Category Archives: NBA

Friday roundup: Suns referendum campaign fails, Panthers owner floats roof, Inter Miami and Raiders both still need temporary homes

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The stadium news does not care if I am having a busy week, it just keeps happening! And I am, as always, here to catch it in a bucket and dump it out for you:

Friday roundup: What time is the Super Bowl article rush going to be over?

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It’s too cold to type an intro! I miss the Earth before we broke it. But anyway:

Phoenix officials say they flipped on Suns arena subsidy thanks to added social service spending, owner being all friendly-like

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I almost didn’t finish reading this Arizona Republic article about the Phoenix Suns‘ successful push for $168 million in arena renovation subsidies, since the headline and intro made it seem like it was just going to be another unsupported article about how area residents were convinced that it was a good deal because that’s what the city councilmembers who switched their votes to approve the deal insist, and why would they lie? But buried toward the end of the piece is some actual information about what seems to have prompted those swing votes to swing Suns owner Robert Sarver’s way:

  • Councilmember Michael Nowakowski, who’d been the key vote demanding public hearings before approving the Suns deal, said he was swayed by the city agreeing to spend more money on homelessness prevention and public safety, though none of that money will be provided by Sarver. (Some of it will be rent paid by Sarver, but only rent he was going to pay anyway under the original deal; for why this counts as public money, see the Casino Night Fallacy.) Also, Sarver let Nowakowski look at the Suns’ financial books: “Everybody says he’s really rude and tough to deal with but it hasn’t been that way.”
  • Councilmember Vania Guevara, who’d previously called the arena subsidy “bad policy” and said she’d vote against it, switched sides after Sarver agreed to make a $10 million contribution to local preschool programs and other nonprofits.

As far as wangling boodle in exchange for your vote goes, this is pretty penny-ante stuff compared to the more than $100 million that Miami-Dade county commissioner Michelle Spence-Jones got funneled to her district in exchange for approving the Miami Marlins stadium deal. Phoenix officials come cheap, I guess.

Republic reporter Jessica Boehm also raises the question of whether Sarver’s deep pockets could have influenced Nowakowski and Guevara, both of whom are currently raising campaign money for election battles later this year, but Nowakowski reassured her that no funny business like that had happened:

Nowakowski said Sarver never brought that up in any negotiations.

He said Sarver did bring up Suns Charities and asked Nowakowski if there were any non-profits in his council district deserving of the Suns’ support.

Nowakowski said he did not think it was appropriate to have that conversation during the arena negotiations but said he told Sarver that he would be happy to work with him after to see how the team could be more involved in the community.

That’s reassurance, right? Not a city councilmember admitting publicly that he was offered payola by a pro sports team owner and replied, “Shh, let’s talk later so it’s not so obvious”? I can’t tell anymore what’s a scandal and what’s just what passes for democracy these days.

Seattle arena builders ask for a tax break, nothing is pure and innocent in this world

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You know, it never fails: No sooner do I praise a sports venue deal for being the rare case that doesn’t screw over taxpayers than it turns out the team owner actually plans to screw over taxpayers at least a little. So I should have known that my Deadspin article a year and change ago about how the Seattle arena deal is an exceptionally good deal would beget this:

With costs climbing on the KeyArena renovation, members of the Los Angeles-based Oak View Group were in Olympia on Wednesday seeking to defer at least $80 million in sales tax payments related to that project and an NHL training facility…

“We want everybody at the legislature to hear from us that we are not asking for any special consideration,’’ Leiweke said of the Olympia visit. “We’re not asking for a tax break. We’re not asking for a waiver. We’re not asking for a rebate. We’re simply working through the payment structure and we’re going to pay 100 percent of our taxes.’’

Well, no: If you require legislation to be passed just for you, then by definition you’re asking for special consideration. Even if the Mariners and the Seahawks owners got similar special consideration before you did.

The gain from the tax deferral is likely to be small: As the Seattle Times’ Geoff Baker explains it, OVG will even pay interest to the state on about $90 million in deferred construction sales tax payments. The main benefit would be shifting the cost from its capital books to its operating expense books, which would allow the arena builders to save money on its federal taxes by deducting them all at once rather than depreciating them over time:

“In effect, it’s a tax scheme that is designed to make sure you get your money back quicker,’’ [College of the Holy Cross sports economist Victor] Matheson said. “That all being said, it’s a small subsidy and it is not a subsidy from the taxpayers of Seattle and Washington, but a subsidy from federal taxpayers. And it isn’t a huge one. Even a stadium critic like me would have a hard time getting too worked up over it.’’

Me too! But it’s still a subsidy, even if a small one, and also one that as a U.S. federal taxpayer I’m going to help kick in for. So even if it’s not as bad as the Kansas City Chiefs owners trying to demand a full sales-tax break on the purchase of a bronze sculpture of late Chiefs founder Lamar Hunt Sr., it still makes me a little sad that we can never have nice things.

Indiana poll shows public opposition to Pacers and Eleven subsidies, pollster says if state pretends it’s not public money they should be fine

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There’s a new poll out on what central Indiana residents think of plans to subsidize a new stadium for Indy Eleven and still more arena upgrades for the Indiana Pacers, and according to the Indianapolis Star, they don’t think much of them:

The poll found that 23 percent of respondents support taxpayer funds for a soccer arena, according to a news release. Thirty-four percent support subsidies for Bankers Life Fieldhouse, where the Pacers play.

According to the news release, 37 percent favor subsidies for the Indiana Farmers Coliseum and Victory Field and 31 percent for Lucas Oil Stadium.

That actually isn’t a very helpful way of putting it, Indianapolis Star: What were the “oppose” numbers? And what’s this “according to the news release” nonsense? Didn’t you at least ask to see the underlying poll numbers? Sure, it doesn’t appear to be on the pollsters’ website yet, but surely you could call or email these guys? (I just did, am currently waiting to hear back.)

Anyway, the more important news, according to both the Star and the pollsters at the IUPUI Sports Innovation Institute, is that we can ignore what the populace thinks if we’re clever enough about pretending that public money is really private money:

There may be a silver lining for sports teams. David Pierce, director of the IUPUI Sports Innovation Institute, thinks the use of the special taxing districts being proposed — rather than new or increased taxes directly paid by Hoosiers — have a better chance for support.

“The Indy Eleven strategy to predominantly shield taxpayers from the burden of funding the stadium through sales and tourist taxes and rather through tax increment financing in a sports development district will likely play better at the Statehouse than previous proposals,” he said in a prepared statement. “Given the tepid support for taxpayer funding shown in the poll results, the more private and the less public the partnership, the more palatable it will be.”

Right, tax increment financing is totally “more private” funding! Except for how it actually lets businesses take back their own property tax payments and spend them on private projects, to the point where the Milwaukee Bucks owners are collecting interest on a loan they made to themselves using their own property taxes. That will surely poll better — not that the Indiana poll seems to have asked anyone if they’d prefer a TIF, but we don’t need to bother busy regular folks with details like that, now do we?

Howard Schultz running for president on strength of driving Sonics out of Seattle, $3 Starbucks gift cards

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If you haven’t heard by now, former Starbucks CEO Howard Schultz told 60 Minutes on Sunday that he’s considering running for president in 2020 as a “centrist independent,” and lots of people think that’s exactly what the U.S. doesn’t need right now. Which is certainly a valid point, but my first thought was somewhat different: Wait, people are really going to be asked to vote for the guy who moved the Sonics out of Seattle?

To recap for those who have forgotten the Aughts: Starting in 2006, Schultz demanded $220 million in arena upgrades from the state of Washington, threatened to move the Sonics out of town if he didn’t get them, didn’t get them, sold the team to a guy from Oklahoma City while swearing they would stay in Seattle, saw the new guy move the team to Oklahoma City, sued to get the team back on the apparent grounds that the new guy was just supposed to threaten to move not actually do it, lost, and went back to selling crappy coffee. And he was reportedly a terrible boss in other ways as well; as a former Sonics employee wrote later in Deadspin:

One story of Schultz’s cheapness is famous among his former staff. The Sonics’ previous owner, Barry Ackerley, had bought holiday gifts each year for the folks in the front office. When Schultz’s group took over, the custom died. Rightly or wrongly, some of the employees groused that no gesture had been made to them. According to an employee at the time, another of the team’s new owners, Richard Tait, the co-creator of Cranium, heard about the complaints and subsequently gave out copies of his popular board game. Not to be outdone, Schultz followed suit. He gave each employee a Starbucks gift card. One member of the staff—who wasn’t a Starbucks regular—decided to use his card to get some snacks. When he went to pay for his roughly five dollars’ worth of food, he asked how much money remained on the card.

“Well, you owe me money,” the cashier said.

The Sonics employee asked how much had been on the card to begin with.

“$3.50,” the barista replied.

At the time, we would later learn, ordinary customers couldn’t buy a Starbucks card with a value of less than $5. These were custom $3.50 gift cards.

This, apparently, was a bizarre Schultz custom, as several people have testified to on Twitter in the last two days:

And:

Yes, it’s arguably more important to vote for someone for president based on what their policies would be, not on whether they have a record of mismanaging one former business and running another with breathtakingly petty cheapness. But given that everybody in the U.S. is maybe running for president already, you can probably find somebody on that list who isn’t regarded as one step up from a war criminal in his own home town. Okay, not this guy, but somebody.

Indiana preparing to throw more money at Pacers owner on top of $384m in public cash he’s already received

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Good news for Indiana taxpayers: That plan to give the owner of the minor-league Indy Eleven soccer franchise $174 million in future tax kickbacks to fund a $150 million stadium now “seems like more of a long shot,” according to the Indianapolis Star. Much, much worse news for Indiana taxpayers: Instead the state legislature is expected to take up still more subsidies for the Pacers, who have already collected $384 million in public money over the last 20 years:

The Pacers’ current deal, $160 million in public money for a 5-year lease extension, expires in 2024. Sen. Ryan Mishler, chairman of the powerful budget-writing Senate Appropriations Committee, thinks there’s legislative will to broker an agreement to keep the team in town longer.

“There are communities out there that are willing to pay quite a lot of money to get sports teams,” Mishler said. “The goal should be to keep the Pacers here in Indiana. The entire state benefits from the Pacers, not just the city of Indianapolis.”

To recap: Indiana fronted $191 million, 96% of the cost of the Pacers’ new arena, in 1999 in exchange for just $1 a year in rent (Marquette’s arena lease site says $79 million, but Judith Grant Long’s book says $191 million in 1999 dollars, and Long usually accounts for more hidden costs so I’m going with that); demanded (and got) $33 million more in “operating subsidies” in exchange for not opting out of their lease in 2010; then got another $160 million for staying put through 2023. And now team owner Herbert Simon appears to be preparing for his biggest public payday yet, with money coming from “a mix of existing income, sales, innkeepers, admissions and auto rental taxes,” according to the Star. While the total dollar value is as yet unknown, there are bills in the legislature renewing existing taxes that provide $24 million a year to the state Capital Improvement Board while adding $8 million to $8.5 million a year in a new special taxing district, a pool of money that could provide as much as $500 million worth of present value to Simon (though obviously the CIB could choose to spend it on other stuff as well).

The Pacers’ deal is turning into a classic public gift that keeps on giving, in large part because former Indianapolis mayor Stephen Goldsmith agreed to give Simon an opt-out clause in the middle of his lease, and Simon knew exactly how to use it to extract more public cash to make his team wildly profitable. One would hope that this time, at least, the state of Indiana would force Simon to commit to more than a few years’ worth of lease extension if he’s going to cash another nine-figure public check, but given the way this conversation is starting — “There are communities out there that are wiling to pay quite a lot of money to get sports teams,” declared state senator Mishler, effectively establishing that he’s willing to extort himself for money — I wouldn’t hold your breath.

Friday roundup: Vikings get $6m in upgrades for two-year-old stadium, Sacramento finds rich guy to give soccer money to, CSL screws up yet another stadium study

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No time to dawdle today, I got magnets to mail, so let’s get right down to it:

  • The Minnesota Vikings‘ two-years-and-change-old stadium is getting $6 million in renovations, including new turf, and taxpayers will foot half the bill, because of course they will.
  • Billionaire Ron Burkle is becoming the majority owner of the USL Sacramento Republic, so now Mayor Darrell Steinberg wants to give the team “tens of millions of dollars” in infrastructure and development rights and free ad signage so that he can build an MLS stadium. “The richer you are, the more money we give you” is the strangest sort of socialism, but here we are, apparently.
  • Concord, an East Bay suburb until now best known as “where the BART yellow line terminated until they extended it,” is considering building an 18,000-seat USL stadium. No word yet on how much it’ll cost or how much the city will chip in, but they probably first need to wait to see how rich the team’s owner is.
  • Not everyone in Allen, Texas wants to live across the street from a cricket stadium, go figure.
  • Everybody’s favorite dysfunctional economic consultants Convention, Sports & Leisure have done it again, determining that Montreal would be a mid-level MLB market without bothering to take into account the difference between Canadian and American dollars. (One the exchange rate is factored in, Montreal’s median income falls to second-worst in MLB, ahead of only Cleveland.) CSL explained in a statement to La Presse that it wanted to show “the relative purchasing power” of Montrealers, and anyway they explained it in a footnote, so quit your yapping.
  • The Milwaukee Brewers are going to change the name of their stadium from one corporate sponsor to another, and boy, are fans mad. Guys, you know you are free to call it whatever you want, right? Even something that isn’t named for a corporation that paid money for the privilege!
  • Local officials in Maryland, Virginia, and D.C. are still working on an interstate compact to agree not to spend public money on a stadium for Dan Snyder’s Washington NFL team, though passage still seems unlikely at best, and the history of these things working out effectively isn’t great. Maybe it’ll get a boost now that team execs have revealed that the stadium design won’t include a surfboard moat after all. Nobody respects the vaportecture anymore.
  • The libertarian Goldwater Institute is suing to force the release of a secret Phoenix Suns arena study paid for by the team and conducted by sports architects HOK, but currently kept under lock and key by the city. (Literally: The study reportedly is kept in locked offices and is only allowed to be accessed by a “very limited number” of people. Also, a citizen group is trying to force a public referendum on the recently approved Suns arena subsidy, though courts have generally not been too keen on allowing those to apply retroactively to deals that already went through. And also also, one of the two councilmembers who voted against the Suns subsidy thinks the city could have cut a better deal. Odds on any of this hindsight amounting to anything: really slim, but maybe it can help inform the next city to face one of these renovation shakedowns, if anyone on other city councils reading out-of-town news or this site and ultimately cares, which, yeah.
  • Oakland Raiders owner Mark Davis and Los Angeles Rams owner Stan Kroenke signed agreements to cover the NFL’s legal costs in any lawsuit over those teams’ relocations, and they’re both being sued now (by Oakland and St. Louis respectively), and NFL lawyers are really pricey. Kroenke is reportedly considering suing the league over this, which I am all for as the most chaotically entertaining option here.
  • Wilmington, Delaware is being revitalized by the arrival of a new minor-league basketball team, so make your vacation plans now! Come for the basketball, stay for the trees and old cars! Synergy!

Phoenix council successfully lobbies self to give Suns owner $168m for new furniture, air conditioning

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Really, we all knew how this was going to end: One month after the Phoenix city council postponed a vote on $168 million in public funding for a Suns arena renovation in the wake of terrible poll numbers, and then spent the ensuing month councilsplaining at everyone in sight about why really this was a good thing, a very good thing, the council voted 6-2 yesterday to approve the deal. There were a few minor tweaks — mostly Suns owner Robert Sarver agreeing to kick in $10 million to a “community benefits” fund, which councilmember Vania Guevara cited as swaying her vote — but mostly it was the same deal that was rejected last month, only this time with more votes.

There were many specious arguments made in favor of the Suns deal: that Sarver would move the team otherwise (not likely, even if Seattle is out there as a bogeyman); that if Phoenix didn’t agree to this deal it could be on the hook for more renovation costs if an “obsolescence” clause was triggered (the clause would only have let Sarver break his lease 10 years early in 2022, not force renovation payments); that the Suns are worth so much to the Phoenix economy that spending $168 million on them is a drop in the bucket (hahahahaha!). But really, this was about the councilmembers building themselves a cover story for voting the way they wanted to, thus enabling everyone to avoid any nastiness when a new mayor gets elected in March who might have scrapped the entire project.

Now that all the shouting is over, it’s probably best to look at this deal as a simple payment from Phoenix to Sarver for new a/c ducts and furniture and stuff in order to get him to extend his lease until 2037. Spending $168 million to get 15 extra guaranteed years of NBA basketball (or whatever it is that the Suns play) comes to $11.2 million a year; how does that compare with other sports lease extension deals?

So, not the worst lease extension deal ever, but close to it! And that’s only if you consider “fair” to be “what everyone else is paying,” as opposed to, you know, fair.

The biggest surprise at yesterday’s hearing — at least from what I gleaned from news reports and all that I could stand to watch before Phoenix officials started trotting out the “but the obsolescence clause!” canard — was probably that both the former county supervisor who was shot by an enraged citizen after she voted to subsidize the Arizona Diamondbacks stadium in 1997 and the enraged citizen who shot her showed up to testify. Mary Rose Wilcox was still in favor of sports subsidies, calling the renovations “needed,” while Larry Naman was still opposed, calling for a public referendum before any decision was made. Which I guess just goes to show that violence isn’t very good at changing anybody’s minds.

Phoenix residents have a long history of hating sports subsidies, not that democracy matters or anything

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The Phoenix city council votes tomorrow on the city’s proposed $168 million Suns arena renovation plan, and the Arizona Republic’s Jessica Boehm took the opportunity for a deep dive into the history of people hating stadium and arena subsidies, and found that yep, people sure do have a history of hating stadium and arena subsidies:

Sports deals have never been wildly popular. In 1997, a disgruntled man shot former County Supervisor Mary Rose Wilcox in the back and claimed it was justified because of her support of a tax hike to build the Diamondbacks ballpark…

“Slowly, over time, we’ve seen more and more of these deals and more and more economic studies showing that they’re not productive for cities,” said Neil deMause, co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit and a companion website that critiques professional sports deals…

With three of the four major sports teams searching for a new opportunity, it’s a lot for a community to handle, [University of Michigan sport management professor Mark] Rosentraub said.

“If they had come at different times it may have been easier to swallow, but it’s difficult to swallow everything at once,” he said.

Also, the Suns are terrible, and sports teams are even more fabulous money-makers than in the past, and you know the drill (and also I don’t to quote Boehm quoting me more). Plus, Boehm confirms that while the public money that would go into the arena project would come from the Phoenix Sports Facilities Fund, not the city’s general fund, the city absolutely could spend that money on other tourism needs, thus saving general fund money, if it told the Suns to go pound sand.

Of course, the one thing that Boehm’s story doesn’t address is that regardless of whether Phoenix residents still hate the deal or have been swayed by city leaders’ incessant repeating that no, no, really it’s a good thing, it doesn’t much matter, because the fate of the bill is going to depend on whether the holdout councilmembers who delayed the plan’s approval back in December now say okay, we talked about it and nobody yelled too loud at the public hearings so fine, go ahead or not. Public opinion isn’t what matters here, it’s public officials’ perception of public opinion, which is a far murkier thing.

Also, late last week Phoenix revealed the breakdown of the planned arena costs, and while the biggest share — $99.58 million for new mechanical, electrical, plumbing and communication systems — genuinely sounds like an upkeep issue, the next-biggest line item — $26.37 million for “furniture, fixtures, and equipment” plus upgrades to food service areas — uh, really does not. It would certainly make the arena nicer and potentially more profitable, which nobody is arguing, but then wouldn’t it make sense for the Suns (or concessionaires) to pay more to use the upgraded facilities? Is anybody on the Phoenix city council going to ask this question? I know the probable answer to this, don’t I?