Oakland’s $1.3B stadium plan for Raiders: Get NFL to reject Vegas move, figure out details later

Finally, we have some details — sort of — for Oakland Mayor Libby Schaaf and former-NFL-player-turned-developer Ronnie Lott’s stadium plan to keep the Raiders in Oakland. And it looks like this:

  • $600 million from Lott’s investment group
  • $300 million from Raiders owner Mark Davis
  • $200 million in G-4 funding from the NFL
  • $200 million in “infrastructure” spending by the city of Oakland and Alameda County

That comes to $1.3 billion, and you can certainly build a respectable stadium for that. The unanswered question, though, is: Who would get the revenues from the place? The San Francisco Chronicle report indicates that the public money “would be repaid from revenue generated by the stadium project,” and further that “the city and county would share some percentage of non-football revenues at the stadium,” though that might be targeted for paying off the remaining $95 million in debt on the Oakland Coliseum’s 1990s expansion. And what about football revenues? Would Lott’s group want some of those (probably), or be content with proceeds from building a retail development project around the stadium (probably not, since they’d have to pay for that separately from their $600 million in stadium expenses)? Is there enough money in this whole thing that everyone could possibly be made whole? (I really doubt it, since there not being enough revenues to go around is what made the previous private developer’s plan crash and burn.)

All this isn’t really any more detailed that the rough sketch that had been floating around before Schaaf announced it last week, so it’s not really clear what she had to gain from—

The hope is that the show of support will be enough for the NFL owners to block the team’s move to Nevada and open the door to the locals talking directly with Davis, which he has refused to do as long as the Las Vegas deal is on the table.

Oh, right. So take this less as actual stadium plan, and more as “Hey, NFL owners who may be having second thoughts about this whole ‘put a team in Vegas and hope that tourists buy season tickets thing,’ don’t listen to Davis when he says Oakland doesn’t care about him, we’re giving you an out if you want to vote no!” Given that NFL owner votes are known to be swung by ridiculous things, it’s not the worst gambit, really.

County official proposes diverting one-third of tourist dollars to build Cavs a glass wall

It’s been almost eight months since the Cleveland Cavaliers asked for a $140 million expansion of their arena to add more public space and give it a glass exterior wall, and Cuyahoga County Executive Armond Budish said, “Let me get half of that for you.” Now, Budish thinks he may have found some of the money, asking the local tourism agency to use hotel tax money to pay for the Cavs’ renovations.

Destination Cleveland collects about $15 million a year in hotel taxes, and paying off $70 million in Cavs expenses would cost about $4-5 million a year, so this would clearly be a hefty chunk of change, unless Budish has other revenue sources in mind as well. The Cavs are already getting a cut of the alcohol-and-cigarette-tax extension that county voters approved back in 2014 — Budish recently proposed splitting the proceeds evenly among the Cavs, Indians, and Browns, as nobody bothered to work that out beforehand — and since that amounts to about $170 million in total present value, Cavs owner Dan Gilbert is effectively asking for $70 million on top of the $60 million he just got two years ago for renovations. But really, who can put a price on the enjoyment that local sports fans get from a glass wall?

Stadiums now just big-ass billboards and public subsidy generating machines, face it

Today in sports teams sell ad rights for lots and lots of money:

The [Atlanta] Falcons organization has sold corporate sponsorships at Mercedes-Benz Stadium totaling more than $900 million in contractually obligated long-term revenue, SportsBusiness Journal reports in this week’s edition.

That’s $900 million over several decades, so not really worth $900 million toward today’s construction costs. Still, it should go a long way toward helping pay off the Falcons$1.6 billion stadium, especially when the team is already getting tax money worth nearly $700 million.

Also today in sports teams sell ad rights for lots and lots of money:

The Minnesota Timberwolves and Lynx named five new “founding partners” on Monday who will help pay for the $130 million renovation of Target Center now underway…

In exchange for its sponsorship, each founding partner will receive a customized package with the two teams. Each package will offer a yet-to-be disclosed “physical presence” inside the arena, plus outdoor and indoor digital signage and category exclusivity.

That Minneapolis Star Tribune article doesn’t mention it, but the Target Center renovation also got $48 million in public funds.

These are only two data points, obviously, but they do help explain why team owners are so eager to build new facilities despite tons of evidence that they don’t bring in all that much more money in actual arena revenues. New sports venues aren’t just new sports venues — they’re also new billboards, and corporations are more willing to throw money at slapping their names on a fresh canvas than on one that’s been written on already a bunch of times, even if it’s dubious whether there’s any real business value.

Plus, of course, it’s way easier to ask for public money for new (or renovated) buildings than it is to just ask for straight taxpayer handouts because you want to boost your profits. When future alien anthropologists try to puzzle out why we spent so much of our time building and then tearing down places to watch mass sporting spectacles, it’ll be fun to see how many tries it takes before they arrive at “it was the best way to separate people from their wallets.”

Minnesota officials defend free suites for Vikings games as needed to conduct, uh, “business”

Here we go again: The Minneapolis Star Tribune revealed yesterday that board members of the state-run Minnesota Sports Facilities Authority get use of two free luxury suites to Vikings games as part of the deal that approved more than a billion dollars in public stadium subsidies. That’s fairly common, as is outrage over the impropriety of such deals once they’re revealed.

The twist in the Minneapolis case is that even though the suites are supposed to be used for business purposes (wink, wink), nobody on the MSFA will say who’s using the tickets (and free food and parking passes), and insist that secrecy is vital to the cause of conducting government business at football games:

MSFA Chairwoman Michele Kelm-Helgen and Executive Director Ted Mondale say confidentiality is critical as they seek to book the stadium’s event spaces to cover the cost of amateur events such as high school football, baseball and soccer games, along with University of Minnesota baseball games.

“If people think they’re going to be in the newspaper, it’s not going to be effective,” Mondale said.

Or it could be because they’re bringing family members and campaign donors to games, in violation of the state’s ban on public officials accepting gifts outside of their government duties. Who can say! That’s what makes secrecy so fun!

The big question here, obviously, is whether there was some sort of quid pro quo that induced state officials to approve the stadium funding by offering them free tickets to games. Probably not directly — the people on the MSFA board aren’t the same legislators who voted to approve the deal back in 2012. But lots of stuff happens indirectly in politics, which is why there are laws against taking gifts. Plus it just looks really, really bad when taxpayers are paying the bills on a $1-billion-plus stadium plus PSL fees and higher ticket prices, and state bigwigs are getting to watch games for free.

(Also, obligatory note: Ha ha, Ted Mondale thinks people still read the newspaper! He’s so quaint.)

Sportswriter with history of citing unsourced rumors says Chargers are moving to L.A., maybe

CBS Sports’ Jason La Canfora, who two weeks ago wrote that San Diego Chargers owner Dean Spanos had little choice but to share digs with the Los Angeles Rams in Inglewood now that his request for $1.1 billion in public funds for a new stadium-convention center complex was crushed at the polls, is doubling down on that assertion, saying talks between the two teams are continuing to “improve in tenor.” His source? “League sources.”

La Canfora has a bit of a track record now of making anonymously sources predictions on NFL stadium deals, so let’s see how well he’s done in the past:

  • October 2012: NFL would rather have stadium built at Dodger Stadium than either City of Industry or the downtown “Farmers Field” site. Verdict: Hard to say, as none of the three sites ended up being approved.
  • September 2015: NFL owners can’t agree on whether to approve the Inglewood or Carson stadium plans. Verdict: Maybe at the time, though they did end up coming to an agreement just four months later.
  • October 2015: Rams owner Stan Kroenke would be willing to share his Inglewood stadium with another team. Verdict: True! Though how willing, we’re still waiting to see.
  • October 2015: St. Louis could come up with a stadium plan good enough to keep the league from approving a Rams move, but not so good that Kroenke wouldn’t refuse to take it and then move somewhere else, like maybe London. Verdict: Yeah, that didn’t happen.
  • December 2015: If denied the chance to move to L.A., Kroenke could sell the Rams to someone in St. Louis and buy the Denver Broncos instead. Verdict: We’ll never know.

Add it all up, and you get a reporter with lots of insider league contacts, and the willingness to run with any rumor that they’re telling him. Which doesn’t make the rumors wrong, necessarily, but it also doesn’t give them much predictive power.

So while it’s probably true that somebody has heard that the Spanos-Kroenke talks are going well, or at least proceeding apace, that doesn’t tell us much about whether they’ll actually come to an agreement. Or about La Canfora’s other predictions (similarly cited to “sources”) that there’s a “strong chance” the league could reduce the Chargers’ relocation fee (from what, he didn’t say) and that the Chargers “continue to investigate possibly” playing at the Los Angeles Galaxy‘s StubHub Center in Carson for two years while waiting for the Inglewood stadium to be built. La Canfora also said that Spanos asking for an extension on his January deadline to make a decision on an L.A. move “is not expected,” which is as close to a solid prediction as he gets in this article — mark it down, and we can add it to his scorecard in another few weeks.

Santa Clara declares 49ers in breach of lease, threatens to seize stadium three days before Xmas

The city of Santa Clara’s showdown with the San Francisco 49ers over handing over budget documents to show who’s spending what on running the place got kicked up a notch before Thanksgiving, with the city council voting to find the team in violation of its lease, a move that could lead the city to seize operational control of the stadium if the Niners owners don’t cough up the documents by December 22:

“We hired ManCo. They work for us. They don’t get to decide what is withheld from the owners of the stadium,” [Santa Clara Mayor Lisa] Gillmor said. “How do we know we are managing this public asset in the proper manner if we cannot get the documents from the management company that we hired to manage the stadium?”

Representatives for the 49ers countered that the team has been giving the city regular reports and has lived up to its end of the deal. They said the team is withholding information in two areas it considers confidential: security plans and financial information related to non-NFL events.

Making security information available would put the public at risk, while disclosing the details of the non-NFL events would damage ManCo’s ability to effectively negotiate with promoters such as LiveNation and AEG Live, the team says.

This is a weird dispute to crop up just two years into a team’s move to a new city, needless to say, though Gillmor and friends have a point that it’s hard to determine revenue-sharing shares when your partner won’t fess up to what their total revenues are. That it’s coming up now seems to come down to a bunch of factors: new city officials elected since the stadium project was approved who are less starry-eyed about the arrival of the NFL; a crappily written lease that didn’t specify what documents the 49ers would turn over or how the city would audit their finances; and a team that’s so dismal on the field that even 49ers fans are probably happy (or indifferent) enough for the city to take them to task. (“The 49ers are broken all around the place,” resident Dorothy Rosa told last week’s council hearing. “They don’t know how to run a football team. They don’t know how to run anything.”)

And speaking of the Niners’ on-field woes, the terrible team continues to be terrible news for people who bought the high-priced personal seat licenses that helped fund the new Santa Clara stadium, only to find themselves forced to choose between paying through the nose for near-worthless tickets every year or unloading their PSLs at a huge loss:

[Tom] Addison wanted out after the 2015 season. He wanted to sell what the team called his Stadium Builder Licenses so he did not have to keep spending $5,000 annually for four season tickets in the corner of an end zone, a requirement to maintain the licenses.

He was able to sell all four on the secondary market, but at $2,000 apiece after dropping his asking price, and recouped only $8,000 of the original $20,000 investment. The alternative would have been walking away from the licenses and getting none of the money back.

“I was relieved to get rid of them,” Addison said in the dining room of his Burlingame home. “I was so happy when the guy wanted to buy all four. I was happy to get out.”

Which, you know, there’s that thing that P.T. Barnum never said about suckers — plus, about half of the PSLs were bought up by ticket brokers, who will just write this off as a bad bet. Still, with things so bad that 6% of all PSL holders have just defaulted on their annual payments and walked away with nothing rather than have to keep plunking down money for tickets every year, you have to wonder how eager, say, Los Angeles Rams fans will be to put down cash for PSLs once those go on sale next year.

Oakland mayor announces that Raiders stadium plan framework concept is mumble mumble something

Oakland Mayor Libby Schaaf announced a thing yesterday:

The mayor of Oakland announced that the city has reached a framework agreement with the Ronnie Lott group for a new stadium, with the hopes of keeping the Raiders in Oakland.

“It is exciting that we have reached a conceptual framework agreement with the Lott group,” said Mayor Libby Schaaf.

So what exactly would that be, a “framework agreement” with a developer to build a stadium for a football team that isn’t actually party to the agreement? Schaaf’s office hasn’t actually announced anything — and her press spokesperson didn’t respond to my queries — but NBC Bay Area’s Ray Ratto sums up the state of things as follows:

That stadium is considered by most experts, including Oakland mayor Libby Schaaf, to run in the neighborhood of $1 billion, with the city and county’s contribution limited to infrastructure improvements that are loosely estimated now at around $190 million, to be generated by some new tax or taxes as opposed to access to the general fund.

So: The city and county will put in maybe $190 million for infrastructure, which it will get from somewhere, while the developers will put in $1 billion, which it will earn back by charging the Raiders something. Or maybe getting an equity stake in the team. None of which has been worked out yet with team owner Mark Davis.

Maybe someone on the board of supervisors or city council, who would have to vote on this, can shed some light?

Alameda supervisors discussed the proposed deal behind closed doors Tuesday morning, but Supervisor Scott Haggerty, the president of the board, downplayed Schaaf’s comments that the county was close to voting on Lott’s proposal. Haggerty said the city has not released information supervisors have requested. He would not say what that information was.

Well, then. Maybe Schaaf and Lott have actually agreed on something, but if so, they aren’t saying what it is, and even then, it may not matter unless Davis agrees to have the Raiders play there. She got her name in the paper under “getting things done” headlines, though, so I suppose that’s a short holiday work week well spent if you’re a mayor.

Chargers owner’s only choice is to bunk with Rams in L.A. (or not)

Jason La Canfora of CBS Sports says San Diego Chargers owner Dean Spanos has little choice but to move to Los Angeles now that a stadium subsidy initiative was soundly defeated at the polls. But then he quotes an NFL insider of saying … not completely the opposite, but pretty close:

“If Dean stays, it’s not because he thinks he can get a stadium in San Diego,” one ownership source said. “It’s just because he doesn’t want to take the deal in Inglewood.”

That was always the case, no? Los Angeles is bigger and wealthier than San Diego, and will soon have a newer stadium. But it will also be a stadium that will come with a whole lot of construction debt, and Los Angeles Rams owner Stan Kroenke is going to want to make that back by charging oodles of rent to any team that wants to bunk with him. So Spanos’s decision all along has been whether to take the deal that Kroenke is offering him, or to take whatever he has going for him in San Diego — and while “being the sole team in an old stadium” won’t be as lucrative as “being the sole team in a new stadium that the public would mostly pay for,” it’s still the same general calculus.

Will the Chargers move to L.A.? We can’t tell without knowing what offer Kroenke has on the table, and how much haggling he’s willing to do to ensure that he has a renter. No doubt this will all get worked out by the January deadline — or will get worked out as far as Kroenke and Spanos deciding they want an extension on that deadline — but as for how it all ends, your guess is as good as mine.

Rangers owners get $500m to tear down 22-year-old stadium for lacking a/c, oh democracy

So in those other election results:

With 100 percent of precincts reporting, the [San Diego] Chargers received only 43 percent approval on Measure C, the team’s $1.8 billion downtown stadium and convention center annex that proposed raising hotel taxes from 12.5 percent to 16.5 percent to secure $1.15 billion in bonds to help pay for the project.

We already pretty much knew that was going to happen: That the Chargers stadium plan fell so far short was a slight surprise, but it never had any hope of getting close to the required two-thirds majority, and even 50% was probably out of reach. So anyway, what about the other stadium vote, the one whose outcome was still in doubt?

On Tuesday, voters in Arlington, Texas, approved a measure to contribute up to $500 million toward the cost of a new ballpark for the Texas Rangers. … The ballot measure passed by a margin of 60 percent yes to 40 percent no.

That’s also to be expected, once you take into account that the pro side (i.e., mostly the Texas Rangers owners) was outspending the anti side (a handful of volunteer activists) by more than 200-to-1, and anything over a 100-to-1 margin usually guarantees a victory. Still, as of just a few days ago it looked like a toss-up, and … nah, nobody wins against that kind of spending firepower, especially not in Texas.

So Chargers owner Dean Spanos will now be deciding whether to accept a lease from Los Angeles Rams owner Stan Kroenke to be tenants in Inglewood, or whether to try to fight an uphill battle to somehow get stadium subsidies in San Diego. (Or to stay in San Diego without subsidies HA HA HA HA just kidding.) And Texas Rangers owners Ray Davis and Bob Simpson will be getting a half-billion-dollar check from Arlington taxpayers so they can tear down a 22-year-old stadium because it doesn’t have air-conditioning. The American experiment is going great.

Dolphins revenues soaring after stadium redo, if you have a lenient definition of “soaring”

Another weird article, from today’s Miami Herald:

Revenues at the stadium now known as Hard Rock were up 11 percent in the 2015 fiscal year, a sign that [Miami Dolphins owner Stephen] Ross’ half-billion dollar investment is already paying dividends.

That’s according to Fitch Ratings, a Big Three credit rating agency that recently announced that it has affirmed South Florida Stadium LLC’s BBB (“investment grade”) credit rating.

That’s potentially really interesting, since one of the big questions in stadium finance debates is how much new revenue a team can actually collect from a new or renovated stadium. Much of the Dolphins’ stadium renovations — new seating, upgraded suites, and new concessions facilities — were completed in time for the 2015 season, even if the new roof canopy wasn’t ready until this season, so let’s project out an 11% revenue increase and see what that means in actual dollars. Yo, Forbes, what do you have for annual Dolphins revenues?screen-shot-2016-11-07-at-9-54-05-amTeam revenues had been going up $5-10 million a year in prior years, but that’s still a sizable jump of $78 million in a two-year span, which would be more than enough to make the payments on Ross’s $350 million stadium renovation cost, especially when more than half of that is really being paid by the NFL. Why, if Ross hadn’t rebuilt his stadium, he’d be muddling along like — who’s next on the Forbes list, the Green Bay Packers? Let’s check them out:

screen-shot-2016-11-07-at-10-00-51-amHuh. What about a team toward the bottom of the revenue barrel, like the Oakland Raiders?

screen-shot-2016-11-07-at-10-02-54-amYou see the problem here? Every NFL team is doing dramatically better the last couple of years, thanks largely to the league’s lucrative new TV deals. Forbes doesn’t break down stadium revenue vs. overall revenue, unfortunately, but it’s clear that even if the Dolphins are seeing an 11% jump in venue revenue, that’s a drop in the bucket compared to those annual TV checks.

None of which is to say that Ross shouldn’t have done the renovations, or that they’re not nicer for fans, or even that we should care one way or the other what Ross does with his own money, and the NFL’s. (Well, we can still care about whether the renovations are nicer for fans.) But this is another data point in favor of “new or renovated stadiums have a more modest impact on fan spending than you might think,” which is a lesson that everyone needs to remember when talk starts up of a team owner’s “need” for a new stadium.