Islanders really definitely considering building new arena at Belmont Park, maybe

Confirming rumors that first emerged last summer and then re-emerged in February, NHL commissioner Gary Bettman said on Friday that the owners of the New York Islanders are definitely going to bid on state-owned land at Belmont Park racetrack, with the goal of building a new arena there:

“Yes, there is an RFP [request for proposal] for Belmont and I know they are going to participate in that,” Bettman said of the Islanders. “I believe that everyone thinks there is a terrific opportunity there, if not at Willets Point, to create a more hockey friendly environment for the Islanders, which is something [Islanders co-owner] Scott [Malkin] is committed to do.”

You’ll note that all this is still pretty hedgy: “Participating” in bids for the land isn’t the same as actually committing to building an arena (the New York Cosmos participated in bidding for years, and that went nowhere), and Bettman still isn’t ruling out building in Willets Point near the Mets‘ stadium, either. He did rule out playing at the renovated Nassau Coliseum as “not a long-term option,” but really all this comes down to is: The Islanders owners want a new arena of their own, and they’re going to try to get one, by gum.

Who would pay for both construction and land costs remains a mystery. Yes, Tim Leiweke’s Oak View Group and his partners at Madison Square Garden seem eager to make a splash in the arena business regardless of the cost, but that still doesn’t necessarily make the finances of yet another New York–area arena work out. I’ll close, by repeating what I said back in February:

There are way too many unknowns here to say whether this story could have legs, or is mostly just the Islanders owners trying to leverage Prokhorov into giving them a lease extension in Brooklyn that lets them keep their guaranteed-income deal and/or renovates the Barclays Center to be a less sucky place to watch hockey. I’m in an optimistic mood today, so I’ll say I hope that this is another indicator of a burgeoning arms race within Big Arena that sees billionaires throwing money at new venues without demanding big public subsidies, just because they’re trying to drive each other out of business. It couldn’t end well — anybody remember the Borders-Barnes & Noble war? — but at least the only casualties would be some private corporation’s bottom line.

The new Belmont Park request for proposals is expected to be issued soonish. If nothing else, it will be a very interesting ride.

Ottawa mayor says he’ll consider public money for arena that’s supposed to use no public money

And meanwhile, in Ottawa, where Senators owner Eugene Melnyk promised last year that he’d build a new arena and surrounding development with “no government money” … you know where the rest of this sentence is going already, don’t you?

Mayor Jim Watson isn’t ruling out investing public money into a downtown NHL arena at LeBreton Flats.

“I don’t know if they’re going to come forward and ask for any of those dollars,” the mayor told reporters after Wednesday’s council meeting. “Certainly I want to make sure that whatever happens there is to the benefit of the taxpayers of Ottawa.”…

While the mayor repeated that he wasn’t going “to speculate on something that hasn’t been asked,” it is the first time he has seemed open to the possibility of putting taxpayers money into the arena.

“My bottom line is, whatever is being asked from us, does it make sense and is there a return on our investment whether it be through property or development charges or the increased market value assessment of the property,” Watson said.

Yeah, you know, if you don’t want to speculate about something that hasn’t been asked, maybe openly speculating about it isn’t the best way to go about it. To be fair, Watson was probably asked about this by a reporter, and felt like he had to say something, and so he improvised a line about “return on investment” based on something he vaguely remembered Naheed Nenshi saying, and it ended up as a headline. So cut Mayor Paralipsis a break, okay? This whole talking-while-governing thing is hard.

The Coyotes arena-subsidy saga is even more pathetic when you lay it all out in one place

Here’s a fun headline to start your week with:

Arizona’s Terrible Hockey Team Wants a Third Taxpayer Funded Stadium Since 1996

The article, in the libertarian magazine Reason, doesn’t break a lot of new ground, but it is a great overview of the Arizona Coyotes situation, in which the team relocated from Winnipeg to Phoenix in 1996, then across town to Glendale in 2002, and now is trying to move to Tempe or anyplace else in the Phoenix area that will build them a new arena. The team owners are not just looking to play off cities against each other, though, but get state funding, which is extra-stupid because:

Since the team is already in the area, building a new stadium would not create a new source of tax revenue for Arizona, says Victor Matheson, a sports economist at the College of the Holy Cross. Moving from Glendale to Tempe, Matheson says, merely would shift the economic benefits from one municipality to another.

And also:

Building more stadiums in a single metropolitan area will only create more competition for a limited number of major events.

“Lady Gaga isn’t going to play both Phoenix and Glendale,” is how Matheson puts it.

And then there’s:

The Coyotes are unlikely to leave for greener pastures, though, because NHL executives care much more about having a team in the Phoenix area than anyone in the Phoenix area cares about having a hockey team. The Phoenix metropolitan area is the sixth largest media market in the United States, which means an NHL benefits from having a presence there—even if the team is terrible and the fans are apathetic—for marketing purposes and television advertising revenue.

That’s more debatable: The NHL’s national U.S. TV revenue is pretty piddly as these things go, and I really doubt NBC said during negotiations, “Well, since you have that all-important Phoenix hockey viewership market, we’ll tack on an extra $25 million a year.” More likely is that NHL commissioner Gary Bettman is fixated on his “Sunbelt strategy” to to seed NHL franchises across the U.S. South and West, and doesn’t want to back down — though since that’s a strategy predicated on filling U.S. markets to get bigger U.S. TV deals, I suppose Reason is at least half-right. You’d kind of think by now that some of the other NHL owners would be saying, “Gary, this whole Arizona thing isn’t working out, let the team move somewhere that it can actually sell a ticket or two,” but I suppose where there’s arena-subsidy life, there’s hope.

Flames CEO threatens to move team, denies he’s threatening to move team, universe explodes

Almost 20 years ago, Joanna Cagan and I coined the term “non-threat threat” for the common practice of sports team owners warning that their teams would leave without a new stadium, while simultaneously saying that that was the last thing they wanted. (We could have gone with the “paratrooper gambit,” but in the days before hotlinking we weren’t sure everyone would get the reference.) But until now I’d never seen a team owner actually levy a move threat while explicitly claiming he wasn’t making a move threat — until now:

“There would be no threat to move, we would just move, and it would be over. And I’m trying my level best to make sure that day never comes, frankly,” [Calgary Flames CEO Ken] King said during an interview on Sportsnet Fan 590 in Toronto on Wednesday.

So I sort of know what he’s saying — “There won’t be any warning, we’ll just be gone, boom” — except that saying that on the radio is actually pretty much the definition of a threat. That last bit about “trying my level best to make sure that day never comes,” meanwhile, is straight out of the Vercotti brothers playbook, or concern trolling if you prefer.

The goal of this non-threat threat, of course, is to shift the terms of the Calgary Flames arena debate, from “Why should the city give your team $1.2 billion?” to “How are we going to keep the team in town?” (The timing, coming two days after Calgary Mayor Naheed Nenshi declared the Flames owners’ previous arena plan “dead,” was surely not coincidental.) And with that “hey, we don’t want to move” element, King simultaneously gets to introduce plausible deniability, which both keeps fans from descending with torches and pitchforks and also sidesteps any questions about exactly where the team is threatening to move to — since it’s not really a threat, see?

Whether this is a real non-threat or a fake one, though, depends on exactly that: What other options do the Flames owners have? The team currently sits smack in the middle of the NHL as far as team valuation, according to Forbes, and turns about a $20 million a year profit. Would oil sands tycoon N. Murray Edwards and his fellow owners really move the team to, say, Seattle (if that city built a new arena) or Quebec (which would require selling the team to local owners there) in hopes that it would catapult them into the upper tier of NHL franchises? It’s not impossible, but it also doesn’t seem very likely, compared to the more plausible interpretation that King is just dropping idle threats (sorry, sorry, non-threats) in order to panic Calgary fans and elected officials into not caring about that $1.2 billion.

And so how’s that panic going, anyway? Mayor Nenshi seemed unperturbed, or feigned unperturbation at least:

“The owners of the Calgary Flames have repeatedly assured Calgarians that they would not threaten to move the team, and I assume that they have not shifted from that position,” Nenshi said. “I plan to enjoy the playoff run while letting the conversations continue.”

The Calgary Herald, meanwhile, scoured social media to find that some people are made at Nenshi (“nenshi do u work as much as u tweet???if flames leaves calgary,you should leave yyc”) while some are mad at King (“If this is such a great idea, then why don’t these well-off business people pool their resources and build one?“), which should surprise no one who’s ever been on social media. (No reports yet on whether the threat has moved the poll numbers on an arena subsidy plan.)

Over the weekend, King tried to clarify things, or at least forestall some pitchforks, by issuing a statement on the Flames website that read in part:

In response to a question, are you going to use the threat of moving as a tactic, I said we would not. I also said we would “just move.” The facts are we need a solution and if it is deemed that there is no made in Calgary solution we will have to make a decision at that time, which logically could include deciding to move the team. It is merely one out of a few possible outcomes if we are unable to reach a deal with the City that will work for both sides.

To which one Flames fan replied on Twitter:

Yep, that about sums it up. Though if it ends up working as a savvy negotiation tactic, King will surely be able to live with the Twitter ridicule.

Calgary mayor sticks fork in Flames-Stampeders combined stadium-arena plan

It’s always best not to assign too much significance to the exact wording of off-the-cuff remarks, and the CalgaryNEXT stadiarena plan for the Calgary Flames and Stampeders has been pretty much dead since it was revealed last April that the public cost would be at least $1.2 billion, and the city council could still overrule him, and declaring one plan dead isn’t the same as declaring all plans dead. Still! Calgary Mayor Naheed Nenshi actually using the word “dead” — as in, “the thing about a new arena project, and I’ll use those terms because CalgaryNEXT, the West Village project, is dead” — is a pretty good sign that the Chest Protector Dome is, in fact, dead. Time to move on to Plan B, of which nobody actually has a clear one, but it sounds a lot more polite than “lump it.”

The more interesting statement by Nenshi came after the “dead” thing, actually:

“But, the thing about a new arena project is that our first criteria has always been public money for public benefit, so it really is up to the Calgary Sports and Entertainment (Corp.) to figure out what the public benefit is,” the mayor continued.

Again, that’s nothing new from Nenshi, who’s consistently said he won’t approve any plan without a clear public benefit. But it’s also a bit of a thrown gauntlet: You want money for a new arena, first show me why I should build you one. This is an eminently reasonable way to approach subsidy demands, whether from a hockey team or an auto plant, and provides an even better reason to consider making the great leap northward.

Coyotes’ $170m tax kickback bill is mostly dead, owners go back to drawing board

So if Arizona Coyotes owner Andrew Barroway and NHL commissioner Gary Bettman though that threatening vaguely that the franchise “cannot survive” in its existing arena in Glendale was going to shake loose money from the state legislature, yeah, no, that’s not happening. State senate president Steve Yarbrough told the Arizona Republic yesterday that “I have no expectation that that bill is going to move,” and even the bill’s sponsor was reduced to mumbling something about how where there’s life, there’s hope:

[Sen. Bob] Worsley, who pushed the bill through a committee he chairs in February, said it “may be the case” the legislation is in trouble. Yet he noted that no bills truly are dead until the Legislature adjourns.

So assuming that the bill to write as much as $1 billion in blank checks to local sports teams for new buildings isn’t going anywhere, now what? Barroway and his co-owners may not be getting paid $8 million a year to run the Glendale arena anymore, but they still have a fairly cushy lease that has already been extended through 2018, so they can easily keep going year-to-year while trying to find some other Phoenix-area elected body eager to throw public money at them. They could try to move the team, but the options there aren’t much better: Quebec would require selling the team to Quebecor, Seattle still doesn’t have an NHL-ready arena, and other cities are even more of a shot in the dark. The real answer here appears to be “if you’re going to buy a hockey franchise, maybe don’t buy one that plays in a non-hockey hotbed and has never been able to draw flies,” but Barroway and company have made their bed, so honestly unless you’re a Coyotes fan, there’s no reason to worry about how they choose to lie in it.

Brooklyn arena losing even more money since Islanders and their sweetheart lease arrived (UPDATE: not!)

When last we visited Brooklyn’s Barclays Center, it was losing millions of dollars a year, and arena (and Nets) owner Mikhail Prokhorov was threatening to evict the New York Islanders in 2019 because he thought he could do better without them. Now, Forbes’ Michael Ozanian reports (or not! see below) that the arena is losing even more money since the Islanders moved in:

Brooklyn Arena LLC, the arena arm for the Nets that operates the Barclays Center, post an operating loss of $45.6 million last season, according to the 2015-16 financial statements. That was the first season the Barclays Center hosted the NHL team.

The prior year Brooklyn Arena LLC posted an operating loss of $38 million.

Now, keep in mind that “operating loss” doesn’t actually mean “loss”: More than $30 million of that figure is for depreciation, which is just a way of telling the IRS that you should owe less in taxes on your building because it’s getting older. Assuming the depreciation figure has stayed roughly the same, and using Atlantic Yards/Pacific Park Report’s Norman Oder’s earlier estimate that the arena had lost $5-6 million the previous year, this would up the arena’s actual red ink to about $13 million after the Islanders arrived.

The reason for this is pretty clear once you look at the arena revenue figures that Oder reported on last week:

BarclaysThirdPartyEventProfitSummary1In short, the Barclays Center only really brings in any significant revenue from concerts — everything else is almost a wash. (Though it’s interesting that sporting events got more profitable the year the Islanders arrived — assuming that’s not just tricksy bookkeeping.) So you can see why it might make sense for Prokhorov to give the heave-ho to the Islanders and their deal in which the arena owner pays the team a flat fee ($37.5 million, per Ozanian) in exchange for its ticket-sales revenues, in hopes he can do better booking more concerts.

In any case, it’s clear that the deal to bring in the Islanders has pretty much sucked for Prokhorov, thanks to wildly overoptimistic assessments of how many Islanders fans want to go see games in a too-small arena a long train ride from where most of them live. It seems to be working out significantly better for the Islanders owners, according to Forbes figures, which raises at least the possibility of a lease renegotiation, at least a short-term one, that guarantees the Islanders owners less money. Though it’s hard to predict this early in the game, especially since there’s an arena sucker born every minute.

URGENT UPDATE: Michael Ozanian screwed up, and Forbes doesn’t employ fact-checkers:

I was wrong. The exact opposite is true. The Barclays Center posted an operating profit of $46 million with the Islanders for the year 2015-16, versus an operating profit of $38 million in 2014-15.

I inadvertently inserted minus signs instead of plus signs. A spokesperson for the arena operating company gracously called me today to point that out.

Okay, first off, apologies for not double-checking Ozanian’s numbers, but I (wrongly) assumed that the dude literally in charge of the most important sports business coverage in the country could read a spreadsheet. Or somebody else at the magazine could.

I could try to backtrack and figure out what we now know about the Islanders’ worth to the Barclays Center and vice versa, but I want to actually have time to spend quality time with the numbers before saying anything more. Meantime, go stare at the “event profit summary” that I reposted from Norman Oder above, since he’s a professional and actually knows what he’s doing.

 

Bettman to Calgary: New arenas are shiny, c’mon and give Flames tax money for one already

Look out, Calgary! NHL commissioner Gary Bettman has come to talk at you about why you should build the Flameswealthy oil-executive owners a new arena whether you want to or not:

“I actually spent an hour this afternoon with the mayor. We had a very cordial, open, candid conversation,” Bettman said. “I’m hopeful that the city and the Flames can be on the same page so this can move forward as quickly as possible.”

And what message did Bettman bring to Mayor Naheed Nenshi? If you had “I will not be shackled to a rusty girder,” you win the pool:

Calgary’s Scotiabank Saddledome is an “old, antiquated, inefficient building” that “doesn’t hold a candle to what has been done in new arenas,” NHL commissioner Gary Bettman said after touring the facility Wednesday.

Speaking to reporters ahead of Wednesday’s game between the Flames and Boston Bruins, Bettman repeated his comments from a day earlier, when he said the city is in need of a new arena.

“In terms of amenities, in terms of facilities, in terms of egress and the like, for all the events that go here, this building was built in the 1980s, they don’t build buildings like this anymore,” he said. “It’s a grand old building, it’s got a great roofline, it’s historic in many ways, but … these aren’t the facilities our hockey teams typically have.”

And for good measure, he dropped in the “arenas cause unspecified good economic things” argument:

“I’m not sure that people that focus on the deal in the appropriate way would say no taxpayer money,” said Bettman. “If in fact, a new project with development creates new revenues and new taxes that didn’t exist before, reinvesting it in the city, reinvesting it infrastructure, reinvesting it in quality of life, seems to make a lot of sense to me.”

Whether it makes sense to Nenshi — who has shown an admirable dedication to actually doing the math on a Flames arena project to see if it would work for the city — is going to be another story. But Bettman got his message, or the Flames owners’ message if you prefer, across in the media, and that’s what this game is all about at the moment. At least until the CBC website starts up an Actually Doing The Math section.

St. Louis mayor says Blues arena needs $70m to keep wrestling finals, but what does math say?

I spend a fair amount of time here ragging on media outlets that go out of their way to parrot the arguments made by sports team owners and their political allies on behalf of stadium and arena subsidies. But it’s also instructive to stop and take a look at a more routine kind of media bias: the kind where journalists do their basic job of reporting the facts, but stop short of the most important step, actually explaining to readers what those facts mean.

For today’s punching bag, I present reporter Austin Huguelet of the St. Louis Post-Dispatch, whose entirely competent article on St. Louis Mayor Francis Slay asking the state of Missouri for subsidies to his city’s hockey arena (or the Blues‘ hockey arena that is on the city’s books, if you prefer) included the following:

A proposal from Sen. Dave Schatz, R-Sullivan, would allow the state to contribute up to $6 million per year to upgrading the St. Louis Blues’ 23-year-old home ice, which officials say needs urgent fixes if it is to continue attracting top-flight sporting events and concerts…

Without the money, Jack Stapleton of St. Louis Sports Commission said Scottrade could lose out on events like the wrestling championships to better equipped facilities with better public support.

“The competition is stiff,” he said. “We are going to up against a lot of cities with newer buildings with public funding.”

He listed Louisville, Chicago and Oklahoma City as examples.

Proponents also offered an array of statistics to support the bid. A report prepared by Johnson Consulting and given to legislators said Scottrade has generated nearly $170 million per year in spending from visitors and an average of about $11 million in annual tax revenue for the state.

So far, so good, though it’d be nice to explain who Johnson Consulting is or what their track record is for economic projections for their other consulting projects. (One example from this site’s archives: Johnson’s prediction of hotel stays due to Austin’s new convention center ended up being overly optimistic by more than 25%.) But more to the point, let’s connect the dots between the first and last figures in that story: The state is being asked for $6 million a year in subsidies in order to avoid hurting an arena that produces $11 million a year in state tax revenues. Unless the wrestling championships are a huge chunk of the arena’s business, that seems like a pretty terrible return on Missouri’s investment — taxpayers would be far better off letting Louisville have the damn wrestling and keeping their $6 million a year for other, more economically productive uses.

Sure, there are other benefits to having the shiniest arena on the block. (Though there are also other downsides that aren’t reported here, like the roughly equal amount of money that the city of St. Louis would be putting up under the Blues owners’ proposal.) But still, this is one of the huge drawbacks of a media industry that sees its job merely as accurately reporting what elected officials and business leaders say, not exploring whether it makes any damn sense. Doing basic math isn’t bias, and neither is investigating the bona fides of the institutions you’re reporting on — though both take time, something that’s increasingly in short supply at newsrooms stripped to the bone in response to declining revenues (and demand for higher profits). So my sincere sympathies to Huguelet and his ilk, but if you have a moment to spare, please try to up your game some next time, okay? Little things like an informed public and the fate of democracy depend on it.

 

Maple Leafs ticket prices aren’t part of a grand conspiracy, except for the usual ones

A headline like “Why are NHL tickets expensive in Toronto? Because they’re cheap in Phoenix” has got to be pretty much irresistable if you’re an editor at the Globe and Mail. But does columnist Tony Keller actually make that case? Let’s follow the bouncing argument:

  • The Toronto Maple Leafs can charge through the nose for tickets because demand for hockey in Ontario exceeds the supply.
  • The Arizona Coyotes can’t charge squat for tickets because demand for hockey in Arizona is a sad joke.
  • If the Coyotes moved to Toronto or even Hamilton, it would cut into the Leafs’ market, and they’d be forced to lower ticket prices.
  • Since the Coyotes don’t make money, they have to be subsidized by revenue sharing from teams like the Leafs.
  • “The MLSE golden goose helps subsidize a squad of American lame duck franchises; those lame ducks, stuck in dry ponds, make necessary a golden goose in Toronto.”

All of this is technically true, but there are some leaps of logic here: There’s no reason to think that the NHL would allow the Coyotes to move to within spitting distance of Toronto if they left Arizona, and that Toronto “golden goose” is something the league presumably would want to keep around (and the Leafs owners would absolutely want to keep around) with or without the Coyotes’ revenue issues. There’s a difference between “the Maple Leafs owners are willing to send some money to the Coyotes’ owners to maintain their monopoly” and “this is all part of a grand conspiracy to screw hockey fans both coming and going.” (Except inasmuch as trying to use your monopoly power as the only major pro league to jack up ticket prices is the plan for pretty much every sports league that doesn’t have open promotion and relegation.)

That said, it is undeniably true that if territorial rights were eliminated and teams could move wherever they wanted, it would be arguably good for hockey fans (except those in lousy hockey markets like Phoenix) and maybe even good for the league as a whole — just the same as it would be for MLB if the Steinbrenners and Wilpons didn’t have monopoly rights to New York City. But then, sports leagues aren’t really monolithic corporations, but rather cartels of individual business owners, each in it for themselves. The only conspiracy at work here is the profit motive combined with the failure to enforce antitrust laws, which is a bigger problem than just for hockey.