Charlotte newspaper to new Panthers owners: Here’s how to shake us down for stadium cash

So I know I’ve poked fun before at the Charlotte news media for wondering aloud about how to meet the new Carolina Panthers owners’ demands for a new stadium when the new owners haven’t even been selected yet, let alone have they made any stadium demands. But, guys, this is getting seriously nuts.

Here, for your perusal, is an article from today’s Charlotte Observer, an actual newspaper, about all the ways that a prospective Panthers owner could extort stadium money from taxpayers, and which ones would work best:

  1. “We need a new stadium built outside Uptown Charlotte.” Unlikely to work, says Tom Regan, graduate director of the University of South Carolina’s sport and entertainment management department, because it’s too hard to get to the outskirts of town, just look at how the San Francisco 49ers are suffering in Santa Clara. (Which probably isn’t actually the reason for the 49ers’ woes, but whatever.)
  2. “A new domed stadium will draw frequent major events.” They only play the Super Bowl and Final Four once a year each, so they wouldn’t be in Charlotte very often regardless.
  3. “A major retrofit on Bank of America Stadium is necessary.” The place is only 22 years old and just got a significant taxpayer-funded upgrade, seriously?
  4. “If you don’t give us what we want, we’ll find a city that will.” “Given the current ownership structure of the Panthers and ongoing renovations (and lease agreements) at BOA,” says Vanderbilt sports economist John Vrooman, “the new majority ownership partner will probably be from or have strong financial ties to sweet home Carolina, and the Panthers are not likely to engage a credible franchise-relocation stadium-extortion game for at least another decade.”
  5. “We’ve upgraded, but there are still things city could help us do.”
    Add more suites at public expense, maybe, suggests Regan? Who could say no to that, right?

None of this specific analysis is incorrect, per se — in fact, it sounds like the Observer polled a bunch of stadium experts and got back, “The Panthers don’t really have much reason to complain or much leverage.” But the thrust of the article itself — trying to figure out which arguments for getting public stadium money might work best, like you’re a consultant to the team’s new owners rather than, you know, a journalism outlet — remains nuts, and is even more so when you consider the headline:

‘Stadium extortion’ arguments for Panthers ‘folly,’ industry experts say – except one

Except even Regan didn’t say that demanding more upgrades like suites wasn’t “folly” — in fact, he said, “When I look at stadiums on the East Coast – outside of the domes — Charlotte has one of the nicer stadiums.” So the Observer is really bending over backwards here to find some way to spin this as “Charlotte needs to do something for the Panthers.” I’d expect better from a major newspaper, but then, I’d also expect a headline that doesn’t make it sound like “one industry expert” is the exception, not one stadium extortion argument, so clearly I’m not hep to the ways of 21st-century journalism.

Friday roundup: Islanders close to Nassau deal, Olympic stadium to be razed after four uses, and it’s rethink your MLS stadium site week!

And in other stadium and arena news this week:

Have a great weekend, and see you Monday!

Falcons make more money by lowering food prices, also make less money by lowering food prices

I have griped here about the New York Times’ Ken Belson on so many occasions, usually right after he’s written a long article drawing sweeping conclusions that aren’t actually quite justified by the facts of what he’s describing. Today, Belson is back with a report on concessions prices at the new Atlanta Falcons stadium, and let’s see if he has improved any:

In Atlanta, Concessions Prices Go Down and Revenue Goes Up

Wow, that would be an impressive feat! How did they manage this?

Despite a 50 percent decrease in prices for food and nonalcoholic drinks compared to prices in the Georgia Dome, the amount spent per fan increased by 16 percent, Blank’s sports company, AMB Sports and Entertainment, said on Thursday.

The results suggest that fans will consume more if prices are kept at more reasonable levels, with potentially no effects on the team’s bottom line.

That … is not how math works. Even if fans spend more overall on cheaper food, actual team revenue from concessions depends on what’s left over after you pay for all that additional food — so if you bring in 16% more in cash but spend, say, 30% more on buying frozen hot dogs, that’s not “no effects on the team’s bottom line.” So how did this gambit actually work out in terms of net revenue?

Belson doesn’t actually say, but fortunately Bloomberg has the full story:

[Fans] bought more food — sales were up 53 percent — and each fan spent, on average, 16 percent more on concessions. It wasn’t enough to offset the drop in prices, though. The team made less on concessions in 2017 than it did the year before, according Steve Cannon, chief executive officer of AMB Group, the company through which Blank owns the team.

Okay, then! So Belson’s article really should have been headlined “Falcons Cut Food Prices by Half, But Make It Up in Volume.’

To be fair: Belson doesn’t explicitly say that the Falcons are profiting on the food price cuts (though he implies that they could), and even the headline could mean “gross revenue goes up” and not “net revenue (i.e., profit) goes up,” though that’s not how normal humans tend to read that word. Still, it’s all very misleading, especially when Bloomberg shows how to get it right.

Why is this all important, aside from getting to poke fun at the Paper of Record yet again? Because the true numbers hint at the reason why concession prices — and ticket prices, and everything prices — at sporting events are so crazy high: Yes, you can make more fans happy by setting prices lower, but in the early 21st-century economy, you make more money by selling fewer seats/pulled pork sandwiches to fewer people than by selling more of them to more people.

Props to the Falcons management for not choosing to do it that way — given Cannon’s quote to Bloomberg that “sure, we could shake out a few more dollars of margin under the old model, but we believe that the direction we’ve taken, given all the other positive benefits, is the bigger revenue play, period,” it sounds like they figure this is a necessary loss leader to keep people interested in live football, especially with fans increasingly choosing to watch on TV or not at all. Or maybe they figure fans will spend more willingly on pricey tickets this way, as I predicted when they announced the food pricing scheme back in 2016. Either way, it’s a move that’s worth not oversimplifying if we want to understand how sports teams try to extract maximum dollars from our pockets, and that’s what we’re here to do every day, right?

How not to evaluate how much public money to spend on a stadium, in seven easy steps

I’ve often said that cities should calculate what sports teams are actually worth to them before writing a blank check for a stadium or arena — you know, like Naheed Nenshi has tried to do in Calgary — so when Andrew Dunn, editor-in-chief of something called the Charlotte Agenda (“Charlotte Agenda exists to make Charlotte the smartest, most human city in the world”! Also: “We believe in drinking beer at work”!), set out to do just that today for a Carolina Panthers stadium deal, gotta give him at least some props, right? Let’s see how he did:

  • “Economists generally agree that the costs to taxpayers outweigh the benefits of all the additional spending on construction, hotels, restaurants, tickets and concessions.” He can read! Good start!
  • Notes that Charlotte paid $87.5 million in 2013 for a six-year lease extension for the Panthers, which means “the going rate is at least $13.75 million per year to make a team stay put.” He doesn’t note that that was one of the worst returns on a stadium subsidy in history, so maybe his reading doesn’t extend to this site.
  • “I believe that the Panthers are worth public money.” That’s kind of assuming your conclusion there, but in case he means “something, even if it’s only a penny,” I’ll allow it.
  • “I’ll grant that Charlotte’s government will never be able to directly recoup in employment and sales taxes the money it puts toward the Panthers. But putting public money toward pro sports shouldn’t be analyzed that way. Think of it more as a marker of what kind of city we want Charlotte to be.” Followed by an assertion that the Hornets and Panthers “put the Charlotte name in the national consciousness and touched off a business boom,” his sole presented evidence being a 1994 Chicago Tribune article in which a Hornets season-ticket holder says that the teams put Charlotte on the map.
  • “An investment in the Panthers is not using the same money that would build affordable housing.” This because the city could use hotel and rental car tax money that is earmarked for promoting tourism, notwithstanding that if general fund revenue ends up being used on a tourism project because the hotel and rental car tax fund is all spent on a football stadium, it’s absolutely taking away from money for things like affordable housing.
  • “Let’s figure out what we’re willing to do before a new ownership group gets involved. They’ll buy the team knowing what support they can count on from the community.” I.e., let’s make an offer before we’ve even been asked for anything. Where figuring out what a team’s presence is worth to a city (and, just as important, whether it has any better options for leaving if you don’t lavish its owners with cash) is a great preparatory step for negotiations, up and telling new team owners, “Hey, we have a check this big waiting for you!” is a terrible, terrible idea. What were we just saying about bidding against yourself?
  • “Perhaps both sides will come out in the black.” Uhhh, remember bullet point #1 back up there? Where you wrote that economists agree a win-win situation almost never happens? Maybe his reading doesn’t even extend to the very editorial he’s writing.

Overall grade: D, maybe C-minus for a good essay topic, but the execution needs a lot of work. To do this right you need to analyze the actual return on a stadium investment in tax revenues, the emotional value of an NFL team to a community, any measurable impact on business activity as a result of the presence of sports teams (though those economists back in the first paragraph have it covered for you: there is none), what other options the team has to move, and so on. Instead, Dunn’s analysis comes down to: Economists say stadiums don’t pay off, but I really like football, and there’s tourism tax money just sitting right there, so somebody just offer something already, I can’t take this uncertainty! Sounds like somebody needs another beer.

Three bills introduced to try to block Washington NFL team stadium bidding war

One of the big questions in the stadium-subsidy world is “Why don’t local elected officials just get together and say, ‘Fuck those greedy sports owners, let’s agree among ourselves not to get played for subsidies in interstate bidding wars’?” (Actually, it’s the same question for non-sports bidding wars, too.) And now some legislators in Maryland, Virginia, and D.C. are getting attention for trying exactly that in response to Washington NFL team owner Dan Snyder’s stadium shakedown attempt:

The liberal Democrat in Maryland, conservative Republican in Virginia and left-leaning independent District of Columbia Council member have introduced legislation to set up an interstate compact barring any public spending on incentives for a new stadium.

The idea is to prevent the jurisdictions from competing against each other with lucrative offers of public assistance for the new facility. The team’s current lease at FedEx Field in suburban Maryland ends in 2027 and it is exploring new potential locations.

This is, needless to say, a great idea for protecting the public purse, and the elected officials behind it — Virginia Republican delegate Michael Webert, Maryland Democratic delegate David Moon, and District Council member David Grosso — deserve to be cheered for their efforts.

It’s important to note, though, that these bills have a long road ahead of them. Each one has only been introduced, and there’s no indication yet of how much support they have — and each jurisdiction (man, would choosing nouns for these articles be easier if D.C. were just a state already) will no doubt be keeping a close eye on the others to make sure they don’t jump into a non-aggression pact before any of their erstwhile rivals. And then, too, even on the rare occasions when pacts like these have been enacted in the past, they haven’t held up well — non-poaching agreements between New York, Connecticut, and New Jersey, and between Minneapolis and St. Paul, pretty much immediately collapsed back in the 1990s. (Though I’m not sure if those had the same legislative teeth as these bills — it’s been 20 years, my notes are in a box somewhere.)

In short: A for effort, but the devil is going to be in the political machinations necessary to get these bills passed. Everyone watch this very closely, because if D.C., Virginia, and Maryland somehow do manage to say “You’re not the boss of us” to Snyder, it could have nationwide repercussions.

Friday roundup: Naming-rights woes, Austin update, and the World’s Largest Chest of Drawers

It’s Friday already? Seems like we were just doing this, but the pile of stories in my Instapaper queue says otherwise, so away we go:

  • The Florida state house has again passed a bill that would ban building or renovating private sports facilities on public land, which would potentially affect the Tampa Bay Rays, among others. This is kind of a dumb idea, as we discussed back in October, since there’s nothing wrong per se with putting stadiums on public land so long as the public gets a good deal for it; a far better plan would be a Seattle-style bill to require that local governments get a return on their investment in any sports lease project. But then, this bill already passed the Florida house last year and died in the senate, so probably not worth getting worked up over too much just yet.
  • Sports Authority agreed in 2011 to pay $6 million a year for 25 years for the naming rights to the Denver Broncos stadium, and now Sports Authority is bankrupt, and Metropolitan State University of Denver marketing professor Darrin Duber-Smith is saying I told you so: “My big warning was, ‘I’m not sure Sports Authority is a big enough or healthy enough company to commit that much money from their marketing budget each year.’ And I was right.” The Broncos are now looking for another company to pay $10 million a year for naming rights, and haven’t found any takers yet, hmm, I wonder why?
  • Chelsea F.C. will get to move ahead with its new-stadium plans after the town council used a compulsory purchase order — like eminent domain, surely you’ll remember it from that Kinks song — to clear an injunction that a nearby family had gotten on the grounds that the new stadium would block their sunlight. The purchase order isn’t actually seizing their home, but the land next to it, which is enough to invalidate the injunction; not that this doesn’t raise all kinds of interesting questions about the use of state power for private interests, I’m sure, but man, don’t you wish this were the only kind of stadium controversy we had to put up with in North America? League monopoly power over who gets a franchise is a bad, bad thing.
  • High Point, North Carolina is spending $35 million on a stadium to bring an indie minor-league Atlantic League baseball team to town, and City Manager Greg Demko says this will help the city’s commercial tax base recover, because “the construction of a stadium is like an anchor for the revitalization and development of a downtown.” Demko is going to be so disappointed, but at least he got mention of his city in a Bloomberg article as “home to the World’s Largest Chest of Drawers,” and you can’t buy publicity like that.
  • New Seattle mayor Jenny Durkan says that while it’s “a longshot,” it wouldn’t be impossible for Chris Hansen to build his Sodo arena while OVG renovates KeyArena at the same time. I’m going to interpret the tea leaves here as “Hey, if you want to spend your money to try to compete with another arena across town, be my guest,” but stranger things have happened, maybe?
  • The city of Austin has issued a report on eight possible sites for a stadium for a relocated Columbus Crew, and are now waiting on Crew owner Anthony Precourt to tell them which, if any, he likes. A consultant for Precourt has since ruled out a site or two, but it looks like nothing might be ready for the city council to vote on February 15 as planned; Austin MLS lobbyist Richard Suttle says the problem is “between the holidays, flu season and winter storms, it’s been slow going.” It’s not quite helping to spark women’s suffrage, but the flu still reminds us who’s boss from time to time.
  • Now that Amazon has announced its short list of cities that will get to bid on its new second headquarters, it’s time for another look at how to stop corporations from launching interstate bidding wars to be their homes, which once again leads us to David Minge’s 1999 bill for a federal excise tax on public subsidies. “Of all those offers [made to Amazon] there’s one obvious one that should have been made and it should have come from Congress,” University of Minnesota economist and former Minneapolis Federal Reserve research director Arthur Rolnick, who helped Minge concoct that bill, tells CityLab. “Now if that offer were on the table it would end it, it would end the bidding war. Then Amazon would simply base its decision on where location is best for business.” It’d work for sports leagues, too!

Raiders’ lease blocks Nevada from levying ticket taxes, we’ve heard this song before

The Washington Times had a big article yesterday on the Oakland Raiders‘ lease for their new stadium in Las Vegas, and how it contains a provision that would prevent the state from trying to recoup its $750 million in stadium costs by levying new taxes on the team down the road:

An unusual provision in the Raiders agreement with the state allows the team, currently playing its final seasons in Oakland, to break the lease and look for another home if Nevada attempts to impose new taxes over the next three decades on the team, stadium, fans or players. That includes visiting teams and fans as well.

The provision applies to any “targeted tax” aimed at collecting revenue specifically from players or fans. It would not protect the team or its fans from any new taxes applied generally on businesses or individuals across Nevada, however.

I’m quote in this article, calling the lease clause “adding insult to injury” since it “makes sure Nevada taxpayers never see a penny from the stadium.” Which is true, but what the Times left out was that I mentioned this isn’t unheard of — other teams have leases that prohibit local governments from levying team-specific taxes as well. This is probably because I didn’t actually cite any examples to the Times reporter — I was busy and couldn’t look any up — but a quick search through the FoS archives reveals two examples right off the bat:

  • The Cincinnati Bengals and Reds owners have lease clauses that allow them to block ticket tax surcharges during the course of their leases, and did so in 2010.
  • The owners of Minnesota United asked for limits on that state’s ability to impose future taxes on the team, though I’m having a hard time confirming whether that provision made it into the final lease agreement. (The world really needs a database of stadium leases. Get right on that, world, okay?)

I realize this isn’t overwhelming evidence, but it is a sign that the Raiders clause isn’t entirely unprecedented, even if the Times reports that Temple economist Michael Leeds said, in the paper’s words, that this provision “goes beyond anything he has ever seen.” And it makes sense that team owners would try to forestall ticket surcharges: As we’ve covered before, targeted ticket taxes tend to mostly come out of team owners’ pockets because, unlike other taxes, they reduce the amount of money an owner can get away with charging for tickets. So if you sign a 30-year lease and then the state turns around and says, “Hey, $10 surcharge on all your tickets, we get the money!” and you can’t get out of the lease, that’s a huge chunk of change that is suddenly going out of your pocket and into the public’s.

Which, of course, is exactly why it’s so disappointing that the Raiders lease contains this clause — with the state already on the hook for $750 million, a ticket tax would have been one of the only ways for taxpayers to get some of that money back. But the Raiders had smart contract lawyers, so that’s not going to be happening. Evidence really is accumulating that Mark Davis may be smarter than he looks.

Friday roundup: A’s won’t give up on Laney, Isles could play “some” games at Coliseum, more!

Tons of stray news items this week, so let’s get right to them:

  • The Rhode Island state senate’s finance committee approved $44 million in spending by the state and city of Pawtucket for a new Pawtucket Red Sox stadium, which is what everyone expected, because the real opposition is in the state house. A spokesperson for House Speaker Nicholas Mattiello said that if the bill passes the Senate, “it will be assigned to the House Finance Committee and be given a public hearing,” which isn’t exactly a ringing endorsement, but then, Mattiello has been saying consistently that his constituents hate this plan.
  • Oakland A’s president Dave Kaval said that the team owners have “identified three final locations” for a new stadium, and … they’re the same three sites the team announced more than a year ago, even after Laney College officials since took themselves out of the running. “We spent a lot of time getting it to three final sites, and those are the sites that are viable,” Kaval told reporters. Props for sticking to your convictions, I guess, but there’s a time to go to a Plan B, and it’s maybe after Plan A told you, “Get offa our lawn.”
  • The city of Liverpool is set to spend £280 million on a new stadium for Everton F.C., four years after saying no to a similar plan, but Mayor Joe Anderson defends the plan as a loan that the team will repay and more. The Guardian reports that “the city council could make £7m-a-year profit from interest charged on a loan of £280m over 25 years, plus extra revenue from business rates and related developments once the stadium is up and running” — which sounds good if the profit is guaranteed just from the loan payments (the city would reportedly have first dibs on Everton team revenue), not so much if it would rely on those “related developments,” which could be stuff that would happen with or without a new stadium. As is so often the case, it all comes down to what that comma means.
  • NHL commissioner Gary Bettman toured Nassau Coliseum on Tuesday, after which New York Islanders owner Jon Ledecky said he was “confident” that “some games” would be played there while waiting for a new Belmont Park arena to be built, but that playing full seasons there would be “difficult.” So that would imply … some games in Nassau and some in Brooklyn, since the two arenas have the same owner? Some in Nassau and some at Madison Square Garden, which is set to help build the new arena? Some in Nassau and some on a frozen-over East River after that ice age that the American Museum of Natural History seems to think is imminent hits? Your guess is as good as mine.
  • A Unitarian minister writes in an op-ed for the Charlotte Observer that if the Charlotte city council is going to spend money on a new Carolina Panthers stadium, it should be required to build affordable housing, too. My theology is shaky at best, so I’m not sure what Unitarianism has to say about a right canceling out a wrong.
  • Speaking of North Carolina, the Hurricanes got a new owner this week, and in his first few hours as head of the team, he didn’t demand a new arena or threaten to move the team without one. Though that may have more to do with the team’s sweetheart lease on its current arena that last through 2024, which had led former owner Peter Karmanos to say in 2015 that “we’d have to be idiots to move from here,” so give the new guy a few more hours, at least.
  • This. You’re welcome.

Charlotte TV station knows a guy with a farm where Panthers stadium could go, totally

The Carolina Panthers story so far: Team owner Jerry Richardson was investigated for sexual harassment and stepped down as managing partner and said he would sell his stake, and immediately speculation started as to whether whoever bought the team would demand a new stadium, and then the local media jumped ahead straight to wondering where this phantom stadium that the new owner who hasn’t even been finalized yet might demand would go, and that brings us to last night’s WCNC-TV headline:

EXCLUSIVE: Where the new Carolina Panthers stadium could be built

The actual story, such as it is, is that two unnamed sources told the station that there is “interest” in building a stadium near the South Carolina border, and there’s a guy who owns a 220-acre farm there and his daughter-in-law went to school with the son of possible new owner Felix Sabates, and it’s truly amazing that this is an EXCLUSIVE and nobody else is on this story, huh?

But I didn’t come to you today just to laugh at self-important local TV news broadcasts; no, I came to you to laugh at what that headline really should bring to mind. Because where a new stadium “could” be? WCNC really should have shaken down a few more unnamed sources, because the possibilities are endless:

  • Here are 21 lots in Charlotte that are big enough to hold a football stadium. (Okay, one appears to be the side of a hill, but that worked for Dodger Stadium, right?)
  • If you’re willing to go further afield in North Carolina, here are 304 sites around the state that would work.
  • You know where there’s a lot of cheap land? Alaska. Just saying.
  • Olympus Mons. Pros: Lots of room for parking and ancillary development. Cons: Minor media market, but as long as you get a cut of the NFL’s national TV contract that shouldn’t matter too much, right?

This has been your morning exercise in finding places to build a stadium for an owner who doesn’t even own the team yet, let alone has he demanded a replacement for its stadium that’s just 21 years old, but that’s the job of journalism, right, to anticipate subsidy demands before they’re made and make them for you? Pretty sure it’s something like that.

Megatron’s Butthole is leaking

And speaking of unfortunate headlines, here’s one from yesterday’s Kansas City Star atop an AP story ahead of last night’s College Football Playoff title game at the Atlanta Falcons‘ new stadium:

High-tech Atlanta stadium a hit with fans after early woes

Mercedes-Benz Stadium is about to be on perhaps its largest national stage — Monday night’s College Football Playoff title game — and fans say Atlanta’s new $1.5 billion facility is living up to the hype despite a series of construction setbacks that delayed its opening…

So far, the stadium is winning attendees over despite its signature feature, the retractable roof, being opened a couple times during events since the opening in August. The roof, which opens and closes like a camera lens, is one of the many attractions of the stadium including the massive 360-degree, 63,000-square-foot halo video board and cheap food pricing.

So those construction delays and malfunctioning retractable roof are all a thing of the past, and everything works great now! Except maybe you might have wanted to wait for the game actually to be played before writing that headline:

The roof of Atlanta’s $1.6 billion stadium is leaking at the CFP title game
With rain hitting Atlanta on Monday, reporters at the College Football Playoff national title game noticed a stream of water pouring in from the Mercedes-Benz Stadium roof.


Fans frustrated after long waits to get into Mercedes-Benz Stadium

The lines were constant, no matter how early fans arrived. By 5:30 p.m., nearly three hours before game time, the wait to get into the stadium was running about an hour.

And worst of all:

President Donald Trump arrived in Atlanta on Monday night to attend the National Championship Game between Alabama and Georgia.

Okay, so Trump’s presence can’t actually be blamed on the new stadium, except inasmuch as that if Atlanta hadn’t gone and helped build it, they probably wouldn’t have gotten to host the CFP championship game and then would have been spared the president’s presence. (Is this what economists call an externality?) The leaky roof is a bigger problem, and it really might be time to ask whether spending hundreds of millions of dollars on a cool-looking retractable roof is worth it when it doesn’t retract and also doesn’t really work as a roof. Though I guess it did earn the stadium an awesome nickname, and what price can you put on that?