Warriors finally agree to pay Oakland $49m for arena debt they tried to skip out on by leaving town

A California state appeals court has ruled what an arbitrator and a lower court already did: The Golden State Warriors owners still have to make $49 million in debt payments to Oakland and Alameda County to help pay off upgrade costs on their old arena as required by their lease, even after moving to San Francisco.

This should seem unsurprising — “as required by their lease” is normally kind of a tipoff — but the Warriors owners had been employing an interesting legal strategy that just because they agreed to make the payments in their lease, that shouldn’t apply once the lease expires. As we covered back in 2018 when the arbitrator first ruled on this:

The dispute, if you’re interested, was over this language in the Warriors’ 1996 lease:

“if the licensee terminates this … agreement for any reason prior to June 30, 2027, and there is a principal balance remaining on the project debt … then licensee shall pay an amount equal to the excess of scheduled debt service.”

Sounds pretty cut and dried, no? Except that the lease expired in 2016, even though it was later extended through 2019, so the Warriors owners argued that it no longer applied even if the lease clause said “2027,” and — know what, they lost, so we don’t have to think about this anymore.

Okay, clearly I was wrong about the “don’t have to think about this anymore” part, because when it comes to lawyering up, where there are appeals courts, there’s hope. It sounds like the team is finally going to pay up this time — a Warriors spokesperson told the San Jose Mercury-News that “we’re obviously disappointed with the court of appeals decision but, as we’ve always said, we will fulfill our debt obligation” — so maybe now we can never speak of this again. And maybe future arena lease negotiators will make sure that when a team says it’ll help pay off construction debt, they include a “no backsies” clause.

Share this post:

Coronavirus shutdowns will cost pro teams mumblety-something, say sports finance experts

Forbes is starting to focus on the all-important question of whether the coronavirus, in addition to killing tens of thousands of people, will harm the bank balances of some of your favorite multibillion-dollar sports franchises. Let’s give them a read and see if they make any damn sense and/or are affronts against humanity!

First up, because it beat the other one by a few hours, is “senior contributor” Patrick Murray’s essay on the Golden State Warriors, who had the misfortune to open their new San Francisco arena the same year as sports came to a grinding halt (and before that, the same year as its vaunted starting lineup suffered a sudden and gratuitous total existence failure). Take it away, Patrick:

The Athletic’s Anthony Slater has reported that cancelling the remaining seven home games would cost the Warriors in the region of $25m. That’s on top of the money they might have expected back in the fall from a potential playoff run, before Stephen Curry got injured. They might not have been hotly tipped to make a deep run with Klay Thompson out, but most people were expecting a team led by Curry to at least make the postseason. And that would have meant more revenue flowing in. Tim Kawakami previously reported that at Oracle Arena in recent years the Warriors received $4-5m gross per home game in the early playoff rounds. At Chase Center that figure would have been even higher.

Oh noes, the Warriors are missing out on all the playoff money they would have earned … if they’d been in the playoffs, which they weren’t going to be? So maybe it’s just that $25 million for seven home games that is at risk — Forbes has the Warriors’ gate receipts at $178 million per year, so the per-game figure pencils out.

And, of course, the Chase Center isn’t just about basketball, it’s about concerts and other arena events, so how will that work out?

It’s unknown just how much that will cost the Warriors, but in Forbes’ latest franchise valuations just under a quarter of their $4.3bn valuation was attributed to their arena.

Thanks for the math, Mr. Senior Contributor! You’re totally worth every penny of that $250 a month you’re being paid!

The second article is by Mike Ozanian, who is an actual Forbes staffer and the magazine’s longtime sports valuation guru, even if he’s had his own occasional problems with basic math. Ozanian takes on the finances of the Atlanta Braves, and discovers (according to “John Tinker of G.research LLC,” which is apparently a thing that a financial analysis firm has actually decided to call and punctuate itself) that playing only half a season of baseball will, amazingly, cause fewer people to go to baseball games:

Tinker reckons the Braves’ revenue would drop to $174 million, from $438 million in 2019, with attendance dropping to 630,000, from last year’s 2.65 million. The drop in attendance would cut revenue from the gate and concessions to about $55 million in 2020, from $202 million the prior year, and halve the broadcast and sponsor revenue to $118 million, from $236 million.

Player expenses, meanwhile, were lowered by only 50%, to $86 million, and operating expenses and SG&A costs by 40%, to $146 million. Bottom line: Tinker estimates the team will post an operating loss of $59 million, versus an operating profit of $24 million in 2019.

There’s some weirdness here: Why would attendance drop by three-quarters if the number of games is cut in half? (Not that playing games in front of fans is even that likely, but if it does happen wouldn’t you expect there to be some pent-up demand? Especially since games would be played in the summer, when ticket sales are normally the highest? Unless the G.research study assumes that by summer fans will be too afraid to leave the house, which is certainly possible.) And how would broadcast and sponsor revenue fall by $118 million when the Braves’ TV deals with Fox Sports South and Fox Sports Southeast only gets them $83 million a year in the first place? And does Ozanian know for sure that the Braves’ TV and sponsorship contracts would be canceled (or scaled down) if a full schedule isn’t played? Who can say!

If there’s a takeaway here, it’s that while the sports stoppage will almost certainly cost sports team owners big time, the actual bottom-line numbers are going to depend on myriad picayune contractual details that probably can’t be figured out just by looking at profit and loss summaries. And also, in case anyone might think otherwise, that whether a team is paying for their own building (the Warriors are, the Braves mostly aren’t) shouldn’t play at all into financial impact assessments, because stadium and arena expenses are sunk costs that don’t change the calculus of how much added red ink teams will see.

(This is true for local governments that are paying for sports venues, too, incidentally: If your state was counting on hotel-tax revenues to pay off a stadium and hotel-tax revenues are in the toilet because no one is leaving their houses anytime soon, that’s bad, but no worse than if hotel-tax revenues were being counted on to pay for other public expenses. Maybe if you were counting on hotel-tax revenues to soar as the result of people coming to see your new team, but that probably wasn’t a safe bet anyway.)

And, of course, that owning a major pro sports team is so fabulously lucrative that even skipping most or all of a season isn’t likely to bring anyone to their knees. The Warriors turned an estimate $109 million profit in 2019, according to Forbes figures, while the Braves’ Liberty Media ownership group made $54 million. So while losing a season could wipe out an entire year’s worth of profits — that’s not good! — the other way of looking at this is that teams could regain their losses in just the first season of resumed play, whenever that might be. Starting to get why sports leagues are so willing to shut down over labor contract disputes? If you’re a team owner doing this right, you’re playing the long game, or at least the medium-term game, and if COVID-19 is still affecting things like sports attendance in the medium term, we’re going to have way bigger things to worry about than the Braves’ bottom line.

Share this post:

Friday roundup: Stadium trends, phantom soccer arenas, and the inevitable narwhal uprising

Welcome to the first weekly news roundup of the fourth decade during which this site has been in operation — unless you’re one of those people — which is kind of scary and depressing! I know I didn’t expect in 1998 that there would still be a need for Field of Schemes in 2020, but no one likes to give up a good grift when they see one, and for the last few decades nobody’s been able to make rich people in the U.S. give up much of anything, so here we are.

Seeing as I don’t want to even think about whether we’ll still be having this conversation in 2030, let’s get right to the news:

  • In the midst of a long New York Times article about how cool the new Golden State Warriors arena is, because the future, Temple University economist Michael Leeds asserts that it’s an example of “a trend since the Great Recession that, with some notable exceptions, cities have been much less willing to open up a pocketbook and fund a stadium or arena.” While “some notable exceptions” is a large caveat, I’m still not convinced that cities were all that much less willing in the Teens than the Aughts to cough up sports venue money — in California, sure, but then what of Nevada and Arlington and Georgia and Milwaukee and Indianapolis? I’ve emailed Leeds to ask for his data, but really what the world needs is a fresh dose of updated Judith Grant Long spreadsheets.
  • Major League Baseball says its plan to stop providing players to 42 minor-league franchises is not actually a plan to “eliminate any club,” and it’s minor-league owners’ fault if they insist on going bankrupt instead of pulling themselves up by their own bootstraps and joining unaffiliated leagues. Also, this latest missive was apparently prompted by objections by Sen. Richard Blumenthal to the elimination of the Connecticut Tigers, who are in the process of being rebranded as the Norwich Sea Unicorns, and now all I can think about is: What’s a sea unicorn? Is it just a narwhal? Is Norwich now on the Arctic Ocean? What ship is the sea unicorn the captain of that earned it its captain’s hat, and how is it going to fire that harpoon-bat with its flippers? And at what? Is it a whale that has turned against its own kind? Or is it turning against humanity in revenge for our destruction of its habitat? Maybe MLB is just trying to protect us from the animal uprising, which if so they really should have mentioned it earlier in their statement.
  • The owners of the San Diego Sockers, which are an indoor soccer team, implying that there must still be indoor soccer leagues of some sort, are looking at building a 5,000- to 8,000-seat arena in Oceanside, which would cost dunno and be funded by ¯_(ツ)_/¯, but which team execs swear would be more affordable than paying rent at their current arena in San Diego and arranging schedules for their 12 home games a year. I can’t see anything that could possibly go wrong with this business plan!
  • Remember that $60 million soccer stadium for the NWSL Seattle Reign and USL Tacoma Defiance that was proposed for Tacoma last July, with negotiations expected to be completed by the end of the summer? The Tacoma News Tribune does, and notes that such details as how it would be paid for “all still remains to be seen,” though city sales tax money and hotel tax money could be on the table. This is clearly going to require more renderings.
  • English League Two soccer club (that’s the fourth division in English soccer, for English soccer reasons you either already understand or don’t want to know about) Forest Green Rovers are planning to build an all-wood stadium that will supposedly be “the greenest football stadium in the world,” but even if the timber is “sustainably-sourced,” wouldn’t it have less carbon impact to leave both the trees and the oil to fuel the construction equipment in the ground and keep on playing at this place that is just 14 years old? The narwhals are not going to be happy about this at all.
  • Should Syracuse build an esports arena? A gaming industry exec is given op-ed space to say: maybe!
  • How can anybody say that sports stadiums don’t create an economic spinoff effect when local residents can charge $10 a car to let people park on their lawns? That’s it, I take back everything I’ve said the last 22 years.
Share this post:

Friday roundup: Congress gets riled up over minor-league contraction, Calgary official proposes redirecting Flames cash, plus what’s the deal with that Star Trek redevelopment bomb anyway?

Happy Thanksgiving to our U.S. readers, who if they haven’t yet may want to read the New Yorker’s thoughtful takedown of the myths that the holiday was built on. Or there’s always the movie version, which has fewer historical details but is shorter and features a singing turkey.

And speaking of turkeys, how are our favorite stadium and arena deals faring this holiday week?

Share this post:

Friday roundup: Team owners rework tax bills and leases, Twins CEO claims team is winning (?) thanks to new stadium, and other privileges of the very rich

Tons more stadium and arena news to get to this week, so let’s dive right in without preamble:

Share this post:

Friday roundup: Will Royals sale spark new stadium, is Miami asbestos report a Beckham ploy, could developers influence Bills’ future?

Happy last Friday of summer! You’re probably busy getting ready to go somewhere for the long weekend, but if you’re instead staying put (and enjoying the space left by all the people going somewhere for the long weekend), consider spending some time if you haven’t yet reading my Deadspin article on “What’s The Matter With Baseball?“, which interrogates the various theories for MLB’s attendance decline and determines which ones may not be total crap. Do I conclude that it’s all the fault of team owners who’d rather charge rich people through the nose for a lesser number of tickets than try to sell more seats to less deep-pocketed fans? No spoilers!

And now to the news, and lots of it:

  • A new rich guy is buying the Kansas City Royals, and already there’s speculation about whether John Sherman will demand a new stadium when (or before) the team’s Kauffman Stadium lease is up in 2031. The Kansas City Star editorializes that “Kansas Citians should reject any plan that significantly increases public spending for the Royals, either for a new downtown stadium or a ballpark somewhere else,” and further notes that there’s no guarantee a new stadium would even help the Royals’ bottom line (“Winning, it turns out, is more important than a new stadium”), which is all a nice first step; let’s see what happens when and if Sherman actually opens his mouth about his plans.
  • Miami has closed Melreese golf course after determining it had high levels of arsenic and reopened Melreese golf course after environmental officials determined there was nothing “earth shattering” about the pollution levels. And now there’s concern by at least one city commissioner (Manolo Reyes, if you’re scoring at home) that the release of the arsenic findings is part of a ploy by David Beckham’s Inter Miami to get a discount on the lease price of the land, which is still being hashed out. The Miami Herald reports that the team and city are at loggerheads over whether to take environmental remediation costs into account when determining the land value; this epic Beckham stadium saga may have a couple more chapters to go yet.
  • Buffalo developers Carl and William Paladino are really excited about the possibility of a new Bills stadium near land their own, because they could either sell it to the team at an inflated price or develop it themselves once people are excited to live or shop near a new football stadium. (No, I don’t know why anyone would be excited to live or shop near a football stadium only open ten days a year, just go with it.) Carl Paladino once ran for governor of New York, so it’s worth watching to see if he uses his political ties (or skeezy lobbyist friends) to try to influence the Bills’ stadium future.
  • A group trying to get an MLB team for Nashville may not have a stadium or a site or a team, but they do have a name for their vaporteam: the Nashville Stars. Guy-who-wants-to-be-an-MLB-owner John Loar tells the Tennessean he decided on the name “after reading a book on Nashville’s baseball history by author Skip Nipper,” which is presumably this one; the Seraphs, Blues, Tigers, Americans, Volunteers, and Elite Giants honestly all seem like better names than the Stars, which was last used by a franchise in the World Basketball League (the basketball league where tall players weren’t allowed, which, yes, was actually a thing), but it’s really not worth arguing over the name a team that may never exist in our lifetimes.
  • The Richmond city council’s plan to approve spending $350 million on a new downtown arena without consulting the public has hit an apparent snag, which is that four or five members of the nine-member council reportedly oppose the plan, and seven votes are needed to pass it.
  • The editor of the San Francisco Examiner has penned an opinion piece saying the Golden State Warriors‘ new arena is overly opulent and expensive — premium lounges feature wine butlers and private dining rooms, so yeah — but is resigned to this as a necessity (or at least the headline writer is) that it’s “the price we pay for a privately-funded arena.” Which, does anyone really think the Warriors owners would have passed up the chance to charge through the nose for wine butler service if they’d gotten public money? This is the price we pay for rampant income inequality, and don’t you forget it.
Share this post:

Warriors to get $295m for naming rights to arena plaza, or maybe $31m, math is still hard

The healthcare group Kaiser Permanente has agreed to pay Golden State Warriors owners Joe Lacob and Peter Guber to give the plaza and park outside their new San Francisco arena the name “Thrive City.” That much we know. What we don’t know, after yesterday’s Phil Matier column in the San Francisco Chronicle, could fill volumes:

  • How much is Kaiser paying for the naming rights? Matier writes that “the total for the naming rights and other costs could hit $295 million,” but also that Kaiser indicated that “expenses ‘associated with Thrive City would be about $2.5 million a year,’” which would come to a present value of about $31 million. Clearly that’s a big difference! The larger figure is apparently from a December 2016 meeting of the Kaiser board’s finance committee, which included a single line recommended “the expenditure in an amount not-to-exceed $295.58 million for the Golden State Warriors sponsorship strategy over a twenty-year period.” The smaller figure is what Kaiser’s PR officer is claiming. The truth is either somewhere in the middle, or off to either side, because neither of these are exactly watertight financial figures.
  • What will Kaiser get for its money? The name of the park and plaza, certainly, but “sponsorship strategy” implies that Kaiser is also buying arena ad signage or the right to be the official health insurer of the Warriors or uniform ad patches or god knows what. So it’s tough to put a number on the actual naming rights.
  • Why “Thrive City” of all things? “Thrive” is a Kaiser wellness program/branding strategy that involves cutting healthcare costs by promoting healthier living and, for some reason, running marathons dressed as a lobster. One hopes that the company was smart enough to include in its deals with the Warriors the right to change the name of the plaza to something else if Thrive is abandoned or rebranded in the next 20 years, which seems extremely likely given the shelf life of corporate subbrands.

Whatever the actual amount of money changing hands in exchange for what, this does hint at how on earth the Warriors owners are planning to make back their new arena’s $1.4 billion construction cost. They’re already getting about $15 million a year in naming rights from Chase Bank, so if you add in plaza naming rights and new ad signage and corporate logos on anything not nailed down, then … even in a white-hot real estate and consumer market like San Francisco, it still seems like a lot of money to spend, but it’s Lacob and Guber’s money, so more power to them if it’s what they want. Though do remember that Warriors president Rick Welts wants you to know that the fact his team is building its own new arena is no reason for other cities not to give public money to their teams’ new arenas, a thing that should keep happening because arenas “enhance the quality of life for residents.”

I became depressed after a serious problem with my spine. The pain was intense and terrible. I couldn’t sleep or eat. This nightmare lasted for about 6 months. Klonopin by https://foamcast.org/klonopin-clonazepam/ acts for a long time, almost a day. 1/4 pill put under the tongue and within 30-40 minutes you’ll get the proper effect. After that, you feel lied-back.

Of course, one could also wonder if these naming rights deals, especially to a big empty plaza that is unlikely to get a lot of free TV mentions or whatever naming rights deals are supposed to do for companies, are really worth the expense. That’s what the National Union of Healthcare Workers is complaining, saying that Kaiser would be better off spending money on patient care (money that would flow to union members in the form of paychecks, naturally) at a time when “some patients wait weeks, even months for mental health appointments.” Good thing there’s no such thing as bad publicity, or one might be tempted to conclude that Kaiser had just bought itself $295 million of exactly that.

Share this post:

Friday roundup: Rangers fans don’t like nice weather after all, Orlando re-renovating renovated stadium, Dan Snyder has a $180m yacht

Today is site migration day — cue the jokes about how Field of Schemes should be hosted half the time in Montreal and half the time in Tampa Bay — so if things look a bit weird after 2 pm Eastern or so, that’s to be expected. Rest assured that the site will be back to normal soon, hopefully later today but certainly entirely by Monday; or actually better than normal, because the whole point of this exercise is to have a zippier, more reliable platform so that you can get your immediate fix of stadium news without having to refresh or even wait multiple milliseconds for images to load.

And speaking of your immediate stadium fix, here’s the rest of this week’s news:

  • The Texas Rangers are building (read: mostly having the citizens of Arlington build for them) a new stadium just so they can have air-conditioning so that fans will go to games, but the Fort Worth Star-Telegram points out that the team has been winning and the weather has been nice this spring, and fans still aren’t showing up.
  • MLS commissioner Don Garber said that he “could see [Las Vegas] being on our list for future teams,” which is literally the most noncommittal thing he could say, but he still gets headlines for it, so he’s gonna keep saying it.
  • Here’s an article about how building a whole real estate development that will turn a big profit will help the Golden State Warriors make more money, if anyone wasn’t clear on that concept already.
  • The Orlando city council approved the $60 million in renovation money for Camping World Stadium (née the Citrus Bowl) that they said they would last fall. Since the stadium doesn’t even have a regular sports tenant — it is only used for the occasional soccer friendly, college football game, or concert — it’s hard to call this a subsidy to anyone in particular, but it’s still probably a pretty dumb use of money, especially since the stadium was just renovated once already in 2014.
  • There is no actual news in this Page Six item, but if you thought I was going to pass up a chance to link to an article that begins, “Washington Redskins owner Dan Snyder roared up to Cannes Lions in his $180 million yacht as ad sources speculated he’s in town to find a title sponsor for the team’s new stadium,” you’re crazy.
  • Construction on the Las Vegas Raiders stadium was momentarily halted last week when it turned out one of the parts didn’t fit, which probably isn’t a big deal in the long run — in fact, the ill-fitting steel truss was adjusted and reinstalled a few days later — but that doesn’t mean we can’t make Ikea jokes.
  • The Arizona Diamondbacks owners have hired architecture firm HKS, who designed the Texas Rangers’ new park, to design a new stadium for them if they choose to build one, and you know what that’s going to mean: lots of renderings with Mitch Moreland and his wife in them.
Share this post:

Friday roundup: Jacksonville mayor says “whatever Jaguars want” on stadium renovations, that’s it, I’m done, I can’t even finish this headline

Running late on the roundup this week — I just published two new articles on the wastefulness of film tax credits and New York’s probably fruitless attempts to fight off sea level rise, plus I have another major writing deadline today — so let’s get to it:

Share this post:

Friday roundup: Rays stalling on St. Pete stadium talks, Marlins tear out seats to please millennials, Raiders stadium maybe delayed or maybe not

Happy baseball season! Or not-so-happy baseball season, as Deadspin reminded us in two excellent articles this week, one on all the ways from bag-check fees to card-only transactions that teams are using to separate fans from even more of their money, the other on how fans were stuck on endless lines to get into stadium on opening day because of things like paperless ticketing apps that kept crashing. And on those cheery notes, the rest of the rest of the week’s news:

Share this post: