Friday roundup: IRS hands sports owners another tax break, A’s accused of skimping on Coliseum land price, Rays could decide this summer on … something

Happy Friday! Here is a fatberg of stadium and arena news to clog up your weekend:

  • San Jose Mercury News columnist Daniel Borenstein says the Oakland A’s owners could be getting a discount of between $15 million and $65 million on their purchase of half the Oakland Coliseum site from Alameda County, which is hard to tell without opening up the site to other bids, which Alameda County didn’t do. You could also look at comparable land sale prices and try to guess, which shows that the A’s owners’ offer is maybe closer to fair value; it’s not a tremendous subsidy either way, but still oh go ahead, just write us a check for whatever you think is fair is probably not the best way to sell off public assets, yeah.
  • St. Petersburg Mayor Rick Kriseman says he expects to hear by this summer from Tampa Bay Rays owner Stuart Sternberg whether Sternberg will seek to build a stadium in St. Pete or across the bay in Tampa. Of course, Sternberg already announced once that he was picking Tampa and then gave up when nobody in Tampa wanted to pay for his $900 million stadium, so what an announcement this summer would exactly mean, other than who Sternberg will next go to hat in hand, remains unclear.
  • Fred Lindecke, who helped get an ordinance passed in St. Louis in 2002 that requires a voter referendum before spending public sports venues, would like to remind you that the soccer stadium deal approved last December still has to clear that hurdle, not that anybody is talking about it. Since the soccer subsidies would all be tax kickbacks and discounted land, not straight-up cash, I suspect this could be headed for another lawsuit.
  • Cory Booker and James Lankford have reintroduced their bill to block the use of federal tax-exempt bonds for sports venues, but only Booker got in the headline because Lankford isn’t running for president. (Okay, also it’s from a New Jersey news site, and Booker is from New Jersey.) Meanwhile, the IRS just handed sports team owners an exemption from an obscure provision of the Trump tax law that would have forced them to pay taxes on player trades; now teams can freely trade their employees like chattel without having to worry about taxes that all other business owners have to, thank god that’s resolved.
  • Golden State Warriors star Kevin Durant, for some reason, revealed that “Seattle is having a meeting to try to bring back the Sonics,” but turns out it’s just Chris Hansen meeting with a bunch of his partners and allies from his failed Sodo arena plan, not anyone from city government at all, so everybody please calm down.
  • The rival soccer team that lost out to David Beckham’s Inter Miami for the Lockhart Stadium site in Fort Lauderdale is now suing to block Beckham’s plans for a temporary stadium and permanent practice facility there, because this is David Beckham so of course they are.
  • Publicly owned Wayne State University is helping to build a $25 million arena for the Detroit Pistons‘ minor-league affiliate, and Henderson, Nevada could pay half the cost of a $22 million Las Vegas Golden Knights practice facility, and clearly cities will just hand out money if you put “SPORTZ” on the name of your project, even if it will draw pretty much zero new tourists or spending or anything. Which, yeah, I know is the entire premise of this site, but sometimes the craziness of it all just leaps up and smacks you in the face, you know?
  • The Philadelphia Union owners have hired architects to develop a “master plan” for development around their stadium in Chester, because they promised the city development and there hasn’t been any development and maybe drawing a picture of some development will make it appear, couldn’t hurt, right?
  • Wannabe Halifax CFL owner Anthony LeBlanc insisted that “we are moving things along, yeah” on getting federal land to build a stadium on, while showing no actual evidence that things are moving along. “The only direction that council has ever given on this is ‘dear staff, please analyze the business case when it comes,’” countered Halifax regional councillor Sam Austin. “Everything else is media swirl.”
  • Never mind that bill that could have repealed the Austin F.C. stadium’s property tax break, because its sponsor has grandfathered in the stadium and any other property tax breaks that were already approved.
  • Hamilton, Ontario, could be putting its arena up for sale, if you’re in the market for an arena in Hamilton, Ontario.
  • And finally, here’s an article by the Sacramento Bee’s Tony Bizjak on how an MLS franchise would be great for Sacramento because MLS offers cheap tickets and a diverse crowd who like public transportation and MILLENNIALS!!!, plus also maybe it could help incubate the next Google, somehow! And will it cost anything or have any other negative impacts? Yes, including $33 million in public subsidies, but Tony Bizjak doesn’t worry about such trivialities. MILLENNIALS, people!!!

St. Louis MLS owners unveil square-roofed stadium (actual contents may differ from images on box)

The wannabe St. Louis MLS team owners have released some renderings of their wannabe stadium:

So, that square roof is cool and all, but I’m not sure it works in terms of geometry, given that soccer pitches are longer than they are wide. It looks from that image like the seats at the ends are more stacked vertically than the ones on the sidelines, which could be one way of getting around that; let’s see another angle:

We’re looking from one end in the above image, so maybe. Still, it’s also possible this is some form of forced perspective, or the designers just decided to fudge the shape of an actual soccer field to get a cooler image, and the actual roof — if there ever is an actual roof — will be more rectangular. Which is actually what appears to be going on in this GIF:

Team co-owner Carolyn Kindle Betz did call the renderings “conceptual,” so I’m going to take that to mean “it won’t actually look like this, we just wanted something to distract you with.”

Which is fine, but can’t we get any renderings with the more usual fantastical stadium elements, like weird lighting effects and people cheering at nothing in particular? Please?

Ahhhh, much better. Judging from the keeper sprawled on the ground, it looks like somebody (the red team?) has just scored, which isn’t too surprising given that the black team has utterly failed to track back to play any defense.

The stadium — which you will recall is set to get something on the order of $60 million in public subsidies — is supposed to seat 22,000, with room to expand (maybe they can put temporary seating in those gaps in the corners, though the landscaping is going to get in the way), which will make MLS commissioner Don “really our stadiums should hold 27,000 people even though the league average attendance is only 20,000 and that’s with teams papering the house” Garber happy. And since making Garber happy enough to give St. Louis owners a franchise — sorry, sell St. Louis owners a franchise, for an expansion fee of at least $200 million and maybe more — really that’s how we should be looking at all of these pretty pictures: They’re profile pics, nothing more, nothing less.

MLS is adding St. Louis and Sacramento franchises (maybe), demanding bigger stadiums (possibly)

Eleven months after announcing its expansion to 28 teams, Major League Soccer has decided to expand to 30 teams with new franchises in St. Louis and Sacramento … okay, has decided to invite prospective owners in St. Louis and Sacramento to apply for franchises … okay, let’s let the Associated Press try to explain it:

St. Louis and Sacramento, California, have been invited to submit formal bids for franchises as Major League Soccer’s Board of Governors formally unveiled plans Thursday to expand to 30 teams.

Commissioner Don Garber made the announcement at the board’s meeting in Los Angeles, pointing to expansion as one of the key drivers of the league’s growth in North America in recent years.

“We continue to believe that there are many, many cities across the country that could support an MLS team, with a great stadium and a great fanbase and great local ownership that will invest in the sport in their community,” he told reporters following the meeting.

So that’s really just “St. Louis and Sacramento are front-runners for the next two MLS franchises, which we’re planning to award sometime this year.” Which is exactly what Garber said last month. So this is not actually news at all, just confirmation that those two cities will get teams if all their t’s are crossed — which mostly means having stadium deals in place. Both cities have given preliminary approval for new stadiums, with St. Louis promising about $60 million in subsidies and Sacramento about $33 million; these would not be the worst deals in sports history or even MLS history, but still, you know what Everett Dirksen may or may not have said about money adding up

In completely unrelated news but not really, F.C. Arizona, a team that currently plays at a high school field in Mesa in the fourth-tier National Premier Soccer League, has announced plans to build a 10,900-seat stadium at an unspecified location in the Phoenix area, saying they’ll pay for the unspecified costs with their own unspecified private money. That’s an awful lot of seats for a team in what’s essentially a semi-pro league — not all players are paid — so you have to figure this is an attempt to get on the radar of either MLS or the second-and-third-tier USL to get a franchise. U.S. soccer may not have promotion and relegation where teams can move up to higher leagues just by winning games, but it does have a clear path by which owners can buy their way into higher leagues, and it’s clearly leading to a land rush for owners hoping to find an angle by which to enter into the major-sports ownership club without shelling out a billion for a big-four league expansion team.

If you consider MLS a major sports league on par with the big four, that is, which remains an open question. Garber also took time out to say that Minnesota United‘s new stadium is too small, asserting, “I wish the stadium wasn’t 19,000 and that it was 27,000 because I think at some point we are going to be thinking of how do we make the stadium bigger. I think we are going to be dealing with that in a number of different markets.” This is the same week that the New York Red Bulls announced that they’d begin tarping over some seats in the upper deck because they couldn’t sell them; team GM Marc de Grandpre recently remarked, “If we were to build the stadium today…we’d have built the stadium with a flexible capacity system,” meaning a way to reduce capacity from its current 25,000 seats, not increase it. Clearly there are still some bugs to be worked out of the MLS business model — those $150 million expansion fees from St. Louis and Sacramento, or whoever steps in if St. Louis or Sacramento falter, should help buy some time to figure them out.

MLS commissioner doubles down on giving teams to whichever cities cough up stadiums

MLS commissioner Don Garber has issued his latest missive on the league’s never-ending campaign to create an endless carpet of soccer teams across the United States (and an endless carpet of expansion fees), and it has several points:

  • St. Louis and Sacramento are the frontrunners to become the league’s 28th team, with a verdict to be handed down by the end of this year. And the price of admission is clear: While a stadium subsidy package got preliminary approval from St. Louis in December, “It would really help their bid if they had stadium naming rights and a jersey sponsor in place,” Garber told the St. Louis Post-Dispatch. “So there is a specific level of financial corporate support.”
  • Other cities, of which the commissioner specifically named Charlotte, Las Vegas, and Phoenix, will have to await the next round of expansion, which league officials have previously indicated could be completed by 2026.
  • Detroit is apparently out of the running for now, with Garber saying, “I’ve been in regular conversations with them. And we still struggle with their stadium plan. … We think that in order for us to be successful in that city, we need a soccer-specific stadium. And the options that we’re presented with today are only at Ford Field.”

This is all in keeping with MLS’s long-established business model: Keep handing out new teams every year or two, at a pace geared to ensure a steady flow of expansion fees while still keeping enough cities interested that the league can levy demands — namely, for new publicly subsidized soccer-only stadiums — in exchange for granting franchises. (Lucrative naming rights deals, apparently, will be the new tiebreaker.) At least, except when it’s presented with owners it craves enough to be worth waiving that rule, which was the case with NYC F.C. and Atlanta United but not with Detroit for some reason.

If anything, the main advance made by Garber is that he pretty much just straight-up admits the game he’s playing now:

Garber called the competition good for the league.

“Life is good when you have options,” he said. “I believe that there are many cities in our country today that can support an MLS team. We’ve got to get this last one over the finish line and then sit down and figure out what happens to those cities that were not part of the 28 that we set out to finalize a couple of years ago.”

“Life is good when you have options.” That one really needs to go alongside Jerry Reinsdorf’s “A savvy negotiator creates leverage” in the sports shakedown Hall of Fame.

St. Louis officials overwhelmingly approve MLS deal marginally less onerous than one voters hated last year

The St. Louis Board of Aldermen voted 26-2 on Friday to give preliminary approval to tax breaks and free land for a new MLS soccer stadium, with final approval to come when and if the city actually lands a team. Which means it’s a perfect time for me to help throw some cold water on the board’s enthusiasm, via column by St. Louis Post-Dispatch columnist Tony Messenger (which he spoke to me for before the vote, but which ran this morning).

My only actual quote should be pretty uncontroversial:

“The latest plan is arguably less onerous for the public than lots of other stadium projects out there — and certainly better than the previous soccer proposal for St. Louis,” deMause says. “But that’s damning with faint praise, because the median in stadium deals is ‘pretty awful.’”

Most stadium deals are terrible, and this one is better than most! But it’s not the best, either, which Messenger notes by pointing to my recent Deadspin article on stadium deals that don’t suck, citing in particular the Orlando S.C. deal where the team owner paid for construction, land, and property taxes like a normal land developer. St. Louis mayoral chief of staff Stephen Conway retorts that Orlando’s situation is an “outlier,” which is true, but when you’re giving your own plan five stars out of five, by definition you’re saying it’s as good as any outliers. (What would an Orlando-style plan get, six out of five stars?)

Anyway, to recap and update what the prospective St. Louis MLS owners will get as part of the tax and land break package, with some numbers via city documents helpfully provided by Messenger:

  • A 3% sales tax surcharge on goods sold at the stadium. The present value of future taxes is estimated by the city at $21.3 million, but since the higher sales taxes which arguably would just force the team to charge lower face-value prices, it’s not fair to consider this entirely a city cost.
  • An exemption from half of city ticket taxes, with the other half funneled into a stadium upgrade fund. Project supporters say that all the other St. Louis sports teams get an exemption on this, so the soccer team should too; still, that makes it less “not a subsidy” than “a subsidy, but one that the city hands out like candy.” The city analysis estimates the value of this exemption at $11.6 million in present value.
  • An exemption of sales taxes on construction materials, which is estimated to cost the city $1 million in present value while saving the developers $4-5 million; no explanation is given in city documents how this bookkeeping magic occurs (the city sales tax rate is about equal to the state’s), so just roll with it.
  • Free state highway department land and an exemption on property taxes for it. This is the big unknown, since the city apparently threw up its hands and said, “Well, we’re not getting any money from the land now, so may as well give it away for free,” which is not how assets work. (Not that it’s stopped far bigger developers from trying the same argument.) Here’s a vacant lot in the same general vicinity selling for a little under $23 a square foot; if you figure at minimum about 500,000 square feet for a soccer stadium, then you’re looking at $10 million in forgone land value, plus whatever the city would be giving up in forgone future property taxes.
  • The state has already approved $30 million in tax credits, though since it doesn’t appear to be a rebate of any specific taxes, this is probably better thought of as “cash.” (Really, all tax rebates are better thought of as cash, since there’s no functional distinction between the two.)

Add it all up, and we’re looking at maybe $60 million in public subsidies, whereas the previous soccer stadium plan that was rejected by voters in 2017 would have provided … $60 million in city subsidies, plus $40 million from the state. So, yeah, this would be somewhat better, but not all that dramatically so. Probably the most honest way to present this to the public would be “We want a soccer team, and at least this way we’d get one at a mild discount over what some other cities are spending,” but maybe that’s just what “FIVE STARS!!!!!” translates into in the politician-to-English dictionary.

St. Louis development agency gives self “five stars” for soccer plan because it won’t lose as much money as last one

The St. Louis Development Corporation released a financial impact report on the city’s proposed new stadium for a proposed MLS expansion team yesterday, and because the city development agency apparently bases its economic methodology on Yelp, it gave the plan “five stars”:

“You’re not going to see a proposal this good anywhere, any place in the country,” said Steve Conway, chief of staff to Mayor Lyda Krewson.

The analysis, which Conway called conservative, predicts a new stadium would send the city $1.4 million in tax revenue every year.

It also shares a litany of new information with aldermen hungry for details: The present values of tax incentives for this proposal add up to $39.7 million, in comparison to $123 million offered to the effort that failed to land a team last year. The proposed stadium improvement fund, fed by a 2.5 percent ticket tax, would add up to $28.7 million over 30 years.

Wait, so the tax incentives and siphoning off half of the city’s ticket tax money would add up to $68.4 million over 30 years, and the new tax revenue would add up to $42 million over 30 years? I don’t know what kind of curve the St. Louis Development Corporation grades on, but that sounds like three stars at best, maybe two if the waiters didn’t promptly refill water glasses.

Normally at this point I would dive into the text of the report itself, but as the St. Louis Dispatch didn’t bother to include a link and the SLDC apparently hasn’t gotten around to posting it on its website, that’ll have to wait. (I’ve requested a copy from the SLDC, but it’s a little early in the morning yet for them to reply.) For now, it looks like the most we can say about the public cost of the soccer plan is it’s not as bad as the last one, and we already said that a couple of months ago, and besides that’s not saying much considering how awful the previous plan was. Further updates as they become available, I guess.

St. Louis legislator says MLS stadium includes hidden future costs, is told to shut up because she has a rental-car dispute with team owners

Several members of the St. Louis city board of aldermen are raising objections to board chair Lewis Reed’s proposal for the city to help build a soccer stadium for a potential new MLS franchise (viewable in its entirety here), specifically on the grounds that it would put the city on the hook for future upgrades. From Reed’s plan:

An exemption from fifty percent of the City amusement tax and the deposit of the proceeds of the remaining amusement tax revenue that is collected from the activities at the stadium into an escrow fund (the “Soccer Stadium Improvement / Demolition Fund”) annually by the City to support major future improvements to the stadium, and, if warranted, the demolition of the stadium.

So that “50% amusement tax break” is actually a 100% amusement tax break — or at least, half off the ticket tax and letting the team use the other half for its own future improvements, which is functionally the same thing. I previously guesstimated that eliminating the 5% ticket tax for a soccer team would cost the city about $450,000 a year, which would be worth maybe $7 million in present value; it’s not a huge amount, and could end up being worth less than the full exemption on property taxes that Reed wants to extend to the team, but it’s still not nothing. And the proposed solution by Alderman Christine Ingrassia — making the soccer team the owners of the stadium — would presumably eliminate the property-tax break, too.

According to Ingrassia, six to eight members of the 29-member board of aldermen have expressed concerns about the future upgrade slush fund, but she withdrew her resolution to put the stadium and its future costs in the team owners’ hands because (deep breath) she says Reed accused her of trying to sabotage the stadium plan, while Reed accused Ingrassia of being biased against one of the team’s prospective owners, the Taylor family of Enterprise Rent-a-Car fame, because she’s fighting with Enterprise over $3,000 in damages to a car she rented for a conference that she says she didn’t cause.

Anyway, the whole mess now goes to an aldermanic committee, where no doubt we will hear lots more about Ingrassia’s car rental bills. And maybe even something about exactly how much the ticket tax break and property tax break would be worth to the team owners — we can dream, can’t we?

St. Louis MLS owners to pay all $250m in stadium costs (except for tens of millions in tax breaks and free land, shh, don’t mention that)

If you want a strong candidate for the most misleading newspaper headline since, well, pretty much ever, I would nominate yesterday’s St. Louis Post-Dispatch masterpiece “Downtown St. Louis soccer stadium would be paid for with cash by would-be team owners.” Here is how it begins:

The hopeful owners of a new Major League Soccer team in St. Louis are prepared to pay for a $250 million downtown stadium in cash, the leader of the ownership group said on Wednesday.

And here is its sixth paragraph:

The Kavanaugh-Taylor group is asking for tax-dollar help. The city of St. Louis has proposed giving the owners a 50 percent break on ticket taxes, a full tax exemption on stadium construction materials, a $30 million tax break from the state, a 3 percent sales tax on stadium goods, and the free use of land — just west of Union Station on Market Street — for the stadium.

That is not “paid for with cash by would-be team owners”! Unless all it means is they wouldn’t sell bonds or take out a bank loan, but would front the $250 million, getting repaid in part by all those tax breaks. Which would make the headline correct on a technicality, while still implying the exact opposite of the truth.

Anyway, the city-run Land Clearance for Redevelopment Authority approved the $30 million state tax break and the sales tax break on construction materials yesterday, sending it to the Missouri Development Finance Board for final approval. (And yes, you are correct that neither of those bodies is made up of elected officials.) The city council could vote today on the ticket tax, the free land, and the stadium sales tax surcharge. Neither Post-Dispatch report attempted to determine a total value for all the tax breaks, because come on, man, journalism is hard enough in these troubled financial times without having to “provide numbers” and “write clear headlines” and all that.

Enterprise rental car family proposes new St. Louis MLS stadium plan that sucks less than the last one, probably

There are new owners hoping to bring an MLS expansion franchise (and MLS stadium) to St. Louis, and the Post-Dispatch is reporting on it with typically dispassionate hometown newspaper skepticism:

For those who thought the city’s ambitions of becoming a Major League Soccer town died at the ballot box last year, there is hope — and its name is Taylor.

Taylor is the family behind Enterprise rental cars, which is based in the St. Louis suburb of Clayton. The Post-Dispatch goes on to pick up such press release soundbites as that this would be the first MLS team majority-owned by women, and that Enterprise has lots of ties with local nonprofits, and okay okay, we get it, what about the damn stadium that was the stumbling block the last time somebody tried to get a soccer expansion team for St. Louis?

A roughly $250 million stadium dedicated to the soccer franchise would be “overwhelmingly” privately financed, the Taylors say. Public help would likely come from dedicated sales taxes on concessions and other merchandise sold to patrons, a property tax break from a city agency owning the stadium site and leasing it to the group, state tax credits and a break on the city’s 5 percent ticket tax.

That “overwhelmingly” sounds good; that longish list of tax breaks sounds less good. Let’s take them one at a time:

  • Those “dedicated sales taxes on concessions and merchandise” would apparently mean an extra 3% sales tax surcharge within the stadium. That would mostly come out of the team’s pockets — the economics gets a bit complicated, but suffice to say that as with ticket taxes, sports teams tend to lower concessions prices to eat the surcharge themselves, since they are already trying to charge fans as much as the market will bear for hot dogs — so probably wouldn’t be a significant public subsidy.
  • The size of the proposed property tax break is unknown — here’s the site under consideration if somebody wants to dig through St. Louis tax records to estimate how much it would normally be expected to pay.
  • Actual MLS ticket sales and prices are famously hard to calculate thanks to teams’ policies of goosing the gate by giving away tickets for free or cheap, but if we guesstimate 300,000 tickets a year at an average of $30 a pop, then eliminating the 5% ticket tax would cost the city about $450,000 a year.

So all told, yeah, that all sounds preferable to the $60 million from sales tax hikes and kicked-back property taxes on adjacent land that would have gone into the previous soccer stadium plan. Though of course right now we’re just taking the word of the prospective team owners for it, so let’s see what the fully fleshed-out proposal looks like. Hopefully the Post-Dispatch will remove its rose-colored glasses long enough to report on that, once it’s available.

Missouri governor looks to reheat coagulating old plans for St. Louis soccer stadium

When last we visited plans for an MLS team in St. Louis, voters were rejecting spending $60 million in city tax money on a stadium for one, and the whole idea was falling by the wayside. But it’s been almost a year and a half since then, and the MLS commissioner mentioned their name on the telly recently, so sure, once more into the breach!

An official in Gov. Mike Parson’s office told the Post-Dispatch that officials with the state Department of Economic Development met with Major League Soccer representatives as recently as Tuesday, and that the Parson administration was interested in working on a stadium proposal.

Oh yeah, one other thing happened since April of last year: Missouri governor Eric Greitens, who had denounced the soccer stadium plan as “welfare for millionaires,” resigned in a scandal over using a nude photo of his former hairdresser as blackmail to threaten her into not revealing their affair, and was replaced by lieutenant governor Mike Parson. That Parson is open to working on an MLS stadium plan isn’t necessarily an ominous sign — maybe he just wants to smooth the path for a team owner to spend their own money on a stadium, it’s possible, kinda! — but that his office went as far as to leak it to the press probably means that he’s trying to get some attention for St. Louis in the wake of Don Garber’s latest expansion saber-rattling, which probably isn’t good.

Anyway, MLS may still be a Ponzi scheme, but Ponzi schemes can last a good long while if they’re run well and can come up with a continual supply of new marks. And with both prospective owners and prospective cities lining up to prove Apocryphal P.T. Barnum right, it looks like it’ll be a while yet before any chickens come home to roost.