Category Archives: Nashville MLS team

Nashville councilmember proposes rescinding MLS stadium funding, is immediately shouted down

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I didn’t even get a chance to post about yesterday’s proposal by Nashville councilmember Steve Glover to rescind the city’s approval of $75 million in funds for a new MLS stadium before it was immediately voted down by the full council:

The council voted 16-8, with seven abstentions, to strike down a plan to scrap funding for one of former Mayor Megan Barry’s defining projects. It would have revoked the council’s 31-6 vote in November to approve $225 million in revenue bonds for the future stadium.

Glover’s intent, it sounds like, was to put the funding on hold because of concerns that money was being spent on stadium prep before the bonds had even been sold:

Glover’s push was inspired by recent reports from WSMV-TV scrutinizing preliminary work for the stadium. That included one story that found Metro Chief Operating Officer Rich Riebeling authorized $135,000 in predevelopment work overseen by Commonwealth Development Group that came from Bridgestone Arena’s financial account. The Metro Sports Authority, which operates the arena, was unaware of the spending.

“We have spent money that we never authorized,” Glover said. “And until we get our act together, until we as a council fully understand what the expenses are, then I’m asking us to rescind it.”

Stadium backer Councilmember Colby Sledge, though, retorted that funding had to be approved so that negotiations could begin with the owners of Nashville S.C. over a community benefits plan:

“If we’re going to go ahead and have this action to rescind then what’s the point?” Sledge said. “Why are we asking community members to come out and spend their time?

“To me, I think it’s disingenuous to say we would potentially do this and have this hang over our heads.”

Uhhh, maybe actually the team owners might have more incentive to negotiate a community benefits agreement if they didn’t already have their money in hand? Just a thought. Now that the funding is back on track, we’ll see how well Sledge’s “hand over the cash now, negotiate terms later” plan ends up working.

MLS announces expansion teams in Nashville and TBD

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The long-awaited MLS expansion teams announcement is in, and the winners are Nashville and … nobody?

Nashville is the first of 12 cities that submitted formal bids in January to be awarded one of four available MLS expansion teams…

As a result of a private-public partnership between the club’s owners and the community, the team will play in a new, 27,500-seat soccer stadium at The Fairgrounds Nashville in the capital city’s artistic Wedgewood-Houston neighborhood.

That’s all well and good and expected, given that Nashville was waving $75 million plus free land at the league as an inducement for getting a team. (That’s what sports league press releases call a “private-public partnership.”) But what about expansion team #2? Why didn’t Sacramento, Cincinnati, or Detroit get a nod as well?

Nashville and Sacramento had been viewed as the favorites for the league’s newest teams, with Cincinnati and Detroit the other finalists. A decision on the second area picked is expected within a few weeks.

So you gotta ask at this point: What is MLS waiting for? Holding out hope that someone will fill the Cincinnati ownership group’s $25 million stadium funding gap? Waiting to see if David Beckham’s Miami team will really be ready to go anytime soon, or if the league should pick two more winners now, and push Miami back till the next round of expansion? It could be anything, really — but until we learn more, it’s just congratulations, Nashville taxpayers, your $75 million check has won you an MLS team, enjoy.

 

MLS picks four expansion finalists, only two (or three!) will win the prize

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Major League Soccer announced four finalist cities for expansion franchises yesterday, and the results are both unsurprising and kind of intriguing, for reasons I’ll get to in a minute. The four remaining contenders:

These are the four frontrunners predicted by Soccer Stadium Digest last week, so no shockers there. It’s an interesting mix of candidates, though: two with stadium plans in place, one with strong fan support but a funding gap, and one with a prominent ownership group but only an NFL stadium to play in, which the league has said previously it would consider, but it seems kind of suboptimal if your goal is to extract as many new stadiums as possible. Only two winners will be chosen later this month (December 14 will reportedly be the vote), so one would think that this will come down to Sacramento and Nashville, with Cincinnati and Detroit getting a “thanks for your efforts, try again next year once your stadium plans are more firmed up.”

Unless MLS could actually pick three winners. Because don’t forget, David Beckham’s previously announced franchise still doesn’t have a home, and his stadium partner Tim Leiweke told the Toronto Star on Tuesday that he’s not super optimistic:

“I’m helping any way I can with David,” Leiweke told the Sun. “I hope it gets done, but it’s not done. I have my fears as to whether it’s going to get done because things like this that drag on this long that’s always tough on a process. But for David I hope he lands somewhere.”

So, Cincinnati and Detroit could be in there as fallbacks in case MLS needs a last-minute sub for Miami. Or, Leiweke could just be saying this as leverage to get the final hurdles cleared for a Miami stadium, and this really is still a four-to-get-two situation. In which case the final verdict will say a lot about MLS’s business model: If it’s Sacramento and Nashville, we know that anybody with a $150 million check and a soccer-only stadium deal will get the nod; if it’s Sacramento and Cincinnati, we know that MLS is looking to where there’s the most established fan support; and if Detroit is involved at all it’s either because of the allure of a more major media market, or the allure of some big-money owners who can increase the league’s ties to the NBA, or who knows.

A lot is likely to depend on how things play out the next two weeks in Cincinnati, where both the city council and the county commission approved $50 million in public stadium subsidies yesterday, but still nobody’s saying how that additional $25 million would be paid for. (Or even what the total stadium cost would be; the gap could end more than that.) And also in Nashville, where the group Save Our Fairgrounds filed suit yesterday to block construction of a new stadium at Fairgrounds Nashville. Maybe hedging with four finalists isn’t a bad idea, in other words, but picking a final two (or three) two weeks from now is going to be anything but an easy task — I guess asking the four bidders to throw money on the table until two have emptied their pockets would be too unseemly?

Nashville MLS study ignored cannibalized sales taxes, author says it’s still “modest”

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Hey, the Associated Press actually asked some economists whether the $75 million in subsidies for a new MLS stadium that Nashville approved last week could ever pay off via increased sales tax receipts, and it turns out they’re split: The economist who did the city’s study says it will, and everybody else says it won’t.

  • “It doesn’t seem to be the kind of objective appraisal that the city would need to render a believable opinion on why they should spend public money subsidizing the stadium,” said Lake Forest College economist Robert Baade, noting that the city’s study failed to account for “substitution,” where people spending money at at a soccer match will then spend less on other entertainment options that they’re skipping in order to go to a soccer match.
  • University of Colorado economist Geoffrey Propheter says the idea that a sports team increases local area income “has been debunked.”
  • University of Tennessee economist Lawrence Kessler, who co-authored the city’s study, admitted he didn’t try to account for substitution effects but said “we tried to be as modest as possible” in projections. Which, it seems like being as modest as possible would actually involve trying to account for the fact that you’re relying on the Casino Night Principle to make your numbers work, but I’m not paid the big bucks to be an economics professor, so okay.

This seems like it could have gotten a stronger headline than USA Today’s “Cost study for proposed MLS stadium in Nashville questioned” — under the new rules of subjunctive journalism, you’d think it could at least warrant “Proposed MLS stadium could be massive money pit.” (The Tennessean, which ran a longer version of the USA Today article, used the headline “Nashville’s proposed MLS stadium may have hidden costs to city coffers,” which is a lot better.) But then, I’m not paid the big bucks to write headlines, so — hey, wait, I actually am. Props on fact-checking the city’s stadium claims, then, USA Today, but points off for not having the backbone to report what the actual evidence says: Friends don’t let friends count stadium sales tax revenue as new money, because it’s not.

 

Nashville MLS stadium lives, Virginia Beach arena dies (for now)

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As expected, the Nashville Metro Council voted yesterday to approve $225 million worth of public bonds for a new soccer stadium for a proposed MLS expansion team, in a deal that will ultimately cost taxpayers at least $75 million, plus free land:

The financing overcame criticism over a part of the deal to give the Ingram-led ownership group 10 additional acres of city-owned fairgrounds land for a future private development next to the stadium.

Ingram, along with minority owners Steve and Jay Turner of MarketStreet Enterprises, has planned a mixed-use development with affordable and market-rate housing, retail, restaurants, a hotel and office space that he says is “essential” to the fan experience and the overall deal. Skeptics have slammed it as a “giveaway” to wealthy developers — on top of eight acres of fairgrounds land needed for stadium’s footprint.

“We’re giving away tens of millions of dollars worth of land to billionaires,” [councilmember Dave] Rosenberg said.

The Tennessean speculates that this could make Nashville, along with Sacramento, one of the frontrunners for an expansion franchise award in December, which, sure, maybe? It’s all the same to MLS where its $150 million expansion fee checks are coming from, so might as well reward the cities that provided public subsidies for the league’s prospective owners.

And also as expected, the developers of a proposed Virginia Beach arena couldn’t get their acts together by last night’s deadline to provide a financing plan for the project, even though more than 90% of the costs would be repaid by public subsidies. Or, at least, they claimed they’d gotten their acts together, but provided no concrete evidence of said acts:

Just hours before that deadline they stood before city council and said it was a done deal.
“We have JP Morgan, the United States largest bank, that is ready, able and willing to close this evening with direction from the city,” said Andrea Kilmer with Mid-Atlantic Arena. “We are ready to spend over $250 million dollars dollars in this city.”

However, city council did not believe the developer was ready.

“I would say that the city would disagree with what she represented to you,” said Mayor William Sessons.

Sessoms, however, said he was still open to the idea of a new arena, and even to working with these developers, so the deadline was apparently a bit of an abstraction? At this point, I’m never willing to call an arena plan dead until I see the wooden stake protruding from its chest.

Nashville set to approve $75m subsidy today for MLS stadium

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The Nashville Metro Council’s Budget and Finance Committee voted 10-3 last night to approve $225 million in public bonds for a new soccer stadium, which is probably a good sign that the full council will approve the bonds today.

As the Tennessean keeps reporting in all its coverage, the bonds would cost $13 million a year to pay off, and the Nashville S.C. proposed MLS expansion team would pay off $9 million of that, leaving the public on the hook for $4 million a year. About 80 percent of that would be paid off via sales-tax kickbacks, amounting to about $50 million worth of public subsidy in present-value terms; the city would also put up $25 million in additional general obligation bonds that it would pay off itself, so that’s a total taxpayer cost of $75 million. Plus 18 acres of free land for both the stadium and surrounding development, which I haven’t seen a price tag on.

Is that worth it to land an MLS team? Almost certainly not in economic impact terms; in “We’re gonna be major-league, wait, what do you mean the Tennessee Titans play here, we hadn’t noticed” terms, also almost certainly not, but it depends how much you dig Major League Soccer.

Anyway, like it or not, it looks like Nashville will be getting a new publicly subsidized soccer stadium, which should push it to be one of the frontrunners to land an expansion franchise either this year or next. That’d leave three more slots for all the other contenders, at least until MLS decides to sell a few more franchises to raise some quick cash.

Friday roundup: New soccer stadiums, yet another Vegas arena, Falcons roof still not done

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Happy fifth anniversary of Hurricane Sandy, everybody! While you get ready to go to your anniversary parties and dress up as, um, hurricanes, and you know what, this riff isn’t going anywhere, let’s get to the news:

  • Had you forgotten about former UNLV basketball star Jackie Robinson’s $1.4 billion retractable-roofed-arena-plus-hotel-plus-other-stuff project just because Las Vegas already has one new arena, he hasn’t — and now says it’s a $2.7 billion project that will include a 63-story hotel, a conference center, a 24-lane bowling alley, and a wedding chapel. No construction has begun yet, but Robinson says it will all be completed by 2020, or else maybe by then it will cost $5.2 billion and include a space elevator.
  • Chris Hansen is trying a new gambit to turn attention away from Oak View Group’s KeyArena renovation plan and toward his SoDo new-arena plan, and it involves declaring the OVG plan a “public” and not a “private” process, which would require a longer environmental review process, and if your eyes are glazing over already I don’t blame you, skip to the next item, it’s got juicy if unproven allegations of political corruption in it.
  • New York Mets owner Fred Wilpon has given Gov. Andrew Cuomo’s 2017 re-election campaign a $65,000 donation that’s twice as large as all other donations he’s previously given the governor combined, and with Wilpon in the midst of looking to get approval from the state for a new soccer stadium Islanders arena (sorry, had a brain fart on this one while typing) next to Belmont Park racetrack … well, you connect the dots. (Or don’t: An Empire State Development spokesperson snapped, “Participation in the political process has zero bearing on any of this and any of these ‘sources’ with questions are free to contact us instead of trafficking in conspiracy theories.”) Bigger question: Fred Wilpon has $65,000 to spare?
  • The Atlanta Falcons‘ retractable roof is now set to finally work by March 2018. Probably.
  • Nashville held a hearing on its proposed $75 million soccer stadium subsidy deal, and if you guessed that a self-proclaimed soccer mom said it would be a “feather in our cap” while a non-soccer-fan local resident said “you’re asking me to help fund a quarter-of-a-billion-dollar project for another sports team that most likely will not benefit me,” then you’re right on the money.
  • The prospective NASL team San Diego 1904 F.C. is planning a stadium that will cost only $15 million because it will be built modularly elsewhere and shipped to the stadium site in Oceanside, but at least they didn’t skimp on the searchlight renderings.
  • The chair of Rhode Island’s senate finance committee says he’ll put a halt to the Pawtucket Red Sox‘ $38 million stadium subsidy request if the team owners don’t provide more financial information. It sounds like this is over the team’s internal finances, and could be resolved with a non-disclosure agreement, but still, it’s something to keep an eye on, since projects have succeeded or fallen over pettier things.
  • Louisville approved $30 million in bonds to help pay for a new Louisville City F.C. soccer stadium, in exchange for which the team will repay $14.5 million over 10 years, which comes to about $11 million in present value, so the city will only lose $19 million on the deal, unless there’s still plans for as much as $35 million in state property-tax kickbacks via a TIF, in which case this is really a $54 million subsidy for a minor-league soccer stadium. Maybe they should go with one of those modular dealies instead? Just a thought.

MLS still set to announce two new teams in December, unless it needs the stadium leverage

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MLS has been dead set on announcing two expansion franchises this December, with two more getting the nod next year. But on Thursday, commissioner Don Garber hedged on that timetable just a bit:

A league spokesperson later texted, according to ESPN, that “MLS remains on track to name two teams in December, with an announcement ‘likely around Dec. 19-20.'” But that’s still hedging, in a way that could probably best be taken as We’re planning an announcement the week before Christmas, but we reserve the right to change our minds.

What could be going on here? Soccer Stadium Digest thinks that MLS wants to be sure that David Beckham’s Miami franchise will actually get stadium approval in time to begin play next year — the stadium won’t be done by then, mind you, but MLS will award a team so long as it has a stadium deal in place — or else award a franchise to a fallback city in order to keep an even number of teams. That’s certainly possible, though MLS has operated with an odd number of franchises before, so it could always just push back Miami’s entry another year or three if necessary.

Equally possible is that MLS may want to wait out the legislative process in some potential expansion cities to see what they can shake loose in terms of public stadium funding. Of the four frontrunners declared by Soccer Stadium Digest, Detroit Pistons owner Tom Gores and Cleveland Cavaliers owner Dan Gilbert’s $300 million plus free land and I’ll build Detroit a new jail to replace its already half built one plan still needs both city and county approval, Nashville S.C.‘s $75 million subsidy demand requires approval of the regional Nashville Metro council, F.C. Cincinnati‘s gambit for that city to pay for half of a new $200 million stadium hasn’t seen much action in recent months (other than a new Cincinnati citizens’ group petitioning Garber to let the team move up to MLS while still playing at Nippert Stadium, where it’s setting attendance records), and Sacramento F.C. has already started clearing land for a new stadium, though with actual construction not scheduled to begin until 2018 the team owners can always slam on the brakes if they don’t get awarded an MLS franchise by then.

That’s a whole lot of uncertainty, and could easily be a reason why the league doesn’t want to set an expansion announcement date in stone. When running a bidding war, it’s a fine line between wanting to scare the participants with a countdown clock, and wanting to make sure they always have enough rope to up their bids.

Nashville mayor vows MLS stadium with almost no public costs, it’d actually cost $75m-plus

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Nashville Mayor Megan Barry released her proposal for a soccer stadium for a new MLS franchise yesterday, and this is how the Nashville Scene headlined it:

Mayor Proposes $275 Million Soccer Stadium Deal

Potential MLS team would be responsible for all but $25 million of fairgrounds stadium cost

Sounds pretty good, right? What’s that? What do you mean, “You’re just setting us up with a rosy headline so you can undermine it with the actual horrible facts, aren’t you?” Do you think you know me that well?

The actual horrible facts:

  • Of the $275 million in construction, land, and infrastructure costs, the Nashville Metro Council, a joint city-county governing body, would put up $250 million by selling bonds. The other $25 million would come from John Ingram, owner of Nashville S.C., a USL expansion club slated to begin play in 2018.
  • Ingram and his fellow owners would pay off the bonds via “a mixture of rent, captured taxes from revenue generated at the stadium and private investment,” according to the Scene. The Tennessean breaks that down: It’s actually $9 million a year in rent payments, plus $4 million a year from kicked-back state sales taxes from anything bought at the stadium and from a $1.75 surcharge per ticket.
  • If sales taxes and the ticket surcharge fall short of $4 million, Metro would be on the hook for the shortfall.

Let’s be clear about this: Counting money siphoned off from sales taxes collected at a sports venue as a “private” contribution is completely insane. Even aside from the substitution effect — where increased money spent at, say, soccer matches invariably turns out to mostly be counterbalanced by decreased money spent at, say, local movie theaters and restaurants — this is money that for a normal business would flow directly into the state treasury. For Ingram to insist that this is really “his” money because he touched it with his hands (or his concessions workers did, anyway) is just the Casino Night Principle.

Exactly how much in public money this would actually cost Tennessee taxpayers is a little tricky to determine, since those sales taxes are lumped together with a ticket surcharge, something that economists universally agree ends up mostly coming out of the team owner’s pocket. But let’s try to back into it: If a typical MLS team sells 20,000 tickets per game (I’m assuming here that tickets given away for free still have to pay the surcharge), and there are 19 home games in a year, that’s 380,000 tickets per year. Multiply by $1.75, and the ticket surcharge should generate about $665,000 a year.

That leaves $3.335 million a year to be covered by sales taxes, which comes to about $50 million in present value. Add in the $25 million that won’t get repaid, and we’re at $75 million in public cost — at minimum, because if tickets don’t sell well, then Nashville would have to make up the shortfall out of its own pocket.

This is not the worst stadium proposal in history, but it’s also not the “private-public” (emphasis on the first word) deal that Mayor Barry promised. And if things break the wrong way, it’s not that far off from the $100 million subsidy demand that is raising eyebrows in Cincinnati. MLS stadiums are still generally lighter on the public purse than those in other U.S. pro sports, but that’s only because MLS team owners and wannabes know they can’t get away with demanding as much — and that doesn’t make the cash that taxpayers would be out any better of a deal.

(Rest in peace, Tom.)

Friday roundup: Raiders talk lease extension, Rams attendance woes may set record, and more!

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Here’s what you missed this week, or rather what I missed, or rather what I saw at the time but left till Friday because there are only so many hours in the week, man: