Friday roundup: Indiana and Missouri rack up another $390m in team subsidies, and other dog-bites-man news

Sadly, there’s another loss to report this week: Rob McQuown, who for the past decade has been one of the core tech and admin guys at Baseball Prospectus, passed away on Tuesday. I never met Rob personally, but in my days writing and editing for BP we exchanged emails a ton, and he was always a sharp and good-humored presence keeping the site running behind the scenes. (He wrote some excellent fantasy baseball coverage for a while, too.) I haven’t heard the details of his death, but I do know it was way too soon, and my sympathies go out to all his friends and family and colleagues who are mourning him this week. Here’s a lovely podcast tribute by Ben Lindbergh to Rob’s multifarious and too-often underappreciated gifts.

And now, to the news:

  • The Indianapolis City-County Council gave final signoff to $290 million in subsidies for the Indiana Pacers, which along with new and past operating subsidies brings team owner Herb Simon’s total haul to more than a billion dollars. The team’s new lease lasts until 2044, but I’d wager that Simon won’t wait that long before going back to what’s been an insanely lucrative taxpayer well.
  • The state of Missouri has reportedly approved $3 million a year for 20 years, coming to a total of $70 million, for upgrades for the St. Louis Blues, Kansas City Royals, and Kansas City Chiefs stadiums — yeah, I don’t get how that math works either, especially when this was previously reported as $70 million for the Blues plus $30 million for the K.C. teams, and has elsewhere been reported as $70 million for the Blues and $60 million for the K.C. teams, but I’m sure it was copied from a press release somewhere, and that’s what passes for fact-checking these days, right? This brings the teams’ total haul to … let’s see, the K.C. teams got $250 million previously, and the Blues owners got $67 million in city money, so let’s go with “around $400 million,” about which you can say that it’s at least cheaper than what Indiana taxpayers are on the hook for, and that is pretty much all you can say.
  • The city of Anaheim is still waiting on its now-overdue appraisal of the Los Angeles Angels‘ stadium land so it can open talks with team owner Arte Moreno on how much he should pay for development rights on the stadium parking lots. Mayor Harry Sidhu has appointed a negotiating team, though, which includes Sidhu himself, something that has drawn criticism since Angels execs donated to his election campaign. Sidhu also stated that “our theme parks, sports venues and convention center are a matter of pride, but their real purpose is to serve residents by generating revenue for public safety, parks, libraries and community centers and by helping us keep taxes and fees low,” which is not likely to help convince anyone that he understands sports economics like his predecessor did and isn’t just repeating what his funders tell him.
  • Oak View Group’s Tim Leiweke is trying to build a 10,000-seat arena in Palm Springs, and economists point out that this won’t help the local economy much because “you’re crazy if you think I’m flying to Palm Springs to see your minor league hockey team,” and Leiweke says Palm Springs is just different, okay, because so many attendees will be people who are already coming to town to play golf, gamble, or stay at local resorts. How this makes it a major economic plus when those people also see a concert when they’re in town Leiweke didn’t say, but who’re you going to believe, a bunch of people who study economics for a living or a guy who was once the youngest GM in indoor soccer?
  • A Cincinnati nonprofit is trying to raise $2 million to preserve affordable housing around F.C. Cincinnati‘s new stadium, and the Port of Greater Cincinnati Development Authority says that maybe building more market-rate housing will allow low-income residents of existing buildings to stay put. Yeah, that’s really not going to work.
  • Nobody in Miami-Dade County has studied the impact of building a new Inter Miami stadium right next to the city’s airport, and some county commissioners think that maybe that might be a thing they’d want to study.
  • Here’s a good, long R.J. Anderson article on three cities vying for MLB expansion teams (Portland, Montreal, and Raleigh) that should provide reading material for the inevitable endless wait for MLB to actually expand. (I’m also quoted in it, right before Jim Bouton.)
  • And here’s another long article that quotes me, this one by Bill Shea of The Athletic on how stadium subsidies have changed since the Great Recession (some sports economists say it’s tougher to get public money now, I say “Bah!”).

Missouri approves $41m worth of renovations for Blues arena that St. Louis just paid $67m to renovate in 2017

The state of Missouri has approved $70 million in spending over 20 years for renovations to the St. Louis Blues arena — and if you feel like this just happened a couple of years ago, you’re almost right: That was $67 million in city money, and will cover scoreboard, sound system, and seat upgrades; the state money will pay for escalators, roofing and heating, and air conditioning, because apparently that’s what was left to buy on the Blues’ gift registry.

This will be totally worth it, say public officials, because competitiveness!

“Without renovations, and without public-sector support for those renovations, we run the risk of being less competitive in pursuit of national events,” said Frank Viverito, president of the St. Louis Sports Commission, a nonprofit organization that attracts and manages sporting events.

Also because hockey is fun!

The fact that the Blues currently are making a run in the NHL postseason was mentioned by more than one state lawmaker during House debate on Wednesday, including by some who eagerly described going to hockey games.

(I’m having trouble finding documents to confirm this 100%, but the Blues owners appear not to have agreed to any sort of lease extension in exchange for the subsidies, presumably because St. Louis and Missouri official are even bigger morons than their neighbors over in Indiana.)

Since the payments are deferred a bit, the state’s $70 million in nominal subsidies is worth more like $41 million in present value, so that reduces the sting a bit. Though the legislature also tacked on approval to pay another 10 years’ worth of $3-million-a-year lease subsidies to the Kansas City Chiefs and Royals, which adds to the sting, though at least those are subsidies that were planned for all along, so it’s not really a new waste of cash, just an agreement to keep up with the commitment to an old one? Maybe it’s best just to say Who can put a price on state-of-the-art escalators? and leave it at that.

Friday roundup: Suns referendum campaign fails, Panthers owner floats roof, Inter Miami and Raiders both still need temporary homes

The stadium news does not care if I am having a busy week, it just keeps happening! And I am, as always, here to catch it in a bucket and dump it out for you:

Seattle arena builders ask for a tax break, nothing is pure and innocent in this world

You know, it never fails: No sooner do I praise a sports venue deal for being the rare case that doesn’t screw over taxpayers than it turns out the team owner actually plans to screw over taxpayers at least a little. So I should have known that my Deadspin article a year and change ago about how the Seattle arena deal is an exceptionally good deal would beget this:

With costs climbing on the KeyArena renovation, members of the Los Angeles-based Oak View Group were in Olympia on Wednesday seeking to defer at least $80 million in sales tax payments related to that project and an NHL training facility

“We want everybody at the legislature to hear from us that we are not asking for any special consideration,’’ Leiweke said of the Olympia visit. “We’re not asking for a tax break. We’re not asking for a waiver. We’re not asking for a rebate. We’re simply working through the payment structure and we’re going to pay 100 percent of our taxes.’’

Well, no: If you require legislation to be passed just for you, then by definition you’re asking for special consideration. Even if the Mariners and the Seahawks owners got similar special consideration before you did.

The gain from the tax deferral is likely to be small: As the Seattle Times’ Geoff Baker explains it, OVG will even pay interest to the state on about $90 million in deferred construction sales tax payments. The main benefit would be shifting the cost from its capital books to its operating expense books, which would allow the arena builders to save money on its federal taxes by deducting them all at once rather than depreciating them over time:

“In effect, it’s a tax scheme that is designed to make sure you get your money back quicker,’’ [College of the Holy Cross sports economist Victor] Matheson said. “That all being said, it’s a small subsidy and it is not a subsidy from the taxpayers of Seattle and Washington, but a subsidy from federal taxpayers. And it isn’t a huge one. Even a stadium critic like me would have a hard time getting too worked up over it.’’

Me too! But it’s still a subsidy, even if a small one, and also one that as a U.S. federal taxpayer I’m going to help kick in for. So even if it’s not as bad as the Kansas City Chiefs owners trying to demand a full sales-tax break on the purchase of a bronze sculpture of late Chiefs founder Lamar Hunt Sr., it still makes me a little sad that we can never have nice things.

K.C. Business Journal parrots debunked NFL economic impact numbers

It’s sports playoff season, which means it’s time for another round of stories claiming huge economic windfalls from postseason games. Today’s contestant is the Kansas City Business Journal’s Krista Klaus:

The Kansas City area is poised to reap a significant economic benefit from the coming Chiefs playoff game in January, the first hosted at Arrowhead in six years.

Estimates of how much money might be poured into the local economy range from $6 million to $20 million.

A study commissioned by the NFL and conducted by Washington-based Edgeworth Economics placed the average economic effect of NFL teams on local communities at $160 million, or $20 million a game for an eight home-game season.

Another study conducted by the University of Minnesota put the economic effect of a single NFL game at closer to $6 million.

A summary of the U of M study is here, and makes clear that the authors merely took the total number of people who came from out of town for a Vikings game (in this case, a playoff game against Dallas last January), multiplied it by the average spending, and came up with a figure of $9 million. There’s no adjustment for the substitution effect, however: How many of those people would have gone into Minneapolis to spend their money some other way if they hadn’t been blowing it on the Vikings? And did any of those Vikings fans displace other spending — say, people who chose to stay home that day because they didn’t want to fight the football crowds on the highways and in the downtown restaurants?

As for the Edgeworth study (which was actually done for the NFL players union, not the NFL), I haven’t been able to find the complete study, but the talking points make it clear that the numbers aren’t to be taken seriously:

The studies used in this assessment were commissioned to justify a start, increase, or continuation of public funding for NFL stadiums and/or to retain or draw a team to a city. As such, the numbers are based on the League’s and facilities’ own projections of the economic activity associated with NFL games.

But don’t just take my word for it: Read what sports economists told the Atlanta Journal-Constitution about the study last month. Which Krista Klaus could have found out about as easily as me, if she’d bothered to type “Edgeworth” and “NFL” into Google. Guess she was too busy feeding the hamster wheel.

K.C. squabble continues over stadium reno subsidies

Kansas City Mayor Mark Funkhouser is back again with his proposal to stop paying the city’s $2 million a year subsidy towards renovations of the Royals and Chiefs stadiums. Funkhouser proposed the same thing last year, you may recall, but the city council ultimately ended up not going along with it.

This is really a squabble between the city and the county, thanks to a terribly written stadium funding contract that guarantees the teams public money, but doesn’t specify which public body will pay it (and which the city isn’t actually a signatory to). The only thing for certain: Kansas City residents will end up paying the cost somehow, whether via city taxes or county taxes. If not, the teams could break their leases and move to … well, I’m sure there’s someplace out there with newly renovated stadiums that would love to host some sports teams. Hey, there’s an idea…

K.C. risked defaulting on Royals lease in 2009

Hey, remember how Kansas City agreed to spend $425 million on stadium renovations a few years back in exchange for the Royals and Chiefs agreeing to stay in town for another 25 years? Looks like somebody should have read the fine print: Thanks to a tussle between the city and state over who’ll pay $4 million a year in ongoing upkeep and improvement costs to Kauffman Stadium and Arrowhead Stadium, the city nearly defaulted on its lease last year, to the point where Royals management had drafted a letter declaring the city in default. If that happened, the teams could leave before the 25 years were up, effectively making the entire $425 million expense worthless — except inasmuch as having nicer digs would give them less reason to want to leave. Still, it’s a worthwhile reminder that leases are only as good as their fine print — something K.C. could have learned just by looking across the state.

K.C. and Jackson County tussle over who’ll pay stadium subsidies

If nothing else, the economic meltdown and attendant budget woes seem to be making local governments bolder about trying to reign in subsidies for sports facilities. On Thursday, Kansas City Mayor Mark Funkhouser proposed a city budget that would eliminate the city’s $2 million a year subsidy of the Chiefs and Royals stadiums, which was extended as part of the teams’ $425 million stadium renovation deal approved three years ago by Funkhouser’s predecessor, Kay Barnes.

Jackson County Executive Mike Sanders immediately flipped out, saying it would allow the teams to break their leases and leave town if they wanted to. “The fact that we would have violated a substantive provision would mean those leases are now gone,” Sanders told KMBZ radio. “We would be on a tightrope or a high wire with no safety net.”

Sanders’ confusion about funambulist nomenclature aside, the teams’ leases themselves (Royals here, Chiefs here) don’t seem to support his contention: They only say that the teams will get money from the existing “local/state sports tax revenues,” defined as “currently, Missouri State of $3 million, County Property Tax of approximately $3.5 Million, and City of $2 Million, with a minimum annual amount of these three combined sources not to be less than $8.5 Million per year.” In other words, the state, county, and city are responsible for coming up with $8.5 million a year, but how they get there is between the three of them, meaning if the city stops kicking in, the county and state would have to make up the shortfall — which helps explain why Sanders is flipping out, but also why Funkhouser felt free to say, “I don’t think it would jeopardize leases. We’re trying to focus on … basic services like police. That is a core function. Operating a sports venue is not.”

Chiefs unveil extra stadium doohickeys

If you were wondering what the Kansas City Chiefs are doing with the extra $25 million in state tax credits they got last month, wonder no more:

The improvements to be completed by August 2010 include:

-$15.5 million to expand the scope of Arrowhead’s upper deck, widening it far beyond originally planned with additional concession stands and more public gathering places.

-$4.77 million to increase from eight to 18 the number of elevators for people with disabilities.

-$4.19 million to expand the Hall of Honor.

The other common-area improvements presented Tuesday included $6.2 million for parking lot and road repairs; $7.3 million in concrete coatings; and nearly $400,000 to improve drainage on ramps.

Spain described the expenses as unanticipated ones discovered after the original scope of the project had been set.

Not sure how you “discover” the need for more concession stands, but there you go. The Chiefs will be kicking in $50 million of their own money toward the new expenses, so when Missouri taxpayers admire the new concrete coatings at Arrowhead Stadium, they can rest easy that only one-third of it is made up of their money.