Wake County, North Carolina yesterday approved $46.6 million a year in tourism tax spending — money from a 6% hotel tax and 1% restaurant tax imposed in 1991 — and the beneficiaries are set to include the Carolina Hurricanes and the Raleigh Convention Center, though not yet a proposed Raleigh soccer stadium:
- The Hurricanes would get $9 million a year in tax money for the next 25 years, a present value of about $125 million. The NHL franchise has been looking at an arena renovation cost of up to $200 million, so this would pay for the bulk of that.
- The convention center would get $3 million a year for maintenance, $2.2 million a year for parking and infrastructure, $19 million flat fee for renovations and new land acquisition, and $17.575 million a year starting in the mid-2020s for an expansion and new music venue.
- The North Carolina FC USL team didn’t get its proposed $11 million a year stadium grant, but can still apply for part of the remaining funds, where it would compete against other arts groups.
I know that some of you are thinking about now, “But isn’t the whole point of a tourism tax to promote tourism, so the tax money should be spent on things that will bring tourists to town?” Sure, but then it’s important to ensure that the spending will bring tourists to town, and the return on sports and convention spending is historically really awful in that regard: Sports teams only bring in a tiny sliver of new spending compared to what they cost in subsidies, and conventions are equally dismal.
One solution, if you’re really determined to use tax dollars to encourage people to come to your town, would be to demand some kind of direct repayment from the beneficiaries: Sure, we’ll give you a pile of free cash, but then you need to share the resulting increased revenues with the public treasury. But that doesn’t appear to be what’s going on in Raleigh; rather, the Hurricanes and other operators will keep any windfall revenues, and local government will just sit back and hope that the rising tide lifts their fiscal boat as well.
This whole plan still needs to be signed off on by the city of Raleigh, but at this point it looks like all that’s left to decide is which private interests to funnel tax money to, not whether to do it at all. (It’s possible there are some ways that Wake County could use tourist tax dollars to displace other spending that would then be freed up for broader social goods like schools or whatever, as has been the case in other locales, but none of the coverage has addressed that.) If anyone was wondering why somebody would spend $420 million to buy an NHL team with attendance near the bottom of the league, you may have just gotten your answer.
Remember last year around this time, when a new rich guy bought the Carolina Hurricanes and didn’t immediately demand a new or renovated arena and I was all “he has a sweetheart lease through 2024 so maybe he won’t complain for a few more years”? Well, forget all that:
“If you look around the league, for public buildings, we’re at the bottom of the league,” Hurricanes president Don Waddell said. “It’s nothing that anyone did wrong. Those were the times back in the ‘90s. But if we’re going to be a sustainable franchise in this marketplace for a long time, the lease plays an important role. The economics of the deal have to change in our favor.”
Well, that’s a tidy bundle of threat bombs! Without changing the “economics” of the lease — read: giving Hurricanes ownership more and the public Centennial Authority less — the franchise won’t be “sustainable” for “a long time.” (I will skip including here my usual link to the Army Protection Racket sketch. Oh, paralipsis!)
The irony is that, as mentioned above, Hurricanes owner Tom Dundon has an exceptionally team-friendly lease now, where he gets all the revenues from the arena while paying nothing in operating or capital upgrade costs, just a $3 million a year rent that he can deduct a bunch of expenses from before paying. (He’s still probably losing money on the team, but them’s the breaks when you own a hockey team in a small city in basketball country.) But leases can always get sweeter — hell, the Arizona Coyotes used to get paid to play in their arena! — and you can’t get if you don’t ask, right?
There’s also the issue of upgrades to the Hurricanes’ arena, which “is in need of massive renovations that could exceed $150 million,” according to the News & Observer, citing no sources at all. The paper goes on to report: “While the building’s behind-the-scenes infrastructure has been maintained at a high level by the arena authority, public-facing areas from the arena bowl to the entrances have an understandably dated look compared to state-of-the-art arenas elsewhere.” So it really just needs a more modern paint job? A $150 million paint job? I’d think Dundon would do better asking for $150 million to subsidize his annual operating losses, but I guess if you can ask for both, all the better!
It’s Friday (again, already) and you know what that means:
- New York State’s Empire State Development agency held a series of three public hearings on the plan to build an Islanders arena on public land near Belmont Park racetrack (which the team would be getting at as much as a $300 million discount), and the response was decidedly unenthused: Speakers at the first hearing Tuesday “opposed to the project outnumbered those in favor of the plan by about 40 to one,” reports Long Island Business News, with State Sen. Todd Kaminsky joining residents in worrying that the arena will bring waves of new auto traffic to the town of Elmont, that there’s no real plan for train service to the arena, and that there’s no provision for community benefits to neighbors. Also a member of the Floral Park Police Department worried that the need for police staffing and more crowded roads would strain emergency services. Empire State Development, which is not a public agency but a quasi-public corporation run by the state, is expected to take all of this feedback and use it to draft an environmental impact statement for the project, which if history is any guide will just include some clauses saying “yeah, it’ll be bad for traffic” without suggesting any ways to fix it. I still want to see this plan from the Long Island Rail Road for how to extend full-time train service there, since it should involve exciting new ideas about the nature of physical reality.
- Meanwhile in Phoenix, the final of five public hearings was held on that city’s $168 million Suns renovation plan, and “out of nine public comments, three involved questions, five voiced support and one was against the deal,” according to KJZZ, so clearly public ferment isn’t quite at such a high boil there. One thing I’d missed previously: The city claims that if it doesn’t do the renovations now with some contribution ($70 million) from Suns owner Robert Sarver, an arbitrator could interpret an “obsolescence clause” in the Suns’ lease to force the city to make the renovations on its own dime. I can’t find the Suns’ actual lease, but I think this just means that Sarver can get out of his lease early if an arbitrator determines the arena is obsolete [UPDATE: a helpful reader directed me to the appropriate lease document, and that is indeed exactly what it means], and he can already opt out of his lease in 2022, it’s pretty meaningless, albeit probably more of the “information” that helps convince people this is a good deal when they hear it. (Also important breaking news: A renovated Suns arena will save puppies! Quick, somebody take a new poll.)
- Speaking of leases, the Los Angeles Angels are expected to sign a one-year extension on theirs with Anaheim, through 2020, while they negotiate a longer-term deal. It’s sort of tempting to wish that new Anaheim mayor Harry Sidhu would have played hardball here — sign a long-term deal now or you can go play in the street when your lease runs out, like the Oakland Raiders — but I’m willing to give the guy the benefit of the doubt in his negotiating plans. Though if this gives Angels owner Arte Moreno time to drum up some alternate city plans (or even vague threats a la Tustin) just in time to threaten Anaheim with them before the lease extension runs out, I reserve the right to say “I told you so.”
- The Calgary Planning Commission issued a comprehensive plan for a new entertainment district around the site of the Flames‘ Saddledome, but forgot to include either the Saddledome or a new arena in it. No, really, they forgot, according to city councillor Evan Woolley: “It should’ve been identified in this document. It absolutely should have. Hopefully those amendments and edits will be made as they bring this forward to council.” The 244-page document (it’s not as impressive as it sounds, most of them are just full-page photos of people riding bicycles and the like) also neglects to include any financial details, beyond saying the district would be “substantially” funded by siphoning off new property taxes, “substantially” being one of those favored weasel words that can mean anything from “everything” to “some.” Hopefully that’ll be clarified as this is brought forward to council, too, but I’m not exactly holding my breath.
- Here is a Raleigh News & Observer article reporting that the Carolina Hurricanes arena has had a $4 billion “economic impact” on the region over 20 years, citing entirely the arena authority that is seeking $200 million to $300 million in public money for upgrades to the place. No attempt to contact any other economists on whether “economic impact” is a bullshit term (it is) or even what they thought of the author of the report, UNC-Charlotte economics professor John Connaughton, who once said he “questions the sincerity” of any economist who doesn’t find a positive impact from sports venues. Actually, even that quote would have been good to include in the N&O article, so readers could have a sense of the bona fides of the guy who came up with this $4 billion figure. But why take time for journalism when you can get just as many clicks for stenography?
- The San Francisco Giants‘ stadium has another new name, which just happens to be the same as the old new name of the basketball arena the Warriors are leaving across the bay, and I’m officially giving up on trying to keep track of any of this. Hey, Paul Lukas, when are you issuing “I’m Still Calling It Pac Bell” t-shirts?
- Indy Eleven, the USL team that really really wants somebody to build it a new stadium so it can (maybe) join MLS, still really really wants somebody to build it a new stadium, and hotels, office and retail space, an underground parking structure, and apartments, all paid for via “[Capital Improvement Board president Melina] Kennedy wasn’t available to discuss the proposed financial structure of the project.” It would definitely involve kicking back future property taxes from the development (i.e., tax increment financing), though, so maybe Indy Eleven owner Ersal Ozdemir is hoping that by generating more property taxes that his development team then wouldn’t pay but instead use to pay off his own stadium costs, that would look better, somehow? I mean, he did promise to keep asking, so at least he’s a man of his word.
- “At some point in time, there’s going to have to be a stadium solution,” declared the president of a pro sports team that plays in a stadium that just turned 23 years old. “If we don’t start thinking about it, we’ll wake up one day and have a stadium that’s not meeting the needs of the fans or the community.” Want to try to guess which team? “All of them” is not an acceptable answer! (Click here for this week’s puzzle solution.)
Tons of stray news items this week, so let’s get right to them:
- The Rhode Island state senate’s finance committee approved $44 million in spending by the state and city of Pawtucket for a new Pawtucket Red Sox stadium, which is what everyone expected, because the real opposition is in the state house. A spokesperson for House Speaker Nicholas Mattiello said that if the bill passes the Senate, “it will be assigned to the House Finance Committee and be given a public hearing,” which isn’t exactly a ringing endorsement, but then, Mattiello has been saying consistently that his constituents hate this plan.
- Oakland A’s president Dave Kaval said that the team owners have “identified three final locations” for a new stadium, and … they’re the same three sites the team announced more than a year ago, even after Laney College officials since took themselves out of the running. “We spent a lot of time getting it to three final sites, and those are the sites that are viable,” Kaval told reporters. Props for sticking to your convictions, I guess, but there’s a time to go to a Plan B, and it’s maybe after Plan A told you, “Get offa our lawn.”
- The city of Liverpool is set to spend £280 million on a new stadium for Everton F.C., four years after saying no to a similar plan, but Mayor Joe Anderson defends the plan as a loan that the team will repay and more. The Guardian reports that “the city council could make £7m-a-year profit from interest charged on a loan of £280m over 25 years, plus extra revenue from business rates and related developments once the stadium is up and running” — which sounds good if the profit is guaranteed just from the loan payments (the city would reportedly have first dibs on Everton team revenue), not so much if it would rely on those “related developments,” which could be stuff that would happen with or without a new stadium. As is so often the case, it all comes down to what that comma means.
- NHL commissioner Gary Bettman toured Nassau Coliseum on Tuesday, after which New York Islanders owner Jon Ledecky said he was “confident” that “some games” would be played there while waiting for a new Belmont Park arena to be built, but that playing full seasons there would be “difficult.” So that would imply … some games in Nassau and some in Brooklyn, since the two arenas have the same owner? Some in Nassau and some at Madison Square Garden, which is set to help build the new arena? Some in Nassau and some on a frozen-over East River after that ice age that the American Museum of Natural History seems to think is imminent hits? Your guess is as good as mine.
- A Unitarian minister writes in an op-ed for the Charlotte Observer that if the Charlotte city council is going to spend money on a new Carolina Panthers stadium, it should be required to build affordable housing, too. My theology is shaky at best, so I’m not sure what Unitarianism has to say about a right canceling out a wrong.
- Speaking of North Carolina, the Hurricanes got a new owner this week, and in his first few hours as head of the team, he didn’t demand a new arena or threaten to move the team without one. Though that may have more to do with the team’s sweetheart lease on its current arena that last through 2024, which had led former owner Peter Karmanos to say in 2015 that “we’d have to be idiots to move from here,” so give the new guy a few more hours, at least.
- This. You’re welcome.
There’s a battle brewing in Raliegh, N.C., over the use of PNC Arena by the Carolina Hurricanes and North Carolina State, and some of the accusations are getting pretty ugly. Selfish university officials leaving the Hurricanes open to threats of NHL fines! Team officials going behind the school’s back to press the ACC for schedule changes!
The issue here is that even though the Hurricanes’ parent company manages the arena, the team agreed to a lease upon moving from Hartford that gave it third priority over arena dates behind N.C. State basketball and football (the football team uses the parking lots for its games at neighboring Carter-Finley Stadium). For some reason, this is suddenly causing problems, with the Hurricanes management charging that N.C. State is holding an excessive number of dates for its own usage (129 out of 214 dates, including 26 out of 30 days in November, according to Hurricanes GM Jim Rutherford), leaving the team open to league fines of $100,000 if they have to make a late schedule adjustment. N.C. State counters that it’s only holding 65 dates open, and that it can’t do better than that since the ACC’s conference schedule isn’t released until late summer. And N.C. State chancellor Randy Woodson made his own charges, saying that he only recently discovered that the Hurricanes had been directly lobbying the ACC to shift his school’s schedule in order to leave open dates for NHL games.
Why this is suddenly coming up now, 14 years after the Hurricanes moved in, is a bit of a mystery. It’s also not clear what the Hurricanes expect to get out of this, since they agreed to be second fiddle when they signed the lease in the first place (paying only $60 million out of the arena’s $158 million construction cost). Their lease runs through 2024, so it’s a bit early to be making noise about wanting revisions or to get out of it … though on second thought, maybe not. And while this guy is no longer mayor, clearly it’s never too early to start talking about replacing a slightly-used arena.
Dog-bites-man story of the week: An online poll (in other words, not worth the electrons it’s printed on) of Raleigh residents shows they’re overwhelmingly opposed to Mayor Charles Meeker’s proposal to replace the Carolina Hurricanes‘ RBC Center, which only just opened ten years ago. Nearly 70% of those voting said they were opposed to building a new downtown arena, while 28% were in favor; 2% for some reason chose to take the poll despite not having an opinion.
To be fair, Meeker doesn’t want to replace the RBC Center until 2019, at which point it will be a mind-numbing 20 years old. At this rate, sports stadiums and arenas are going to have a shorter expected lifespan than cats.