How cities haven’t actually fallen out of love with funding sports stadiums

The May issue of Governing magazine has an article with the provocative headline, “How Cities Fell Out of Love With Sports Stadiums,” though it’s really mostly about why St. Louis balked at throwing money at an MLS stadium and fought back against paying for arena upgrades for the Blues after getting burned when the Rams got the most sweetheart lease deal in history and then used a lease loophole to move back to Los Angeles just 21 years later.

All that is good and fine, as is the article’s discussion of how “the economic impact reports singing the praises of sports development have largely been discredited.” But in the service of trying to make the story into “regular folks used to fall all over themselves to hand money to sports teams, but now they’ve smartened up,” writer Liz Farmer oversimplifies or just plain gets wrong a number of things about the stadium subsidy game and how it’s played, which is going to be a problem if any people in the business of actual governing take it as gospel. Let us count the ways:

“When [Rams owner Stan] Kroenke came along and had the gall to start making demands for a football team that hadn’t had a winning record since 2003, the city was — quite literally — spent. St. Louis was suffering under the same socioeconomic and fiscal pressures as Cleveland, Detroit and most other Rust Belt cities. Its population was declining rapidly, and it was stuck paying off debt for the existing stadium until 2022. Residents were increasingly skeptical when it came to investing in gaudy entertainment amenities the lower-income population couldn’t afford to use.”

St. Louis’s population has been declining since 1950 — if anything, it’s leveled off some in recent years — though its county population has soared as more people moved to the suburbs. And residents were pretty darned skeptical before, too: Way back in 2002, St. Louis citizens approved a referendum requiring that all public subsidies for sports facilities would need to go to a public vote. Unfortunately for voters, courts ruled that the target of that referendum — the Cardinals stadium deal that had just been approved prior to that — was grandfathered in, but it’s not like public resistance in St. Louis is anything new.

“The era of taxpayer-financed stadiums came about almost by accident. Seeking to limit the use of government bonds in stadium financing, the federal Tax Reform Act of 1986 included a provision that capped at 10 percent the direct stadium revenue — mostly from ticket sales and concessions — that could be used to pay for the cost of the facility. That meant that governments would have to raise broad-based taxes, such as on sales or business, to cover the rest of the cost.”

Not quite. What the 1986 tax reform law was attempting to do was to rein in cities’ use of federally tax exempt bonds for private projects — not just stadiums, but all kinds of development — by saying, “Look, only really public amenities, okay? Don’t just offer discounted bonds to anybody who asks and then stick federal taxpayers with the bill.”

Unfortunately, the way that Congress chose to address this was by defining public amenities as things that were paid for by the public — if more than 10% of the cost was paid off by private funds (or special taxes that were just private funds masquerading as public dollars to get eligibility), low-cost federal bonds were off the table. Unfortunately, what that did was to increase the leverage of sports team owners, who could now say, “Yeah, sorry, we would love to put in more money of our own, but then it would increase the financing costs, and we can’t have that, can we?”

This is by no means what started the era of taxpayer-financed stadiums, though: Team owners were already demanding new stadiums and arenas left and right, using the usual playbook of methods to do so (move threats, claims of economic benefits, etc.). The tax reform law further titled the scale toward bigger demands, but it didn’t create the demands in the first place — and while getting rid of tax-exempt bond subsidies would be a nice step, it wouldn’t put an end to stadium subsidies in the slightest.

“But Congress didn’t account for the fan loyalty and pride that — at the time — made raising local taxes more acceptable.”

Fan loyalty and pride are still on full display, but sports fans are taxpayers, too, and have been resisting handing their tax dollars over to sports team owners as much as anyone since the beginning. Just ask Frank Rashid.

“The boom was driven in part by demand from teams and fans for a more sophisticated sports experience than the drab concrete coliseums they were used to.”

If by “more sophisticated sports experience” you mean “more pulled-pork sandwiches and nicer cupholders,” sure. But plenty of sports venues have been torn down in recent years to make way for new facilities that are arguably even drabber than the ones they replaced.

“The Washington, D.C., soccer team, D.C. United, spent years negotiating with the nation’s capital over a new soccer-specific stadium. Those talks effectively shut down once the economic downturn hit in 2008, and the team spent another seven years shopping around in the surrounding counties — even going as far as Baltimore — trying to find a local government that would pay for the facility. None would bite. Ultimately, the team stayed in D.C. and is paying to build a stadium on land the city spent $150 million acquiring. The deal includes a non-relocation agreement.”

In addition to that free land, D.C. United is also getting $43 million in property tax breaks, making it the most expensive MLS soccer stadium subsidy in history. The tide is turning!

“Kiel Center Partners, the firm that owns the NHL Blues, had asked the St. Louis City Board of Aldermen for $64 million to finance upgrades to the Scottrade Center. Had the city’s voters not been distracted by the soccer stadium proposal and by a heated mayoral election, the financing might have met more resistance. Some aldermen did question whether the city’s 1994 lease with the team required it to pay for upgrades, but still the proposal narrowly passed. If it had been submitted to a popular vote, it most likely would have failed.”

Again, “if voters had been asked, they would have voted it down” is likely true of all of St. Louis’s past sports subsidy deals. (Possibly not the original Rams deal, though if they’d known that it would allow the team to move away by claiming their two-decade-old stadium was no longer “state of the art,” they might have balked at that, too.) And voters didn’t get to vote because the city council just up and decreed that they wouldn’t be allowed to, despite that 2002 referendum, so it’s tough to see how this is a sign of increased political resistance.

“So the hockey team got its way. Things like that still happen. But they don’t happen easily, and they don’t happen with broad public support. Several years ago, for instance, when the NFL’s Minnesota Vikings wanted a publicly funded stadium, the state legislature rejected the proposal. Eventually the team got its money, but with a state law capping public contributions to the $1 billion project at $498 million.”

OMG, the Vikings owners actually had to ask for stadium subsidies multiple times! And then they had to settle for a mere half-billion dollars in cash, except counting tax breaks and other hidden goodies it’s actually costing taxpayers more like $1.1 billion, so, uh.

In the end, the Governing article isn’t a terrible one, and it does touch on a lot of details of the stadium scam that Governing likely wouldn’t have been caught dead discussing 20 years ago. (Now there’s some progress.) But if the takeaway is that the general public loved sports stadium plans, but now have realized they were duped, that’s not the story at all: Actually it’s been a battle from the beginning between team owners trying to extract as much public money as possible, and taxpayers and some of their local representatives trying to push back. And while maybe a few more elected officials are pushing back harder, there’s pushback against the pushback, too. So this whole mess isn’t ending anytime soon, much as I wish it were so I could retire this blog and go back to treating sports as the purely apolitical, fun pastime that it never really was.

Some Calgary council members want Mayor Nenshi out of Flames arena talks, because he’s not “gung ho” enough

This article from the Toronto Star is really weird and convoluted and lede-burying, but if I get the gist of it, it’s that some members of the Calgary city council are trying to find a way to freeze Mayor Naheed Nenshi out of future negotiations with the Flames over a new arena, because he’s been too good at not giving away the store. The evidence on hand:

At least 10 councillors are directly involved in or aware of recent meetings in which elected officials have discussed drafting a notice of motion calling on council to strike a new committee — one that may exclude past brokers from both parties.

“Initially, it should be new blood that’s on it to give it a different perspective than we’re getting now,” said Coun. Ray Jones.

“The longer we leave it, the more it just kind of goes away,” he explained. “Everybody right now is gung ho to get going on it, and I think we should take advantage of that.”

And:

In addition to Jones, councillors Ward Sutherland, George Chahal, Sean Chu, Shane Keating, Peter Demong, Diane Colley-Urquhart, Joe Magliocca, Evan Woolley and Jeff Davison are directly involved in or aware of discussions to restart talks and form a new committee.

“We’ve got to get a few oars in the water here and moving in the same direction before we really can make any headway with it,” said Davison, who is leading the charge.

“Overall, you’re just seeing a different makeup on council,” he said. “There’s a lot of us that are new, and sometimes some of the ideas that failed in the past get rejuvenated.”

And:

Lori Williams, associate professor of policy studies at Mount Royal University, said councillors might be wary of voter backlash given many Calgarians supported Nenshi’s position.

“I suppose it does make sense to try to get new people to the negotiating table so that any animosities that may be lingering from the breakdown of negotiations in the past would not be part of this,” Williams said.

Okay, sure, “new blood” and “new ideas,” but otherwise this is just weird: The last round of negotiations “broke down” not because of any problems on the council side, but because Nenshi pointed out that the Flames owners’ plan could cost the city more than a billion dollars, and then the Flames walked away from the table and put all their energies into trying to defeat Nenshi in last fall’s mayoral election. When that didn’t work, they mostly sighed a lot about how now what were they gonna do with a mayor in power who didn’t want to give them lots of taxpayer money, and deployed NHL commissioner Gary Bettman to say that the Flames will lose money without a new arena, when that’s patently not true.

While Nenshi has been possibly the most prominent city mayor anywhere in holding the line on sports subsidies, he’s always been limited by Calgary’s weak-mayor system, in which he’s only one vote on the 15-member council. Given that the Star report only talked to a couple of council members, it’s hard to say whether this is an actual major revolt or just some people trying to trash-talk the mayor into getting out of the way and letting them get down to the business of shoveling money at the Flames — one councillor, Shane Keating, is cited as having said of Nenshi, “I’ll never be as intelligent as you are, but I’ve been smarter than you many times,” which is described as a “stinging rebuke.” Maybe it sounds different in the original Canadian?

Friday roundup: Spending on training facilities is a bad idea, Portland seeks MLB team, Jays game postponed after roof hit by falling ice

I can’t believe none of you wrote in to ask why I hadn’t reported on a Toronto Blue Jays game getting postponed due to falling ice puncturing a hole in the stadium roof, but I guess you’re all acclimated to waiting for the Friday roundup now for that sort of thing. But wait no longer! (Well, wait a few bullet points for that one in particular.)

Friday roundup: Marlins claim British residency, video football with real humans, and the White Sox stadium that never was

Busy (minor) news week! And away we go…

  • Derek Jeter’s Miami Marlins ownership group, facing a lawsuit by the city of Miami and Miami-Dade County over the team stiffing the public on the share of sale proceeds they were promised, are trying to stave it off by claiming that (deep breath) because one of the owners of an umbrella company of an umbrella company of the umbrella company that owns the Marlins is a business incorporated in the British Virgin Islands, the case should be arbitrated by a federal judge who handles international trade issues. Maybe the Marlins should quit trying to sell tickets to baseball games and sell tickets to the court proceedings instead.
  • Tampa Bay Rays chief development officer Melanie Lenz, in response to concerns that a big-ass baseball stadium wouldn’t fit into the Ybor City historic district that it would be on the border of, said that “we expect to build a next-generation, neighborhood ballpark that fits within the fabric of the Ybor City community,” though she didn’t give any details. That’s vague enough to be reassuring without actually promising anything concrete, but it’s worth making a note of just in case the historic district ends up becoming a stumbling block in stadium talks, which, stranger things have happened.
  • A guy wants to start a football league where fans vote on what plays to run via Twitch, and build an arena in Las Vegas for people to watch … the players? The voting? The Las Vegas Review-Journal article about it was a bit unclear, though it did say that the organizers want to “create the experience of playing a football video game with real people,” which isn’t creepy at all. It also reports that the league plans to use blockchain technology, which is how you know it’s probably a sham.
  • Something called the Badger Herald, which I assume is a University of Wisconsin student paper but which I really hope is a newspaper targeted entirely at badgers, ran an article by a junior economics major arguing that the new Milwaukee Bucks arena will be a boon to the city because during the first few years “many will come from across the state to watch the Bucks play in this impressive new facility” and after that it will “continue giving the people of Milwaukee a reason to be optimistic.” The author also says that the arena was built after “the NBA gave the Bucks an ultimatum — either obtain a new arena, or the NBA would buy the Bucks and sell the franchise to another city,” which, uh, no, that’s not what happened at all.
  • Here’s a really nice article for CBS Sports by my old Baseball Prospectus colleague Dayn Perry on the Chicago White Sox ballpark proposed by architect Philip Bess that never got built. Come for the cool pictures of spiders, stay for the extended explanation of why supporting columns that obstruct some views are a design feature that stadium architects never should have abandoned!
  • The Los Angeles Rams are trying to pull a San Francisco 49ers, according to Deadspin, by making a run at a Super Bowl in the same year they’re selling personal seat licenses for their new stadium. More power to ’em, but prospective Rams PSL buyers, check how that worked out for 49ers fans before you hand over your credit card numbers, okay?
  • The state of Connecticut has cut $100 million for Hartford arena renovations from the state budget, at least for now, so that it can use the money toward a $550 million bailout of the city of Hartford itself. Is that what they call a “no win-win situation“?
  • NHL commissioner Gary Bettman says the New York Islanders need to move back to Long Island because Brooklyn’s Barclays Center “wasn’t built for hockey,” which he actually pointed out at the time they moved there, but did anybody listen?
  • Alameda County is moving to sell its share of the Oakland Coliseum complex to the city of Oakland, which should make negotiations over what to do with the site slightly simpler, anyway.
  • That Missouri governor who killed a proposed St. Louis MLS stadium subsidy, calling it “welfare for millionaires,” is now under pressure to resign after his former hairdresser claimed he groped her, slapped her, and coerced her into sex acts. Maybe we should just stop electing men to public office? Just a thought.

Long Island may get yet another arena for the Islanders not to play in

Suffolk County, New York, otherwise known as “the part of Long Island you can only get to by starting in New York City and driving more than an hour east,” yesterday approved a $1 billion development project in Ronkonkoma that will include a 17,500-seat sports arena. Or maybe an 8,000-seat sports arena. Apparently it’s all still up in the air, except that whatever it is, it’ll be great for the local economy, because economies:

“This is entirely tax positive. There is no residential here,” [lead engineer John] Cameron said. “This is an economic engine. A catalyst for growth.”

And if you can’t trust a construction engineer to make economic impact predictions, who can you trust?

Cameron said his company had been contacted by a sports league about using the arena, which could mean anything. (Note that he didn’t even say “pro” sports league, at least not as ABC7 reported it.) The Islanders, for their part, immediately dismissed any interest in playing in eastern Long Island. I suppose it’s conceivable that a Suffolk County arena could survive just on selling concert tickets to Long Islanders who don’t want to make the shlep into the city, or drive an hour in Long Island traffic to Nassau Coliseum — though lots of them work in the city anyway, so Nassau Coliseum would just be a stop on the way home. Building a sports arena makes more sense with a sports team to play in it, is all I’m saying, unless the developers plan to ditch or massively downsize the arena aspect down the road after using it to get Suffolk County’s attention, which is entirely possible.

Anyway, what the hell the developers’ business plan is should matter less to Long Island taxpayers if they’re not on the hook for any costs, and no subsidies have been reported thus far — though Long Island Business News does note that “it has yet to be determined whether the property and the additional 40 acres of compost site will be sold or ground-leased for the redevelopment effort.” But surely they’ve at least agreed on a price for the land, right? Right? Tune back in for any further reports that filter in from the far-flung province of eastern Long Island.

Friday roundup: Warriors rail stop turns pricey, West End stadium undead again, Montreal mayor meets with would-be Expos owners

Superbrief mode today:

  • Expanding light-rail service to the Golden State Warriors‘ new arena is now expected to cost at least $62 million, which is a lot for Muni Metro, though not for some other transit systems. The Warriors owners are kicking in $19 million, but the rest will be funded by tax money from the arena district, which may or may not be enough to cover the entire nut. Tim Redmond saw this coming.
  • F.C. Cincinnati owners are officially pivoting back to the West End stadium site that it had declared dead last month after not getting offered enough property-tax breaks on the land. How come? Team CEO Jeff Berding said of the other two options, Oakley is “not as close to the urban core as desired,” and the team couldn’t secure land in Newport, Kentucky. Sounds like the West End has the club over somewhat of a barrel, which it should be able to use to ensure the team pays full property taxes, at least, though some residents may be more concerned about keeping out a stadium entirely over fears it will further gentrify their neighborhood.
  • The mayor of Montreal is meeting today with an ownership group that wants to bring a new Expos MLB team back to town. “We don’t need a cent from the city of Montreal, but we need a little help,” prospective co-owner Stephen Bronfman said earlier this week; your guess is as good as mine what that actually means.
  • Minnesota taxpayers have spent $1.4 billion on new or renovated sports venues over the past 20 years, if anyone is counting.
  • The Pawtucket Red Sox‘ stadium demands continue to be stalled, if anyone is keeping track.
  • “A deputy in one of Russia’s 2018 FIFA World Cup host cities has claimed that a latest inspection by the world’s footballing body has neglected a missing column at a newly built stadium.” You’ve just got to read the whole Moscow Times article now, don’t you?

 

Profiteering innovator Wayne Huizenga dies at age 80

Former Miami Dolphins, Florida Marlins, and Florida Panthers owner Wayne Huizenga died on Friday, and any time a soul passes from this earth there’s a sadness, and we pass long our sympathies to all of Huizenga’s relatives and loved ones.

And now that that’s out of the way, let’s talk about how Wayne Huizenga helped to make the sports world a worse place while he was alive:

Does all this make Huizenga a bad man? First and foremost, he was a corporate businessman, trying to extract maximum value from the assets he owned, whether his sports teams or waste-hauling company or Blockbuster Video, even if at the expense of the public or his fellow team owners or his team’s on-field success. Whether this makes him a capitalist running dog or someone merely following his own rational self-interest depends on your political perspective, but it’s undeniable that his cash grabs were more innovative than that of most team owners, and had a more detrimental effect on the sports landscape. So while he may have exhibited “kindness and generosity,” as his former team tweeted last Friday, he also did all those other things too; and that, in all his complexity, is how he should be remembered by history.

Friday roundup: Coyotes seek investors, Detroit MLS stadium deal maybe not dead after all, and new stadium fireworks renderings!

So much news! Let’s get right to it:

Hartford arena director says building needs $100m renovation because it’s “tired”

The head of the state authority in charge of Hartford’s XL Center says it needs costly upgrades before it can be sold to a private operator, because of “tired systems”:

“The building is truly out of its prime,” Michael W. Freimuth, executive director of the Capital Region Development Authority, said in a legislative hearing. “It has had a very difficult time competing, primarily with our own casinos, let alone when Springfield comes along. It requires quite a bit of upgrade, not simply of its tired systems which we can’t even find parts for anymore but just the way it presents itself.”

Among other things, apparently none of the elevators or escalators at the building are functioning. The Connecticut legislature is currently considering a $100 million proposal by Gov. Dannel Malloy to rehab the arena, though Freimuth didn’t say whether that would be enough to make it competitive.

The other obvious question that Freimuth didn’t answer is whether anybody would pay $100 million to buy the arena — if not, it’d be kind of a dumb investment by the state. But apparently he considers the XL Center too big to fail, or too downtown to fail, or something:

Knocking down the building could cost as much as $40 million, Freimuth said, all to create a hole in the middle of downtown.

“Frankly, having that go dark at the center of town, well, symbolically, it sends a lot of bad vibes, obviously,” Freimuth said. “It impacts everything from parking revenue to restaurant revenue to taxes. … The event load plays into the hotels.”…

The arena also is considered a key amenity in the city’s revitalization and is attractive to people moving into the new downtown apartments, Freimuth said.

This is the same claim that arena advocates made a year and change ago, when they argued that nobody was going to move to downtown Hartford without a renovated arena, despite tons of people in fact moving to downtown Hartford in recent years. Maybe millennials just like climbing stairs? Damn kids today are killing escalators, too.

Flames arena wasn’t built to last like in Charles Dickens’ day, writes confused Canadian columnist

Here’s an article from the Globe and Mail on the Calgary Saddledome that starts with an extended Charles Dickens reference, because man, oh man, does sportswriting get boring after a while if you don’t mix it up.

Once columnist Roy McGregor gets to the point, it turns out to be that unlike the things Charles Dickens saw on his visit to Canada — and, presumably, Dickens’ works themselves — the Flames‘ arena wasn’t built to last, or at least “wasn’t made to produce revenue in the deep streams demanded these days by professional hockey.” (Whereas Canadian buildings in 1842 were? Hey, it’s not my metaphor.)

This is an assertion we can actually check! Hey, Forbes magazine, how does the Calgary arena compare to the rest of the NHL in revenues? Unfortunately, Forbes doesn’t break down the NHL by venue revenues, but the Flames rank 21st out of 30 overall in the league in total revenues, which is neither great nor awful. They’re about $22 million in annual revenue behind the Edmonton Oilers, the team that’s most often held up as an example of a nearby franchise that got a new arena and is now thriving — spending $1.2 billion on a new arena to get back $22 million a year in new revenue would be spectacularly stupid, which is no doubt why the Flames’ owners want the city of Calgary to spend much of the money instead. And if that strikes you as spectacularly stupid in turn, McGregor has an answer for that: revitalization!

In this era of what he calls “sportainment,” André Richelieu says that, increasingly, arenas are being built as entertainment hubs, the “jewel box,” so to speak of massive developments that go far beyond any sporting event.

Richelieu, who has taught sports marketing at Laval University and is currently a professor at École des sciences de la gestion in Montreal, says “The rationale behind these real estate projects is to trigger traffic all year round in order for the new stadium complex to become a point of convergence for the community and, in some instances, revitalize a neighbourhood.”

Yeah, no, not so much. With numbers like this, maybe it’s understandable that you’d reach for the Dickens quotes instead.