Real Salt Lake got secret $1m-a-year tax break, nobody noticed for five years

I’ve written almost nothing about the Real Salt Lake MLS team over the years, except for a brief mention of a minor-league soccer stadium the club at one point promised to build if given public land, a proposal team owner Dell Loy Hansen later backed out of, with the state later spending $10 million to build it as a rodeo arena instead. Anyway, this was mostly because Hansen wasn’t demanding the kind of public subsidies that get this site’s attention — or at least, wasn’t demanding any he was letting the public know about:

By asserting it was losing money, the Real Salt Lake soccer team quietly persuaded Salt Lake County officials to cut its property tax on Rio Tinto Stadium by nearly half starting back in 2012.

That off-the-field victory has saved the team more than an estimated $5 million in taxes since then…

Why are you only telling us this now, Salt Lake Tribune?

The tax cut happened so quietly that it never drew public attention until now. Even Salt Lake County Council members who approved it say they don’t remember the vote nor discussing it, noting it was buried among more than 700 revaluations proposed by the county assessor’s office in the same meeting.

Apparently a local commercial real estate agent, Joe Scovel, stumbled across the five-year-old tax break, and the Tribune then followed up. Hansen, it turned out, not only argued that his team was losing money, but that other local teams’ low stadium assessments meant that he should get a break too — including that one city-owned stadium wasn’t taxed at all, which, right, that’s how municipal ownership works.

Instead of taking this as a sign that maybe other stadiums were getting off scot-free, then-Sandy Mayor Tom Dolan agreed to devalue RSL’s Rio Tinto Stadium by 42% to save the team about $1 million a year in property taxes. Why he did this, I’m sure no one will ever know—

Dolan — who would receive a hefty $10,000 in campaign donations from RSL or Hansen in subsequent years — backed Hansen’s request and sought the City Council’s agreement.

The upshot of all this was that Salt Lake City, which was counting on the team’s property tax payments to pay off the $11 million in bonds it sold to help pay for the stadium, is now dipping into its general fund to make the payments instead. Nice work, everybody! Especially the county tax assessors who wrote the bill so that nobody noticed until Dolan was safely out of office. At least now Dell Loy Hansen gets something substantial in his category entry on this site — I bet that was really embarrassing before now when the sports team owners gathered to smoke cigars and sip brandy and whatever else they do.

Friday roundup: CFL in Halifax, Columbus ghost stadium, Sydney is the new Atlanta, and more!

Are any of my American readers even out there, or are you all too busy tormenting retail workers with your demands for discounted goods? If so, you’re missing out, because we’ve got all your goods right here, at our everyday discount of free!

  • The CFL is considering expanding to Halifax, which means Halifax would need a CFL stadium, which means somebody would have to pay for a Halifax CFL stadium. Halifax Mayor Mike Savage says a stadium is “not a capital priority at this time” and would have to be built “without putting taxpayers at risk.” The Ottawa RedBlacks stadium model is being floated, which is slightly weird because that ended up costing taxpayers a bundle of money plus free land, but maybe “taxpayer risk” is defined differently in Halifax. Anyway, we’ve been this far before, so grains of salt apply.
  • Remember how I wasn’t sure what would be included in the $75 million in public “infrastructure” spending that F.C. Cincinnati is demanding? Turns out that’s because nobody’s sure: WCPO notes that the team hasn’t provided any cost estimates or a traffic study, which “leaves us wondering where, exactly, FC Cincinnati came up with its figures.” I’ll take “nice round number, slightly less than the $100 million elected officials balked at previously” in the pool, please.
  • A guy in Columbus came up with an idea to use county sales tax money to build a new stadium to keep the Crew in town, then the next day said it was just an idea he came up with over the weekend by himself and never mind.
  • The city of Worcester is still trying to lure the Pawtucket Red Sox to town, and the state of Massachusetts may be getting involved, with one unnamed source telling the Worcester Telegram that stadium funding would need to be a “a three-legged stool” among the city, state, and team. You know this article is just going to be waved around in the Rhode Island legislature as it heads toward a vote on public funding for a PawSox stadium there, and what was everyone just saying about the role of enablers in abuse, again? (Not that stadium swindles are morally equivalent to sexual harassment, obviously, but you get my point. Also, why are all the articles about the role of enablers in sexual harassment a month old, are we not going to pay attention to that after all?)
  • The state of Connecticut may spend $40 million on upgrades to Hartford’s arena and some retail properties near its entrance, on the grounds that it might make it more attractive to buyers. If this seems like getting it backwards to you, yeah, me too, but at least it’s better than spending $250 million on the arena and then not selling it.
  • Laney College students, faculty, and staff all hate the idea of an Oakland A’s stadium on their campus. “They want to disrupt our education by building a ballpark across the street with noisy construction, traffic gridlock, pollution, and alcohol consumption by fans,” Associated Students of Laney College President Keith Welch told KCBS-TV. “We will not sacrifice our education so that the A’s owners can make more money.” Pretty sure they won’t get a vote, though.
  • “Industry experts” say that the new Milwaukee Bucks arena will charge more for concert tickets because … it’ll draw bigger-name acts that cost more, I think they’re saying? That doesn’t actually seem like a detriment, though they also note that the new arena has a higher percentage of seats in the lower bowl, which people will pay more for even if they’re way in the back of the lower bowl, and helps explains why arena and stadium designers are so obsessed with getting as many lower-deck seats as possible even if it makes for crappier upper-deck seats. Which we kind of knew already, but a reminder always helps.
  • And move over, Atlanta, there’s a new planned stadium obsolescence king in town: The state of New South Wales is planning to spend $2 billion Australian (about $1.5 billion U.S.) to tear down the Sydney stadium it built for the 2000 Olympics, along with another smaller stadium in Sydney built in 1988, in order to build newer ones that are more ideally shaped for rugby, I think? Because nobody thought of that in 2000? I need to wait for my Australian rugby correspondent to return from holiday break for a more authoritative analysis, but right now this is looking like one of the worst throw-good-money-after-bad deals in stadium history, and it’s not even in America, the land that has perfected the stadium swindle. Crikey!

Friday news: Phoenix funds Brewers but not Suns, brewers float crowdfunding Crew, and more!

So, so much news this week. Or news items, anyway. How much of this is “news” is a matter of opinion, but okay, okay, I’ll get right to it:

  • Four of Phoenix’s nine city council members are opposed to the Suns‘ request for $250 million in city money for arena renovations, which helps explain why the council cut off talks with the team earlier this week. Four other councilmembers haven’t stated their position, and the ninth is Mayor Greg Stanton, who strongly supports the deal, meaning any chance Suns owner Robert Sarver has of getting his taxpayer windfall really is going to come down to when exactly Stanton quits to run for Congress.
  • Speaking of Phoenix, the Milwaukee Brewers will remain there for spring training for another 25 years under a deal where the city will pay $2 million a year for the next five years for renovations plus $1.4 million a year in operating costs over 25 years, let’s see, that comes to something like $35 million in present value? “This is a great model of how a professional sports team can work together with the city to extend their stay potentially permanently, which is amazing, and we’re doing it in a way where taxpayers are being protected,” said Daniel Valenzuela, one of the councilmembers opposed to the Suns deal, who clearly has a flexible notion of “great” and “protected.”
  • And also speaking of Phoenix (sort of), the Arizona Coyotes are under investigation by the National Labor Relations Board for allegedly having “spied on staff, engaged in union busting and fired two employees who raised concerns about pay.” None of which has anything directly to do with arenas, except that 1) this won’t make it any easier for the Coyotes owners to negotiate a place to play starting next season, when their Glendale lease runs out, and 2) #LOLCoyotes.
  • A U.S. representative from Texas is trying to get Congress to grandfather in the Texas Rangers‘ new stadium from any ban on use of tax-exempt bonds in the tax bill, saying it would otherwise cost the city of Arlington $200 million more in interest payments since the bonds haven’t been sold yet. (Reason #372 why cities really should provide fixed contributions to stadium projects, not “Hey, we’ll sell the bonds, and you pay for whatever share you feel like and we’ll cover the rest no matter how crappy the loan deal ends up being.”) Also, the NFL has come out against the whole ban on tax-exempt bonds because duh — okay, fine, they say because “You can look around the country and see the economic development that’s generated from some of these stadiums” — while other sports leagues aren’t saying anything in public, though I’m sure their lobbyists are saying a ton in private.
  • A Hamilton County commissioner said he’s being pressured to fund a stadium for F.C. Cincinnati because Cincinnati will need a sports team if the Bengals leave when their lease ends in 2026 and now newspapers are running articles about whether the Bengals are moving out of Cincinnati and saying they might do so because of “market size” even though market size really doesn’t matter to NFL franchise revenues because of national TV contracts and oh god, please make it stop.
  • MLB commissioner Rob Manfred says the proposed Oakland A’s stadium site has pros and cons. Noted!
  • NHL commissioner Gary Bettman says the Calgary Flames‘ arena “needs to be replaced” and the team can’t be “viable for the long term” without a new one. Not true according to the numbers that the team is clearing about $20 million in profits a year, but noted anyway!
  • Cincinnati Mayor John Cranley is set to announce his proposal for city subsidies for F.C. Cincinnati today, but won’t provide details. (Psst: He’s already said he’ll put up about $35 million via tax increment financing kickbacks.)
  • The Seattle Council’s Committee on Civic Arenas unanimously approved Oak View Group’s plan to renovate KeyArena yesterday, so it looks likely that this thing is going to happen soon. Though apparently the House tax bill would eliminate the Historic Preservation Tax Credit, which the project was counting on for maybe $60 million of its costs, man, I really need to read through that entire tax bill to see what else is hidden in it, don’t I?
  • The owners of the Rochester Rhinos USL club say they need $1.3 million by the end of the month to keep from folding, and want some of that to come from county hotel tax money. Given that the state of New York already paid $20 million to build their stadium, and the city of Rochester has spent $1.6 million on operating expenses over the last two seasons to help out the team, that seems a bit on the overreaching side, though maybe they’re just trying to fill all their spaces in local-government bingo.
  • There’s a crowdfunding campaign to buy the Columbus Crew and keep them from moving to Austin. You can’t kick in just yet, but you can buy beer from the beer company that is proposing to buy the team and then sell half of it to fans, and no, this whole thing is in no way an attempt to get free publicity on the part of the beer company, why do you ask?

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

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.

 

Montreal to spend $250m on new roof for stadium hardly anyone plays in, because “patrimoine”

Quebec Tourism Minister Julie Boulet says the province will spend $250 million on a new roof for Olympic Stadium because … dear lord, why?

Radio-Canada reported in May the roof tore 677 times over the last year and 7,453 times over the past 10 years.

Okay, yes, that’s a problem, as is the fact that the stadium can’t currently be used when there’s more than two inches of snow on the roof, which is basically “winter” in Montreal. But Olympic Stadium was a perfectly functional stadium for a decade before the roof was built, and since right now the place is mostly used for the occasional Impact or Alouettes playoff game, for that kind of cash you could just buy 60,000 parkas and hand them out to fans for each game.

Stadium chief Michel Labrecque told CBC that tearing down the stadium doesn’t make sense because “It’s part of what we call the patrimoine. My father, your father, paid for it, built it. So it’s impossible, foolish to think about dismantling it.” (Someone please direct Labrecque to read this explanation of sunk costs, or the French equivalent.) Then he said it would cost between $500 million and $700 million to demolish it, which seems a little excessive, and suggested that the stadium has to be maintained in good shape so that it can keep hosting exhibition series with the Toronto Blue Jays each spring so that MLB will give Montreal a new team, not that it would play at Olympic Stadium or anything, but just, you know, as a showcase.

I have been to Olympic Stadium a couple of times, and have an admitted soft spot for the place, but this is just madness. If you want to impress MLB, better to save the $250 million to put toward an actual baseball stadium eventually. Or, since repairing the old roof only costs $1 million a year, take $50 million of that, put it in a savings account, and pay for roof maintenance with the interest, while saving the other $200 million for anything else.

This just goes to show that the “stadiums are economic engines” meme has sunk into elected officials’ consciousness so much that they’ll even spend public money on them when there’s no team owner shaking them down for funds. I’m going to have to keep running this website forever, aren’t I?

Friday fun: Draw your own Rays stadium, Pacers make money hand over subsidized fist, and more!

Oh, has it ever been another week! Some things that happened:

  • The Indiana Pacers revealed they brought in a record $13.2 million in revenues from non-sports events last year. “We’re trying to be a good steward for this venue,” said Rick Fuson, president of the team that is getting paid $16 million a year by the city to run its arena without sharing any of its revenues with taxpayers and also may ask for more public money for arena upgrades soon. “This is about an investment into the economic vitality of our city and our state.”
  • UC Berkeley is going to bail out its terrible football stadium deal with non-athletic department funds, though it can’t say where exactly the money will come from other than that it won’t be student tuition or state tax dollars. You guys, I’m starting to worry that UC Berkeley may have a lucrative meth-lab business on the side.
  • The University of Connecticut is spending $60 million on three new stadiums, which it will presumably totally pay for out of student tuition and tax dollars.
  • The NFL is opposed to the language in the GOP tax bill that would ban use of tax-exempt bonds for sports stadiums, because of course it is. “You can look around the country and see the economic development that’s generated from some of these stadiums,” NFL spokesperson Joe Lockhart said with a straight face, either because he doesn’t understand that any sliver of economic development in one part of the U.S. from stadiums just comes at the expense of economic development in another part, or because it’s what he’s paid to say, or both. Meanwhile, speaking of that tax bill, there are a lot of reasons to be terrified of it, even if that stadium clause would be nice.
  • The Oakland Chamber of Commerce polled 503 “likely voters” and found that a large majority supported the idea of an A’s stadium at “a new, 100 percent privately financed site, near Interstate 880, four blocks from Lake Merritt BART and walking distance from downtown.” Cue the opposition poll describing it as a “cramped site wedged into an already-developed neighborhood with existing traffic problems” in three, two…
  • A website commenter got sick of waiting for the Tampa Bay Rays to issue stadium renderings and drew some of their own, getting on SBNation for it despite having failed to find the Fireworks menu in their CAD program. No, I don’t know why it has an apparent non-retractable roof, or how people in that upper deck in right field will get to their seats, or what’s holding up those seats, or lots of other things.
  • FC Cincinnati president Jeff Berding says a stadium announcement is scheduled for next week and that it will involve Cincinnati Mayor John Cranley, so presumably the team owners are now focused on building in Cincinnati instead of across the river in Kentucky, using Cincinnati’s tax kickbacks instead of Kentucky’s. Poor Cincinnati.

Crew owner claims Columbus is bad for business, actual numbers show otherwise

SBNation’s Elliott Turner dug into Columbus Crew owner Anthony Precourt’s claim that he needs to move the team to Austin because the “business is struggling,” and, surprise surprise, it turns out this is not so much the case:

  • The Crew currently pay a piddling $72,000 a year in rent. In fact, they’ve only paid $1.14 million in rent their entire 19-year history.
  • The team pays no property taxes on its stadium, an annual savings of $414,000. The New York Red Bulls, by comparison, pay more in property taxes each year than the Crew have paid in their lifetime as a franchise.
  • The Crew brought in around $11 million in ticket revenue in 2017, plus about $1 million in parking revenue, plus an undetermined share of naming rights money. Turner doesn’t provide comparable figures for other MLS teams, but it’s worth noting that the Crew were right in the middle in terms of team revenues in past rankings.

Is that thriving? The team’s total payroll is under $6 million, so … really, it depends on how much it costs to run the rest of the operation. But the Crew’s costs and revenues are pretty comparable to other MLS teams, so this means that either 1) Precourt is lying about needing to move in order to turn a profit, or 2) pretty much all MLS teams are struggling financially. And either way, there’s no reason to think he’d be better off in Austin. It’s almost as if he’s trying to come up with an excuse to threaten to leave, in order to get subsidies for a new stadium out of Columbus — hmmmmmm.

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

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

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.

Chicago developer offers stadium to Amazon as part of HQ deal, just because, okay?

I’m sorry, what?

A Chicago developer is offering a unique perk in the all-out competition to win Amazon’s second headquarters: Amazon Stadium.

Sterling Bay’s proposal to bring as many as 50,000 Amazon headquarters workers to its Lincoln Yards development includes the potential for a sports and concert venue near the Chicago River.

The developer describes preliminary plans for “a world-class sports and entertainment stadium” in the materials obtained by the Tribune.

And look, there’s a rendering:

That is indeed a stadium, and it indeed says “Amazon” on the field, where there appears to be a soccer match going on. (The Amazon logo is going to be sideways when viewed on TV or by the vast majority of fans in the grandstand, but they can always tweak that later.) The question is: Why? Does Sterling Bay really think that Amazon would like a sports stadium as part of its corporate headquarters, for when the company is bored with dominating retail sales and streaming video and wants to monopolize sports, too? Is this part of some gambit to move the Chicago Fire out of Bridgeview, leaving the suburb with its massive stadium debt that it already can’t pay off? Is it just trying to get “Sterling Bay” associated with “stadium building” in the public mind, so that next time a stadium needs to be built, they’re the ones who get the call?

I think maybe let’s just go with “When a megacorporation like Amazon dangles jobs as a carrot, both local elected officials and local developers tend to lose their minds.” This is so going to make the Tesla subsidy shakedown look like penny-ante stuff, I’m afraid to even watch.