Cleveland Plain Dealer: Give Cavs owner $70m, because LeBron and Mickey Mouse WOOHOO!!!

The Cleveland Plain Dealer has historically not been a very good newspaper in covering stadium development issues, taking local sports team demands seriously even when they want to do things like cover their stadium with a geodesic dome, and generally giving Roldo Bartimole an entire career of shaking his head sadly at their miserable reportage.

None of that, though, prepared anyone for this editorial published on Friday, which argues that it’s totally worth Cuyahoga County giving Cavaliers owner Dan Gilbert $70 million to pay half the costs of an arena expansion because, well, let’s try to follow along:

[Do you remember] the payoff when LeBron James electrified the city and team by coming back and helping to deliver an NBA championship in a never-to-be-forgotten, come-from-behind series? A series that turned downtown Cleveland into a sea of ecstatic fans and led to a victory parade that attracted Cavs fans the world over for a glorious day of downtown pedestrian gridlock that banished our comeback doubts.

Yes, winning championships is fun. Gilbert doesn’t get to rescind that championship if his renovation isn’t approved. So, what’s your point again?

How much would it be worth to get even more economic development value from the money the public already has invested in Quicken Loans Arena — the jobs, the energy, the draw — by extending the life of the Q another dozen years or more?

An excellent question, though posed a bit strangely — the only thing threatening “the life of the Q” is the city and county’s eventual willingness to replace it, so it’s not like that decision is really hanging on a new glass exterior wall. But sure, it’s a calculation that should be conducted, ideally with studies and tax revenue projections and—

It’s certainly worth the deal on the table now in which the Cavs pay half and make other commitments to the county, city and region.

Or you could just say “You betcha!!!” Yup, that is also an option.

As part of the deal, the Cavs pony up $122 million of their own dollars (for an arena the public owns) and underwrite risk in the financing deal for the county and agree to stay in Cleveland until at least 2034.

Yeah, no, not exactly. That $122 million isn’t in cash but in increased future rent payments, which will reimburse the county for half the $140 million in renovation costs, leaving the other $70 million to be covered by ticket taxes and hotel taxes that would otherwise go into city and county coffers. Yes, the public owns the arena, but only on paper so Gilbert doesn’t have to pay property taxes. (He owns the revenue streams from the arena, which are the important part.) I have no idea what “underwrite risk” means, other than that Gilbert would over cost overruns, which, that’s all well and good, but he’d still get his $70 million in free money regardless.

The only real reason worth considering here is getting Gilbert to extend the Cavs lease to 2034, when it currently expires in … 2027. So that’s seven years of added lease time, in exchange for $70 million in renovation subsidies. We have seen worse deals, but that doesn’t necessarily make this a good one.

The Q is a city treasure that goes far beyond its use by the basketball team.

How many of the region’s children have been wowed there by Mickey Mouse on ice skates, circuses and monster truck shows? How many people have danced in the aisles to the performances of Bruce Springsteen, Paul McCartney, Jay Z, Taylor Swift, Justin Timberlake, Beyonce? We want those acts to keep coming.

Now we’re getting deep into crazy talk, and not just because Paul McCartney is going to be 92 years old in 2034. Does the PD editorial board really think that Mickey Mouse is going to refuse to lace up his skates and play Cleveland if the arena doesn’t have a new glass wall in front? Have they bothered to investigate what concert acts want out of an arena? Or is investigation one of those old-media things that fly in the face of synergy and monetization and whatever else the things that used to be called newspapers are in the business of now?

All in all, this editorial can be summed up as: Arenas are fun places, is $70 million really too much to spend on more fun? To which the answer should be: We dunno, let’s check it out. That’s what the Detroit Free Press did when Gilbert came asking for cash for an MLS stadium in that city; clearly either the billionaire has greater pull in Cleveland, or the Plain Dealer editors have forgotten Rule #1 of journalism.

Arizona senators push to give Coyotes, Suns, D-Backs up to $1.1b for new arenas and stadium

Arizona Coyotes owner Anthony LeBlanc may not have any idea where he wants to build a new hockey arena now that Arizona State University pulled out of a planned venue in Tempe, but that’s not going to stop members of the Arizona state senate from pushing legislation to give him $170 million in sales- and hotel-tax kickbacks to help build one. And hey, while we’re at it, let’s make it easier for the Diamondbacks and Phoenix Suns to get state subsidies, too:

The bill would allow creation of “community engagement” districts of up to 30 acres. Within them, up to half of the state’s share of sales taxes generated from retail sales and hotel stays would be dedicated to paying the bond debt for new sports or entertainment facilities. It also would allow an additional 2 percent district sales tax to be applied to all purchases within the district, with those revenues also dedicated to defraying the cost of facility construction.

In the case of the Coyotes, the plan envisions public funding covering 57 percent of a new arena’s cost, with new sales taxes covering $170 million and the host city contributing $55 million. The Coyotes said the team’s portion would be $170 million, amounting to a 43 percent contribution toward the $395 million total cost.

This is a bit of a hybrid bill, combining super-TIFs (where half of existing sales and hotel taxes would be kicked back to pay teams’ construction costs) with a new sales tax surcharge in the area around the new sports venue. The math on how much of a subsidy this amounts to gets dicey — virtually all of a TIF would be cannibalized from sales and hotel tax receipts elsewhere in the state, but a slice of a sales tax surcharge could come out of a team owner’s pockets, depending on how big the surcharge area is — but the vast majority of it would be a straight-up gift to team owners, all to allow cities in one part of Arizona to steal teams from cities in another.

You’ll note that I said “teams,” not just the Coyotes. That’s because the new super-TIF districts could be applied to help build any new sports and entertainment facilities. The only limit is that state money would only be allowed to pay for half of construction costs up to $750 million — meaning that if the Coyotes, Suns, and Diamondbacks all availed themselves of the legislation, as you know they would love to do, Arizona taxpayers could potentially be on the hook for $1.125 billion. (If the Coyotes stick to their $170 million demand, the max would be only $920 million, but as we’ve seen before, sports construction costs only tend to go up, and there’s nothing stopping LeBlanc from revising his ask as time goes on.)

Now, the bill has so far only passed one committee in one branch of the Arizona legislature — Sen. Bob Worsley of Mesa used one of those “gut an unrelated bill and insert your own language” tricks to get it on the agenda of his own transportation and technology committee — and none of the teams involved have identified places where they’d like to build new facilities, or how to pay for their halves. Still, it’s a pretty remarkable response to a “crisis” started by the Coyotes’ need to leave their nearly-new arena in Glendale because … hey, Coyotes ownership, why do you need to leave again?

“It does not work in Glendale,” Ahron Cohen,the team’s general counsel, told the Senate panel. “In 2013, our ownership group bought the team. The previous ownership chose to go out there.”

Oh. Well, if it “doesn’t work,” then it doesn’t work. I thought you were going to say something about how you couldn’t bear to be forced to compete for the rights to operate the arena instead of just being handed $8 million a year by Glendale in a no-bid contract. Good thing it’s not that, because asking the state of Arizona to pay you a couple hundred mil to get you out of that pickle would be chutzpah in the Nth degree, and only complete morons in state government would actually consider it.

Milwaukee Bucks introduce “digital tour” of their PR spin for new arena

The Milwaukee Bucks have introduced an interactive virtual tour that fans can take of the team’s new $500 million arena that taxpayers are funding virtually all of , and — hey, wait a minute, that’s not an interactive virtual tour, that’s a video of some Bucks guy taking an interactive virtual tour! We want to do our own clicking on our own touchscreens, Bucks guy!

Anyway, for those who can’t be bothered to take 2:33 to watch the video, here are the highlights:

  • The virtual tour is “used in all of our meetings” and “super-impactful”!
  • There will be a lobby!
  • Fans sitting in the first four rows will get their own VIP entrance, so they aren’t forced to hobnob with those peons sitting in the fifth row!
  • Those VIP fans will get to gawk at/reach out and touch/throw things at the players as they enter the court via their tunnel from the locker room, because that’s worked oh so well in the past.
  • Designer types call entry ramps “vomitories” without thinking its funny, and apparently without thinking everyone else will think it’s funny.
  • Seventy-five percent of the main concourse is open to the court area, so that you can “grab a beer” and “still watch the action.” Now, having spent a lot of time at baseball games where open concourses are more common, I can tell you how this will work: Because of sports geometry, while you are waiting on line for your beer, you will only be able to see the airspace above the actual game; because of sports fan behavior, you won’t be able to see much of it, because lots of people will be standing at the edge of the concourse, blocking your view. So in reality, you will be waiting to grab your beer, will hear a big noise, look over to see what happened, not be able to see a damn thing, try to decide whether to run back to the seating bowl (or the vomitory) to see what’s going on, decide it’s too late, then look up at the video screens placed by the beer line to watch that instead. I.e., exactly what you’d do in a space without an open concourse, but with the added feature of eliminating several rows of decent seats and replacing them with ones at the back of the upper level.
  • Bucks guy says of the concourse that “this is where most of the guests are going to spend their time,” so either he’s anticipating really slow beer lines or acknowledging that most people will be there to eat the food, not watch the Bucks.
  • “Everybody is much closer to the action.” There is no way that this is true, especially when you consider those gaps for the open concourses, but it is a thing that every arena and stadium developer says, so this guy is contractually required to, too.
  • Those creepy party spaces where fans won’t get to see the game but will get to be bathed in strange neon lights are now called the “sky mezzanine level,” and the Bucks are “really excited” for people to use them for weddings and corporate events and stuff other than watching Bucks games, because that would be a terrible idea.
  • And speaking of terrible ideas, the “corner sponsor towers” that likewise featured no way for most fans to see the game and possibly no railings appear to be gone, though it’s hard to tell without a virtual tour that I can actually control.

In short, it looks pretty much like every other new sports venue, with maybe a couple of unique elements that could be fun or could be awful, but now comes with a heaping helping of PR to help you understand why you’re having a better time, whether or not you actually are. If that’s not super-impactful, I don’t know what is.

Warriors break ground on privately funded SF arena, only travesty is the entertainment

The Golden State Warriors held their long, long-awaited groundbreaking on their new San Francisco arena this week, which presumably means they’re actually going to build this thing. The event was not without its awkward weirdness, though:

Oooookay. That’s got to be the worst of it, though, right?

Man.

Anyway, the Warriors arena is still being built with $1 billion in private funding, because ownership decided it could make more money by having an arena closer to its wealthier fan base (and to give San Francisco its first arena for hosting concerts and such), which while slightly icky if you consider the whole “San Francisco is for richies while less-richies have to go live in the East Bay” thing is at least the way that matters should work in a world without public subsidies to chase after. And at least East Bay residents can still get to games easily enough — which is good, because it meant at least the Warriors avoided the embarrassment of having a fan from their former city interrupt their welcome-to-their-new-city event, like some other relocating California teams I could name.

Seattle calls for applicants to redo Key Arena with no public cash, may actually get bites

This may go absolutely nowhere in the end, but the city of Seattle is certainly giving it the old college to see if it’s feasible to renovate Key Arena instead of building a whole new one, issuing a request for proposals for private developers to do so with no public money:

Under terms of the 25-page document, the city would maintain ownership of KeyArena, and any developer with an accepted proposal would pay a rental fee and assume all costs for maintenance and arena operations. The developer could sell naming rights for the upgraded venue as well as sponsorships and gain additional revenues via ticket sales and other routes.

“The assumption is that the city would be leasing the facility to the entity that would invest in it,’’ said Ben Noble, city budget director.

This sounds like exactly the sort of deal that private developers would turn up their noses at — you want us to put how much of our own money into renovating an existing arena and pay a rental fee and operating costs on top, what? — and yet two entertainment companies, AEG and Oak View Group (run by former AEG honcho Tim Leiweke), have said they’d be interested in bidding. So, if you’re the Seattle city council, why the hell not?

At worst, this will give the city more leverage to demand concessions from would-be arena developer Chris Hansen, which has already worked once. At best, just maybe they get AEG and Oak View into a bidding war for the rights to operate an arena in Seattle, which while not lucrative on the surface may matter a whole lot in the ongoing battle for arena management market share. Either way, it’s exploring your options rather than bidding against yourself, so preliminary kudos to the Seattle council for doing the right thing on that front.

Agency that okayed Red Wings arena deal is run by a bunch of tax cheats, this all makes sense now

Now here’s a newspaper lede you don’t see every day:

The Downtown Development Authority board spending $250 million in taxes on Little Caesars Arena is dominated by tax delinquents with financial problems and in some cases criminal records, according to public records.

The DDA, you’ll recall, is the local quasi-public development corporation that spearheaded the push to spend $300 million in public money on a new Red Wings arena, plus another $34.5 million to move the Pistons in with them. It’s long been considered about as in the pocket of the local business establishment as you can get — its longtime director took a job with the Red Wings as soon as he’d left office — and now, according to the Detroit News, its board is a clown car full of clowns:

Seven of the 12 appointed DDA members have a history of financial issues, including more than $500,000 in state and federal tax debt, according to public records. Several blamed the problems on the Great Recession, an ordeal they say made them better public stewards and taught them how to avoid making new financial mistakes.

Yes, you read that right: The tax delinquents on Detroit’s development authority board say that this makes them uniquely qualified to plan the city’s economic future. And the city council president agrees with them:

Council President Pro Tem George Cushingberry Jr. said he doesn’t see the past financial troubles of some board members as an issue.

“It doesn’t mean that they aren’t capable of doing a good job,” said Cushingberry, who filed for bankruptcy in 2011 and lost a home to foreclosure. “In fact, we probably need a few people that have some tax issues so they can anticipate the possibilities.”

Not that making bad financial decisions should necessarily rule anyone out from public service, but maybe it might be a consideration for a job that requires making financial decisions for the city? What next, hiring a guy to run an agency that he not only wants to eliminate, but he can’t even remember the name of? Wait, what?

No, the Cavs didn’t get their $70m glass-wall subsidy approved, headline writers are idiots

Media literacy quiz time! Back in April, Cleveland Cavaliers owner Dan Gilbert declared that he wanted $70 million in public money to help him pay for a $140 million renovation of his arena, mostly to build a giant glass wall. Yesterday, Cleveland.com ran this headline:

Quicken Loans Arena, home of LeBron and the Cavs, to get $140 million makeover

Does this mean:

  • A) The money was approved
  • B) The money passed an important hurdle, but more approvals are still necessary
  • C) Gilbert agreed to pay for the renovations himself
  • D) Nothing happened at all beyond the Cavs putting out a press release

Yep, that’d be D:

The Cleveland Cavaliers today announced a striking $140 million upgrade to the Q Arena that dramatically alters the facility’s appearance and, the team says, would make the 22-year-old arena competitive by creating more space for dining, bars and public gathering…

Cleveland City Council will hold public hearings and vote on the proposed use of the city’s admission tax to pay back part of the loans.

The rest of the article is mostly just a rehash of Cavs talking points (“without any increase in taxes”! “an up-to-date arena for sports, concerts and other entertainment”! “the proposal looks pretty good compared to other small or medium-sized sports markets”!), plus a bunch of new renderings helpfully labeled “The Q TRANSFORMATION.” Somebody in the Cavs ministry of propaganda deserves a raise today.

Cleveland to Browns, Cavs, Indians: Everybody gets $57m in tax money, now play nice

And it’s official: The Cleveland Browns, Indians, and Cavaliers will get equal cuts of the “sin tax” extension voters approved back in 2014:

Each team will get $4.6 million per year for the next 20 years. The money can be used to upgrade the stadiums and arena where they play.

Via the magic of net present value calculators (even those that don’t know how to spell “principal”), we can determine that this revenue stream will be worth about $57 million in today’s dollars to each team. It shouldn’t be hard for each of them to find ways to spend that down — especially with the Cavs already asking for another $70 million to pay for a new super-spendy glass exterior wall — but if all else fails maybe they can just buy some IBM “Internet of things” gewgaws and call it “infrastructure.”

Atlanta mayoral candidates debate Hawks arena deal that they won’t get to decide anyway

Atlanta Mayor Kasim Reed is term-limited out of office after next year, which means the city is gearing up for the election of a new mayor in 2017. And, as befits a city that just spent almost $700 million on a Falcons stadium and saw the Braves leave for the suburbs in exchange for $355 million in stadium subsidies and is facing a demand for $142.5 million in arena renovations for the Hawks, sports subsidies are becoming an issue in the campaign:

Candidates Cathy Woolard and Vincent Fort have come out swinging against the proposal, calling it a giveaway to a billionaire. Councilwoman Keisha Lance Bottoms, a key negotiator in the deal, is a hearty backer, while competitors including Atlanta City Council President Ceasar Mitchell, Councilwoman Mary Norwood and businessman Peter Aman, have been more sanguine…

Bottoms, who threw her hat in the ring to run for mayor just days before news of the Hawks deal broke, is also head of the Atlanta-Fulton Recreational Authority that owns Philips and will recuse herself from voting. But she said the project would be a boon to Atlanta’s hospitality community.

“It’s not just about sports,” she said. “It’s an arena that has a lot going on. It’s about being a good steward of a city-owned asset.”

By contrast, Fort said recently, “This is another instance where billionaires are making out like nobody’s business and the citizens of the city are getting very little in return.”

Yep, those would be the two stock arguments. Not that any of the candidates — except Bottoms, Mitchell, and Norwood, since they’re on the city council — will actually have any say in this matter, since the council is expected to vote on it way before the mayoral election, but the public debate could help influence how that vote goes. Especially with candidates saying stuff like this:

Woolard said there was little risk of losing the Hawks after Cobb County Commission Chairman Tim Lee was ousted by voters following his deal with the Atlanta Braves.

“I’ll call that bet,” she said. “I’m not sure the NBA would let Atlanta not have a pro team. And what other jurisdiction in metro Atlanta is going to do this deal after Tim Lee lost [re-election] after the Braves deal?”

That’s a good point! Also not likely to carry much weight, especially when we just saw the Texas Rangers get $500 million in subsidies for a new stadium to replace their 22-year-old one in part by dropping hints that they’d move from Arlington to Dallas even though Dallas hadn’t made any moves to offer them a stadium. But it’s nice to see mayoral candidates using logic as an argument, just for a change of pace.

Pistons, Red Wings still not telling anyone how they plan to split their arena boodle

You know what I could really use this morning? A good article to read. Here’s a good article, from Sunday by Bill Shea of Crain’s Detroit. What makes it good: It’s that rare article about an important lack of information, which nonetheless informs readers about what the issues are, and why it’s important to know what certain parties are refusing to divulge:

The long-speculated on deal to relocate the Detroit Pistons from Oakland County to the Red Wings’ new downtown arena that will open in September was formally announced Nov. 22. What hasn’t been disclosed are any details about the upcoming financial relationship between the clubs.

Neither team is willing to discuss terms of the deal — which apparently still is being finalized — and a spokesman for Detroit’s Downtown Development Authority that owns the new arena said the Pistons-Red Wings contract has not yet been shared with the city. Terms of the deal between the teams do not have to be provided to the city or DDA.

There are plenty of ways to structure the deal, reports Shea, including Red Wings owner Mike Ilitch paying the Pistons to play in his arena but then keeping basketball club seat and suite revenue in exchange (as the Boston Bruins do with the Celtics). And what form it takes could have as much with trying to play revenue-sharing arbitrage with the NBA and NHL rules as with plain old sports bookkeeping.

And if you’re wondering why you should care how the Pistons and Red Wings owners divvy up their private revenue — the $334.5 million in public cash in the deal will remain the same regardless — this is not only likely to help determine the future fate of the Pistons’ old arena in Auburn Hills and how the two teams approach monopoly control of a region’s arena market, but should tell us a lot about what teams can get out of new arenas and why they want them. Other than the $334.5 million, obviously — it’s pretty clear why they want that.