MSG to build concerts-only arena in Vegas, because three arenas with no pro team wasn’t enough

Las Vegas just opened its third arena without a pro sports team to play in any of them, plus it’s considering building a pro football stadium, plus it has yet another arena (with a retractable roof!) that broke ground in 2014 and then has never been heard from again. So you know what that city really needs? Another arena:

[Madison Square Garden] announced Wednesday that it will build a 17,500-seat arena just off the Las Vegas Strip…

The new venue is a partnership among Madison Square Garden Co., Sands Corp., Azoff MSG Entertainment, concert promoter Live Nation and Oak View Group, an entertainment advisory firm.

“This will be a state-of-the-art venue of the future, an entertainment-only venue,” O’Connor told The Times.

On the one hand, this is not entirely crazy, because MSG successfully remodeled the L.A. Forum as a concert-only venue, and certainly they and Live Nation know something about the concert business. (The plan is for this new as-yet-un-price-tagged arena to have all its seats in front of the stage, so really “arena-sized theater” might be a better description.) On the other hand, it is completely crazy, because even if Las Vegas is a huge tourist destination, how many arena concerts can one city reasonably host? Even New York City only has three arenas (four if you count the Nassau Coliseum), and New York has like five times as many people living there as Vegas would have even if you double-booked all its hotel rooms.

This can only end with at least one of the Vegas arenas eventually going out of business. The good news, at least if you believe MSG officials, is that this will involve no public money, so it’s just the sort of crazy land rush that corporations would occasionally engage in even if subsidies didn’t exist. At least in Vegas, because that place apparently makes even corporate bean counters lose their minds.

Coyotes to Glendale: If we can’t run arena, we’ll take our puck and go … somewhere

Arizona Coyotes owner Anthony LeBlanc had already made pretty clear that he doesn’t want to keep the team in its current arena in Glendale without its prior sweetheart management deal, but he hammered in home yesterday by sending an open letter to city manager Kevin Phelps declaring that they’re outtie as soon as they can figure out a place to be outtie to:

Simply put, the Arizona Coyotes have every intention of leaving Glendale as soon as practicable. … By unilaterally breaking a 15-year signed management agreement with the team — a contract the Coyotes would have honored for the length of its term — the Council effectively evicted us from our home. While you claim that the Council has had a change of heart, we have not. As a business responsible for hundreds of employees, and a team, that relies on the support of hundreds of thousands of fans statewide, we simply cannot afford to do business with partners who do not keep their word, or honor their contracts.

Boom! Burn those bridges, Anthony! Except, of course, that the Coyotes don’t actually have another place to go to, so unless they’re going to relocate to the Suns‘ old arena or move in with their friend Oscar, they have to stay in Glendale for the time being, hence that “as soon as practicable” line in LeBlanc’s letter.

Local news coverage had this as LeBlanc declaring that he wouldn’t engage in lease talks with AEG, the arena management giant that recently won the rights to operate the Glendale arena, but realistically he’s going to have to talk to them at some point, since right now the team doesn’t have anywhere to play starting in September 2017, and nobody’s going to build them a new arena by then. LeBlanc keeps saying that he’s going to have an arena announcement real soon now, and maybe that will include a new temporary home, for all we know. If not, he’s painting himself into a potentially ugly corner, but we’ll just have to wait and see.

NYU study: Relocating MSG would cost $5B, give it a rest already

Certain sectors of the New York City policy world (the Municipal Art Society, the New York Times editorial board) have been calling for a while for the relocation of Madison Square Garden, so that a new, grand Penn Station could be built in its place. (The old, grand Penn Station was demolished in the 1960s to make way for the current Madison Square Garden, the fourth building to bear that name.) NYU’s Rudin Center for Transportation Policy and Management released a study last week of how much it would cost to do this, and came up with … do I hear $5 billion?

Screen Shot 2016-05-06 at 8.23.17 AMThis isn’t really all that surprising: A billion and a half for a new MSG sounds about right given that just renovating the old one cost a billion, and acquiring new land could easily cost half that in this market. (The Rudin report looks at the price of buying up the annex to the Farley post office building across the street Morgan post office annex a couple of blocks to the southwest, but other sites would be priced similarly, if you could even find any.) And almost $3 billion for building a new Penn Station is already the price tag established by Gov. Andrew Cuomo for his plans (which would leave MSG intact but build lots of new stuff under it).

It’s also important to consider the political context, with Cuomo’s plan to expand Penn Station with MSG in place (to be paid for by some as-yet-unidentified private developer — applications were due two weeks ago, but if any have been revealed it’s news to me) going up against the MAS and Regional Plan Association’s insistence that MSG really needs to be kicked out. Given that Rudin director Mitchell Moss has already endorsed Cuomo’s plan, and his report’s conclusion is “It’s time to move on,” it’s easy to see some political gamesmanship going on here.

Still, this whole mess is a reminder that as easy as it is to envision redesigning your city to undo past mistakes (tearing down one of the greatest public spaces ever, building a kind-of-ugly sports arena in its place), there’s something to be said for actually existing architecture, both in that it’s already paid for, and in that the city has grown up around it to accommodate it. Not to say that nothing should ever get built or torn down, but it’s important to look at the true costs of doing so, and whether the money could be better spent mitigating the effects of your last mistakes.

Senators owner wins right to develop downtown Ottawa site, cost still TBD

Ottawa Senators owner Eugene Melnyk has won his battle with a rival developer for the federally owned LeBreton Flats site, the National Capital Commission awarding him exclusive negotiating rights to develop the 21.6-hectare (that’s 53 acres — you double it and add 30, or something) downtown site. If talks go well, and the federal government approves, then Melnyk would build a whole buncha stuff on the site, including a new Senators hockey arena to replace their old one, which is 20 whole years old but also in the middle of nowhere because their old owner was crazy.

If you’re ready carefully, meanwhile, you noticed that that’s just the right to negotiate to develop the site — still up in the air is how the money would work out, including how much Melnyk would pay for the development rights and whether the project would require any public cash, as he’s previously indicated. (He’s since said there would be “no government money that is going to be granted,” but that doesn’t preclude tax breaks or a discounted price on the land.) This could end being a good deal for Ottawa — if you want to develop undeveloped land, you’re going to need a developer — or a lousy one, depending on how details like that go, and also details like the development timeline, which could stretch as long as 30 years. Win-win or land grab to get a site for a new arena? They still need to talk about it. Meanwhile, are there renderings with beams of light streaming into the night sky? You betcha!

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Glendale council okays AEG arena management deal, hopes this one won’t suck quite as badly

The Glendale city council gave its blessing to the AEG management deal for the Arizona Coyotes‘ arena last night:

The Glendale City Council voted unanimously Tuesday night to approve a $28 million deal with the Los Angeles-bases AEG Facilities to operate the Gila River Arena.

The new deal is an effort to keep the Coyotes in Glendale beyond the 2016-2017 season.

Okay, none of that is exactly right, 12News: Whereas normally a “$28 million deal” means you get paid $28 million, here Glendale will be paying AEG $28 million over five years. Plus it’s not really an effort to keep the Coyotes in Glendale so much as an effort to reduce the fiscal bleeding that was put in place by the Coyotes’ 2013 sweetheart lease for the arena, now canceled. Plus you misspelled “based.”

As discussed here yesterday, the new lease is about $2-3 million a year cheaper for Glendale than the old Coyotes one, though it’s about on par with the temporary management contract the Coyotes signed last summer to tide everyone over until the open bidding was complete. (The Coyotes owners decided not to submit a bid, because screw that competitive-bidding crap.) AEG can renegotiate the lease if the Coyotes move, or opt out of it entirely if the two sides then can’t agree on new terms.

In all, it’s best to look at this as a compromise between putting up with the original Coyotes deal and shutting down the arena entirely: The hockey team is still there for the immediate future, after all, and AEG is really good at booking concerts, so maybe they can make a go of it. If it works out, Glendale saves itself maybe $10 million or so, and ends up with a slightly more viable arena, with or without hockey; if it doesn’t work out, the arena probably still shuts down, but Glendale still saves the $10 million. Unless some future council gets suckered into renegotiating a worse deal just because “we spent all this money on an arena, we don’t want to waste it,” but hopefully by now everyone in Glendale has learned the hard lessons about sunk costs.

Glendale’s new arena lease to require shoveling less money at AEG than city was shoveling at Coyotes

Glendale’s proposed arena lease with AEG is finally out, and ready for the city council to vote on! So who’s paying what to whom?

The city would pay AEG $5.6 million a year; one payment of $2.8 million, then two more payments of $1.4 million each.  The contract is for an initial period of five years with the possibility to renew for five additional years.

Glendale had been paying the Arizona Coyotes between $6.5 million and $8.7 million a year to run the place (the total varied depending on arena revenues), so looks like Glendale saved itself between $900,000 and $3.1 million a year by opening up the arena management contract to competitive bidding. [EDIT: A commenter notes that the city is also giving up about $900,000 a year in naming-rights and Coyotes rent revenues to AEG, so this deal is pretty much a wash with the Coyotes’ current revised stopgap lease, though still a good bit better than the long-term one that Glendale decided to terminate last spring.] Two cheers, Glendale! (The third cheer would have been if the city had included “run the arena ourselves” or “shut the damn place down instead of throwing good money after bad” as potential options, but I suppose those are still possibilities as they consider the AEG offer.)

The full proposed management contract is here; for those wondering what it says about the Coyotes, it hands over to AEG the right and responsibility to “negotiate, enter into, administer, amend and terminate all contracts relating to the use of Arena facilities and services, including the Coyotes Lease,” i.e., “you guys work it out now.” Though there’s also a clause at the very end that AEG can renegotiate the deal (or cancel it if the two sides can’t come to a new agreement) if the Coyotes were to stop playing games in Glendale, which could end up dragging the council back into negotiations if Coyotes owner Anthony LeBlanc gets serious about any of the umpteen arena plans in other towns that he’s pursuing.

All in all, the proposed AEG lease is not as awful as the old Coyotes one, but it’s not great, either — the result you’d expect after spending public money to build an arena that no one really needs for a hockey team that no one really follows and then deciding that it’s too big to fail as a way to get people to shop at the neighboring mall. I still like the idea of taking $5.6 million a year in small bills and having city staffers stand in the mall and hand them out to shoppers, but I know it’s tough for elected officials to think outside the box that way.

Flames, Calgary to discuss how neither of them wants to pay for new arena

The Calgary Flames have responded to last week’s damning city report on the projected costs of their stadium-arena proposal, and it looks like both sides are going with “everybody smile and hope things will somehow work out so that everyone is happy.” Flames CEO Ken King said that he’s “thrilled” city officials want to meet to discuss possible alternate sites, while Mayor Naheed Nenshi made a classic hey-always-willing-to-talk statement:

“Calgarians have been pretty clear that they would like to see better facilities, but they’ve also been pretty clear that public money has to go for public benefit and the real issue there is to square this circle and see if we can put those two things together,” he said.

Of course, King also ruled out putting in any more of the team’s own money (“Our financial proposal stands for CalgaryNext”), and Nenshi said that bit about how public money can only go for public benefits, so this may be less a question of squaring the circle than of getting two non-intersecting Euler diagram circles to meet. Talking is always good, though! Maybe either King will find some more money in his other coat pocket, or they’ll figure out how to build an arena out of staff — if they’re just going to replace it 20 years later, it could sort of work.

Calgary report: Combined stadium-arena would cost public $1.2B, Flames should give up and start over

Calgary Mayor Naheed Nenshi is not your average mayor when it comes to sports subsidy deals: He’s insisted on evaluating the Flames owners’ arena plan on whether it’s good for the public, not just good for the team, openly called out NHL commissioner Gary Bettman as being a paid shakedown artist, and promised a public debate about any arena decision. Now the Calgary city manager’s staff has completed a hard-eyed analysis of the plan for a combined Flames arena and Stampeders stadium, and determined that it would cost $1.8 billion, double the total that the teams had estimated, with the public cost coming in at between $1.2 billion and $1.4 billion.

That’s a hell of a lot of money, even in devalued loonies. According to the city report, the extra $900 million would go toward “land, municipal infrastructure, environmental remediation, and financing.” Most of that isn’t even the long-worried-about creosote contamination cleanup (which comes to around $65-110 million), but other items: New transportation infrastructure is down for another $166 million, for example, and finance charges would be an additional $371-390 million. (It’s not immediately clear if these are present value or nominal figures — if the latter, then it’s not really fair to count them as an added public cost, since it’s just the cost of paying later instead of now, like the additional money you pay on your home mortgage over time compared to what your mortgage is actually worth.)

The city council is scheduled to discuss the report on Monday, but it’s likely to be a short discussion — the CBC says the $1.2-billion-plus price tag “effectively scuttles the proposal as it stands.” And the report itself recommends as much, indicating that “the CalgaryNEXT concept is not feasible in its present form or location and alternative development concepts, locations, and financial models should be investigated.” In particular, it suggests looking at building a new arena near the site of the current Saddledome (which the Flames owners previously rejected as not ambitious enough) and putting a new football stadium and field house at the current site of the Stampeders’ stadium at the University of Calgary.

There’s still some concern here that by focusing on alternative sites, this could end up becoming a battle of where to build the new arena and stadium, not whether to fund one with public money — though given that the report repeatedly indicates that the city government’s first priority is that “public money must be used for public benefit,” and Nenshi has said the same, probably not too much concern. Mostly, instead of taking the team owners’ demands and price figures as a given, Calgary sat down and trying to figure out if it made sense financially from the city’s perspective — and the answer came back “hell, no.” Now they’re kicking it back to the team to come up with a plan that makes sense. It’s all eminently logical and responsible, and only remarkable because so few city administrations do anything like this.

So far, Flames CEO Ken King is insisting on keeping CalgaryNEXT alive: “I realize we may sound simplistically optimistic, but we still think there’s some room here,” he said yesterday, which is definitely either the first or third Kübler-Ross stage. There’s still many months or years of haggling to go here, almost certainly, but Calgary has set an excellent example for other cities on how to go about tackling the first round.

Phoenix mayor explains grooviness of using taxes for Suns-Coyotes arena: It’s cheaper than two arenas!

Phoenix mayor Greg Stanton made his pitch for a new publicly funded arena for the Suns and Coyotes yesterday, and he didn’t provide much more specifics than when he leaked it the day before: He will use tax money, but he won’t raise taxes to pay for it, and he’s for it because he thinks it will bring more spending to downtown Phoenix.

“I as mayor will do everything I can to pursue a course that makes a new facility home to the Suns, the (Phoenix) Mercury and the Coyotes,” Stanton said, noting the WNBA franchise as well. “Building two new sports arenas in our region simply doesn’t make fiscal or common sense.”

He’s right there, as far as it goes: One arena is definitely cheaper than two, albeit a lot more expensive than zero. So does building one new sports arena make fiscal or common sense for Phoenix?

Stanton’s funding plan, based on what little he’s revealed about it, would be a bit of a Rube Goldberg scheme, avoiding new taxes by siphoning every last bit of value out of existing ones. Currently, Phoenix levies hotel and car rental taxes and uses the proceeds to pay off a bunch of past construction projects, including the Suns’ existing arena (opened in 1992), a Sheraton hotel, and other buildings. (Note: This is separate from the county hotel and car rental taxes that pay off the Arizona Cardinals stadium and which were partly ruled unconstitutional in 2014.) The current arena will be paid off in 2022, however, and the hotel plus a downtown biotech building are in the process of being sold off, which would free up those tax revenues to be used for something else.

Great, free money, right? Not exactly. First off, the “something else” could be pretty much anything — in the most extreme example, the city could just cancel the hotel and car rental taxes once the existing arena is paid off, and either leave taxes low as an inducement to visitors or levy new ones to fund other needs. And on top of that, selling the Sheraton to get out from under its debt load isn’t without a cost: The buyer is effectively getting the building for free by paying off $300 million in remaining debt, and the city will lose any future profits it would be getting from the hotel. (The Sheraton currently loses money, but that’s partly because any revenue it brings in goes right back out to help pay off its construction debt.)

In short, then, Stanton is saying that the city’s decision in 1990 to build a new arena for the Suns is an open-ended commitment to keep on building new arenas for the Suns into eternity, while selling off any city assets necessary to make that possible. That’s a legitimate political position, I suppose, but you can see why he chose not to frame it that way. Or to put a price tag on it. Because people are cranky enough about it already.

Phoenix mayor to announce again just how groovy a new Suns-Coyotes arena would be

If there was any doubt about Phoenix Mayor Greg Stanton really wanting to build a new arena for the Suns and Coyotes after the last time he said his city needed one to keep its teams (and also, weirdly, to get the Harlem Globetrotters to appear), it should be dispelled once Stanton gives a speech today about doing just that:

According to sources who have reviewed the mayor’s planned remarks, Stanton will outline his vision for building a new taxpayer-funded arena during his fifth State of the City speech. The mayor is scheduled to speak before a crowd of hundreds of business and political leaders at the Sheraton Grand Phoenix hotel in downtown about noon.

Stanton will use his most visible stage of the year to make it clear that he prefers the arena be a joint-use facility shared by the National Basketball Association and National Hockey League teams, those sources said.

The Arizona Republic’s sources didn’t specify how Stanton would begin to pay for this, though they did indicate that the mayor would promise not to raise taxes to do it. Using existing taxes, such as the hotel and car rental tax that is currently paying off the Suns’ current arena, is another story — as, presumably, would be asking for state sales tax kickbacks to pay for arena construction.

As to whether this will be Coyotes CEO Anthony LeBlanc’s promised arena announcement to come by the end of the month, that’s anybody’s guess, though it sure sounds like he’s still trying to see who’ll provide the most lucrative bid:

At the same event, LeBlanc told The Republic that the deal would have to allow for equally shared revenues, in which each team would keep the revenue they generated and that both franchises would share non-event revenues, such as naming rights and advertising. The Suns currently have control over revenue at Talking Stick Arena.

“The Coyotes have had multiple conversations with the city of Phoenix and we continue to have detailed discussions,” LeBlanc said in an earlier statement. “However, as we’ve consistently stated, we also continue to have discussions with other Valley locations. It would be premature at this point to indicate a selection has been finalized.”

LeBlanc also trotted out the standard talking points from the new-arena playbook to practice them on the assembled pols:

The trick for the Coyotes, of course, is to come up with an arena plan that isn’t just lucrative, but is more lucrative than the deal in Glendale where they were getting a mostly free arena plus more than $6 million a year in operating subsidies to boot. It’s possible, just maybe, if taxpayers handle the construction costs and there are enough new revenues to split with the Suns, that it could work out to the Coyotes’ benefit. But you can see why they’re busily playing three different sites off against each other to get the best deal — when “we need a new arena and for somebody to cover all our operating losses because nobody comes to our games because we’re a hockey team in the freaking desert” is the agenda, you need all the leverage you can get.

So I wouldn’t expect a Coyotes announcement in the next two weeks, really, not when there’s still more hardball to be played. Talking about it incessantly to get people all excited about where an arena will go instead of why the Phoenix area should be building its third arena in 25 years, though? That’ll definitely happen.