Here’s a bunch of ways rich sports owners are looking to get pandemic bailouts

The owners of the Los Angeles Lakers have voluntarily returned $4.6 million in refundable government loans they received as part of the Payroll Protection Program—

Hold up, let’s try that again.

The owners of the Los Angeles Lakers, a sports franchise worth an estimated $4.4 billion that turns an annual $178 million profit, asked for and received $4.6 million in federal government loans as part of its Payroll Protection Program for small businesses. (The loans convert to grants if recipients keep their current employees on payroll through the end of June.) Like other prominent companies that took advantage of the PPP program — Shake Shack, Potbelly, Ruth’s Chris friggin’ Steakhouse — the Buss family that owns the Lakers chose to return the money “so that financial support would be directed to those most in need” once they realized they’d bum-rushed the subsidy line and edged out actual small businesses, and also probably realized that the PR hit from doing so would have been worth way more than a relatively piddling $4.6 million in government grants.

That a billionaire sports family got approved for small-business loans should be alarming, but not surprising: The federal government has already approved more than $2 trillion in spending to help Americans hit by the coronavirus-spawned economic crash, and it’s all but inevitable that some less-needy Americans would put in applications as well — the feds define “small businesses” based in part on how many employees they have, and sports teams don’t employ a ton of people on payroll. And it’s also inevitable that they’d also be among the first to be approved, since programs like PPP are first-come first-served and rich folks are more likely to have lawyers on staff who know how to file paperwork fast, as well as established bank connections that made them more likely to get approved.

In fact, sports team owners are working many angles to get a cut of the Covid stimulus bailout cash, just as less-deep-pocketed individuals are as they try to figure out whether to consider themselves unemployed gig workers or entrepreneurs in need of cash to keep themselves on payroll. Among the ways:

  • The Sacramento Kings owners are renting out their old empty arena in Natomas for $500,000 a month to the state of California for use as a field hospital, which is the same rent the state is paying for other temporary facilities, but maybe a tad disingenuous given that Gov. Gavin Newsom previously praised Kings owner Vivek Ranadivé as “an example of people all stepping in to meet this moment head-on” without mentioning that he’d be getting paid for his selflessness.
  • The owners of the D.C. United MLS team are part of DC2021, an advocacy group of Washington, D.C. business leaders lobbying the district for “a massive new tax relief program” to help the local restaurant, hotel, and — apparently — soccer industries survive the economic shutdown.
  • The stimulus measures approved by Congress weren’t all expanded unemployment benefits and checks with Donald Trump’s name on them; they also reestablished a tax loophole involving what are known as “pass-through entities” that will allow mostly wealthy people to save $82 billion on their tax bills this year. The biggest beneficiaries will be hedge-fund investors and owners of real estate businesses, a list that obviously includes lots of sports moguls: Just owners of hedge funds who also control sports teams include Milwaukee Bucks co-owners Marc Lasry and Wesley Edens, Los Angeles Dodgers owner Mark Walter, Tampa Bay Lightning owner Jeffrey Vinik, and a pile of others.

Now, not all of this should be considered a fiasco: In the case of the PPP in particular, Pat Garofalo notes in his Boondoggle newsletter that the money is intended to keep low- and moderate-income workers from being laid off — the reimbursements top out at $100,000 per employee — and people who work for sports teams or chain restaurants are just as deserving of keeping their jobs as those who work at genuine small businesses. The main problem with PPP is that Congress massively underfunded it, then made it first-come first-served, then left it up to banks to decide who to approve — okay, there’s actually a lot here to consider a fiasco, but sports team owners deciding to fill their wallets at the same firehose of cash as everyone else is far from the worst part of it.

As for some of the other bailout proposals, though, sports owners come off looking a lot less innocent. That DC2021 plan pushed by D.C. United owner Jason Levien, for example, includes such things as tax holidays for corporate income taxes and property taxes, which Garofalo notes won’t help most small businesses that don’t turn large profits or own land.  (Levien, you will not be surprised to learn, is not just a sports mogul but also a real estate investor.) And the pass-through tax break is almost entirely a sop to millionaires and the Congresspeople who love them, which though it doesn’t single out sports team owners, certainly helps many of them given that they’re far more likely to invest in pass-through companies than you or I.

I’ve said this before, but it really is worth harping on: The recovery from the pandemic is already involving a ton of government spending, and will unavoidably involve a ton more, since the feds are pretty much the only institution that has the power to keep food in people’s mouths during this crisis. (At least until the U.S. Mint is deemed a non-essential business.) This will invariably create winners and losers, both in terms of who gets what money and in terms of who ends up paying off the government debts that are being racked up now. There’s no way to avoid this involving subsidies — pretty much the whole idea of government spending to prevent an economic crash is about creative use of subsidies — so what you want to shoot for is fairness, where you have the most money going to companies and individuals who were most hurt by coronavirus shutdowns, and the least to companies and individuals that just were able to lawyer up the fastest.

Individuals who were most hurt except, of course, for Miami Heat and Carnival Cruises owner Micky Arison, who may have lost more than a billion dollars thanks to the collapse of the cruise industry, but who also lobbied the Trump White House to let them keep sailing even after it was clear that cruise ships were perfect Covid incubators. The cruise industry was notably left out of the stimulus bills, and while that’s more about the fact that they all registered as foreign businesses in order to duck U.S. taxes than their owners being money-grubbing jerks who prioritized profits over public health, I think we can all agree: Screw those guys.

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Friday roundup: Ex-D.C. mayor says his $534m Nats stadium expense was worth it, Clippers arena stymied by car trouble, MLS franchise fees to go even higher

Shouldn’t posting items more regularly during the week leave less news to round up on Fridays? I’m pretty sure that’s how it’s supposed to work, but here I am on Friday with even more browser tabs open than usual, and I’m sure someone is still going to complain that I left out, say, the latest on arena site discussions in Saskatoon. I guess lemme type really fast and see how many I can get through before my fingers fall off:

 

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Friday roundup: Red Wings owner touts his “passion” amid sea of parking lots, cities are terrible stadium negotiators, newspapers are terrible newspapers

The cryptocurrency-based journalism startup Civil couldn’t have gone much worse, but it did spawn a couple of successes, none more welcome than Hmm Daily, the news commentary site from former Gawker and Deadspin editor Tom Scocca. Or as I will always think of him, the co-founder of Funny Paper, the now virtually unfindable-on-the-internet weekly(ish) political analysis of daily comic strips that was the greatest such enterprise until the great Josh Fruhlinger elevated it to an even higher art form. I’ve been enjoying Scocca’s excellent columns on the militarization of language and how big a giant bee is for months now, but I didn’t feel compelled to bite the bullet and kick in any money until I spotted this photo caption in an article by Scocca’s Funny Paper co-conspirator Joe MacLeod: “I have no beef with the M&M’s homunculus infesting the menu.” If you know me at all from reading this website, you know that I immediately pulled out my wallet and became a paying Hmm Daily subscriber (at the $5 a month level, though the reward at the $50,000 level is truly amazing).

Anyways, on to the sports stadium and arena newses:

  • The District Detroit development around the new Red Wings arena still consists mostly of some state-subsidized parking lots, but Red Wings exec Christopher Ilitch says that’s okay because “Our timelines may change. Our passion, the energy, the way we feel about this community has not.” And truly, who can put a price on feels?
  • The Voice of OC cites “experts” as saying that Anaheim may not be driving a hard enough bargain with Los Angeles Angels owner Arte Moreno on a price for stadium parking lot development rights, and oh hey look, it’s me. Also Holy Cross economist Victor Matheson, who says, “Cities tend to be remarkably bad negotiators when it comes to professional sports,” which, yup.
  • Politifact Wisconsin did a fact-check on claims that the state of Wisconsin will get a “tremendous” payback on its Milwaukee Bucks arena subsidies and found that that’s only if you assume the Bucks would have moved without them, and assume that Bucks fans would have all stopped spending their money in Wisconsin without them, and assume that NBA salaries will quintuple by the 2040s, and further found that Villanova sports stadium researcher Rick Eckstein calls the revenue estimates “fantasy figures,” and concluded that this makes the claim Mostly True. It is just slightly possible that having staff members of the local newspaper that has a record of overarching credulity on the arena deal do fact-checking on it might not be the best idea.
  • The people trying to get an MLB franchise in Portland are running out of momentum as MLB waits for the Tampa Bay Rays and Oakland A’s to work out their stadium situations before considering expansion, but at least they got a meeting with MLB Commissioner Rob Manfred — no wait, the news report has corrected itself, they didn’t even get that. Well, at least they have weirdly non-Euclidean renderings.
  • Speaking of MLB expansion hopefuls, Montreal’s would-be neo-Expos owner Stephen Bronfman has a deal in place on land for a new stadium … not on buying the land, mind you, but with a developer to help develop the non-stadium part of the land once they buy it. This could be a while.
  • And speaking of the Rays and of terrible newspapers, the Tampa Bay Times’ John Romano wants to know when St. Petersburg and Tampa officials will stop bickering and get to work on throwing money at Rays owner Stuart Sternberg already?
  • The New York Times is a significantly less terrible newspaper, but a profile on A’s president Dave Kaval with the headline “Can This Man Keep the A’s in Oakland?” is not only pretty sycophantic in its own right, but it assumes a lot about the team owners moving without a new stadium when they’ve already gone a couple of decades demanding a new stadium and not getting one and still not moving.
  • Henderson, Nevada, is giving $10 million to the owners of the Vegas Golden Knights to build a practice rink, which is dumb but less dumb than some other cities’ expenses on similar projects.
  • The Arizona Coyotes are getting a new majority owner and the Phoenix Suns are up for sale, according to Sportsnet’s John Shannon, who added, “as one NHL official told me yesterday, when I asked that very question, I said, ‘Does this new owner mean that there’s an arena closer to fruition?’ And the answer was, if you get a new owner, there’s a better chance of a new arena. So you can put two and two together, Steve.” Then the Suns owners and a report in The Athletic on the Coyotes completely refuted what Shannon said, so maybe you’re better off putting two and two together without his help.
  • I was about to write up this news story about a potential rezoning approval for Austin F.C.‘s new stadium, but then I saw that KXAN managed to write “Austin’s Planing Commission” and “this ammendment” in the first three paragraphs, and now I gotta go cry all day about the death of copy editing, sorry.
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Wisconsin TV station reports “immense” Bucks arena windfall after talking only to guy who cut Bucks arena deal

And now for your periodic reminder in how to read a news article. First, the headline:

‘UPFRONT’ recap: Return on Fiserv Forum will be immense for state taxpayers

Seeing as this appears on the website of the Milwaukee TV station WISN, “UPFRONT” is likely some TV news program. Fiserv Forum is the name of the new Bucks arena. And “immense” means huge, so presumably WISN reporters took an independent look at the return on state spending on the arena and found a lot of money coming back. Or, you know, not:

Fiserv Forum, the new home of the Milwaukee Bucks, will return a “tremendous” amount of money to state taxpayers who helped fund it, said Scott Neitzel, the former administration secretary for Republican Gov. Scott Walker who helped craft the arena deal.

Yes, WISN left out the part where the immense return (actually the quote was “tremendous” but apparently they were trying to cut characters) is entirely according to the guy who negotiated the deal, and who now runs a consulting firm for local businesses, another tidbit that WISN left out. In fact, the entire report was based solely on a single interview with Neitzel, who asserts that the state of Wisconsin will take in $600 million in income taxes for its expenditure of $80 million in tax money. (Plus “the pride of now having a potential championship team here,” because apparently the Bucks owners would have traveled back in time to 2013 and not drafted Giannis Antetokounmpo if they hadn’t received the arena subsidy.)

This is actually something that has already been researched, and Neitzel’s claims, it turns out, are somewhere between overblown and completely fraudulent:

  • The state’s own earlier estimates were for $299 million in new income taxes over the next 20 years, not $600 million. Neitzel gave no explanation for the doubling of his projections.
  • $169 million of that $299 million would come from projected increases in NBA salaries over coming years, something that would only work out if average player salaries rise to $33 million a year.
  • Even that remaining $130 million in state tax receipts assumes that 1) the Bucks would have left without a new arena and 2) people who would have spent money on Bucks games would then take their money and spend it elsewhere. The latter of these has been shown by studies to be categorically untrue, though the presence of an NBA team can move some spending from the suburbs to the city — which benefits Wisconsin state tax coffers, needless to say, not at all, unless you’re luring tons of fans from across the Illinois border.

All of which leaves, well, who knows? But it’s certainly a lot less than a “tremendous” or “immense” windfall, as a call to any independent sports economist, or even a quick googling, would have confirmed. WISN, though, didn’t have time for that, so it was left to viewers to figure out for themselves whether Neitzel was telling the truth or some other thing. And really, isn’t that what journalism is all about?

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How rich are the Bucks and Brewers owners getting off public subsidies? Not as much as you’d think

Bruce Murphy of Urban Milwaukee has almost certainly spent more time looking into that city’s subsidies to the Bucks and Brewers than any other person alive, and this week, with the new Forbes MLB team value estimates out, he devoted his column to trying to figure out how much more rich those taxpayer dollars have made the teams’ owners:

Forbes estimates the value of the franchise is now $1.35 billion, up by $900 million since the team was purchased for $450 million in 2014. (The price was technically $550 million but previous owner Herb Kohl promised to pay $100 million of the team’s contribution to a new arena.)

That’s a stunning three-fold increase in the value of the franchise in just five years…

[Brewers] owner Mark Attanasio bought the teamfor $223 million in 2004, and the current value, according to Forbes, is now $1.175 billion. That’s a five-fold growth in value in 15 years. That increase has helped the team, which ranked last in value before Miller Park was built, jump to 25th in value, ahead of six franchises including those in bigger markets like Miami and Cleveland.

I’m sure you’ve already spotted the problem here: Sure, both the Bucks and Brewers are worth a lot more since getting new publicly subsidized homes, but how much of that is due to the buildings, and how much just to the fact that MLB and the NBA are rolling in money from things like cable TV and streaming video revenue?

Here’s Forbes’ estimates for Bucks team value and gross revenue over time:

As you can see, there’s certainly been a jump in both over the four years since the stadium was approved in 2015 — though, interestingly, the jump in value started the year before the arena was approved, and revenues began to take off well before the new arena opened last summer. Annoyingly, Forbes doesn’t offer charts for the average NBA team, but let’s take a look at a couple of other smallish-market NBA teams without new arenas for comparison. First, the Denver Nuggets:

And the Minnesota Timberwolves:

Those are about as close to identical charts as you’re going to see. And while they don’t prove that the new Bucks arena has been worthless to billionaire owners Marc Lasry and Wes Edens, it’s also pretty good evidence that most of their current basketball riches would have been achieved even if the team had kept playing at the Bradley Center.

Okay, how about the Brewers? The Forbes charts don’t go back to before Miller Park’s opening in 2001, but their archived team valuations at Rod Fort’s sports economics stats site do, so we can do similar value comparisons for small-market baseball teams that did and didn’t get new stadiums in that time period:

Milwaukee Brewers: $1.175b (2019), $167m (2000) (up 604%)

Baltimore Orioles value: $1.28b (2019), $347m (2000) (up 269%)

Colorado Rockies: $1.225b (2019), $305m (2000) (up 302%)

Cleveland Indians value: $1.15b (2019), $364m (2000) (up 216%)

Kansas City Royals value: $1.025b (2019), $122m (2000) (up 740%)

This looks a bit more promising for the Brewers owners (now not-quite-billionaire Mark Attanasio, then a fetid pile of hypocrisy in an ill-fitting suit), though it’s worth noting that the Royals owners did even better playing in a stadium that opened in 1973, though it did get a bunch of taxpayer-financed upgrades in 2009. (It’s also worth noting that the Orioles, Rockies, and Indians were in the midst of new-stadium honeymoon periods in 2000, so probably in a bit of a value bubble.) Mostly it’s an indication that the entirety of MLB is rolling in dough, and while having a new taxpayer-funded stadium can certainly put the cherry on top, it’s not going to make the difference between obscene wealth and merely PG-rated wealth.

So, wait, does this mean that new sports venues aren’t such a scam after all, because they’re not enriching greedy sports team owners? No, actually, it makes them worse: Greedy sports team owners, it turns out, are mostly just getting a slim trickle of new money thanks to the firehose of public spending — which makes sense, since the construction costs of new stadiums and arenas soak up most of that cash. Sports subsidies are not just a massive transfer of cash from public to private; they’re a massive taxpayer expense where much of the benefit just goes to construction companies, while the team owners who pulled off the schemes just collect a few dimes on the public dollar. It would be far more efficient, all things considered, for local governments to just pay team owners money to play in their cities, and skip the whole stadium-building part of it — but then, we’re seeing that now too, so I guess why limit yourself to one grift when you can run two?

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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:

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Friday roundup: SF doesn’t want Raiders, Spurs hate Tottenham, Rays outfielder says team has “no fan base” and should maybe move

It was a bit of a slow holiday week, but the news that there was made up for it by being extra-entertaining:

  • The Oakland Raiders played maybe their last game in Oakland, at least until the next time they move back to Oakland. (Hey, it’s happened before.) Still nobody has a clue where the team will play next year, but San Francisco officials are already gearing up to block any Raiders games at the Giants‘ AT&T Park, saying they don’t want to be “scabs” in the city of Oakland’s lawsuit against the Raiders for skipping town that prompted this game of stadium chicken in the first place. This is looking like a better and better option.
  • The New Jersey state legislature is preparing to help out the horse racing industry by providing $100 million over the next five years to goose winnings, which seems like exactly the opposite of how gambling is supposed to work.
  • Tottenham Hotspur still can’t get its new stadium open — the earliest possible date is now in February — but that’s not stopping team officials from griping that the surrounding neighborhood is too dirty to go alongside its fancy new stadium thanks to “litter and fly-tipping.” According to one borough memo, “When the question of all the extra cleaning needed was raised and who would fund it it was made very clear that it would not be paid for by Spurs.” The estimated cost of added street cleaning would be £8,000 per match; the team’s most recent annual profit was £58 million.
  • I love interactive fiction and have even written some myself, so I’m inclined to like this Arizona Republic article presenting the Suns arena showdown as a Choose Your Own Adventure book. But sadly its plot relies on some misconceptions — allowing the Suns owners to break their lease in 2022 doesn’t necessarily mean the team will leave, and if they do leave the city’s estimates of $130-180 million in renovations to keep it “competitive” for concerts may be overblown — so I won’t be voting for it for a XYZZY Award.
  • Some details have been released about plans for a Portland baseball stadium, but none of them involve how the stadium would be paid for or how much rent it would pay to its public landlords or even where a team would be obtained, so feel free to skip reading the full documents unless you’re really interested.
  • Tampa Bay Rays outfielder Tommy Pham was asked what he thought about playing in his new home city after being traded last year from St. Louis, and replied, “It sucks going from playing in front of a great fan base to a team with really no fan base at all.” Pham added, “Do I think something has to happen, whether it be a new ballpark, maybe a new city? I think so.” I am going out on a limb to guess that attendance will probably not be great next year on Tommy Pham Bobblehead Night.
  • The Milwaukee Bucks arena has been open for “several months” now, according to the Milwaukee Journal-Sentinel, which apparently can’t count to four, and the most important takeaways are that: 1) kids like candy, 2) grownups like cheese-covered sausages, 3) everybody likes taking selfies, 4) Bucks president Peter Feigin also likes candy, and 5) nobody actually wants to sit in that ridiculous Panorama Club. No reports back yet on the status of the magic basketball.
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Bucks owners blame NBA for move threat that they themselves probably concocted

After Pittsburgh Penguins owner Mario Lemieux threatened to move to Kansas City if he didn’t get a new arena, then got a new arena, he admitted that it was all just a bluff to shake down the city for public money. Which may not have been a great look, but it was belatedly honest, and had the benefit of making him look less like a carpetbagger (if more like an extortionist).

The Milwaukee Bucks just opened their new arena that was built with $505 million in public money obtained under threat of the team leaving, and team co-owner Wes Edens has forgone Lemieuxesque mea culpas in favor of doubling down on those threats — but, in a twist, saying it was never the team owners who wanted them to leave, it was the NBA:

“Either the team had to build a suitable venue that’s appropriate for the NBA or they had to move,” Edens told USA TODAY Sports.

When Lasry, Edens and ownership partners bought the Bucks for $550 million in 2014, the purchase agreement included a clause allowing the NBA to buy back the team for a potential relocation if the new owners didn’t get a formal arena construction plan in place.

That makes it sound like the NBA made the buyback clause a condition of the sale, which is certainly the way Edens and his fellow owner Mark Lasry painted it back in 2014. But it was almost certainly something that was negotiated by all parties as a way of shifting the blame, as I wrote at the time:

This is, frankly, totally brilliant, in an evil genius sort of way. The NBA would never forcibly seize a franchise without its owners’ consent, so rest assured that this whole buyback clause was arrived at with the full cooperation (if not at the behest of) Edens, Lasry, and Kohl. Now, though, Edens and Lasry are in a perfect position to play Good Cop: We want to stay in Milwaukee, but that mean old NBA will take our team and move it somewhere else if we don’t get a new arena, so you’d better make that happen or else Adam Silver will nail your head to the floor.

To my knowledge, no Wisconsin reporters have ever dug into whether the NBA move-threat clause was a conspiracy with the Bucks owners or not, which is a shame. It’s too late for Wisconsin residents to get their $505 million back, but it’s not too late to stop Edens and Lasry for shifting the blame on why it happened.

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NBA commissioner: The business of America is America’s sports business

The Milwaukee Bucks‘ new arena had a ribbon-cutting and open house this weekend, and there are lots and lots and lots of slideshows and quotes from Kareem Abdul-Jabbar online if you’re interested in that sort of thing, but I would like to focus on just one quote, from NBA commissioner Adam Silver:

“I have to say government works in Milwaukee.”

Yep, that’s what the leader of North America’s most self-consciously woke sports league had to say about an arena approval process that involved spending around half a billion dollars in public money over the objection of pretty much everybody in the city by employing the promise of a magic basketball while hoping nobody would notice that the otherwise virulently anti-tax governor’s fundraising chair was a co-owner of the team, then giving additional subsidies to a company that then turned around and used the cash to buy naming rights for the arena, money that will all go to the Bucks owners, not the public. But it all ended with government building an arena for Adam Silver’s business partners with somebody else’s money, and that’s what democracy is all about, right?

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In perfect synergy, Bucks arena to be named after another corporation that shook down Wisconsin for subsidies

The new Milwaukee Bucks arena got a naming-rights sponsor last week, which, yawn, if I reported on every deal like this I’d never have time to talk about anything else, and a whole lot of corporations would just get some free publicity. But as it turns out, this corporation, the extremely uncreatively named financial services company Fiserv, is dropping money on naming rights to a publicly subsidized arena right after getting $12.5 million in public subsidies of its own as part of the infamous Foxconn deal:

“It makes the Legislature look foolish,” said Sen. Jon Erpenbach (D-Middleton), who voted against the deal. “It makes the governor look foolish.”

People don’t understand why a company would need taxpayer subsidies for its headquarters when it has funds available to buy naming rights, Erpenbach said.

“Maybe the state can sell naming rights on that new (Fiserv) headquarters and get some of the money back,” Erpenbach said.

As with Citicorp getting naming rights to the New York Mets‘ stadium right after getting bailed out by the federal government, there’s no direct relationship here between the naming rights deal and the venue subsidies — it’s just a terrible look for a company to demand $12.5 million in state funds and then turn around and use it to buy ad signage on a building that’s already getting $450 million in public money, especially when the Bucks owners get all the proceeds from the naming-rights sale on the publicly owned building. It’s an even worse look that Fiserv got its subsidy after turning a $1.2 billion profit last year — but then, nobody’s claiming that companies are getting these deals because they need the cash; it’s just extortion exacted by threatening to leave the state. Damn you, Leonard Yaseen.

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