- The group trying to force a public referendum on Phoenix Suns arena subsidies threw in the towel this week, after the city promised a court battle on the grounds that spending $168 million in tax money on renovating an arena is not a “legislative act.” The lesson: If your opponent doesn’t have deep pockets, threaten to sue them into oblivion. (Side lesson from the Suns mess: Elected officials always have their price, and it’s usually pretty cheap.)
- Carolina Panthers owner David Tepper said he’d “love to put some sort of roof” on his stadium so it could host the Final Four, and because this is 2019, nobody can tell if he was kidding.
- David Beckham’s Inter Miami has been turned away by both the Miami Marlins and Dolphins to share digs temporarily in 2020, thanks to the problems of scheduling MLS games around the MLB or NFL schedules, leaving the team with a mystery “preferred site” that team co-owner Jorge Mas promised to reveal in “late February, early March.”
- Oakland Raiders owner Mark Davis says he is “not frustrated” about not having a place to play in 2019, indicating it’s his “preference” to stay in the Bay Area but that he has “other options” as well. In other words, Mark Davis probably doesn’t have any better idea than the rest of us where the Raiders will open the 2019 season, which is just seven months away.
- Sorry if I failed to keep you up on the Queensboro F.C. saga, but the city of New York late last month signed a letter of intent that proposes two scenarios for the contested Willets Point neighborhood, one with a minor-league soccer stadium, one without. In other words, nothing has been decided at all, so feel free to go back to ignoring this story until somebody actually takes a step toward putting concrete plans in motion, or at least releases some cool vaportecture renderings.
- Tottenham Hotspur stadium opening update: April, maybe.
- In anticipation of the arrival of the Boston Red Sox‘ Triple-A team in Worcester, the Worcester Business Journal has taken an exhaustive look at how funding a new minor-league ballpark worked out for nearby Manchester, New Hampshire and eleven other cities. The answer: really, really not well at all, with the new stadiums sparking little of the promised neighboring development. On the glass-partly-full side, Southern New Hampshire University business professor Doug Blais does say of building sports venues, “It’s much easier to say it’s been successful at a $25-million price point rather than a $100-million price point”; unfortunately, Worcester is on the hook for more than $90 million.
- And here’s an exhaustive look from the Kansas City Star at some Chiefs tax returns that were briefly made public; no earth-shattering stadium subsidy news, but it is an excellent explanation of how easy it is to make a bundle owning an NFL team, regardless of whether you win games or not.
- And here’s an article from Fast Company about how stadiums can be good things for municipalities, because look at what the Roman amphitheater in Arles has done for that French city. Never let it be said that I do not provide you with links to the full breadth of stadium coverage.
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.
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.
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…
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.
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.”
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.