Trump threatens to move convention out of Charlotte if demands not met, like former sports owner he is

A former sports team owner threatened yesterday to move a planned event out of town if his arena demands weren’t met, and the only surprise, really, is that the culprit was the president of the United States:

Let’s for the moment ignore the bit where the nation’s leader is demanding to pack 20,000 people into an indoor arena during a pandemic where the one thing we know is that packing people into indoor spaces is the worst possible thing you can do. (And the bit about “building the Arena to a very high standard,” since in fact it was Charlotte taxpayers who just spent $27.5 million on upgrading the Hornets‘ arena.) Instead, I’d like to focus on Trump’s claim that if he isn’t allowed to fill the Charlotte arena to capacity, he will take his “jobs and economic development” and go elsewhere. How many jobs do political conventions create, anyway?

The usual lazy way (or self-interested way, if you’re in the business of staging conventions) of calculating convention economic impact is to add up all the visitors to a city and multiply it by how much you think they spend, which results in numbers as high as $230 million. The better way would be to look at all the cities that have hosted conventions and see if there was any discernable change in job growth or personal income as a result — and sports economists Robert Baade, Robert Baumann, and Victor Matheson did just that in 2008, finding that “the presence of the Republican or Democratic National Convention has no discernable impact on employment, personal income, or personal income per capita in the cities where the events were held confirming the results of other ex post analyses of mega-events.”

In other words, political conventions are much like the Super Bowl: They bring a ton of people into town, but they also drive away other potential visitors who steer clear of the convention week crowds (and convention week hotel prices), as well as local residents who may stay at home if they think restaurants and such will be too crowded. As Baade, Baumann, and Matheson noted, “During the week of the 2004 Republican National Convention in New York City, for example, attendance at Broadway shows fell more than 20 percent compared with the same week a year earlier despite the presence of tens of thousands of visiting conventioneers and journalists.”

(Matheson and Baade also previously crunched the numbers for the NCAA tournament, another brief “mega-event” similar to political conventions, and found that the men’s tournament appeared to have a small negative impact on host cities’ economies, which is impressively bad.)

Reached via email, Matheson further observes that political conventions don’t even provide the “feel-good” effects of a major sporting event, where residents at least report an increase in warm fuzzies from having been in proximity to greatness. (The 2016 Rio de Janeiro Olympics, he notes, seem to have been an exception.) Political conventions, by contrast, are generally remembered in story and song for less cheery reasons.

Now, there’s an obvious caveat here, which is that a pandemic economy is not a normal economy; hotel stays in North Carolina are way down what with much of America not leaving the house, so there may not be many tourists to drive away with a convention (though that’s already starting to change as the state slowly reopens). Matheson writes:

No one is going to fill those rooms up if the convention were to not take place. Hotel occupancy across the country has essentially fallen to zero, so the crowding out effect of mega events has disappeared during COVID-19, leading to real economic damage done by the cancellation of sporting (and political) events.
This also gives Trump’s threat slightly more teeth. In normal times, Trump’s threat to move the convention would be just another inane bit of bluster from a guy who likes to make threats he has no ability to carry out. There would be no city in the country with available hotel rooms and convention space that you could move the event to with this little notice. Nowadays, however, there are probably 30 different cities that actually have availability to host an event like this with last minute notice.

A chunk of the convention spending that advocates like to crow about, however, is from going out on the town during the event: Another paper by Matheson (with co-authors Lauren Heller and Frank Stephenson) found that convention-goers would have to spend seven times as much on food and entertainment as on hotel rooms to justify the most common economic impact claims. Restaurants, though, remain limited to 50% capacity in North Carolina, and if my experience getting takeout food in Brooklyn last night is any guide, there’s plenty of demand for restaurant food from bored, hungry locals right now, so it’s extremely likely that at least some Charlotte residents would choose to stay home rather than line up to sit six feet from Republican convention visitors from who knows where, with their icky who-knows-where germs.

Gov. Cooper hasn’t yet responded to Trump’s demands beyond a brief press statement saying North Carolina will make its decisions based on “data and science,” which certainly could be read as “Yeah, yeah, the president is tweeting at us, give him 24 hours and he’ll be off tweeting at clouds instead.” But don’t sell Donald Trump short: In his time as New Jersey Generals owner, he surely learned something about ways to leverage his power to get concessions from his foes. Or, you know, not.

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Las Vegas Raiders to have fans park in Idaho, and other Friday stadium news

I’ve been busy this morning working on further research into Jeffrey Loria’s Miami Marlins windfall for an article set to run at Vice Sports on Monday, so rather than let the day slip away entirely, let’s do another round of news briefs:

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Here’s the Hornets’ new scoreboards, also my Brooklyn book is out in two weeks

Want to see $24 million worth of scoreboards (okay, all that money didn’t go to scoreboards, but some of it did) that the Charlotte Hornets built with public money? Here you go!

hornets-scoreboard-mk009750xx5642-3174-0-294And there’s a whole slideshow full of more of them here, though most of them aren’t very interesting.

In almost but quite entirely unrelated news, today my publisher Second System Press and I announced that my book The Brooklyn Wars will be available for purchase starting Tuesday, September 27. This is somewhat related because one-quarter of The Brooklyn Wars is dedicated to a recounting of the planning, construction, and aftermath of the Brooklyn Nets’ Barclays Center and its surrounding Atlantic Yards development project — any Field of Schemes readers who are members of the press and would like an electronic review copy right now, drop me an email and we’ll talk. Kickstarter funders, meanwhile, should check their email inboxes for immediate download codes. For everyone else, cool your jets for another 15 days.

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Three sports venues get new corporate names that you’re going to forget immediately

Lots of old sports venues getting new names this week!

The price tags on the Buffalo deal was $40 million for seven years; no money changed hands in Charlotte, obviously, while the Dolphins declined to say how much they got for 18 years of their stadium name. I’m guessing not much, since nobody is going to remember this corporate name any better than the last five or six, but maybe since they just did a renovation, people will think of it as a new building with a new name?

Anyway, the fact that naming rights are worth more for a brand-new, nameless venue continues to be an incentive for teams to demand them. It’s probably not the best thing from an environmental sustainability standpoint that teams and cities are building stadiums partly just to act as giant billboards, but I can’t complain too much so long as it does allow them to fob off some costs on another sucker.

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Inventor of PSLs says he never meant them to be a mere cash grab from fans

My Vice Sports colleague Aaron Gordon has a fascinating interview up today with sports marketer Max Muhleman, best known as the inventor of personal seat licenses. And he gets Muhleman to reveal something that I hadn’t heard before: The original idea for PSLs was not to charge for them at all, but rather use them as a reward for fan loyalty.

As the story goes, Muhleman’s first PSLs were developed for the then-expansion Charlotte Hornets, when owner George Shinn suggesting buying leather jackets for fans who’d put down non-refundable season ticket deposits without knowing if there would even be a team. Muhleman, who’d run the ticket drive, countered by suggesting that fans be allowed to pass their seats on to someone else if they gave them up, rather than having them go to the next person on the waitlist as was usual practice. He called this “charter seat rights.”

Then, history happened:

Muhleman never meant for the PSL to become an investment. It was simply about thanking the fans who pledged their own money to help support a new team or stadium. The idea of re-selling Charter Seat Rights didn’t even occur to Muhleman until he saw a classified ad in the paper after the Hornets’ incredibly successful inaugural season, when they sold out every game in the 23,000 seat arena. The ad read: “‘Leaving town. Two charter seat rights. $5000.” When Muhleman called the number, the person on the other end said they had already received about a dozen calls and they regretted not asking for $10,000.

Four years later, when Jerry Richardson was trying to raise money for a Carolina Panthers stadium, he turned to Muhleman, who remembered that classified ad. Eventually, the rebranded PSLs raised $92 million for Richardson at zero cost to him, and a revolution was born.

The Vice headline claims that Muhleman now “hates PSLs as much as you do,” and while I love a grabby headline as much as the next guy, it’s not quite accurate: He actually tells Gordon that he feels like PSLs have gotten so pricey that they’re just a money grab, losing the necessary balance of also building fan loyalty by offering them something in exchange for their fandom:

“I thought we were on to something that worked, that it made good music with the sport, the fan, the owners, we could all come together in a harmonious, mutually productive, helpful way,” he said. “But these programs I see, so many of them I can only say are unilateral, and unilateral in favor of ‘how much can we get out of these people?’ And I do not believe the path to success in sports is maximum leverage of fans.”

Of course, it depends on your meaning of “success.” When it’s a choice between hundreds of millions of dollars in cash now and potential good will down the road, that hasn’t been a decision that most NFL owners have had to think too hard about.

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Charlotte to pay for $34m in Hornets arena upgrades, Michael Jordan kept at bay a few more years

The Charlotte city council voted 9-2 last night to spend $34 million on renovations to the Hornets‘ Time Warner Cable Arena, which opened in 2005 and is the third-newest building in the NBA. Of course they did, because they (or their predecessors nine years ago) included a “state-of-the-art” clause in the Hornets’ (then Bobcats) lease, which means the city must go on spending indefinitely to keep the arena as up-to-date as the newest NBA arenas:

“It is a contractual obligation,” said council member Claire Fallon, a Democrat. “If we break the contract, who will believe our word anymore?”

At this point it’s worth asking — not that any of the media outlets who were actually at the council vote seem to have asked it, but I’ll ask it to the winds, anyway — how much Charlotte will likely have to put up for renovations over the life of the arena, whatever that may turn out to be. You have to expect that the Hornets will come back for more upgrades in another nine years or so — it’s in their contract, why wouldn’t they? — and that those will be more expensive, since by then there will be even more new arenas to keep up with. And nine years after that … well, by then the arena will be 27 years old, so you have to expect the Hornets will be looking to tear it down and build a new one.

As a reminder, the Hornets are owned by the billionaire most famous former athlete on earth, and got the arena scot-free when Charlotte covered all $260 million in construction costs. Add in the gift-that-keeps-on-giving state-of-the-art clause, and this is a serious contender for “worst arena deal ever,” though at least Michael Jordan isn’t getting negative rent. Yet.

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Charlotte to vote on $27.5m in upgrades to NBA’s 3rd-newest building, because NOT NEW ENOUGH, DAMMIT

The city of Charlotte is asking the city council to approve $27.5 million in upgrades to the Hornets‘ nine-year-old arena — the NBA’s third-newest building — on the grounds that hey, it could have been worse:

In March, the Hornets asked the city to also spend roughly $6 million to renovate suites and $600,000 to refurbish the Hornets’ locker room.

Deputy City Manager Ron Kimble said the city pushed back against spending taxpayer dollars on those expenses, even though he said the team could have had a legal case that those particular upgrades are part of the 25-year operating agreement.

“The city didn’t want to pay for home team locker rooms and suite improvements,” Kimble said. “We want to fund (improvements) that the everyday fan can enjoy.”

The problem is that in exchange for the Hornets (then Bobcats) owners agreeing to severe penalties for breaking their lease and going elsewhere, as the old Hornets (now Pelicans) did when they bolted for New Orleans, Charlotte agreed to a lease clause that requires the city to keep the arena among the NBA’s most modern — which is effectively a blank check for the Hornets to bill the city for anything that the guy down the road has in his arena.

Kimble told council members he believes the city could not spend any less.

“I feel like this is the lowest amount (we could spend) under the contract,” he said.

All together now: Friends don’t let friends sign state-of-the-art clauses.

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Hornets, Charlotte to begin talks on $42m upgrade to 9-year-old arena

We haven’t heard much lately about the $42 million in upgrades the Charlotte Hornets (formerly Bobcats) owners want to keep their nine-year-old arena “economically competitive,” but apparently that’s only because everyone has been working it out behind the scenes. Charlotte city manager Ron Kimble says that talks on the upgrades will begin in the next month, while Mayor Dan Clodfelter said that “negotiations are going along very productively,” implying that … talks are already ongoing? Hey, who’s running continuity at the Charlotte Business Journal, anyway?

No one’s saying how much Charlotte would be putting up for the renovations, though given that city officials were dumb enough to put a state-of-the-art clause in the then-Bobcats’ lease when they built the arena back in 2005, it’s likely to be a sizable sum. Clodfelter says not to worry, because renovations are needed anyway to bring the 2017 NBA All-Star Game to town, which will surely make any new costs pay for themselves, right? No? Oh, well.

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NBA commish to Charlotte: Give Michael Jordan $42m in small bills, or never see your All-Star Game again

Apparently that clause in the Charlotte Bobcats‘ lease that requires the city of Charlotte to keep their arena “economically competitive” isn’t enough for the team owners (some guy named Michael something) to feel confident in getting their $41.9 million in public subsidies for arena renovation, because they’ve now pulled out the big guns:

The NBA commissioner wants to put the all-star game in Charlotte, but first he wants to see upgrades at the 9-year-old uptown arena.

Adam Silver, who became commissioner in February,  called for improvements to the luxury suites, scoreboards and lighting during a 20-minute press conference with local media Monday afternoon.

The All-Star Game is at stake, people! If you don’t put up $41.9 million, you will miss your chance to see a bunch of famous names go out on a court and play a lackadaisical version of something akin to basketball! Or, you know, not.

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Bobcats use “state-of-the-art” clause to demand $42m in upgrades to 8-year-old arena

Friday afternoon, finally I can relax from a crazy week and not have to worry about any breaking sports subsidy news interrupting my — wait, what?

To keep Time Warner Cable Arena among the NBA’s most modern buildings, the Charlotte Bobcats and tourism officials have submitted a $41.9 million list of improvements to the city of Charlotte.

The request includes suite improvements, restaurant renovations and moving the ticket office at the 8 1/2-year-old facility.

And why, exactly, would the city of Charlotte do that? I mean, sure the city just gave $87.5 million to the Carolina Panthers for upgrades to their stadium, but the Bobcats‘ arena isn’t even a decade old, and presumably they have a lease binding them to the place for—

The lease calls for the city to make improvements to the building to keep it among the most modern in the NBA, to ensure the team can “maintain economic competitiveness and revenue potential.”


There could still be some haggling involved over the exact upgrades and cost ($1.42 million to relocate the ticket office, that’s seriously an issue of “economic competitiveness”?) before this is all over. But the point here to remember is: Do not allow state-of-the-art clauses in your sports leases, people. They are licenses for teams to write themselves checks at public expense, or even worse, demand new buildings before the old ones are paid off. Maybe city officials would start listening to me if I charged a $50,000 consulting fee…

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