That bill to give sales-tax kickbacks to pretty much any sports franchise in Florida that doesn’t already get them moved ahead yesterday, as a state senate committee unanimously approved giving $2 million a year to two MLS franchises for the next 30 years. For good measure, the senate commerce and tourism committee also approved giving added tax breaks to Lockheed Martin and Fidelity National, which have already gotten nearly $7 million in subsidies apiece, and could still consider requests for additional money from the Miami Dolphins and Jacksonville Jaguars.
For those keeping score, if the MLS bill is signed into law, it would leave the Orlando City Soccer Club just $45 million short of its $75 million subsidy demand for a new stadium. ($2 million a year for 30 years adds up to just $30 million in present-day expenses because some of it would have to pay for interest on bonds.) It would also potentially open up a road to subsidies for these guys, though they’d have to actually join a real league first.
Florida has long been one of the most generous states in terms of stadium subsidies, offering $2 million a year in subsidies to pretty much any major-league team that says it needs them to build a new stadium. “Major league” is here defined as MLB, NFL, NBA, or NHL, though, so state senator David Simmons has proposed adding MLS to the list, making major-league soccer teams eligible to put as much as $30 million or so in stadium costs on the public tab.
Simmons is from the Orlando area, and it’s fair to assume he’s carrying water here for the Orlando City Soccer Club, a minor-league team that’s hoping to get a new stadium and move up to MLS, only without, you know, having to actually pay for all of it. His bill would allow up to two MLS teams to receive funds, though, so presumably the Tampa Bay F.C. people could get involved as well.
Which would only be fair, since everybody else in the entire state of Florida with claims to being a pro sport is already looking to get some state money:
The help for a future Orlando soccer team comes in addition to a request by the Miami Dolphins NFL team for help with stadium renovations, and the speaker of the House said Wednesday that he expects other bills to be filed to provide help for renovations to Daytona Beach International Speedway and for the Jacksonville Jaguars to make renovations at EverBank Field.
Florida is actually projecting a state budget surplus this year, mostly because it cut so much in past years that there’s some extra money now that the local economy doesn’t totally suck, so it looks like everybody is figuring that it’s time to strike while the iron is hot to grab a piece for themselves. There’s no telling whether all of this bills will pass, but given Florida’s past history in such matters, I wouldn’t bet against it.
With the NFL lockout finally over, the blogwaves are afire with talk of how the league’s new collective bargaining agreement will affect various teams’ stadium campaigns. We’ve already seen a report that the San Diego Chargers could get up to $150 million in NFL stadium funds, another that the San Francisco 49ers and Raiders could pool their stadium credits to get $300 million for a shared stadium, and still others that AEG’s planned Los Angeles stadium could get a cut. (The Minnesota Vikings could also be in line for funds, though apparently they’ve already been counting that particular chicken before it hatched.)
So how much money is really available, and where is it coming from? The press reports are maddeningly incomplete and contradictory, but this is, to the best of my knowledge, what’s going on:
- Back in olden times, the NFL had a program called “G-3,” which allowed home teams to keep the visitors’ share of club seat revenues to use to help pay off new stadium costs. Initially implemented to help convince NFL teams to remain in large markets — it was originally concocted, in fact, by New England Patriots owner Robert Kraft, who limited it to the top six media markets, of which he just happened to play in #6 — it was eventually expanded to the whole league. Then the program ran out, and the flow of funds stopped.
- The successor to G-3 — which, sadly, won’t be called G-4 — instead takes a 1.5% cut off the top of NFL revenues, and allocates it to stadium projects. (Sources disagree over whether this comes entirely out of the players’ share or the owners would contribute as well.) At $9 billion a year in total league revenues, that would imply $135 million a year in stadium credits — though apparently the math isn’t nearly so simple, which may explain why this article says only $95 million. Still, that’s a huge amount of money, enough over ten years pay off about $734 million in stadium bonds. (It’s not $950 million in stadium bonds because payments ten years from now aren’t worth the same as payments now.)
- That huge number notwithstanding, scuttlebutt is that only three teams will be allowed to tap the new stadium loan fund, with rumors putting a cap at $150 million per team. That’d mean that from among the 49ers, Raiders, Vikings, Chargers, any team moving to L.A., and maybe the Jacksonville Jaguars, at least a couple of teams would get left out in the cold. Unless the NFL expanded the program again, which it seemingly would have the money to do.
All in all, this is a good thing for both teams wanting to build stadiums and for taxpayers not wanting to put their own money into stadiums, as this is the NFL recognizing that — because of its weird status as a league where the vast majority of revenue comes from national TV contracts — if it wants to encourage teams to stay in big markets and avoid killing the Fox golden goose, it needs to subsidize stadiums with its own money. Of course, it also could end up helping grease the wheels for some otherwise stuck stadium projects that would still involve some taxpayer money — $150 million per stadium doesn’t go all that far — so in that sense, not so good. But in the grand scheme of things, billionaires voting to spend some of their own billions on projects to increase their billions is nothing to sneeze at.
AEG president Tim Leiweke, not content to be dropping arbitrary deadlines for his company’s downtown Los Angeles stadium plan, let loose another media salvo on Thursday by declaring that his boss, Philip Anschutz (the “A” in “AEG”), was prepared to buy an NFL team to move it to L.A. — and then naming names about which teams he was considering:
“St. Louis, Jacksonville, not extensively, certainly Oakland, San Diego, Minnesota are still in the mix,” Leiweke said listing the teams AEG has met with before adding: “We’re not packing any [moving] vans right now.”
Now, “met with” doesn’t necessarily mean the current team owners are actually considering AEG’s offer (or that there’s a solid offer to consider). Still, it was enough to set off media mayhem in the listed cities. A San Diego Chargers blog declared that “The Hit List Is Out“; Oakland Raiders CEO Amy Trask issued a statement denying that her team was for sale; and Minnesota Vikings execs insisted that their only meetings with AEG were over possibly operating the new stadium they want built in Minnesota.
Meanwhile, though the St. Louis Rams probably aren’t for sale, ESPN noted this would give their owner welcome leverage in his own stadium campaign. And that’s the main upshot here: For Leiweke to come out with a statement like this is a win-win for all the bigwigs involved — AEG gets a carrot to dangle alongside its July 31 deadline stick, and the owners of all the rumored move targets get a threat to use against their own localities, plus plausible deniability against being blamed for threatening a move.
And as for us? We get to play the home version. (Currently leading: The Jacksonville Jaguars, by a sizeable margin over “nobody” and then the Raiders.)
NFL commissioner Roger Goodell visited Jacksonville yesterday, and delivered one of those veiled threats that only sports league execs can do so well:
“We want the team to be successful and we want it to be here. We just want it to play in front of sold-out audiences.” …
Goodell was asked if sellouts this season would keep the team in Jacksonville.
“I think this team is going to continue to be successful here,” he said in response.
You think before you can become a commissioner, you have to go to protection racket school?
Meanwhile, the Jacksonville city council seems prepared to give the Jaguars an additional lease break, on top of the $4 million kickback they’re getting on their naming-rights deal. The new provision, which has been approved by two committees but hasn’t yet gone before the full council, would allow the team to pay for stadium maintenance in advance and then reimburse themselves from a pool of city money. It’s being sold as a way to allow the Jaguars to pay for costs as they arise and not when the city budget is ready, and it may be — but it also leaves open worries about the city having to reimburse the team for costs it didn’t approve or even know about beforehand.
Yet another example of stadium subsidies that keep on giving: When the Jacksonville Jaguars agreed to a $16.6 million, five-year naming rights deal with EverBank for their home stadium this week, apparently one key sticking point was that the team really wanted to hold out for more money. So instead, the city of Jacksonville agreed to forgo its 25% cut of the take so that the deal could go through.
Why exactly the city — which still must give final approval of the deal at a council meeting next month — went along with this is a bit unclear. A spokesperson for Mayor John Peyton said, “We believe it is of the utmost importance to do everything we can to ensure the long-term viability of the franchise in Jacksonville”; council president Jack Webb added, “I think we all kind of agreed that given the economic circumstances, let’s suck it up for the short term for the good of the city over the long term.”
Of course, there’s no guarantee that having a naming-rights deal keeps the Jaguars in town, so effectively the city has just handed over $4 million in taxpayer money — it will come out of the city’s stadium maintenance fund — as a good-will gesture. It’s like taking candy from a baby…
Developer Ed Roski’s Majestic Realty has narrowed down its wish list of teams to relocate to its planned L.A.-area stadium, with managing partner John Semcken now saying the Buffalo Bills and Jacksonville Jaguars are at the top of the relocation list.
“Jacksonville and Buffalo are two teams in very, very small markets,” Semcken told the Associated Press. “They are teams that have either outdated stadiums or are having trouble filling their stadiums or both.” He added that Majestic won’t contact the San Francisco 49ers, San Diego Chargers or Minnesota Vikings as long as they’re pursuing stadium plans of their own — which is probably just fine with those teams’ owners, as they’ll only want to use L.A. as a bogeyman to help in their hometown stadium demands (or, at most, as a fallback in case those stadium plans fall through).
Of course, market size hasn’t generally been a prime consideration in the NFL, since so much of its revenue comes from national TV contracts and the like, not local sources — which is how L.A. wound up with no teams in the first place, for that matter, since a revenue-packed (for the time, anyway) stadium in middle-sized St. Louis was more appealing than a less-snazzy one in the nation’s second largest city. That may change a smidge under the new revenue sharing rules, but not a ton, so it’s unlikely that either the Bills or the Jaguars will be leaping at this opportunity unless Roski shows them some serious coin in terms of stadium revenue that they’ll be able to get at the new digs.
And that likely means luring two teams to spread out the construction costs a bit, which means getting two owners to stop just using Roski for leverage and actually agree to move to L.A., at least one of whom would have to sell majority ownership to Roski since that’s what he’s insisting on … all of which is to say, just because Roski has filled out his Christmas card list, don’t expect to see flying reindeer in the immediate future.
A nice rundown by San Diego Union-Tribune columnist Tim Sullivan of how the approval of a new NFL-ready stadium in Industry, California is helping NFL teams in other cities leverage new stadium demands of their own:
Every city with an NFL tenant and without an ironclad lease is feeling intensifying pressure from Ed Roski’s City of Industry initiative. Every team within range of an escape clause has been wielding newfound leverage since October, when Gov. Arnold Schwarzenneger signed a bill exempting Roski’s project from the California Environmental Quality Act. …
The threat of extortion is always implicit in professional sports. Any business owner has a right to maximize revenue and to seek concessions from the landlord, rights that are obviously accentuated when that business is immensely popular and limited to 32 outlets in 50 states. Still, the shortcut granted Roski has caused a discernible shift in the balance of power, providing NFL owners a tangible relocation threat at a time when public financing is deeply problematic.
“It’s not a coincidence,” said David Carter, executive director of USC’s Marshall School of Business. “I think it’s a combination of the economic environment and the political realities that cities are facing right now (and) the Southern California option that is very real.”
Sullivan goes on to note that Roski still faces some potentially steep hurdles in acquiring a team: He’s part-owner of a casino, a big no-no with sports leagues, and wants to be majority owner of whatever team relocates (and, let’s not forget, pay for it with development rights, not cash). Still, that hasn’t stopped San Diego Mayor Jerry Sanders from suddenly devoting attention to building a new stadium for the Chargers, or the Florida Times-Union from running an editorial begging fans to buy tickets to Jacksonville Jaguars games because “Los Angeles doesn’t have a pro football team and doesn’t need one, but Jacksonville does.”
Noting that the Chargers haven’t explicitly threatened to move to Industry, Sullivan rightly proclaims one of the rules of stadium politics to be: “You don’t need to announce a threat that is already perceived.” Still, there are always ways of hinting…
Majestic Realty stadium czar John Semcken has officially announced his hit list for NFL franchises to lure to Los Angeles, and it looks like the L.A. Times guessed right:
Semcken said new talks would begin after the Super Bowl in February, and may involve the Jacksonville Jaguars, the Buffalo Bills, the Minnesota Vikings, the St. Louis Rams, the Chargers and the Oakland Raiders.
The San Francisco 49ers could also be pursued if a vote for a new stadium in Santa Clara fails.
Semcken said a new stadium could open in 2013, but a team could be relocated as early as next year or the year after, playing at a temporary site for the first couple of years.
In related news, Majestic owner Ed Roski has lost $1 billion of his $2.5 billion net worth in the last year, according to Forbes, thanks to the California real estate crash. Stadium consultant Marc Ganis calls this “significant”; Majestic says it’s just a flesh wound.
Forget the Dallas Cowboys‘ snazzy new stadium — what’s really sparking renewed stadium demands across the nation is the spreading fear that a new stadium in the Los Angeles area could lure an NFL team or two to relocate. The latest team to take advantage: the Minnesota Vikings, whose VP for stadium wheedling Lester Bagley told the St. Paul Pioneer Press they’re preparing a new push for $700 million in stadium subsidies, and added this only slightly veiled threat: “If the answer is no, then why would you own a team in this market?”
The Vikings have “no interest in extending our lease at the Metrodome” beyond 2011, said Bagley, who added for emphasis, in case anyone failed to make the connection: “The clock is ticking, and the lease is coming due. The state can’t afford to have us become free agents.”
Meanwhile, in Jacksonville, Jaguars owner Wayne Weaver is apparently attempting to develop a more home-grown move threat, saying he might move one home game to Orlando’s Citrus Bowl — though he added that it would need renovations to “accommodate the kind of revenues you have to derive out of an NFL stadium.” This at the same time that Weaver is trying to get additional public money from Jacksonville to renovate his team’s current home. Bring out the whipsaw!