And then there’s MLB commissioner Rob Manfred asserting that the Texas Rangers, who currently have the second-best record in baseball, are at a “competitive disadvantage” because their stadium lacks air conditioning. Now I’m really done.
And this is just bizarre:
In an letter released Sunday on WFAA/Channel 8 Inside Texas Politics, Rangers managing partner Ray Davis said the team is working with the Baltimore-based Cordish Cos. to develop retail shops along the Randol Mill Road side of Globe Life Park: “It is the Rangers’ intent to preserve the beautiful exterior facade.”
So if the Texas Rangers owners get more than half a billion dollars in public money to replace their 22-year-old stadium with a new stadium so they can have air conditioning, they’re going to keep the old, un-air-conditioned building around to use as … shops? Or part of the building? And the field could be “refitted for another purpose” somehow? Possibly as “park and festival spaces”?
This is all extremely strange, since it’s unlikely anyone cares much about the Rangers stadium’s facade, unless this is meant to win people over with a “Hey, we’re not tearing down a perfectly good 22-year-old stadium, we’re just gutting it to use it for something it wasn’t meant for instead of for baseball!” Arlington Mayor Jeff Williams also said the city could collect rent on any retail space leased out at the old stadium, which maybe could help offset construction costs, yes — but then, nobody’s saying how much it would cost to gut and redevelop the existing stadium, so who knows if there would actually be a net gain?
Supposedly there’s going to be a press conference about all this tomorrow, so we can boggle some more then. Stay tuned.
After voting unanimously to put a new Texas Rangers stadium funding measure on the November ballot in May and again last week, the Arlington city council did so a third time yesterday, which means the referendum will really truly happen now.
The stadium campaign promises to be more of a battle than it sounded at first — I haven’t seen any polls yet, but there’s an opposition group organized called Save Our Stadium (no website, only a Facebook page, because Zuckerberg owns our public commons) that recently confronted Arlington Mayor Jeff Williams over his support for the $500-million-plus public subsidy plan and his role in banning opposition comments from a Facebook page about the stadium. They then posted a video about it (shot in portrait mode, because the future will also be shot in portrait mode) that ends with the mayor getting steamed at a question about a stadium opponent being threatened with arrest, at which point he tries to grab the phone of one of his questioners, which isn’t something you see every day from a mayor:
I’ve also been sent video (no permission yet to post it, sorry) alleging to show a stadium supporter trying to smash the car window of some people handing out anti-subsidy flyers. With emotions running this high with three months to go, I’m honestly a little anxious about where this will go by November, this being Texas and all.
Remember when the city of Arlington released a crazy-ass FAQ about its plans to spend more than $500 million on a new Texas Rangers stadium, and pretended like the presence of the team was going to be worth $2.5 billion to the city when the actual tax revenues involved would be a tiny fraction of that? Dallas Morning News reporter Jeff Mozier, who’s been doing a stalwart job digging into the Rangers plan, crunched the numbers from the study and came up with a story with a hell of a headline:
Arlington could generate more tax dollars without new Texas Rangers stadium, city numbers suggest
Ouch! But also true: That $2.5 billion claim is economic activity, not actual new tax revenue — i.e., it’s the number you get if you add up all the Rangers-related money changing hands in the city over the next 40 years, regardless of whether any of it benefits the city treasury or anyone else in town besides the Rangers owners. The actual fiscal impact on the city budget is projected to be $134 million in new taxes and rent, which is obviously a lot less than $500 million. And that’s before you even take into account that most of the $134 million wouldn’t arrive for a couple of decades, while the $500 million would have to paid now — in present value, any new revenues would be closer to $50-60 million.
There are other problems with the city consultants’ projections — they included the impact of the Rangers staying in town starting immediately, for one, while the Rangers are already locked into staying put through 2023 — but given that we’re already looking at Arlington putting down at least $519 million for a return of at most $60 million, it almost doesn’t matter how much worse it gets. Asked about whether this was a worthwhile expense, Arlington Mayor Jeff Williams replied that he couldn’t think of a better use of tax dollars: “I would love for anybody to tell me something else that is there for me to get.” I’m still waiting for somebody to take up Allen Sanderson on his suggestion of throwing money out of a helicopter — if nothing else, it would make for a nice controlled study.
The Arlington city council yesterday unanimously approved putting a $500-million-and-change public subsidy for a new Texas Rangers stadium on the November ballot, which should come as no surprise given that they already unanimously approved the deal once before. (They still have to approve it once more time, on August 9, because Arlington is apparently run by the Bellman from “Hunting of the Snark.”) Somewhat more interesting is the turnout at yesterday’s hearing, which according to the Dallas Morning News saw “nearly 30 people” speak, while according to the Fort Worth Star-Telegram “speakers opposed to the new stadium outnumbered supporters at least 2 to 1,” so we’re talking something like 20 opponents to 10 proponents. That’s not necessarily an indication of anything about how a vote would go, but it does indicate that there’s at least the beginnings of an organized opposition.
As for what the speakers said, here’s a sampling of the con side:
“When you have a stadium that is 22 years old and is already paid off and everybody loves it, it doesn’t make a whole lot of sense to me,” [William Busby] said.
“If you are thinking about sustainability and green environmental structures, to build a stadium like the one they propose is the epitome of waste,” [Cynthia Belisle] said. “It’s a beautiful building and it’s not right to tear it down.”
[Warren] Norred, who helps operate the anti-stadium Facebook page Save Our Stadium, drew applause when he said some speakers “talked about building a new stadium as though we don’t have one,” he said. “Twenty years ago I couldn’t have said it’s a beautiful stadium, let’s keep it. But I can say that today.”
And the pro side:
“We’ve got to keep the Rangers here in Arlington, where they belong,” said Sylvia Greene, speaking in favor of a proposed retractable-roof stadium to replace Globe Life Park. “They are critical to our economy, and the Rangers have been the building block for all the good things that have come to Arlington.”
Arlington Mayor Jeff Williams added in an interview with the Star-Telegram: “We know we needed to do something, because I did not want to get into a bidding war with multiple cities. Bidding would have started out at $600 million [the city’s portion] next year, there’s no doubt.” Not to doubt a fiscally responsible, results-driven businessman, but that’s what victims of the winner’s curse always say.
All that really matters, obviously, is how residents vote in November, which should be very interesting to watch. There haven’t been a whole lot of stadium referenda lately — mostly because team owners and elected officials alike usually try to bypass a public vote, since who knows what those crazy voters will do — with the last two I can recall being the Cleveland tax hike extension for the Indians, Browns, and Cavaliers in 2014 (which passed), and the vote to fund a new New York Islanders arena in Nassau County in 2011 (which failed). And while Texas voters have generally been friendly to stadium subsidies, this is also the first time they’ve been asked to build a stadium to replace a 22-year-old one because it lacks air-conditioning.
It should be an interesting campaign, needless to say — and an interesting test of whether the old rule that pro-stadium forces need to outspend the anti-stadium side by 100-to-1 to win still applies. Gentlemen, start your checkbooks.
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.
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!
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.
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.
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: