Blues owner demands $138m for arena one day after governor declares end to sports subsidies

As if to prove that when one governmental subsidy door closes, a governmental subsidy window opens, the St. Louis city council followed up new Missouri Gov. Eric Greitens’ declaration that he won’t approve any state sports subsidies by announcing it would vote on spending $67.5 million in city tax money on upgrades to the Blues‘ arena. A funding bill, which would involve $4 million a year in kicked-back arena sales taxes and a new 1% arena sales tax surcharge over 28 years (yes, that’s $112 million total, but since much of it would be collected far in the future it’s only worth $67.5 million in present value), could be introduced as soon as this week in the city council, and council president Lewis Reed has said it won’t require a public vote, notwithstanding that disputed St. Louis law saying that all sports spending requires a voter referendum.

And why, exactly, does Blues owner Tom Stillman think the city should pay to upgrade his team’s 23-year-old arena with such items as new seating, a new scoreboard, sound and lighting upgrades, and renovated locker rooms and concessions stands? Glad you asked!

“The Scottrade Center is no longer competitive,” said Blues Chairman Tom Stillman, adding that NCAA and concert promoters have warned that they will stop coming to St. Louis without upgrades to compete with facilities in Indianapolis, Kansas City, Nashville, Tenn., and elsewhere.

Yeah, that is a concern — to whoever is in the business of operating the Scottrade Center, which would be Stillman. The only potential cost to the city would be the loss of some sales tax revenues if the NCAA or concert promoters actually cut back on events, and since even according to Stillman the city only earns $6 million a year in sales taxes from the arena currently, it’s pretty inconceivable that any loss would be worth $4 million a year, since the Blues would still be playing there 41 nights a year. But as we’ve seen before, the first refuge of a stadium-subsidy grubber is to declare the old place obsolete, so it’s not surprising to see Stillman making that claim, even if the numbers don’t quite add up.

And speaking of numbers, Stillman’s total subsidy demand could more than double, as he’s preparing to ask for a second round of money from the state, Greitens’ Monday announcement be damned:

City and Blues officials also are planning to ask state legislators for $70.5 million for further renovations in a second phase, the timeline for which is still being finalized.

That would come to $138 million in public money for upgrades to a 23-year-old arena, with the only public benefit in return being “maybe we’ll get more concerts and NCAA tournament games this way.” A sane city negotiator would say, “Okay, great, how about you give us a cut of the actual revenues from those events to help pay off the public’s costs, like you’ll be using them to pay off your own share of the renovation?” Instead, we get this:

Reed stressed that the facility has already paid for police officers and transportation needs but hasn’t had a major upgrade since it was opened. “We must stay competitive,” he said.

Greitens hasn’t publicly commented on the Blues subsidy proposal yet, but one newspaper columnist has already decried local officials’ “disunity” on sports funding as the reason why St. Louis is having trouble keeping up with the likes of Louisville. Yes, he said Louisville. Apparently they don’t teach irony in journalism school.

Agency that okayed Red Wings arena deal is run by a bunch of tax cheats, this all makes sense now

Now here’s a newspaper lede you don’t see every day:

The Downtown Development Authority board spending $250 million in taxes on Little Caesars Arena is dominated by tax delinquents with financial problems and in some cases criminal records, according to public records.

The DDA, you’ll recall, is the local quasi-public development corporation that spearheaded the push to spend $300 million in public money on a new Red Wings arena, plus another $34.5 million to move the Pistons in with them. It’s long been considered about as in the pocket of the local business establishment as you can get — its longtime director took a job with the Red Wings as soon as he’d left office — and now, according to the Detroit News, its board is a clown car full of clowns:

Seven of the 12 appointed DDA members have a history of financial issues, including more than $500,000 in state and federal tax debt, according to public records. Several blamed the problems on the Great Recession, an ordeal they say made them better public stewards and taught them how to avoid making new financial mistakes.

Yes, you read that right: The tax delinquents on Detroit’s development authority board say that this makes them uniquely qualified to plan the city’s economic future. And the city council president agrees with them:

Council President Pro Tem George Cushingberry Jr. said he doesn’t see the past financial troubles of some board members as an issue.

“It doesn’t mean that they aren’t capable of doing a good job,” said Cushingberry, who filed for bankruptcy in 2011 and lost a home to foreclosure. “In fact, we probably need a few people that have some tax issues so they can anticipate the possibilities.”

Not that making bad financial decisions should necessarily rule anyone out from public service, but maybe it might be a consideration for a job that requires making financial decisions for the city? What next, hiring a guy to run an agency that he not only wants to eliminate, but he can’t even remember the name of? Wait, what?

Pistons, Red Wings still not telling anyone how they plan to split their arena boodle

You know what I could really use this morning? A good article to read. Here’s a good article, from Sunday by Bill Shea of Crain’s Detroit. What makes it good: It’s that rare article about an important lack of information, which nonetheless informs readers about what the issues are, and why it’s important to know what certain parties are refusing to divulge:

The long-speculated on deal to relocate the Detroit Pistons from Oakland County to the Red Wings’ new downtown arena that will open in September was formally announced Nov. 22. What hasn’t been disclosed are any details about the upcoming financial relationship between the clubs.

Neither team is willing to discuss terms of the deal — which apparently still is being finalized — and a spokesman for Detroit’s Downtown Development Authority that owns the new arena said the Pistons-Red Wings contract has not yet been shared with the city. Terms of the deal between the teams do not have to be provided to the city or DDA.

There are plenty of ways to structure the deal, reports Shea, including Red Wings owner Mike Ilitch paying the Pistons to play in his arena but then keeping basketball club seat and suite revenue in exchange (as the Boston Bruins do with the Celtics). And what form it takes could have as much with trying to play revenue-sharing arbitrage with the NBA and NHL rules as with plain old sports bookkeeping.

And if you’re wondering why you should care how the Pistons and Red Wings owners divvy up their private revenue — the $334.5 million in public cash in the deal will remain the same regardless — this is not only likely to help determine the future fate of the Pistons’ old arena in Auburn Hills and how the two teams approach monopoly control of a region’s arena market, but should tell us a lot about what teams can get out of new arenas and why they want them. Other than the $334.5 million, obviously — it’s pretty clear why they want that.

Cash-starved Connecticut considering $250m arena renovation because millennials or something

The state of Connecticut is considering spending $250 million to upgrade Hartford’s XL Center (formerly the Hartford Civic Center) and everybody likes it except for the part about coming up with $250 million:

Supporters of transforming downtown’s aging XL Center arena lined up at a hearing Tuesday to back the $250 million project, but the uncertainty of whether the money will be there to pay for it hung over the meeting…

There is growing resistance to using bonds — essentially the state’s credit card — for big ticket projects when funding is being cut to social services, road improvements and school construction…

“The state simply can’t afford these kinds of projects at this fiscal moment,” Sen. Joe Markley, R-Southington, said, at the hearing. “Bonding and debt service has grown dramatically and terrifyingly … And $250 million or whatever the final price tag is, we can’t afford in these times.”

I’ve been to the Hartford arena, and I’m sure renovations would be nice (though the place is hardly falling down). But Connecticut already has plenty of other concert venues (the arena in Bridgeport, the Mohegan Sun and Foxwoods casinos, there’s no major pro sports team using the Hartford arena, and while the arena is currently losing about $3 million a year, spending $250 million to save $3 million a year is beyond stupid, so what’s the urgency, exactly?

The authority has said the renovations are necessary if the city hopes to bring major league hockey back to Hartford, absent since 1997 when the Hartford Whalers left…

“If we don’t take action and we leave the thing as it is, how can we attract new businesses, new people, millennials?” said Scott St. Laurent, secretary of the Hartford Whalers Booster Club, who was wearing a Whalers jersey. “How can we attract them to downtown if we don’t give them anything to do?”

There you have it: Connecticut is considering spending $250 million on arena renovations because millennials — who are already moving to downtown Hartford in droves — won’t go downtown unless they can watch an imaginary hockey team. At least this would make everybody forget about the Yard Goats fiasco, though I’m not sure in a good way.

Coyotes get developers to drop opposition to tax-kickback plan by promising not to do it again

An Arizona commercial real estate group has dropped its opposition to the Arizona Coyotes‘ demand for $200 million in tax kickbacks for a new arena because, apparently, the team is promising not to do it more than once:

“We were initially opposed,” [NAIOP Arizona president Tim] Lawless said.

But now the group is neutral.

That comes after meetings with Coyotes President, CEO and co-owner Anthony LeBlanc and assurances an arena tax district would not be applied to other projects and sports developments.

I guess technically this means that LeBlanc gave the commercial real estate developers assurances that any authorizing legislation would be narrowly written to just give him a giant whopping tax break, and not all sports team owners, which would have potentially drained an even large share of funds from the state treasury and left existing real estate owners holding more of the bag. That’s not likely to make the owners of the Diamondbacks and Suns happy if they’re hoping to ask for tax kickbacks for their own projects, but LeBlanc can worry about fighting with them later.

Anyway, none of this immediately changes the fact that top state officials sound cool to the LeBlanc plan, and supposed partners Arizona State University still haven’t actually signed on, and so on. But getting one less semi-powerful group hating on him has to be seen as progress of a sort for LeBlanc, anyway.

Top Arizona officials not really into this whole “give Coyotes another $200m in tax money” thing

Let’s check in on how the Arizona Coyotes owners’ proposal for a $400 million Tempe arena, half paid for by tax kickbacks, is going over with the state officials who’d need to approve it:

“I’m a big fan of the Coyotes but I haven’t heard anything about that,” Gov. Ducey told Welch.

“They’ve not talked to you?” Welch asked the governor, who replied, “No.”

Mmhm. Anyone else?

The newly-elected speaker of the House and a senior lawmaker who formerly chaired the House Appropriations Committee said they would be resistant to a TIF or a tax rebate.

“We care about the Coyotes, we also care about the taxpayers of the state,” said Speaker-elect J.D. Mesnard, R-Chandler.

Sen. John Kavanagh, R-Fountain Hills, the former chair of the House Appropriations Committee, said there just isn’t enough money to go around, especially at a time when the public is calling for more money for education.

“They’re not asking for a tax rebate, they’re asking for us to go into a budget deficit or to take on debt to build their private stadium,” Kavanagh said.

I’m going to go out on a limb and classify this as “not well.” While it’s still early and there’s obviously much haggling to go, perhaps this whole “announce an arena plan without telling anyone about it in advance, including the state university that you’re supposed to be partnering with” thing wasn’t the best idea. Though maybe the Coyotes owners are just really committed to transparency and not negotiating behind closed doors, in which case, kudos to them!

Yep, Pistons owner is getting even more public money to move team to downtown Detroit

And we have the terms under which the Detroit Pistons will move from their 28-year-old arena in Auburn Hills to a zero-year-old arena in their namesake city, courtesy of MLive. With no further ado:

The Pistons will play all home games at the 20,000-seat Little Ceasars Arena starting with the 2017-18 season.

Right, we figured.

The team and Palace Sports & Entertainment will move its business operations, corporate headquarters, team practice and training facilities into a new practice facility, to be built north of the arena at a cost between $32 and $55 million.

That’s pricey. Who’s going to pay for that?

Detroit’s DDA has agreed to contribute $34.5 million in additional bond proceeds through refinancing to be used for redesign and construction to modify Little Caesars Arena from a hockey facility to jointly house an NHL and NBA team.

Apparently Steve Neavling was right to be suspicious when Detroit’s Downtown Development Authority scheduled a meeting for a half-hour before the Pistons announcement and wouldn’t tell anybody what it was. But is this real Detroit city money, or passthrough money that’s really coming out of state education funds, like most of the rest of the arena costs? Reply cloudy, ask again later.

No city of Detroit general fund dollars will be spent on the arena project, and any additional costs or cost overruns will be paid entirely by the Pistons, the Red Wings and associated companies.

Teams pay overruns, all the public money comes out of special segregated funds, not the precious “general fund,” blah blah. It’s still city (or state) dollars that could be used for something else otherwise.

The Pistons are responsible for all costs relating to the development, construction, operation and maintenance of the practice facility.

That’s good!

The location of the team’s practice facility may be owned by the DDA, subjection to a concession agreement with the Pistons.

That’s possibly bad, since it means the practice facility wouldn’t pay any property taxes! Unless the concession agreement involved making payments in lieu of taxes. Reply cloudy, etc.

The Pistons have agreed to a 10-point community benefits plan, including investing $2.5 million over six years for the construction, renovation and refurbishment of more than 60 basketball courts in Detroit, the employment of at least 51 percent of Detroit residents on the construction of the practice facility and provide 20,000 free tickets a year to Detroit youth and area residents.

Better than nothing, but for what the DDA is putting into this, they could have built 1,000 basketball courts.

So, wait, who’s paying for that practice arena again?

Wait, what?

Okay, phew. You know, this “rough draft of history” stuff was a lot easier before Twitter got people publishing their actual rough drafts.

Anyway, total public subsidies for the arena are now at $334.5 million at minimum, and possibly even higher than that. You can argue that it’s worth it to Detroit to throw this money at the arena in order to lure the Pistons across the border from Auburn Hills — the tax impact may not be as huge as team owners like to pretend, but it doesn’t have to be to repay just $34.5 million — or you could argue that the Red Wings are eliminating a competitor (the Palace at Auburn Hills will almost certainly be razed now) and the Pistons are getting a newer home, and they’re both owned by billionaires who clearly want to do this deal regardless, so why the hell can’t they pay for adding a basketball court instead of Detroit be giving up scarce tax revenue?

More news tomorrow morning, if the magic eight ball clears up.

Pistons to announce move to Red Wings arena; public money, fate of Auburn Hills arena unclear

For anyone wondering if the Detroit Pistons are really going to abandon their own arena in Auburn Hills and shack up with the Red Wings in downtown Detroit, looks like, yup, they sure are:

The Detroit Pistons will announce Tuesday that they’ll leave The Palace of Auburn Hills to join the Detroit Red Wings at Little Caesars Arena in downtown Detroit for the 2017-18 season, a source familiar with the negotiations told The Detroit News on Monday.

What all this means in terms of financial details between the Pistons and Red Wings owners, the fate of the Palace at Auburn Hills (razed for redevelopment? all-Disney-on-Ice schedule?), and whether any more public money will be involved, we have no clue as of yet — though Motor City Muckraker blogger Steve Neavling notes with alarm that Detroit’s Downtown Development Authority is going to be voting on something right before the Pistons announcement:

neavling_on_stadiumMore news later today, I guess. Though given the way these things go, don’t be too surprised if we get a lot of renderings and not much in the way of financial details until later.

Coyotes arena plan continues to look less like a plan than like a way to get media attention

Recent developments in the Arizona Coyotes‘ Tempe arena plan kerfuffle, as I was making my way back yesterday from talking to folks at UConn about stadiums and development and journalism and other matters:

  • The Coyotes, as noted previously, would build the Tempe arena on property controlled by Arizona State University, which would get to use the pro team’s attached 4,000-seat practice facility for its own hockey games. (Don’t click on the link unless you really have to, it launches an awful autoplay ad with audio.) But hockey games only — ASU would still be renovating its own 12,000-seat arena for other sports, leaving the Phoenix area with these two arenas, plus the Suns‘ existing Phoenix arena and maybe the new one that they want to build, plus the Coyotes’ old arena in Glendale, and … you know, one of the things I did in Connecticut was a attend a class that was talking about reducing the environmental impact of new sports venues — you think maybe not building a different one for each and every sports team in a metro area would be a start?
  • Speaking of Glendale, that city just settled a longstanding lawsuit by the Cardinals over the city’s previous promise to build more parking spaces by agreeing to pay $17 million, instead of the $36 million the team was demanding. So that’s either a $19 million savings, or another $17 million down the drain of the old Glendale administration’s money-losing sports spending spree, depending how you want to count.
  • Laurie Roberts of the Arizona Republic wrote a good column (no autoplay ads on this one, yay!) laying out how stupid and awful this whole mess is. Sample: “For a brief shining moment on Monday, I actually thought that the Coyotes honchos had figured out there was a reason why their proposal to high-jack tax revenues to build yet another hockey arena was DOA at the Legislature last spring. Boy, was I ever wrong.”

Roberts also noted that no actual city or state elected officials or ASU administrators were on hand for Monday’s press conference, which is looking more and more like an attempt at jump-starting momentum for this arena project than an actual announcement of anything. And I’ve now written about it four times this week already, so apparently it’s working!

Coyotes owner demands $200m in tax kickbacks for arena, says this isn’t asking for government money

So apparently Arizona Coyotes owner Anthony LeBlanc did say something about how he planned to pay for a new hockey arena in Tempe yesterday. And it was: Give us great gobs of tax money.

The Arizona Coyotes will ask the state Legislature to divert up to $200 million in tax dollars to help pay for the team’s planned $400 million arena in Tempe, Coyotes executives said at a news conference Monday.

The team would contribute the other $200 million to a project that “pays for itself,” said Anthony LeBlanc, the Coyotes’ chief executive officer.

“There’s no question that we’re going to have some form of public-private partnership to make this work,” LeBlanc told reporters.

“That is a very typical model. We are not going in and asking for government to build us an arena.”

The state money would come in the form of rebates to the team on sales tax and other tax revenue generated by the arena.

Well, yes, actually you are asking for government to build you an arena — or to build you half an arena, anyway. There’s a longstanding gambit among sports team owners to consider “tax rebates” as different from straight-up cash, but this is nonsense: Money is money, and if I’m running a business, it doesn’t matter to me whether I get it in the form of a check to the construction company or as a check from the state tax agency that I can then use to pay the construction company. (There’s a reason the term “tax expenditures” exists.)

While “sales tax and other tax revenue generated by the arena” is a bit vague, it seems clear that what LeBlanc is talking about here is tax increment financing, or a TIF; or, really, a STIF in this case, since it would kick back sales taxes from money spent at the arena (and maybe team employee income taxes, too?) instead of the more typical property taxes. I’ve gone on about TIFs before and how they cannibalize money that would otherwise go to the public treasury — Good Jobs First has an excellent primer on them as well — but suffice to say that when you’re talking about state money, they’re especially ludicrous, since there’s no way that the state of Arizona will bring in significantly more sales tax revenue just because the Coyotes move from Glendale to Tempe.

Anyway, this appears to be the opening salvo in LeBlanc reopening the TIF discussion that he started last spring. There’s no reason to assume that this will be the final subsidy figure he arrives at — there’s still the matter of operating and maintenance costs to be decided on, and remember Judith Grant Long‘s figure that the average stadium costs taxpayers 40% more than the announced subsidy figure. But at least we know his initial ransom demands, even if we don’t know what he’s willing to settle for.