Detroit MLS stadium isn’t a loss leader for Cavs and Pistons owners, it’s a land grab

The owners of the proposed Detroit MLS team released renderings of their proposed arena yesterday, and it looks just like a sketchily drawn soccer stadium. But more important, they revealed some of their financial and siting plans, and it’s far more revealing of just what Cleveland Cavaliers owner Dan Gilbert and Pistons owner Tom Gores are up to:

Billionaire Dan Gilbert and Pistons executive Arn Tellem announced plans today for a $1-billion investment at Wayne County’s unfinished jail site for a 25,000-seat Major League Soccer stadium and other developments, including restaurants, hotel rooms, and a commercial office tower…

If the unfinished jail site can’t be used, it’s unlikely that MLS will seriously consider Detroit, [MLS commissioner Don] Garber and Gilbert both said.

“If you have a Plan B, it distracts from Plan A,” Gilbert said. “There really is no Plan B.”

The proposed site, in other words, doesn’t involve any of the land that Gilbert already owns in downtown Detroit, but rather a prime parcel near the Tigers, Lions, and Red Wings venues that is currently home to a county jail complex that has gone way over budget. By announcing their designs on it for a soccer stadium — and getting Garber to deliver a “their way or the highway” message — Gilbert and Gores can use the desire for MLS (and for the ever popular “mixed-use development”) as a way to stage a land grab for a potentially valuable downtown property. It’s the Atlantic Yards model, in other words, though with a much cheaper sports facility as the hook.

So would it make sense for the city and county? Fortunately, county elected officials seem to be asking that question. Wayne County Executive Warren Evans said in order to do the deal, a new jail (plus courthouse) would have to be able to be built at the city and state’s Mound Road site for no more than the estimated $175 million it would cost to finish the current jail plan. Evans didn’t say anything about a fair price for the downtown land, but it’s presumably on his mind: The county recently rejected a $50 million offer from Gilbert for the land, something that the soccer-plus-the-kitchen-sink proposal is no doubt designed to get the county thinking twice about.

In theory, there’s nothing wrong with using centrally located land for sports and retail and hotels instead of for a jail — so long as there’s no huge giveaway of public assets involved. Too often, cities that have been facing a long history of disinvestment and abandonment like Detroit end up fighting the last war once there’s an uptick in interest from well-off newcomers in resettling the area, throwing money (or land and development rights that are worth money) at any developer offering a construction project rather than trying to see what its assets are really worth. (I’m just wrapped up writing a Brooklyn Wars chapter that addresses exactly this, so it’s close to my mind.) Gilbert and Gores are clearly looking to dangle that “$1 billion investment” as an enticement to get the county to give them what they want at their price; how the county responds will go a long way toward determining the next stage of Detroit’s problematic revival.

Oh, right, I promised you renderings, so let’s do those now. There are fireworks and searchlights! (There are always fireworks and searchlights.)

635973657163165618-2016-0427-MLS-Detroit-Aerial-Site 635973657070188426-2016-0427-MLS-Detroit-Interior-Bowl

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Cavs, Pistons owners to seek Detroit MLS stadium, because what bankrupt city doesn’t need four new sports venues?

The owners of the Detroit Pistons and Cleveland Cavaliers have announced they’re teaming up to seek a Detroit MLS franchise:

Soccer is the most popular sport in the state, according to [Tom Gores and Dan Gilbert’s press] release, with 92,000 registered players in Michigan and “if Detroit is chosen for an MLS expansion team, it would become the most dense urban sports and entertainment district city in America with four major professional sports stadiums within a 10-15 minute walk: Ford Field, Comerica Park, the new Detroit Red Wings arena and the new MLS stadium.”

Oh, yeah, did I forget to mention this would require a new MLS stadium? Gores and Gilbert didn’t say anything about where a new stadium would go, though Gilbert’s Quicken Loans owns a ton of downtown Detroit land that would qualify as “within a 10-15 minute walk” of Mike Ilitch’s baseball-and-hockey-world.

The bigger question is how a new stadium would be paid for, since a publicly funded MLS stadium could also make Detroit the home of the most dense set of stadium subsidies in America. Gores and Gilbert might choose to go it themselves — MLS stadiums are relatively cheap as these things go, and it could be a kind of loss leader for their other downtown properties. (Not that soccer fans would buy that much from neighboring stores, but anything new in Detroit helps sell that neighborhood as “not the part of the city that’s totally burnt-out and where the streetlights don’t work.”) Best to keep a close eye on this, anyway.

Beckham buys six of nine acres for new stadium, now just needs stadium that’ll fit on nine acres

David Beckham’s Miami MLS ownership group has purchased six acres of private land needed for its proposed soccer stadium, for an undisclosed price. He still needs to buy three acres of county-owned land as well; Miami-Dade Mayor Carlos Gimenez is hoping to use a state economic-development law to get around allowing public bids on the property, which would require Beckham’s group to pay a “market-rate” price, which is estimated to be around $9 million.

You can quibble over the exact price, but none of this should be too controversial — at least Beckham is paying something close to market price, and construction costs and property taxes, too. The biggest question, really, is how to squeeze a 25,000-seat soccer stadium into a nine-acre plot of land: The latest renderings still show a stadium plopped down on top of parked cars, so no way to tell from those. I’m actually tentatively excited to see what Beckham & Co. come up with, as site constraints often make for the most interesting stadiums, but also curious to see how they make this mesh with the demands of a modern-day concession-filled mallpark. Stay tuned to this channel for further breaking news.

D.C. zoning commission likes United stadium, just wishes it looked less like a prison

The D.C. Zoning Commission held its first hearing on D.C. United‘s new stadium being built with the help of $183 million in city money, and the commissioners didn’t sound too thrilled with the team’s bait-and-switch stadium design:

“I actually looked at it and it and I thought, this reminds me of a prison, the facade,” [commissioner Marcie] Cohen said. “I think we need to get a little bit more, maybe a little bit more friendly to the neighborhood, because if I’m looking at the facade, I wouldn’t be too happy with that view.”

What Cohen was talking about was presumably this, which, yeah, she has a point:

dc-united-pressNot to mention: Ghost balloons! Eeeagh!

The good news for United owner Erick Thohir is things like spiffing up the exterior are relatively inexpensive in the grand scheme of things, so they should be able to make the commissioners happy with a few tweaks. And if not, well, Thohir is only on the hook for half of the first $20 million in cost overruns, so it’ll be more the city’s problem than his.

Speaking of Thohir, he also owns Italian soccer giant Inter Milan, and had this to say yesterday about that team’s new-stadium campaign:

“If you look at future revenue, the stadium is very important, just look at what Juventus make with ticket sales. Both Milan clubs are working to improve the stadium, otherwise we’ll lose €20m in profit.”

Lose €20m in profit compared to what exactly? Compared to what they make now? Compared to what Juventus makes now? Compared to what they’d make in a new stadium? How does Thohir know what his profits would be in a new stadium when he doesn’t even know how much he’d have to spend on it? Do sports team owners even think before saying these things, or is it like those “You’re going to be grounded for the next six months!” threats that parents blurt out before thinking what they’re saying or how they’ll enforce it? Anyway, nice to see that while Europe may be far behind when it comes to lavishing public money on its sports teams for no good reason, America doesn’t yet have a monopoly on stupid.

Orlando’s MLS stadium deal not as taxpayer-friendly as reported, still better than a poke in the eye

Elliott Turner, aka Twitter’s @futfanatico, also had a piece in Vice Sports on Friday, this one a long analysis of Orlando City S.C.‘s stadium deal, which I’d previously praised as a rare moment when “a professional sports franchise is actually agreeing to pay to build its new stadium, and pay (something) for the land to build it on, and pay property taxes on the stadium once it’s complete,” though the next day I had to unpraise it when it turned out the team was still expecting the city to use its eminent domain powers to force private owners to turn over part of the stadium land. Turner has even more problems with the deal, though, calling it “a new way to milk taxpayers”:

  • The team will now operate the stadium, not the city, meaning it will cover operating expenses but also won’t share revenues.
  • The team’s non-relocation clause has been cut from 15 to ten years, and it will no longer pay a $20 million fine if it moves before then.
  • The city is still on the hook for sewer and infrastructure upgrades that could amount to $16 million, which will wipe out the $9 million profit the city will turn on the land it bought and re-sold to Orlando City S.C.
  • Under the previous deal, the club was going to pay $675,000 in annual rent; by owning the stadium itself it won’t pay rent but will pay property taxes, but those will likely amount to less than the rent would have.
  • Under the new contract, Orlando City S.C. can deduct future construction cost overruns from the $18 million purchase price it’s paying the city for stadium land.

So how bad is all this? Not real bad, honestly: Operating costs can easily outstrip any revenues. The non-relocation clause is likely a non-issue if the team owns the stadium and would be saddled with it if it moved. Sewer costs are a standard city expense that property taxes are supposed to help cover. And most importantly, that “rent” wasn’t going to pay back the city and county’s $40 million in construction costs under the old deal, but toward paying back a $10 million loan that the city was going to provide toward the team’s share.

The most salient item uncovered by Turner is that the $18 million land purchase price may get eaten up by cost overruns, which is a real concern. But even then, getting a lousy price on land sales is a perfectly cromulent tradeoff for getting out from under $40 million in taxpayer cash obligations. The Orlando City soccer deal may not be the stadium utopia we had hoped for, but it’s at least close, and much closer than the original deal that the team owners originally proposed. I may not be quite shocked and awed by it, but if all stadium deals looked like this one, the world would be a significantly better place.

 

Yankees order NYCFC to stop taking print-at-home tickets, fans locked out of stadium for home opener

I wrote up an article for Vice Sports on Friday on how several sports teams, including the New York Yankees and Minnesota Timberwolves, have banned the use of print-at-home tickets, ostensibly to prevent fraud and counterfeiting but really because it allows them to control the resale of tickets via their own phone apps. I didn’t cover it here because it’s not really so much about stadiums, but following yesterday’s fiasco at NYCFC‘s home opener, I can’t resist:

NYCFC, which plays at Yankee Stadium, announced Friday that the team would no longer accept paper tickets, but the policy would be phased in.

The change—shockingly—led to chaos at Sunday’s NYCFC game.

Apparently what happened is that NYCFC allowed the use of print-at-home tickets, but required that they be “verified” before fans could enter, whatever that means. (Isn’t verification what the scanners at the turnstiles do?) The result was that shortly before game time (it’s hard to tell whether this was taken eight minutes before game time or just posted then), the inside of the stadium looked like this:

With NYCFC half owned by the Yankees, I can’t wait to see how they to resolve this by suggesting that fans all get their fingerprints scanned.

UPDATE: We have our first eyewitness report, and it indicates that the problem yesterday may have been due more to incompetence than intent:

UPDATE #2: An NYCFC official says the problem wasn’t the print-at-home tickets, which were accepted at all gates, but an eight-minute malfunction with the turnstile scanners that backed up the queues at the peak of pregame entry. Still awaiting word back on what the “verification” process was that had tickets scanned once before fans went through security and once after.

Portland sports columnist says Timbers need new stadium, they just don’t know it yet

AAAUGH stop it stop it stop it enough with the sports columnists stumping for new stadiums and arenas oh god here’s another one:

There are a lot of things that might be said on Sunday as the local Major League Soccer championship franchise raises its title banner. But with so many people standing outside, looking in, one has to be, “Can we move this party to a bigger room?!?”

I’m saying it. Not the Portland Timbers. It’s a delicate discussion given that the city, not the Timbers, owns the stadium. But it’s one that needs to happen.

Check that out: The MLS champion Portland Timbers aren’t demanding a new stadium, and in fact are just in year five of a 25-year lease for a stadium that just got a $40 million renovation, most of it at taxpayer expense. And the city isn’t talking about it either, as the column goes on to make clear:

“I can’t remember hearing a darned thing about it,” said commissioner Steve Novick.

Well, here we go then. The lid is officially blown off.

I have seen a lot of journalism in my day, but never before have I seen a columnist take credit for a scoop on information that he admittedly concocted in his own brain. Congratulations, John Canzano and the Oregonian, you have reached a new low, which is impressive given the competition.

Developer of Indianapolis sports-medicine complex says maybe he’ll get his own MLS team, yeah

The failed Dunkin Donuts franchisee who says he wants to build a $500 million sports-medicine complex on the site of Indianapolis’s old airport terminal and include a sports venue of some kind now says he wants to bring an MLS franchise to town:

Craig Sanders, co-founder of Athletes Business Network, said he has been in talks with MLS to get a team for the planned 20,000-seat stadium near Washington Street and High School Road. He said he already has identified a management team to run the club if the MLS approves.

“We believe we have as good a chance as any (city) to make that happen,” Sanders said…

Sanders said it would cost ABN about $125 million in franchise fees and other costs to join the MLS, and the league still would need to do a market study to make sure the city could support a pro team.

Before you say, “Hey, doesn’t Indianapolis already have a minor-league soccer team, Indy Eleven, whose owner says he’s going to apply to move to MLS once somebody gives him $82 million for a new stadium,” I’ll save you a mouthful: Yes, yes it does. Which means Sanders is almost certainly just trying to stir up headlines for his project by throwing around the MLS name — hey, all it takes is a press release and a call to the league offices so you can say you’ve had “talks.” Well done, bankrupt donut magnate.

St. Paul approves spending $93m in public cash and tax breaks toward United’s $150m soccer stadium

The St. Paul city council voted 5-2 yesterday to approve $18.4 million in spending on infrastructure for a new Minnesota United soccer stadium, as was revealed last week would be the city’s price tag. United’s owners are now just awaiting state legislative approval of a full exemption from property taxes and construction sales taxes, and then they say they’ll begin construction.

So what exactly did the St. Paul council agree to? There are a whole lot of documents, but the most interesting one is the “playing and use agreement,” which is effectively the team’s lease. It says, in short:

  • United gets all rights to the stadium and “appurtenant” areas. (Whoever wrote this document really likes the word “appurtenant.” As they should, because it’s an awesome word.)
  • United will pay the city $556,623.96 a year in rent, which is the exact amount that the city will have to pay the regional Met Council in rent for its land.
  • The city can use the stadium for high school sports and stuff, unless United doesn’t want to let it.
  • United will be responsible for all operations, maintenance, and capital improvement costs to the stadium. The city gets to maintain the sewers, because that’s why they’re paid the big bucks.

This answers most of the remaining questions about the deal, and is mostly reassuring — you could argue that the city might have wanted to shop around to see if someone else would pay more for development rights to the land, but at least the public’s costs do seem to genuinely be capped at $18 million. Plus whatever the property tax and construction sales tax break would be worth, of course — previous estimates of the property tax break have put it at around $2.4 million a year, rising over time, which would come to around $54 million in present value, while the construction sales tax break would add about another $3 million.

So the final total public subsidy looks to be $93 million — on a stadium that will cost $150 million to build. Which just goes to show that there’s a big difference between mostly reassuring and all reassuring.

Miami mayor: Beckham’s MLS stadium would force fans to walk upright, that’s crazy talk

Miami Mayor Tomás Regalado is still complaining that David Beckham’s proposed MLS stadium wouldn’t have enough parking, and, you know what, let me leave it to my former corporate colleagues at Miami New Times to explain the crazy:

“I really don’t know how you could possibly walk from Culmer,” Miami Mayor Tomás Regalado tells [the Miami Herald’s Barry] Jackson. “I think it’s too far.”

The Culmer Metrorail Station is three blocks from Beckham’s proposed stadium site. As the Next Miami points out, that’s a five-minute walk.

As the New Times notes, “Granted, the plans still deserve scrutiny, but perhaps the tactic to take shouldn’t be that Miamians can’t walk five minutes. It’s questioning whether enough would even take the Metrorail to begin with.” Though encouraging people to take mass transit by making driving more onerous isn’t the worst idea, really. Maybe Regalado is just mad that his daughter’s school board has been cut out of the deal? Your guess is as good as mine.