Kroenke seeks “significant” subsidies for suburban St. Louis development, has zero sense of irony

Deadspin says pretty much all that needs to be said about this story:

Stan Kroenke, Fresh Off Leaving St. Louis In The Lurch, Asks St. Louis For Tax Dollars

The slightly longer version: Rams owner Kroenke and his attorney Alan Bornstein are pursuing an 1800-acre development in the St. Louis suburb of Maryland Heights that would involve retail, entertainment, office, residential and sports (no indication what kind of sports, but MLS is sniffing around, albeit more downtown than in the burbs), and are seeking “significant” tax kickbacks, possibly in the form of tax increment financing.

Nobody on the Maryland Heights council seems to be batting an eye that this is the same dude who just moved the local NFL team just 20 years after it got huge public subsidies to relocate in St. Louis — which is not all bad, since you do want these things judged on their merits and not on how warm and fuzzy local electeds feel toward the development, but also not all good, since see above re: yanking a team not long after it got subsidies. (Twitter has predictably been less kind to Stan.) Meanwhile, at least one local thinks that the location is a terrible place for tax-subsidized development:

David Stokes, the incoming director for the Great Rivers Habitat Alliance, said he thinks it’s “preposterous” that the city would think of allowing such a project in a flood plain and support it with tax money, especially in light of the damage done in parts of the region by flooding in December.

“The idea that you would subsidize 1,800 acres of flood plain development, well, it’s always a terrible idea,” he said.

St. Louis wants to expand convention center after losing NFL, because that worked so well the last time

Coming off the loss of the Rams, St. Louis’ leaders have come up with a can’t fail strategy for boosting the city and its fortunes: Spend hundreds of millions to improve the convention center and domed stadium complex abandoned by the Rams to better compete in the national convention market. Kitty Ratcliffe, head of the St. Louis Convention and Visitors Commission, owner of the center and dome, recently proclaimed, “Our competitors are building, while we’ve been doing nothing.” The chief of staff for St. Louis Mayor Francis Slay weighed in with “We’re looking at this as a boost for the region’s tourism industry.” And they promised a consultant study “in the next few weeks” that would document the needs and set out a price tag.

Here they go again. Thirty years ago, faced with the loss of the NFL Cardinals, then-Mayor Vince Schoemehl and the region’s business leaders promoted a combined convention center expansion and domed stadium as the cure for the city’s ills. The argument by mayoral staffers was that “the City cannot feel like a ‘winner’ if it’s constantly losing things.” The city’s then budget director argued that a combined dome/convention center would be “an exciting world-class building project. We don’t often get this type of opportunity to make an international impact, like the Astrodome.”

Armed with consultant studies that promised a big boost in convention activity from what was supposed to be the country’s fourth biggest convention center, the city, county and state governments plopped down $240 million for a dome that still didn’t have a football tenant. More consultant studies said that what St. Louis really needed was a 1,000-room hotel next door to the new America’s Center complex. The head of the Convention and Visitors Commission in 1999 forecast that a new hotel would boost major conventions from 33 in 1998 to 56 in 2004, with hotel room nights almost doubling, to 800,000 a year. Mayor Clarence Harmon pressed the case for state aid for the hotel as “the foundation of our efforts to revitalize downtown and its is a cornerstone of our overall economic development strategy in the City of St. Louis.”

The new $277 million, 1,081-room Renaissance Grand Hotel opened in 2003 and immediately floundered, with occupancy and rates well below consultant forecasts. Beyond the problem of opening in the wake of 9/11, the hotel never spurred the predicted convention boom. By 2006, there weren’t 54 major conventions, but just 32. And the total continued to sink, so that 2008 saw just 438,000 convention room nights, a bit less than the 800,000 promised. With no new convention business, the hotel proved a total dud, and bondholders foreclosed on it in 2009, finally selling it for a third of debt. The story of the city’s convention business is still the same — 26 major conventions in 2014 and 425,411 room nights in 2014, almost exactly the same as the figures for 1997 and 1998.

Now, lest the city once again be viewed as a “loser,” with more promises of a “boost” for tourism, state and local officials seem poised to throw away more public money.

 

 

Chargers agree to move to L.A., vow to stay put in San Diego, all in a day’s work as an NFL owner

So here’s some things that happened on Friday:

  • The San Diego Union-Tribune reported (in an article no longer online in its original form) that the Los Angeles Rams (we should start calling them that now, right?) and San Diego Chargers had reached agreement in principle on a deal to share the Rams’ new Inglewood stadium.
  • Chargers owner Dean Spanos issued an open letter to fans stating that “our team will stay in San Diego for the 2016 season” and while he has an “option” to move to L.A., “my focus is on San Diego.”

So what does this mean, exactly? Clearly, Spanos has gotten Rams owner Stan Kroenke to agree to give him the rest of the year to lobby San Diego to cough up more money to keep its team — or as Spanos put it in his letter, to “determine the best next steps and how to deploy the additional resources provided by the NFL.” (That’d be the extra $100 million that the NFL is offering Oakland and San Diego as a sweetener for stadium deals, something that was completely unthinkable when it was St. Louis asking for it.) So expect some nasty, nasty stadium talks to continue the rest of this year, with Spanos clearing his throat and glancing in the general direction of Inglewood anytime someone suggests he kick in more of his own money.

The big question San Diego needs to be asking now is at what point Spanos will feel comfortable walking away from the table and going to Los Angeles — which unfortunately is unknowable, since the details of the deal between Kroenke and Spanos aren’t public. In fact, we have no way of knowing if the details have even been spelled out yet — it’s entirely possible that Spanos went to Kroenke and said, “Stan, let’s put out an announcement, I gotta light a fire under San Diego, we can work out the rest later,” and Kroenke grunted enigmatically.

In short, the NFL owners are playing this perfectly, levying move threats while openly proclaiming their love for current NFL cities (the better not to provoke pitchforks and torches) and holding their cards close to their vest. Which shouldn’t be surprising, as this is the business they’re in, but it’s always inspiring to watch evil geniuses at work up close. If the Chargers do end up getting the cash and staying put, it’ll be interesting to see if Raiders owner Mark Davis can pull off the same trick with Oakland.

MLS to St. Louis: Sorry about your football team, you know we play “football” too, right?

It’s official: With the St. Louis Rams gone, every other sport in town (or not in town) is hoping to grab a piece of that $477 million in public stadium money that the NFL team turned down. Just ten days after the Rams announced their move to Los Angeles, MLS commissioner Don Garber sent a letter to Missouri Gov. Jay Nixon expressing his sympathies and offering to provide St. Louis fans with some kind of football, anyway:

Garber in his letter, dated Friday, said he was surprised and disappointed at the Rams’ departure and “in the wake of recent developments” wanted to reaffirm his commitment to considering St. Louis as an expansion city.

“I look forward to working with you, your staff and local leaders to explore ownership candidates and to investigate viable stadium solutions to bring MLS to St. Louis,” Garber said in the letter.

Yeah, like Missourians are going to accept a whole different sport as a substitute for anoth —

A Florissant lawmaker who earlier offered up a sales tax financing plan for a new riverfront football stadium is now saying a similar idea could be used to bankroll a new soccer stadium in St. Louis.

State Rep. Keith English has introduced legislation that would put a tax of not more than one-tenth of one percent on the ballot in St. Louis and St. Louis County. A green light from voters could generate between $10 million and $15 million annually, he said.

Note that this plan would have to go before city and county voters, so would almost certainly fail, especially given that nobody thought a similar Rams vote could pass, and some people actually already liked the Rams. Still, mute those cheers that by losing the Rams St. Louis has at least saved $477 million — there are plenty of other sports leagues lining up for a shot at it. How long before the Cardinals‘ stadium is 20 years old?

St. Louis asks NFL to pay off remaining debt on Rams stadium, doesn’t hold collective breath

St. Louis City Board of Aldermen President Lewis E. Reed has sent a letter to NFL commissioner Roger Goodell asking the league to pay off the $36 million in remaining debt on the Jones Dome now that the Rams are moving to Los Angeles:

12321229_893924624061853_8661786470950347268_nLet’s be clear about one thing: This is never ever ever ever ever going to happen. Reed’s predecessors in public office signed a horrible deal agreeing to build a stadium for the Rams while letting the team move out before it was paid off if they wanted to (and could show it was no longer “state of the art,” which was always going to be a formality), so if Goodell replies to this in any way other than ineffectually trying to stifle a guffaw with the back of his hand, every human on earth, including Reed himself, will be stunned.

That said, as a way of publicly shaming the NFL by saying, “Guys, we built you a stadium, then you yanked our team away before we’d even paid the last installments, you suck,” it’s fine enough. Or would be if the NFL had any capacity for shame. Maybe it’ll at least get St. Louis some public expressions of sympathy.

L.A. debates Rams stadium’s impact on economy, planes crashing

L.A. Weekly has a long piece up about how the new Rams stadium development will affect the future of Inglewood, and answers, “Reply hazy, ask again later“:

We’re talking about roughly 25 events year — a bump for the Inglewood tax base but probably not much of an economic stimulus on its own.

No, the real economic kick will come from the office space/housing/God-knows-what-else components of the project, and we really don’t know the scope of that yet.

Also, the story notes, this could increase the pace of gentrification in Inglewood, or it might not, either of which could be good, or bad, depending on your perspective.

Meanwhile, Bloomberg News has its own long piece about how the FAA is working with the Rams to make sure the new stadium doesn’t mess with radar and cause planes to crash, which is actually a concern. “You’re trying to do the exact same thing that you do with a stealth airplane,” one aeronautics professor told Bloomberg, which doesn’t sound like something that would increase the cost of the stadium at all. It is a really, really good thing that Stan Kroenke is covering the construction costs on this one, because the way things are going, we could conceivably end up seeing the first $3 billion stadium in history.

Billionaire Kroenke borrowing billion dollars to build L.A. stadium, because why not?

Everybody who’s been talking about how Rams owner Stan Kroenke was in the best position to build an L.A. football stadium because he had the most money, you can shut up now:

Rams owner Stan Kroenke is planning to borrow about $1 billion from JP Morgan Chase & Co. to help fund the proposed Inglewood stadium, which could cost nearly $3 billion.

That’s right: Kroenke is getting a big piece of his stadium construction budget by going to a bank, same way as Dean Spanos and Mark Davis would have in Carson. Not because he doesn’t have cash — he’s worth $7.5 billion, though some of that may be locked up in his cherished vintage typewriter collection or something — but because when interest rates are this low, you’d be crazy to use your own money when you can use a bank’s.

For the rest of the construction cost, Kroenke can use $200 million in NFL G-4 money, and whatever he gets from the sale of naming rights and PSL sales once he’s allowed to sell those next January (or once the San Diego Chargers agree to move in with the Rams, whichever comes first), and whatever he gets from either Spanos or Davis if they agree to move in with him, and the remainder will have to come from out of his bank account. Most of the construction bills won’t come due for a while, so he can cross that bridge when he comes to it — in the meantime, he has $1 billion to play with.

In related news, Fivethirtyeight has a good explainer on why moving to L.A. isn’t as lucrative for NFL teams as for teams in other sports. It’d be nice if they tried to figure out how an estimated $500 million increase in team value (per economist Victor Matheson) is supposed to come close to paying off a $3 billion stadium plus relocation fee cost, but I tried to do it and couldn’t make head or tail of it, and Nate Silver isn’t that much smarter than me, right? (Hi, Nate!)

Rams, Chargers close to agreement on L.A. stadium share, say cats

Unsourced reports! We got more unsourced reports about what’s going to happen to the San Diego Chargers and Oakland Raiders!

And sure enough, execs of the Chargers and the Los Angeles Rams (guess we should start calling them that now, huh?) met yesterday, and afterwards issued this statement:

We have concluded our first meeting. We mutually have agreed not to publicly discuss details of this or any future meeting.

Okay, so that doesn’t sound like an agreement is imminent. But it could be! And sources are predicting it, and correct predictions can come from all kinds of sources!

In other news, NFL owners are saying that it was the pretty pictures that Stan Kroenke provided of his planned football theme park in Inglewood that swayed them to approve the Rams move, after initially leaning toward the shared Chargers/Raiders plan in Carson. If true, this is absolutely terrifying — not because the pictures aren’t pretty (as pictures of people wandering hand-in-hand through a futuristic dreamscape go, they’re top-notch), but because it means that NFL owners are susceptible to Calvin’s clear plastic binder. Me, I would have wanted to see some actual financial numbers, even if they were half made-up, but that’s not how these guys roll, apparently.

No, forcing relocating teams to pay off remaining stadium debt isn’t happening, or helpful

And then there’s this, from Deadspin:

Missouri senator Claire McCaskill says that she is drafting legislation that would require professional sports franchises that skip town prematurely to refund the public. St. Louis now has no NFL team, but incredibly, the city, county, and state still owe a combined $152 million to pay off the Edward Jones Dome…

The likelihood of a bill of this nature ever actually being passed, of course, is slim-to-none. But as a senator McCaskill wields enormous influence, and just the threat of legislation could be enough to compel professional sports leagues to do something that would reduce the brazen fleecing of cities and states.

Um, yeah. First off, let’s note (as Deadspin itself acknowledges) that McCaskill supported paying Rams owner Stan Kroenke $477 million toward a new stadium 20 years after building the Jones Dome with taxpayer money, so this is almost certainly playing to the crowd’s anger by threatening Kroenke with legislation that will never come to pass. (McCaskill also suggested that the NFL could be in violation of antitrust laws if it didn’t follow its own bylaws by forcing the Rams to stay in St. Louis, which, what?) Teams moving out of stadiums that aren’t finished being paid off is an easy thing to complain about, but when you think about it, it wouldn’t be any better a deal for St. Louis if they’d sold 20-year bonds and already paid them off faster rather than having another decade to go, so why should team owners’ responsibility to their cities be dependent on what kind of financing tools were used to borrow the money?

Though I should also note that if this somehow did become law, it would provide an easy way to ensure that teams stay put indefinitely: Just refinance every few years to push your stadium debt out into the future, like Robert Moses used to do with his bridges so he could keep on keeping toll money in perpetuity. Shh, don’t tell anyone I said it, maybe we can pull this off!

Stadium spending is bad for humans and other living things, Thursday edition

Happy National Notice That Stadium Subsidies Are A Bad Deal Day, everybody!

  • The Wall Street Journal notices that the soon-to-be-again Los Angeles Rams are set to join the San Francisco 49ers and Golden State Warriors in building new sports venues without much in the way of public money, and declares this a trend, in California, at least. Though the authors then note that the Sacramento Kings got plenty of public cash, and the San Diego Chargers could yet get a bunch from that city, “despite a wealth of academic studies showing that stadiums and arenas are poor investments when it comes to economic development.” I’m not exactly sure what this all is supposed to add up to, but it does provide a nice roundup of the stadium landscape for anyone who’s been living under a rock.
  • The San Gabriel Valley Tribune asks if the new Rams stadium in Inglewood will provide a big economic boost to the region, and cites a couple of economists and the finance director of Foxborough, Massachusetts in answering, “Nah.” In particular, Vanderbilt’s John Vrooman replies: “The net local impact of a professional sports team is zero, if not negative sum, particularly for an NFL team playing in a monolithic space-eating stadium. … The local sports bars will probably rock, but most direct spending at the stadium stays at the stadium. The injection of new cash flow into the local economy is negligible because it’s coming at the expense of local spending someplace else. The indirect spin-offs are also small because most of the spending leaks out of the economy like a sieve and so the urban/regional multipliers are usually zero, zip … nada.” Stan Kroenke’s poor poor people are going to be awfully disappointed.
  • Milwaukee’s Fox6 looks at the “arena district” the Bucks are promising to create around their new taxpayer-subsidized arena, and notes that in Columbus, while restaurants around that city’s new arena indeed did great, restaurants in other parts of town saw business decline: “Other restaurants went out of business and a lot of people started moving out of the neighborhood and into newer apartments,” said Tony Scartz, a restaurateur in the Brewery District across town from the new arena. “And most importantly, for me personally, was the office space vacancy that was created because people moved out of the Brewery District and into the newer office space down around the Arena District.” This is exactly what you’d expect from the substitution effect, as explained in the Fox6 piece by, um, me.

Tune back in tomorrow, when some city official somewhere will tout the massive economic benefits available from building a new sports venue! They will fight eternally…