Oakland mayor on Raiders stadium: We’ve got better things to do with our money

Add another mayor to the growing list of those speaking out against throwing public money at local sports teams without, like, a good reason:

“That money we’re paying now is general-fund money we could spend on police, parks or libraries,” said Oakland Mayor Libby Schaaf, who has said she cannot support spending a dime of public funds for a new stadium.

This is the strongest statement that Schaaf has made to date against subsidizing a Raiders stadium plan — back when first elected in January she said the Raiders and A’s should be asked to bid for the land they both want — and while it provides plenty of wiggle room (is public land the same as public funds?) it’s certainly a strong indication that she, like Anaheim’s Tom Tait, Minneapolis’s Betsy Hodges, and Calgary’s Naheed Nenshi, doesn’t see a political downside to standing up to local sports owners’ subsidy demands. Which is probably accurate, at least if you’re going by mayors being punished at the ballot box (being punished at fundraising time is another story), but there does definitely seem to be a mini-trend going on here. Will be very interesting to see if it spreads, not to mention how hard a line the Gang of Four are willing to take if teams start busing in commissioners to threaten that they’ll move — though the Raiders are already there and Schaaf doesn’t seem overly concerned.

Commissioners gotta commissioner: Silver says “upgrades” needed for Cleveland to host NBA All-Star Game

Hey look, everybody, a sports league commissioner has used the promise of a major sporting event as a carrot to demand arena and/or stadium upgrades! That’s surely never happened before!

NBA Commissioner Adam Silver said the only thing that would prevent the city of Cleveland from hosting an NBA All-Star game is failing to make improvements to Quicken Loans Arena.

“They’ve expressed interest in it and we’re waiting for them to get the additional work done on the building,” Silver told Northeast Ohio Media Group during Game 2 of the Eastern Conference Finals…

“It really comes down to when are the upgrades going to made to the arena,” Silver reiterated.

Cavaliers owner Dan Gilbert has been asking for public money to upgrade the team’s 21-year-old arena, because the public money he got last year at this time wasn’t enough, or something. So Silver just did him a favor by delivering a promise, or a threat, or a promise-threat, in the hopes that Cleveland officials will get all exciting about the possibility of an NBA All-Star Game without checking to see whether other host cities have actually benefitted from them one bit. Because that’s what commissioners do.

In totally unrelated news, the NFL has said that it will maybe consider holding the 2020 Super Bowl in Los Angeles, if there’s a stadium and a team in place there by then. Must be nice to be the kid with the new car everyone wants to ride in.

Are NFL stadium subsidies really falling? Here’s a chart that won’t help answer that at all!

The San Diego Union-Tribune (officially re-rebranded as of last week, though its domain name hasn’t caught up yet) has been running lots of lots of news articles about the Chargers stadium plan, too many to take in all at once. Let’s find a promising one: How about Saturday’s “Why the Chargers need cash to stay,” which promises to explain the reasons that San Diego citizens should be putting up between $650 million and $ 1.15 billion when the team is willing to build a stadium in Carson for far less in subsidies? Let’s begin:

When it comes to financing new NFL stadiums, think of the Great Recession as halftime in a one-sided football game poised for a big shift in momentum.

I’m sorry, my brain just broke. Enough with the forced sports metaphors, people!

The upshot of the article appears to be that until 2006, the public spent a lot of money on NFL stadiums, but “since 2010, when the New York Jets and Giants built their own new stadium, the trend has clearly moved toward more hefty private contributions.”

Really? The chart that the U-T includes with its article indeed shows several stadiums with larger private costs in recent years (Dallas, New York, Atlanta, Miami, Santa Clara):

stadiumpriceonline-01_t837But that’s a bit misleading: Atlanta’s public cost is listed at $200 million rather than the $554 million that is more accurate, and Dolphins owner Stephen Ross is getting around $100 million in public subsidies toward his own stadium work, which isn’t even a new stadium at all, just a renovation. Take that away and the main trend is that NFL stadiums have gotten way more expensive, and team owners have largely covered that additional cost, while public expenses have remained pretty consistent.

And why have costs soared? The U-T notes that “owners now want the biggest and best so they can command even higher premiums from well-heeled fans and corporations,” while economist Victor Matheson credits this to “stadium envy.” It’s unclear whether this means owners are earning their money back on more expensive stadiums (in bigger markets, at least) or just trying to keep up with the Joneses, but that’s okay, because it genuinely is unclear which is the case, especially for stadiums that haven’t opened yet.

The U-T’s conclusion, meanwhile, is that cities aren’t throwing money at NFL teams anymore, but that’s because only big cities are building NFL stadiums, so San Diego still needs to throw money at its team. That’s pretty much wrong on all counts (Atlanta and Minneapolis are big cities?), but it’s right enough in a couple of cases (New York, Santa Clara) that it’s good enough for newspaper work, and ducks asking questions about whether the proposed public expense for a Chargers stadium is either worth it or necessary to keep the team in town, or just a number that a bunch of local CEOs picked out of a hat in hopes it would make the team owners happy. But there are lots more U-T articles out there to be written — why look, here’s one on how a public vote is needed to prevent the “threat” of a referendum drive that could “stall” the stadium campaign — so I’m sure they’ll get around to the actual finances of the financial plan eventually.

Chargers owner on $650m+ stadium subsidy offer: “Haven’t read it yet, is it good?”

If you’ve read the San Diego Citizens’ Stadium Advisory Group’s proposal for a new Chargers stadium, that puts you one up on Chargers owner Dean Spanos, who apparently hasn’t had time to actually read about how much money the task force is offering to throw at him, because it’s 42 pages and he’s busy, guys:

“I have not seen the actual report,” Chargers chairman Dean Spanos said Wednesday before departing the league’s two-day owners meetings here. “I’m going back today, and I’m going to look at it this afternoon.”…

“I think they submitted some sort of framework of a potential financing plan,” Spanos said of CSAG. “That’s what we’re going to take a look at this week … I’ve always said, and I maintain the fact we want to stay in San Diego. We’re committed to keep trying to see if there is a viable solution. It has now come down to a financing plan, so I am anxious to see what the city puts forth.”

Now, there are several possible explanations here. One is that Spanos was just so busy with the NFL owners meetings (new extra point rules, everybody!) that he didn’t have time to read anything. Another is that he’s read it and still has too many questions — about all those details “to be negotiated,” perhaps — that he doesn’t want to comment just yet. Or he’s waiting to talk to financial people who can tell him exactly how much money he’d get out of the deal. Or he’s sick of this whole thing and wants his sons to be the ones to answer questions from now on.

Whichever it is, it’s slightly weird for the owner of an NFL team isn’t responding to an offer of possibly close to a billion dollars in subsidies that he’s been waiting on for months. But not any weirder than an NFL owner not picking up the phone to listen to stadium subsidy offers. This whole L.A. move threat game is all a complex stew of gamesmanship and personal idiosyncrasies, so it’s probably best not to read too much into anything, at least not until Spanos has decided whether the in-flight movie is more interesting than the stadium proposal that could determine the fate of his team and his bank balance.

San Diego stadium plan could include half billion dollars in hidden subsidies, depending on fine print

Yesterday I got a lot of questions from newspaper and radio reporters (including one who introduced himself as from the “San Diego Union-Tribune” — I congratulated him profusely on the restoration of their rightful name) about the new $647 million Chargers stadium subsidy plan and whether there were any hidden risks for the city. I mostly replied that $647 million is a plenty big risk in itself, but now the Voice of San Diego thinks it’s found as much as another $352 million in additional subsidies:

  • $217 million to $327 million in future operations and maintenance costs, based on estimates that running Qualcomm Stadium costs the city between $7.2 million and $10.9 million a year. “It’s a significant issue,” Erik Bruvold of the National University System Institute for Policy Research told VoSD. “That’s another general fund subsidy.”
  • $20 million to $25 million for a new park on the stadium site, which would be paid for with “potentially state and federal funding,” according to Citizens Stadium Advisory Group member Mary Lydon.

Now, there’s no doubt that maintenance and operations costs are a huge hidden cost of stadiums — and new ones, with more moving parts that can break, typically run even more to maintain. The question now is, is this something the city would really be on the hook for, on top of that initial $647 million in cash and land? Let’s look at the proposal itself:

To pay for the proposed stadium, parking, stadium-related infrastructure and operations and maintenance, CSAG’s financing plan includes 60 acres of land from the City of San Diego valued at $180 million, and more than a dozen funding sources that exceed $1.4 billion

So the implication there is that future operations and maintenance costs would be covered by the initial $1.4 billion, which includes the $647 million from the city and the rest from the team (assuming you count things like NFL funding and naming-rights revenue as “from the team”).

Anything else?

The City, County and Chargers should share the costs of operations and maintenance. These costs will rise over time so payments should be indexed to inflation.

Now, “share” is an incredibly nebulous word — 90% team and 10% city is a share, and so is 10% team and 90% city. What appears to be going on is that the task force has estimated $1.154 billion as the cost of a stadium plus related infrastructure, coming up with $1.4 billion in revenues, and hoping that the difference will be enough to fund future operations and maintenance costs. (Here “share” would mean “paid for out of the big pot of money that both the Chargers and the city are throwing cash into.”) That’s certainly conceivable — the remainder would be $246 million, which is toward the low end of VoSD’s estimates — but it’s more than a bit worrisome that the task force report never actually spells out how much it’s actually budgeting for maintenance and operations, not to mention that elsewhere it proposes using a chunk of this excess money to pay off Qualcomm’s remaining $52 million in debt.

Plus, under the heading of “creating revenue streams to help the City and County recoup capital costs and pay for operations and maintenance,” there are additional subsidies not mentioned in the first $657 million, including $116 million for an “Enhanced Infrastructure Financing District (a TIF by any other name) and $40 million in hotel taxes from a potential new hotel. And again, the task force appears to be double-dipping here, as elsewhere this money is designated for infrastructure for the hotel and other development, not for stadium operations.

So depending on what exactly the plan means — and it’s worth noting that the whole maintenance and operations piece is listed under “Recommended terms for negotiations with the Chargers,” which makes it even less set in stone than the rest of the proposal — we could be looking at anywhere from $647 million to $1.155 billion in public subsidies for this deal. That’s an awfully wide range, and no doubt one reason why NFL commissioner Roger Goodell responded with a “let me get back to you on that” when asked what he thought of the proposal. Though he could also have realistically gone with “Somewhere between $600 million and over a billion dollars in free taxpayer money? Mmm, yeah, that’s why I got into this business.”

Chargers and Raiders buy Carson land, NFL presses San Diego to hurry up with its stadium offer

NFL VP for stadium extortion Eric Grubman hasn’t read the whole Citizens Stadium Advisory Group proposal for a San Diego Chargers stadium yet — it’s 42 pages! and there’s good stuff on TV on Tuesdays! — but he knows what he doesn’t like about it:

“I don’t think they made a specific proposal that includes all the key elements of how they get entitled and so forth and so on. So first of all, I haven’t dug into it. And second of all, I don’t know what the timing of that proposal could be.”

What Grubman seems to be saying is “Nice $647 million in land and cash you’re offering, but hurry up and tell us that you can get it all done by next January, or else we could let the team move to Carson, you know.” Not that the NFL would necessarily do that, but threatening to do that they would totally do.

And speaking of Carson, the Chargers and Oakland Raiders owners and the city’s joint powers authority closed on buying the land for a proposed stadium there yesterday, for an undisclosed sum, setting off a round of “Omigod they’re really building a stadium in Carson!” Which this doesn’t necessarily indicate — the city of Carson gets most of the land, and would keep it for some other development if the stadium doesn’t happen — but it does indicate the teams are serious enough to spend a few million dollars in hopes of advancing the three-city stadium game of chicken a bit further.

San Diego stadium task force proposes throwing $647m at Chargers to see if that’ll make them stay

Saving the best, or at least the most complex, for last this morning: The San Diego Citizens Stadium Advisory Group, which is accurately named so long as your definition of “citizens” is “CEOs,” announced its Chargers stadium funding plan yesterday. And it looks like this:

CFT2Dn7VEAAyI4DOh, sorry, that’s not the financial plan — that’s the rendering of what the stadium would look like, as lit by an unearthly glow and permanent fireworks. What you wanted to see was this:

CFUHu8OUkAAZP7xThat’s slightly less misleading than the stadium rendering, but it still has some problems. First off, the math-inclined will note that the numbers on the left only add up to $1.24 billion, while the bar on the right claims $1.4 billion in funding. Let’s look at the actual plan, shall we, and try to figure this out?

The actual breakdown, according to the chart on page 12:

  • Cash from Chargers owners: $300m
  • NFL G-4 fund: $200m
  • Present value of $7m in annual payments from city: $121m
  • Present value of $7m in annual payments from county: $121m
  • Half of proceeds from personal seat licenses (the Chargers would get the other half): $60m
  • Present value of $10m in annual rent payments from Chargers: $173m
  • Present value of $1.25m in annual rent payments from SDSU: $21.6m
  • Present value of $1.25m in annual rent payments from bowl games: $21.6m
  • Proceeds from sale of 75 acres of city land: $225m
  • Present value of $4.75m in annual ticket taxes: $84.7m
  • Present value of $1.5m in annual parking fees: $26m
  • “Additional funding sources stadium is expected to generate”: $50m

In addition, the city of San Diego would kick in $180 million worth of free city-owned land for the stadium itself.

So what does this add up to in actual public cost? The $242 million in cash from the city’s and county’s general funds, obviously, which no one is saying how they’d be repaid. (The group’s report oddly states that the plan “does not include any new City general fund dollars,” but I think that just means “it does not require any new taxes to feed the general fund, since those would require a public vote, so we’ll just find $7 million a year of something else to cut.”) Plus the $405 million worth of public land that would be thrown into the pot, part of it sold off with all the proceeds given to the Chargers, part of just handed over for free for the stadium.

That puts us at a whopping $647 million worth of subsidies that San Diego’s business leaders are proposing to keep Chargers owner Dean Spanos from heading up the road to Carson — and that’s before we even get into the question of whether the new San Diego stadium would be exempt from property taxes, something that isn’t discussed in the report. (No, the city-owned land doesn’t pay property taxes now, but if the city sold it to a private developer, it very well could in the future.) That’s an awful lot of money to spend when you don’t even know if the other option on the table is a bluff, and makes one wonder if San Diego might do better by letting the Chargers leave, developing the current stadium land and keeping the proceeds for its general fund, and maybe even setting aside a hundred million dollars or so for gas vouchers so Chargers fans don’t mind driving a couple of hours each way on Sundays to see their team play.

U-T San Diego, naturally, says the CSAG report “scores” because a stadium “appears doable now.” And all it took was $647 million. See, some problems can be solved by throwing money at them!

Indiana to give Goldman Sachs $71m in Colts bond refinancing, that sure sounds bad, don’t it?

You know, if can’t count on the business press to give us full information about obscure financial instruments, who can we count on? BloombergBusiness reports that:

The Indiana Finance Authority, which borrowed for the home stadium of the Indianapolis Colts National Football League team, is paying about $71 million to Goldman Sachs Group Inc. to end an interest-rate swap as part of a bond sale to refinance debt.

That sounds bad — and it is bad, because it means Indiana made a lousy bet when it agreed to an interest-rate swap in financing the Colts stadium in the first place. But is this really an extra $71 million coming out of the pockets of Indiana taxpayers? The new fixed-rate bonds are at an awfully low rate, so you’d need to weigh that $71 million lump-sum cost against the savings from not having to pay higher interest rates in the future, and then compare it to the projected bond costs when the deal was first agreed to, and … no matter how far I scroll down in this Bloomberg article, it’s not going to tell me any of this, is it? Sigh. Suffice to say that this could be a good thing, or a bad thing, or making the best of a bad thing that was done years back — the only sure thing is that Goldman Sachs is getting paid, which is always the only sure thing.

One San Diego news outlet not asking hard questions about Chargers deal, guess which one!

You want to know the difference between a news site that’s trying to do good hard reporting on a stadium proposal, and one that’s just trying to find ways to get a deal done? Here’s the Voice of San Diego on the imminent San Diego city plan for a new Chargers stadium:

These are 10 big questions we’ll be looking for the task force’s plan to answer… How much public money? … Where’s the public money coming from? … What kind of public money is it? … What’s the city budget on the hook for? … How much development? … Where’s the private money coming from and who’s getting it? … Who’s responsible for the stadium’s upkeep and who gets the money from its events? …What’s in the fine print? … Are we having a vote? When? … What are we giving up by building a stadium?

All excellent questions, and the VoSD piece goes into detail about how they should be answered. Now, what’s the story over at the still-not-yet-rebranded U-T San Diego?

It’s hard to imagine any viable plan that doesn’t involve public money, so it’s a good time to review how taxpayers might be involved.

The UTSD goes on to propose three different funding schemes — hotel and rental car taxes, a broad tax hike on San Diego residents, or kicking back money from property and sales taxes from new development adjacent to a stadium site — without ever once estimating how much any of this would cost or whether it would be worth it to taxpayers. Clearly somebody needs to be reading the Voice of San Diego more.

Oakland’s stadium plan for Raiders declared to be “gurgling blood,” now what?

The San Francisco Chronicle’s Matier and Ross have a paywalled article up about the Oakland Raiders‘ proposed Oakland stadium deal, but you can pretty much get the gist from the first, unpaywalled paragraph:

The deal to build the Raiders a new stadium in Oakland “is gurgling blood” — the only question being when it’s going to be declared dead, according to one Coliseum official close to the talks.

This is not at all a surprise, given that Raiders owner Mark Davis has been looking for something like $670 million worth of free land and infrastructure, and Oakland’s current elected officials haven’t been inclined to hand it over. (It doesn’t help that the guy supposedly brokering a deal has mostly been mouthing off about how the NFL should butt out, but the money is the real problem.) Now it sounds like things have completely broken down — I’m not clear on whether Davis even offered a bid for the stadium land like Mayor Libby Schaaf requested back in January — which really isn’t much different from talks not being broken down but nobody knowing how to pay for anything, except that one sounds marginally less bad.

This would all seem to argue for the Raiders moving to a new stadium in Carson soon, except that that plan requires the San Diego Chargers to go along with it as well, and they’re awaiting a counteroffer from San Diego this week. Plus, a Carson stadium has its own problems — even the mayor of Carson isn’t totally convinced the teams are serious about building it. It’s all gamesmanship at this point, in other words, so best not to take any statements too seriously, even if “gurgling blood” is pretty dramatic.