveiled their proposal for a new retractable-roofed stadium on Friday, sketching in some more of the details that had been left out of that morning’s leak:

  • The stadium would now cost $1 billion, with Arlington taxpayers’ share at $500 million. No idea why the price tag is $100 million higher than it was on Friday morning, though the conspiracy-minded will note that even if the actual cost estimate is the same, upping the target price means the Rangers owners’ responsibility to pay for all cost overruns won’t kick in as soon now.
  • For the Rangers owners’ share, they would get to use personal seat license fees plus parking and ticket tax money, which would pay off bonds sold by the city — meaning if PSL sales fell short, say, the city could end up on the hook for more than $500 million. This, you’ll recall, was the initial concern with the San Francisco 49ers stadium in Santa Clara, and though that worked out okay in the end when the PSLs sold out, it’s still an added risk for Arlington.
  • The public’s base $500 million will come from the 0.5% sales tax surcharge, 2% hotel tax surcharge, and 5% car rental tax surcharge currently being used to pay off the Dallas Cowboys’ stadium, which the Dallas Star-Telegram calls “no new taxes.” Except that the Cowboys stadium was set to be paid off in 2021, at which point those taxes could either have been eliminated or redirected toward something else — so really this is a new extension of existing taxes for as much as an additional 30 years.
  • The Rangers will continue to pay the same $2 million a year rent to the city that they pay on their current stadium.
  • The city council will vote on a stadium agreement tomorrow — apparently Texas doesn’t believe in things like public hearings — and if approved, the project will then go before voters in November, something that the Dallas Morning News entirely left out of its ten-point rundown of the proposal, which stated the stadium plans entirely in the simple future tense (“It will be open by April 2021”). Way to go, writers on the fait accompli beat.
  • While most of the existing Globe Life Park would be torn down to make way for parking lots (the new stadium would be built on existing parking lots), there could be attempts to save “parts of the facade and other historic features” at the ballpark, which is younger than all but one player on the Rangers’ current roster.

That tells us a lot more than we knew Friday morning, but there are still a bunch of unanswered questions:

  • Nobody knows how the first few years of construction bond payments will be paid off, since the taxes involved still need to keep being used for Cowboys stadium debt through 2021.
  • Will the Rangers owners pay any property taxes on the place? Who will pay maintenance and operations costs? Will Arlington get any share at all of stadium revenues like naming rights, or will the public have to pay off its share entirely from tax revenue while the Rangers get to use actual stadium income for theirs?
  • What do Arlington residents think of the deal? (The Star-Telegram ran an article headlined “What fans, Arlington officials are saying” but then apparently forgot to interview any actual fans, since the only quotes (aside from one local sports bar owner) were from current and former elected officials who supported the deal.)

But hey, there’s still time to work all that out in the next 24 hours before the council vote, right?

Here, just look at some renderings of what the final stadium design almost certainly won’t look like, instead of worrying about all that. It’s what the Rangers owners surely want you to do:

Rangers renderingRangers3

Arlington proposes giving Rangers $450m for new stadium because the old one isn’t air-conditioned

The city of Arlington has scheduled a press conference for 1:30 pm today to announce plans for a new $900 million stadium for the Texas Rangers, with the cost to be split evenly between the team owners and city taxpayers. The public money would come from extending an existing sales-tax surcharge that’s currently being used to pay off the Dallas Cowboys‘ stadium, and the stadium would reportedly open before the Rangers’ lease on their old stadium expires in 2024.

There had been some talk last fall about the Rangers wanting a new stadium, but still, this is pretty stunning for a couple of reasons. First off, the existing Arlington stadium is only 22 years old, and features almost all the bells and whistles that team owners typically want — yes, it’s “the 11th oldest facility in Major League Baseball” (tied with Cleveland), as WFAA notes, but that’s more a function of the flood of new stadiums that opened in the ’90s and ’00s than a sign of impending decrepitude. The truly amazing thing, though, is that the stated reason for the Rangers wanting a new stadium is that the old one isn’t air-conditioned:

The lack of a roof and accompanying air conditioning is considered one factor that can keep fans away from Globe Life Park, especially during the dog days of summer, when the temperature can stay in the mid-90s even during night games.

Okay, so it’s hot in Texas, yes. For the record, though, the Rangers currently rank 11th in the majors in attendance, ahead of every other team with a retractable roof other than Toronto. And last year they finished 16th, not terrible for a team coming off a season in which they lost 95 games (attendance invariably correlates better with record the previous year than the current year), and still better than three of the other five teams with retractable roofs. For $900 million, the Rangers could buy personal air conditioning hats for every man, woman, and child in the metro Dallas area, but instead they’re going to build a new stadium, because that’s what you do when you can.

Of course, the Rangers owners — a couple of rich guys you’ve probably never heard of named Ray Davis and Bob Simpson, plus a passel of minority partners — will undoubtedly get some other benefits from a new stadium, if they can pack it with steakhouses and get a honeymoon boost from curiosity seekers and lord knows what else. (We also don’t know yet, and probably won’t for a while, who’ll pay operating costs on the new place, property taxes, etc.) As for Arlington, meanwhile, what on earth is the city getting for its $450 million?

“We need to show love for the Rangers right now, y’all, ” Arlington Mayor Jeff Williams told the Rotary Club of Fort Worth last week, speaking generally about the city’s desire to keep its team. “The Rangers don’t want to leave, but there are other cities, and we know one that starts with a D that wants to take it. … Right now is a key time for us.”

So there you have it: Arlington taxpayers, assuming this is approved, would be shelling out $450 million to not to have to drive 20 miles to Dallas to see Rangers games. Plus to get air conditioning. I told you that fragmented metropolitan areas where team owners can play different localities off against each other (see: Atlanta) are the worst, but I didn’t even imagine.

In any event, coming on top of the Braves leaving their old stadium after just 20 years, the Rangers’ plan is almost certainly going to lead to a renewed flood of stadium demands by teams struggling by with stadiums that opened during the first Clinton Administration. The Arizona Diamondbacks have already started rattling their new-stadium saber, and the Cleveland Indians are last in the league in attendance with a stadium that opened the same year as Arlington’s, and hey, wouldn’t this be a great time for the Colorado Rockies to finally build that argon-filled pressurized dome they’ve always wanted? The sky’s the limit, and the same is true, apparently, for the numbers on local governments’ checkbooks. Keep this site bookmarked, because we’re going to be here a while.

Dallas newspapers now resorting to running 27-year-old Rangers vaportecture images

Man, the Dallas media just can’t stop beating that “Texas Rangers may seek a new stadium in Dallas” drum, can they? On Saturday, with no actual news to report, the Dallas Morning News dug up an HOK rendering from 1988 of what a Dallas stadium might have looked like, if the Rangers hadn’t ended up getting a new stadium in Arlington:

TAB 1 4.jpgMain takeaway: Man, computer rendering were terrible in 1988. It’s like watching the original Toy Story and realizing how far things have come in a relatively short time.

Right now, the only thing driving any Dallas stadium discussion appears to be the fact that the Rangers’ lease expires in 2024, so Dallas could conceivably try to lure the team away from Arlington at that point if it wanted. This is yet another reason why team owners don’t want to own their own stadiums: Not only would they have to pay their own property taxes then, but they wouldn’t have expiring leases to hold over the heads of local officials. Or have the local news media hold over officials’ heads — it’s so much more convenient that way.

Texas Rangers may want new stadium because old one is 21 years old and doesn’t have a roof and, yeah

If you had the Texas Rangers in the “Who will be the next team that got a new stadium in the ’90s to be rumored to be looking for a new one barely 20 years later after the Atlanta Braves?” pool, congratulations, for you are a winnah!

The Rangers, who began the season in miserable shape, have turned in a remarkable second half of the season, running their way up the standings and currently sitting 1.5 games ahead of the Houston Astros in first place of the American League West. And yet despite the storybook season, the Rangers are pulling terrible attendance numbers…

The attendance problems are likely to contribute to speculation that, perhaps, the time is ripe to push for a Rangers relocation to downtown Dallas. According to the Star-Telegram, Dallas city officials have denied that they are trying to woo the Rangers. However, the team has said they’d really love a stadium with a retractable roof. That sounds a bit like an invitation to suitors.

If that sounds overly speculative even for sportswriters on a slow day, you’ll get little argument from the evidence: Let’s see, there’s an article from early 2014 that notes the Rangers “remain one of the few teams located in a searing summer climate without a roof,” then one from a little later in 2014 that says “rumors have swirled that the club might be looking to move to Dallas and build a stadium with a retractable roof,” and oh look, here’s one from D Magazine (same source as yesterday’s story) way back in 2011 that said the Rangers’ stadium in Arlington is ugly and one in Dallas would be maybe less so (and roofed) and … anything with anybody from the Rangers actually saying for attribution that they want a new stadium? Anyone? No?

What’s going on here is twofold: First off, the Rangers’ lease expires in 2024, so everyone is speculating on what will happen then, even though the team’s owners would be insane to leave the nation’s fifth-largest TV market for, well, anywhere. Second, and more important, is that even more than Atlanta, where Cobb County decided to throw $300 million at the Braves to steal them away from the big bad inner city, the Dallas-Ft. Worth metro area is made up of a bunch of different localities that can fight over a team. And that means lots of people spreading rumors, whether it’s local officials or writers for single-lettered magazines or whatever. And some of these rumors may even turn out to be true — again, with lots of different elected bodies on the prowl, if your lease is up it’s a great way to get a bidding war going, and that floats your boat.

Yesterday’s D Magazine story goes on to give a whole bunch of reasons why a new stadium in Dallas would be awesomer than an old new stadium in Arlington (“The young people heading back to Uptown and thinking about which patio to hit for happy hour would see the stadium looming just a hop away”!), without ever considering that the big difference is you don’t have to build a stadium in Arlington, because it’s already there. For a billion dollars or whatever a stadium is going to go for in 2024, you could pay people to stand on streetcorners (or whatever they have in Dallas — traffic medians?) and hand out maps to downtown Dallas and coupons for free drinks, or whatever the kids of tomorrow will be into.

Most important to note: Whatever you think of the stadium in Arlington, the reason why it’s being considered for replacement rather than the Colorado Rockies‘ stadium or the Baltimore Orioles‘ or the Cleveland Indians‘ has nothing to do with whether it’s a good place to see a ballgame, or even the local weather. It’s about how easy it might be to get somebody else nearby to consider building a new one. Same as it ever was.

Rangers, Pelicans cut deals to make you call their buildings by ridiculous names

The Texas Rangers announced yesterday that they’d sold the naming rights to the Ballpark at Arlington (formerly Ameriquest Field, until Ameriquest broke the economy and went belly-up) for an unknown sum, and that the stadium would henceforth be known as “Globe Life Park in Arlington.” Which is one of the worst names for anything ever — the Fort Worth Star Telegram helpfully noted that “fan reaction to the new name on social media sites ranged from unimpressed to outraged, with comments such as ‘barf,’ ‘lame’ and ‘at least they kept Arlington in the name’” — or at least was, until this a couple of hours later:

The New Orleans Pelicans and Louisiana-based Smoothie King have reached a 10-year agreement to rename the New Orleans Arena as the Smoothie King Center.

On the bright side, at least it’s clear what a Smoothie King sells, unlike a Globe Life. Still, it’s getting increasingly hard to see why anyone should be using these branded names for buildings, since they change about as often as soccer jersey logos. (Thankfully, no one has tried to insist that we call them “Qatar Airways FC Barcelona.” Yet.) It’s easy enough to call the Rangers’ ballpark “the Rangers’ ballpark” (in fact, it’s officially been “The Rangers Ballpark in Arlington” the last few years, not that I’ve noticed), call the New Orleans arena “the New Orleans Arena,” and so on. At least until the teams give us a cut of the product-placement moolah. Hey, New York City’s transit agency does it!