Astros, Nats: We’ll pay rent on Palm Beach spring training site if we get it right back in hotel tax kickbacks

Palm Beach County is still trying to build a new $140 million spring-training complex to lure the Houston Astros and Washington Nationals, with the slight holdup that the county doesn’t actually have $140 million. So the teams have proposed a solution: They’ll pay $2.1 million a year rent (combined), if the county agrees to give them $3 million a year in hotel taxes, rising by 3.5% a year for 30 years wait what? How does that help?

The Palm Beach Post, which apparently first reported this, is behind a paywall, and the subsequent reports in the Houston Chronicle and Washington Post aren’t helping much. (The Chronicle says that $2.1 million a year would pay off $56 million in bonds, which it wouldn’t, and the Post links to a month-old Palm Beach Post article about something else, which is also behind the paywall anyway.) The two teams are making a formal presentation to the Palm Beach County Tourist Development Council on Thursday; hopefully we’ll get some actual information then.


Palm Beach County trying to get all the spring training teams

Looks like the Washington Nationals finally found someone interested in throwing money at them for a new spring-training stadium, even if it’s only theoretical money at this point:

Palm Beach County is willing to play ball with two Major League Baseball teams trying to get a new spring training stadium, but public cost and tax hurdles could get in the way.

The County Commission Tuesday gave its endorsement to trying to craft a deal with the Houston Astros and Washington Nationals that could include building a $100 million stadium and training facility that would host both teams for spring training.

Palm Beach County already has a spring training stadium — Roger Dean Stadium in Jupiter, which tragically does not look like this — which is home to the Miami Marlins and St. Louis Cardinals, but county officials are hoping that adding a second stadium and two more teams will “keep baseball spring training here in Florida,” according to County Mayor Priscilla Taylor. Because, I guess, they’re trying to build a critical mass of teams so that they don’t all move to Arizona, is the theory?

Anyway, the county commission doesn’t know where a stadium would go (there are reportedly ten sites under consideration) or how that $100 million would be paid for (the state has offered $50 million in funding over 37 years, which would only pay for a small sliver of the cost). The county could kick in some hotel tax money, and … yeah, that’s about as far as they’ve got. “There are still a lot of unknowns,” county commissioner Paulette Burdick told the South Florida Sun-Sentinel. Tell me about it.

Nats’ spring training plans hit “roadblocks,” aka “nobody will open their damn wallets”

There’s a long post on today’s Washington Post site about the poor Washington Nationals, whose plans for having Osceola County spend $98 million on building them a new spring-training facility in Kissimmee fell apart last summer over Osceola County not wanting to give them $98 million, and who ever since have been striking out at finding someone else to throw money at them:

Deals for a more ideal location, empty City of Palms Park in Fort Myers, have now fallen apart twice, including a recent proposal that involved a private developer who county officials thought would help make the project possible…

The Fort Myers site re-emerged as an option in August when a private development company, Rockford Construction, joined talks at officials’ requests. County officials hoped that a public-private partnership as part of a mixed-use project that featured the stadium as a centerpiece could be the solution to their financial concerns. But the project hit a major snag last week when officials told Rockford that they didn’t find the developer’s funding proposal feasible.

According to a Jan. 29 letter from Fort Myers City Manager William Mitchell to Paul Roberts, a principal at Rockford, the developer proposed that the city essentially finance the entire cost of the $45 million in refurbishments. By adding that to the existing debt, the city’s total debt on the project would be between $53 million and $56 million, according to the letter.

Now, writes the Post, the Nationals have “few known options.” Aside from, hmm, let’s see, staying at their existing spring training site that’s only 21 years old, or, if being a long bus ride from other teams’ facilities is such a huge deal-breaker, maybe building a new spring training site with some of their own money. But those aren’t “solutions” in the mind of team execs, so far be it from the Post to mention them, either.

Nats owner asked D.C. to add $300m roof to 5-year-old stadium STOP LAUGHING WHY ARE YOU LAUGHING?

Washington, D.C. Mayor Vincent Gray revealed yesterday that — excuse me, what?

Mayor Vincent C. Gray said Tuesday that Washington Nationals owner Theodore N. Lerner pitched him earlier this year on a pricey plan to have the city build a retractable roof over Nationals Park — a proposal, Gray said, that he swiftly but politely rejected.

(Hang on, I’m going to need a minute here.)

Okay, so: This news first broke when WNEW-FM (hey, that used to be our station ID!), which learned from multiple sources that “team executives have approached several District officials, including some inside mayor Vincent Gray’s office,” to propose a $300 million roof atop the five-year-old stadium, which cost $667 million to build, almost all of it from city tax money. Gray later confirmed the report, saying he had a 15-minute meeting with the Nats owner in July at which “what Lerner wanted to talk about was the possibility of a roof on Nationals Park. That was it. There was no discussion about how much it was going to cost and no further details. I’ve had no further discussions.” Another city official, this one unnamed, told the Washington Post: “The mayor was polite but unequivocal. We are not going to spend taxpayer money to put a roof on the stadium, regardless of the cost.”

So we’ve established that whatever else you want to say about Mayor Gray’s sports stadium dreams — not only is he proposing one of the largest soccer-stadium subsidies ever for D.C. United, but he recently approved $50 million in tax-increment financing funds for the Wizards‘ Verizon Center to buy a new scoreboard and other goodies — he’s not totally crazy. Which raises the other obvious question: Is Lerner?

It’s not totally unheard of to add a roof (retractable, presumably, since for $300 million you damn well better get a roof that moves) to a stadium that wasn’t designed for one in the first place: There’s the U.S. Open tennis center’s planned roof, and the one at Wimbledon, and … okay, there’s not a lot else, and certainly no examples from baseball. Roofs, especially retractable ones, require a ton of support structure, which means giant pylons around the stadium, and Nationals Park doesn’t exactly have a lot of free space around it. Supposedly Lerner went as far as having renderings drawn up, which he showed to Gray, but which haven’t publicly surfaced yet.

And then there’s the bigger question: Why the hell do the Nationals need a roof, anyway? Washington isn’t especially rainy as cities go, and though the Nats have shown a strange obsession with not wanting to have to give rain checks for games lost to weather, the amount of revenue at stake has to be piddling. So why spend $300 million to solve a problem that really isn’t?

The answer, I suppose, could be that Lerner wasn’t looking to spend his money. Why he thought Gray would go for building a roof with city money is anyone’s guess, though. Maybe this was just an opening gambit so that later when he says, “Okay, we’ll just take one of those $50 million scoreboard plans like you gave the Wizards,” he’ll sound more reasonable by comparison? Given that right now Jeffrey Loria sounds more reasonable than Lerner, that might be the best bet — call it baseball’s madman theory.

Area Americans disagree on what sports facilities do for (or to) cities that build them

Moyers and Company has a bunch of stadium-related stuff up on its website, including a repost of its 2008 segment on the funding of the New York Yankees‘ new stadium, plus a collection of essays by local community activists and stadium experts on what new sports facilities have done for their cities. (Disclosure: I helped suggest a couple of the essayists.) Among the highlights:

“I invite you to take a walk around the neighborhood and see for yourself if that has happened. Businesses have closed and the remaining ones are hurting as the Yankee organization has moved many of the services inside the stadium.” —Joyce Hogi, Bronx community activist

“Forbes Magazine consistently lists Stockton as the most miserable city in the nation. For those who love Stockton, the arena is a great addition to the city; ‘I never thought Stockton could have something this nice,’ is a common refrain.” —Lori Gilbert, Stockton Record features writer

“When someone sits down with a beer and hot dog, virtually everything they see is owned by the District of Columbia. Yet all of the money earned from the stadium — tickets, concessions, advertising — goes to the team owner, Ted Lerner.” —Ed Lazere, D.C. Fiscal Policy Institute

“The stadium’s opening has been one of the greatest economic drivers for our city, providing thousands of jobs and an expanding sales tax revenue. If you combine this new revenue stream with the $500,000 expected annually from the Cowboys’ new naming rights deal with AT&T then Arlington is on pace to pay off the stadium ten years earlier than anticipated.” —Arlington Mayor Robert Cluck

Add it all up and, well, I’m not sure there’s any consensus, other than that stadiums are expensive, and that people like sports. But it does do a decent job of describing the elephant.

County rejects Nats spring stadium plan for Kissimmee

The Osceola County Commission voted last night on spending $98 million and providing free county land for a new spring training home in Kissimmee for the Washington Nationals — whose old home in Viera is, omigod, almost 20 years old, and can’t be replaced who struck out on getting a new one in Fort Myers because Lee County already owes $234 million for all the other spring-training stadiums it’s been building — and lo and behold, they voted it down, 4-1. Who in the state has the pull to outrank spring-training baseball, self-proclaimed savior of Florida tourism?

Leaders in Osceola’s tourism industry expressed concern that the deal would commit too much of the county’s tourist-tax money to allow adequate funding of Experience Kissimmee, the area’s convention and visitors bureau, and would preclude the county from pursuing any other tourist development projects.

Well, that’s interesting. So apparently local business leaders can recognize opportunity cost — the lost possibilities of doing something else with a sum of money — when the opportunity being cost is something they’re interested in. Or maybe after years of having to watch the Houston Astros play spring games in Kissimmee, local restaurateurs are tired of throwing money at an attraction that just makes people lose their appetite.

Did I forget to mention MLB teams shake down cities for spring training money? Oh, do they ever

Nice piece last night by Deadspin wunderkind Jack Dickey on the never-ending shakedown of Florida and Arizona cities for baseball spring training facilities. Key section:

About the Nationals’ current home: It’s Space Coast Stadium in Viera, Fla., which was built in 1994 to keep the Marlins’ spring games in-state. It remained the Marlins’ home until Jeffrey Loria swapped the Expos for the Marlins in 2002, when Loria decided he’d keep Montreal’s newer spring digs at Jupiter’s Roger Dean Stadium, which opened in 1998. Loria happily forced the older stadium on Montreal’s new owners, MLB. Love that guy. In any event, the Nationals’ home isn’t yet 20 years old. But they’re still itching for a new one. For spring freaking training.

So why is it that Lee County won’t give in to the Nats? Have they finally gotten some sense about the economic ineffectiveness of publicly subsidized stadiums? Are they going to invest in infrastructure? Or schools?

Lee County, however, can’t afford anything close to that amount after taking on about $234 million in baseball-related debt over the past several years—borrowing $143 million to build a new stadium for the Red Sox and agreeing to take on another $91 million loan for improvements the Minnesota Twins want.

Oh, great.

This is nothing new, of course — though I don’t write about it here that often because I’m kept busy enough with major-league stadium news, spring-training subsidies have been a thriving business for years, if only because there’s effectively an unlimited number of Florida and Arizona towns who are able to host spring training, so the hosting merry-go-round is an endless bidding war. But it’s nice to see it all in one place. And by “nice” I mean of course teeth-gnashingly enraging.

Worldwide media domination (Seattle edition)

Chris Daniels of KING5 in Seattle has been in Brooklyn all week covering the new Nets arena (see his interview with Norman Oder of Atlantic Yards Report here), and last night the station aired his talk with me about Seattle’s arena plans. I’m not sure I broke any new ground in analysis of the deal, but if you’ve been dying to see fast-cut closeups of me drinking tea, this is a must-watch.

And because I neglected to mention it at the time, a couple of weeks ago I was interviewed by RT America (the web channel formerly known as Russia Today) about my spiked Washington Post op-ed on the Nationals stadium deal. This one was conducted via Skype — watch closely and see if you can tell the difference in production values!

Why the WashPost killed my Nationals stadium op-ed

In case you missed it, I didn’t have an op-ed in this Sunday’s Washington Post. That’s actually normal for me — I’ve never had an op-ed in the Post before — except that last week, a Post opinion editor approached me and asked if I’d consider writing something for the occasion of the Washington Nationals‘ first postseason appearance, making the case why the city’s $667 million stadium deal might still be a bad one for D.C. residents and taxpayers.

I spent the next 24 hours writing up 1,000 words on the subject, which you can read below. Only hours after I submitted it, though, I was told that the story was being killed, after someone higher up in editorial had raised “serious concerns” about several points, namely:

  • I wrote that D.C. taxpayers were paying for the stadium, but it’s actually being paid for by taxes on large businesses and taxes on concessions and ticket sales.
  • I wrote that stadium taxes are paying for one-third of the construction cost, but actually they’re paying for twice the cost, and the stadium bonds are set to be retired early.
  • The Post’s figures are that 85% of Nats fans come from the suburbs, so isn’t spending by those fans a net gain?

I supplied answers — more on that below — but the reply was the same: Sorry, it’s being spiked.

I’m writing about all this here not to slag the Post in particular — they were actually very apologetic about the whole mess — but rather to point out how widespread economic innumeracy is among the general public, as well as in news coverage. Each of the objections raised to my piece is an example of a common misconception about how public subsidies work that helps sports owners (and other purveyors of “public-private partnerships”) sell their plans to stick the public with hundreds of millions in costs and still claim that it’s a win for taxpayers.

Let’s take them one at a time:

1. It’s only business taxes and stadium taxes that are paying for the stadium. This one baffled me the most when I first read it — last I checked, businesses were taxpayers, too — but the logic goes something like this: The D.C. Chamber of Commerce agreed to a tax surcharge to raise money for the stadium, so it’s really private businesses paying the largest share of the bills, not the public.

This is a commonly used argument among stadium boosters: It’s not taxing everyone, it’s just taxing business owners/car renters/cigarette smokers/etc. First off, this overlooks the fact that across-the-board business taxes aren’t totally cost-free — at least some small chunk of it is going to get passed along to consumers, or decrease businesses’ spending in other areas and so depress the local economy slightly. But there’s a far bigger problem as well: Once you levy a tax increase for one item, that’s a tax you can no longer use for anything else. My favorite example here remains the four sports lotteries that Maryland put in place to fund the Orioles and Ravens stadiums (it’s not taxpayer spending! it’s just those gamblers paying for this!), only to have the state discover when it later wanted to add new lotteries for other needs that the lottery market was tapped out.

In short: Tax money is fungible. A business tax may or may not be a good way of raising revenue, but however you slice it, once it lands in the public treasury it’s taxpayer money, and if the city then spends it on a stadium, that’s money that’s not available for anything else.

2. The stadium is paying back twice its cost. This is what other outlets reported this summer, but it was a gross misreading of what’s actually going on, which is that those tax streams being funneled off to pay for the stadium are running above prior projections, thanks to the fact that D.C. is the one place in the nation where the economy is actually doing well. That doesn’t mean that the stadium is paying for itself, though — it’s still city tax revenue that’s paying for the stadium, it’s just paying for it more quickly, because D.C. businesses and residents are paying more in taxes.

And, of course, while this is the case so far, tax revenues can swing wildly from one year to the next. Cincinnati’s two stadiums were at one point being paid off quickly, too — before the economy took a nosedive and next thing they knew they were having to sell off public hospitals to make up the shortfall.

3. Suburbanites make up 85% of Nats fans, so that’s all new money to the city. I see this argument time and time again, and it’s based on a gross misunderstanding of the substitution effect: It’s not money spent by out-of-towners that should count as new spending, but rather money spent by people who otherwise wouldn’t spend it in D.C. So people from Rockville who otherwise would have gone into the city to eat at District restaurants — or, for that matter, people from Iowa who are in town on vacation and take in a Nats game instead of going to the Kennedy Center — still represent money cannibalized from existing spending.

Does that amount to all of the 85%? No way. But as I noted in my op-ed, even if 50% of Nats spending is new, each fan would have to plunk down $300 per game to pay back the stadium’s costs from new sales tax revenue alone. (Or, if you prefer, if 75% of Nats spending is new to D.C., they’d have to spend $200 a head. Either way, not bloody likely.)

Now, are all these points arguable? Sure, though I’d certainly argue that doing so with all of them simultaneously requires twisting your brain so far over backwards that grey matter leaks out your ears. More to the point, though: None of this is arguing about facts, but rather about the interpretation of facts. Which you would think would be the whole point of opinion pages. Instead, my interpretation was ruled outside the bounds of acceptable debate, because people in power say that the Nats’ stadium is a money-maker, so it damn well must be one.

Anyway, you can read my rejected essay below. Further discussion welcome, especially with regard to what was supposed to be my main point: Not how much the stadium cost taxpayers, but how former Mayor Anthony Williams got snookered in negotiations, when he actually had the leverage to cut a far better deal…


Nats May Win, But They’re Still a Loss for D.C.

There’s no denying it: As moments worth waiting for go, this is a big one. When the Washington Nationals take the field today for the National League Division Series opener, the broadcasters will run down the numbers. It’s been eight years since the former Montreal Expos relocated to D.C. Thirty-three years without baseball before that. Seventy-nine years without a postseason appearance, and 88 since Walter Johnson brought home Washington’s only championship.

This, no doubt, was what Mayor Anthony Williams anticipated on that day eight years ago when he donned a red cap, led council members in a round of “Take Me Out To The Ballgame,” and declared proudly that “the American game is rounding third and at last heading back home to the nation’s capital.” After a years-long search for a new home, the Expos would be transplanted to Washington in exchange for a promise of a $440 million stadium — a number that later swelled to $530 million, then $614 million, and ultimately $667 million, almost all of it footed by taxpayers.

It was a huge ransom — at the time, it was both the priciest U.S. baseball stadium to date and the most heavily subsidized. Innumerable economists had studied the level of economic impact that sports stadiums have on their host cities, and come to the overwhelming consensus: not much. Sales-tax receipts? They don’t budge. Per-capita income? No effect. On the brink of Williams’ deal with MLB, 90 economists signed a public letter warning that “the vast body of economic research on the impact of baseball stadiums” suggests that one “will not generate notable economic or fiscal benefits for the city.”

So how has it worked out? The excitement over a division title aside, any economic benefits are still uncertain. What’s now more clear than ever, meanwhile, is that when Williams bargained to land the Nats, he gave away the store.

Both the D.C. economy and the Navy Yard neighborhood are booming, but it’s hard to say how much, if any, is the result of the Nats, and not the new Metro stops, parks, and other amenities the District has provided. In fact, development immediately adjacent to the stadium has if anything lagged, with fenced-in lots bearing banners that promise possible townhouses and sports bars to come. (This last is a common problem for new stadiums, which are not nearly the catalysts for revitalization they’re claimed to be, in part because of all the in-house restaurants and high-end shopping designed to bring fan spending inside the turnstiles.)

The ballpark itself generates some tax money, but only enough to pay off about one-third of its cost. And while stadium boosters like to tout ballpark taxes as found money, they’re not: Most people have a more or less set amount they spend on entertainment, and if they’re plunking down cash for baseball tickets, much of that substitutes for dollars they’d otherwise have spent elsewhere. In fact, because ballpark taxes are kicked back to the team to help pay for Nationals Park, any spending shifted from Dupont Circle restaurants to ballgames ends up a net loss for taxpayers.

Washington, with so many fans coming from outside city limits, comes out a little better in substitution terms. But even if we count half of Nats fans as “new” spending, they’d each have to spend more than $300 a game on tickets, food, and souvenirs for D.C. to be made whole on its annual $32 million stadium tab.

All this would be easier to swallow if it were just the price that cities have to pay for pro baseball — but all evidence is that D.C. badly overpaid for the Nats. Let’s go back to 2004: MLB had obtained the Expos and promptly set out to conduct a bidding war for the team’s services, but after two years it had gone nowhere, and the team was playing several “home” games a year in Puerto Rico in an attempt to draw fans. (Asked if this should be considered an embarrassment to baseball, Selig could only mumble, “I don’t know if ’embarrassment’ is the right word.”) Other suitors for the Expos’ hand included northern Virginia, whose leading candidate, Arlington, had just withdrawn its bid on the grounds that citizens didn’t support it, and Portland, which a few years later would cement its commitment to baseball by converting its only ballpark to soccer-only, driving its minor-league team out of town altogether. One pair of prospective owners turned out to have faked their resumes as investment-banking tycoons; another, to have falsely claimed that he once sang backup for Sting.

With rivals like those, Mayor Williams could have felt justified in thinking that he had the leverage to take a hard line in stadium talks, especially with three new anti-subsidy councilmembers set to take office. But when baseball relocation chief Jerry Reinsdorf told Williams that his proposed two-thirds/one-third public-private split “is fine, but three-thirds/no-thirds is more of what we had in mind,” Williams didn’t tell him to get the hell out of his office. He said, in effect, “okay” — agreeing not only to pay for the stadium, but for all cost overruns and future capital repairs as well.

Instead, D.C. could have done what Seattle did this year: Emboldened by a voter referendum that barred sports deals where the city didn’t turn a profit, the city council there told hedge fund financier Chris Hansen that if he wanted a new NBA arena, he’d have to pay for it mostly from his own pocket. Because Seattle, like Washington eight years ago, is by far the league’s best vacant market, Hansen agreed — and even agreed to give back some arena taxes to pay for transit improvements. It’s the rare case where city leaders realized that teams need access to their ticket buyers more than the city needs a sports franchise, and won.

If Williams and the D.C. council had followed that path, then today Washington could have not just its first pennant in eight decades, but a stadium that is a model of how to host pro sports without draining the public treasury. And that would be a victory worth celebrating.

Neil deMause is co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Money and runs the stadium news website

MLB won’t let Nats pay for late-night train service, sorta kinda maybe

As the Washington Nationals continue on toward their first-ever postseason appearance, the standoff over providing late-night train service for departing fans continues. Now Deadspin reports that D.C. councilmember Jack Evans (you remember Jack Evans) says that the Nats won’t pay for trains because MLB won’t let them, and says that Nats officials have confirmed this is league policy.

Only maybe not. DCist, which Deadspin scraped for its report, has now taken back its report that Evans said this was an MLB rule, noting that all he said was that “MLB is quite concerned about a precedent being set.” And WTOP’s Adam Tuss, the reporter who initially tweeted that a Nats official confirmed the rule, is now just reporting that the official confirmed that MLB is concerned about setting a precedent.

Tuss also quotes MLB spokesperson Matt Bourne — at last, a named source! — as saying that “No other MLB team has had to pay for service. We’ve never had to face this issue.” So it’s pretty unlikely that MLB has a “policy” against a situation that’s never arisen. More likely, once word got out that D.C. was asking for the Nats to pay for extra train service, MLB officials thought, “Oh, great, now everyone will want one.” Whether they outright ordered the Nats not to bend or not is pretty much moot: By telling the media that they don’t like it, they provide the team owners cover to argue that their hands are tied, it’s big bad Bud Selig that won’t let them pay a measly $29,000 an hour so that fans aren’t stranded on streetcorners after games.

Hopefully this will all be resolved before October, because with postseason start times typically going past 8 pm Eastern, it’s going to get more and more likely that some games will last past midnight. Evans seems confident this will all get worked out — my guess: it’ll be some face-saving trade in which the Nats agree to obey Metro’s payment rules in exchange for free extra police presence or the rights to set up souvenir stands on the Capitol steps or something. Neither MLB nor its teams is in the business of giving away something for nothing; that’s what taxpayers are for.