Field of Schemes

August 30, 2004

There goes the neighborhood

I'll be offline for the next few days, fleeing the invasion force. See you at the end of the week.

Olympic elephants

The International Olympic Committee has said the just-completed 2004 Summer Games would leave no "white elephants" behind in Greece, but the sound of trumpeting is loud and clear around Athens. In building or rehabbing 35 competition venues and 72 training facilities for the Olympics, according to Reuters, Greece neglected to come up with post-Games uses for most of them: "Unfortunately, there isn't any plan," government spokesman Theodoris Roussopoulos recently admitted.

This is fairly common among recent Olympics, which have resulted in some well-used stadiums (the Atlanta Braves' Turner Field among them) and a whole lot of empty velodromes. Adding to Greece's woes: Work on many venues still hasn't been finished, and local mayors are saying they can't pay maintenance and security costs for the buildings while future uses are decided.

August 29, 2004

Nobody home in VA legislature

The Washington Post reports that MLB officials are "seeking immediate assurances" from Virginia that its stadium finance plan would get through the state legislature, after two key legislators panned the deal. One problem: The legislature doesn't meet again until January, which means the only way they could give their assurances would be via Evite.

Another potential problem, though the Post doesn't mention it: The Virginia Stadium Authority's ability to tap state taxes for a stadium expires December 31, and must be approved by the legislature to take effect. Clearly somebody in Virginia has an idea for how this is going to work, but nothing leaps to mind. Maybe they'll vote to turn the calendar back.

August 28, 2004

Vote first, ask questions later

Some Arlington-area voters say they want more info on the city's proposed $650 million Dallas Cowboys stadium - like, say, the details of the lease, which has yet to be negotiated - but city officials say that won't happen before a November 2 referendum. "There's a tremendous investment in things like lawyers' time," city manager Chuck Kiefer told the Fort Worth Star-Telegram. "You're talking about a significant expenditure. Why commit when you don't know the outcome of the election?" There was no immediate confirmation of the rumor that the referendum wording will be simply "I like football: [yes | no]?"

August 27, 2004

Evans: I'll take my ballpark and go home

Okay, now this is getting fun: D.C. councildude Jack Evans has upped the ante in the district's battle with Northern Virginia over the Montreal Expos, insinuating that if Virginia gets the team, he'd block it from using D.C.'s RFK Stadium on an interim basis. "There would be enough anger in the city, including my own, that the council could pass legislation that would keep a northern Virginia team out of RFK," said Evans.

Evans added that he hadn't told MLB officials this, as "that would be too much of a threat." So instead he only told a reporter for the freakin' Associated Press. Not to doubt the integrity of a servant of the people, but I've heard less overt threats in a Beenie Man song.

Jets stadium headed to court

Just four years into the Jets-to-Manhattan controversy, and finally someone has thrown out the first lawsuit. Opponents of the plan, including the Hell's Kitchen Neighborhood Association and Knicks and Rangers owner Cablevision, filed suit in state court yesterday charging that the draft environmental impact statement released by the city in June is inadequate. The EIS, according to the litigants, fails to properly examine the Hudson Yards project's likely impact on air and water quality, while projecting "significant adverse traffic impacts" without including sufficient proposals for mitigation. And if that all sounds nitpicky in the face of a multi-billion-dollar project, just remember, that's what they said about the fish.

D.C. hiring stadium spin doctor?

This just in from FoS readers watching D.C.'s local NBC affiliate: In the wake of negative polls on a publicly funded new stadium, Mayor Anthony Williams is reportedly set to announce that he's spending $60,000 on a p.r. consultant - not to talk MLB into awarding D.C. the Expos, but rather to convince his own citizens that a $400 million baseball stadium is a keen idea. Expect more on this tomorrow.

Everything's smaller in Virginia

Following revelations that it doesn't own most of the site of a proposed stadium/development complex in Loudoun County, the Virginia Baseball Stadium Authority has officially scaled back its plans, from 450 acres to perhaps less than half that. Given that the project's private developer was supposed to contribute $82 million of the stadium's $442 million cost, it's unclear how this will affect ballpark finances; Virginia baseball czar Gabe Paul insists that "the developers can share infrastructure expenses with us so we can meet our budget," but then, what else is he going to say?

In other Expos tea-leaf reading, apparently MLB officials are not going to visit Las Vegas next week after all, after making stops in D.C., Northern Virginia, and Norfolk. Vegas baseball czar Mike Shapiro insists that "they've seen our model and understand our financial plan is viable." If so, that makes one of them.

August 26, 2004

Portland has a plan

Having been reduced to an afterthought in the race for the Montreal Expos, Portland, Oregon nonetheless issued its latest stadium finance plan today. (PDF of the complete plan here, thanks to businessofbaseball.com.) The $350 million proposal breaks down as follows:

$115 million in state income taxes from players and team execs
$85 million from a 10% ticket tax
$56 million in surcharges on businesses in a "stadium district"
$29 million from concessions and merchandise sales
$25 million in personal seat license sales
$12 million in rent paid by the team
$10 million in tax-increment financing

This looks a heckuva lot like the last stadium finance package put forth in Portland, and has the same pitfalls: the income tax figures are likely overly optimistic, the PSLs and concessions money would come out of the same revenue streams that a team owner would want so as to enrich themselves, the workings of the "stadium district" remain a mystery, and so on. At least one leading mayoral candidate has already declared the plan an unacceptable fiscal burden.

If the plan somehow has legs, it's less likely to be used for the Expos than to lure another disgruntled franchise like the Oakland A's, Minnesota Twins, or Florida Marlins. Or more likely, given Portland's smallish media market, as a bludgeon to convince those teams' present homes to cough up some gruntlement.

NYC Olympics would cost - hey, look over there!

And now for our Dan Doctoroff moment of the day, here's the NYC deputy mayor explaining, as only he can, why a New York Olympics would be "completely privately funded," despite relying for an Olympic stadium on the publicly funded $5-billion-plus Hudson Yards project:

Dan Doctoroff: The budget for the Olympic Games themselves, set the West Side Project aside, the price for the Olympic Games is about $3.6 billion �

WFAN sports-talk host Mike Francesca: Wait, how can set the West Side aside? You need the West Side �

DD: It's gonna happen whether we have the Olympics or not.

MK: How do you know that?

DD: Either it will or it won't. If it doesn't we won't have the Olympics, that's very clear. But if we don't have the Olympics, and assuming we get the approvals we need, it's going to go ahead even if we don't get the Olympics.

If Doctoroff finds himself out of office after next year's mayoral election, he might consider a second career.

NFL woos Anaheim

The NFL, frustrated by the unwillingness of Los Angeles to cough up public funds for a new or renovated football stadium, has publicly declared its intentions to court Anaheim, where a stadium plan has already cleared environmental review. (No word just yet on how it would be funded.) Said NFL spokesman Greg Aiello: "Until you have what you want, why wouldn't you keep looking around?"

Saints to state: No backsies

Wanna know how to become a multi-millionaire? Here's how: Talk the state of Louisiana into giving you $186 million in tax money over ten years so you'll stop demanding a new football stadium for your New Orleans Saints. Then when your governor asks if you'd consider returning some of these public funds if she'll build a stadium after all, brush her off, saying, "a deal is a deal." Gov. Kathleen Blanco is set to meet with Saints owner Tom Benson next week to again ask for some of the state's money back; clearly this is why she's just the governor and he's the sports tycoon.

Expos hurry-up offense?

The Washington Times is reporting that MLB's recolation committee could make a recommendation about the fate of the Montreal Expos as soon as next week, with an actual decision by Bud Selig possible the week of Labor Day. While we've heard this all before, the Times does note one added time pressure: Three D.C. councilmembers who support stadium funding face tough re-election fights on September 14, and could be out of office by the end of the year. "We need to get this done sooner rather than later, and we should get it done in this [political] cycle," D.C. Mayor Anthony Williams said pointedly yesterday. "We can't take for granted the political support that is now in place for this." [Late note: a poll of likely voters in the upcoming Democratic primaries - effectively the election in heavily Democratic D.C. - shows 70% opposed to using public funds for a baseball stadium.]

Add in the previously noted January 1 sunset provision in Virginia's stadium authorizing legislation, and there are mounting reasons for Selig to make a decision soon. Of course, he'd still need to deal with the fact that stadium plans are as yet uncertain at best - not to mention the pending RICO case filed by former Expos shareholders, charging a conspiracy by Selig and former owner Jeffrey Loria to eliminate baseball in Montreal. That case is scheduled for an arbitration hearing in September, with a ruling likely in October - and then the actual lawsuit can proceed. Would Selig announce a move of the Expos, even at the risk of having it overturned by a court injunction? Tune in in two weeks, same bat channel.

August 25, 2004

VA senate leader opposes stadium bonds

As MLB officials make yet another rounds of the prospective Montreal Expos homes, another Virginia legislator has come out against the state's proposed stadium finance plan. Earlier this month, you'll recall, Virginia House Speaker William Howell came out against using the state's bonding authority to sell stadium bonds; now state senate president pro tempore John Chichester has told the Associated Press that such "moral obligation" bonds "were not developed to help private enterprise. Private enterprise has to stand on its own."

While the plan to build a $442 million stadium could still go forward without state bonds, the resulting bonds would get a much lower bond rating, and so raise costs substantially. Norfolk's stadium plan, incidentally, would be unaffected: It already uses local bonds backed by tax increment financing, not state bonds.

Indy end run?

Perhaps taking a page from the New York Jets' playbook, the mayor of Indianapolis has asked the quasi-public Capital Improvement Board of Managers to explore building a new Colts stadium that, combined with an expansion of the city's convention center, would cost an estimated $700 million. The CIB, notes the Indianapolis Star, has the power to collect taxes, sell bonds, and condemn property, but "because the board is a municipal corporation, it can get things done much faster - without having every decision subject to a vote of elected officials." Because, you know, letting elected officials vote on government actions is positively un-American.

Counting costs in Arlington

Last night, the Arlington city council unanimously approved a plan to spend $325 million in public money on a Dallas Cowboys football stadium. Arlington voters will now have the final say, in a November referendum.

The Fort Worth Star-Telegram points out one previously unnoted opportunity cost of the proposed Cowboys stadium: By raising the Arlington sales tax to 8%, it would leave the city just one-quarter of a percent shy of a state-mandated sales tax cap. As a result, the city would be unable to raise taxes for other needs, which, writes the paper, "would limit Arlington's financial ability to repair roads, build parks and undertake public works projects for years to come."

(A similar scenario took place in Maryland in the 1990s, where the four sports lotteries used to fund stadiums for the Orioles and Ravens so tapped out the lottery market that when a lottery to fund schools was later proposed, state officials were told that it simply wasn't feasible to raise any more money this way.)

Arlington Mayor Robert Cluck, who's spearheading the stadium drive, insisted that the benefits of a stadium would outweigh the costs, saying, "You have to spend money in order to make money." The economic impact study that Cluck commissioned (PDF file here), however, says differently, projecting about $2.9 million a year in new local tax revenues from the stadium, as against more than $20 million a year in construction debt payments. That does sound like a certain kind of Texas investment strategy, but probably not the one Cluck had in mind.

August 24, 2004

Expos Watch, cont'd

Local opposition is starting to show up to Washington, D.C.'s $340 million stadium plan for the Montreal Expos. Ralph Nader weighed in yesterday with a Washington Times op-ed saying that baseball should simply renovate RFK Stadium on its own dime, while today the right-wing Times itself editorializes that "The city should neither increase taxes nor use tax dollars to finance a new stadium." Meanwhile, in a letter to the Washington Business Journal, the No DC Taxes for Baseball Campaign ups the rhetorical ante:

In what may be the greatest political boast heard in the District of Columbia since Alexander Haig said, "I'm in charge" after President Reagan was wounded by a would-be assassin, [D.C. councilman Jack] Evans wrote: "You come, baseball, and we will build it. I guarantee it." Citizens, stand aside. Jack Evans has proclaimed it thus.

In fact, it's likely questions about Evans' ability to drum up tax money for a stadium - and not Baltimore Orioles owner Peter Angelos' territorial claims - that are keeping Bud Selig from picking a winner in the Expos derby. For more on this, Baseball Prospectus subscribers can see my latest article in today's edition.

August 23, 2004

Maloof! Maloof is on fire!

A month after storming out of a city council hearing that was discussing using public funds to pay for half of a new basketball arena, Sacramento Kings co-owner Joe Maloof issues a new counteroffer: the Kings would pay 20 percent, take it or leave it. Maloof then levied an odd threat, saying that the 16-year-old Arco Arena "still serves a purpose, but in five years there will be no way it will be NBA-approved." I've never heard of any required NBA seal of arena approval, but I guess it'd be one way for team owners to pass the blame buck: Hey, it's not us threatening to take your team away, it's that bad man David Stern! Give us $280 million and we'll send him to the cornfield!

Cowboys deal called great, lousy

More proof that if you put two economists in a room, you'll get three opinions: Backers of the proposed Arlington stadium for the Dallas Cowboys say it's a good deal because the public would get $500,000 a year in naming rights fees and pay 50% of the construction costs, as opposed to 71% for the Texas Rangers stadium built in 1994; critics point out this stadium would be far more expensive than the Rangers' park ($650 million vs. $191 million), and the Rangers agreed to pay $1.5 million a year more in rent than the Cowboys would. Arlington councilmember Kathryn Wilemon, meanwhile, found a previously unnoticed silver lining, noting: "It's really encouraging to me because the younger people, the people under 40, are asking questions and becoming excited." Yeah, that's encouraging to me, too.

Earthquakes set move deadline

The San Jose Earthquakes owners have stepped up their threats to leave town if they don't get $50 million in public funding for a new soccer-only stadium. The Anschutz Entertainment Group, which owns about half the teams in Major League Soccer, has declared a September 17 deadline by which the team will either be 1) moved to San Antonio, 2) sold to a Mexican soccer club that would move it to Houston, or 3) kept in San Jose if a local buyer can be found. Reports the San Jose Mercury News: "Asked if putting out a deadline before talks entered serious stages made it seem as if AEG was never serious about keeping the team in the Bay Area, [Earthquakes President Alexi] Lalas said, 'If we've been at fault for anything, it's for not adequately expressing our urgency.'" Hey, somebody's been taking PR lessons from David Samson!

August 21, 2004

Something's shoddy in the state of Illinois

Weeks after several chunks of concrete fell at Chicago's Wrigley Field, the city buildings commissioner has ordered more inspections, threatening to bar the Cubs from playing their next home game on Monday if they don't like what they find. Similar threats last month came to nothing, and the Cubs were allowed to play their game as scheduled.

This round of inspections, buildings commissioner Stan Kaderbek explained, was prompted by comments by L.A. Times said reporter P.J. Huffstutter that recent repairs at Wrigley were "shoddy and the cause of the falling concrete." And then it got fun: Both Huffstutter and Times higher-ups immediately protested that her statements had been misinterpreted, with Huffstutter calling to say, according to Kaderbek, that "she had mixed up her stories." (Maybe she meant to say it's Sammy Sosa's batting average that's been crumbling?) All this was reported yesterday in the Chicago Tribune - which failed to note that it, the Cubs, and the L.A. Times (though not the Chicago Buildings Department) are all owned by Tribune Media.

Brazil soccer chief: Blow up Maracana

The head of the Brazilian Football Confederation has declared that Rio de Janeiro's Maracana stadium, a shrine to millions of soccer fans, "has to be blown up" and replaced by a modern facility if Brazil wants to host the 2014 World Cup. Polls have shown almost 90% of Brazilians are opposed to the idea, which, because Maracana is a national landmark, could be carried out only by order of the president.

August 20, 2004

Area mayor hopped up on goofballs

New York Mayor Michael Bloomberg united his two current obsessions - a New York Jets football stadium and stopping anti-war protestors from rallying in Central Park during the Republican Convention - in one bizarro quote today:

"Think about the people that want to protest for the Republican convention. Wouldn't it be great if you could put 100,000-odd people indoors and they could have a real protest?"

There's certainly a history of putting protestors in football stadiums, but it's not exactly what Bloomberg had in mind.

More NYers dis Olympics

In a followup to his earlier story on how no New Yorkers he knew wanted the Olympics, New York Post columnist Mike Vaccaro writes: "I was wrong when I said no one wants them in New York; judging by my informal poll, it's actually closer to 2-to-1 against." Best comment, from reader "Lois from Ozone Park": "Did I miss the referendum on whether people thought this was a good idea?"

Newark arena moves ahead

The New Jersey Devils' planned $310 million Newark arena took another step forward yesterday, as the 14-member commission analyzing the plan said "the economic benefit, tax benefit and revenue from the Devils represent a significant return on a $210 million [public] investment." Under the most recent lease plan, the city of Newark would be paying about $14 million a year in bond payments, and receiving between $4 million and $6.6 million a year in rent and arena revenues - much of the rest of the presumed benefits would come from an accompanying hotel and office complex, which as yet doesn't have a developer lined up.

"Has the work of the commission made the deal better? Yes," community activist Richard Cammarieri told the Newark Star-Ledger. "Has their work made it a good deal? No. There are still questions." Once finalized, the arena contract still needs to be approved by the city council.

Waiting for Tomo

Forget October: Now mlb.com reports that a decision "may not happen now until owners gather again in November for their final quarterly meetings of the year." Commissioner-for-life-plus-three-years Bud Selig told reporters at yesterday's owners' meeting: "Would we like to have done it faster? Yes. But you�re moving a franchise into markets where stadiums don�t exist, where there�s much work to be done. � While we'd like to get it done, the fact of the matter is that it's important that we get it done right."

Added Selig: "Please don't read anything into this, but you're talking to a guy who got a team on April 1. We opened on April 7." But, you know, don't read anything into it.

St. Louis County to referendum organizers: No backsies

The St. Louis County Board of Election Commissioners has officially certified that opponents of the new Cardinals stadium have compiled enough petition signatures for a November vote to ... well, they didn't actually certify what it would do. Organizers with the Coalition Against Public Funding for Stadiums say it would block the county from making payments on $46 million in stadium bonds that it sold last December; the county says its lawyers say it could only prevent county spending on future stadiums, not ones already underway. If the referendum is passed by voters in November, its next stop would undoubtedly be the courts.

August 18, 2004

Everybody into the pool!

Narrowing the Expos bid field to Washington, D.C., and Northern Virginia didn't work so good, so today MLB COO Bob DuPuy decreed that baseball negotiators go back and meet with four different cities yearning to be the new home of Montreal's finest. On the record, DuPuy wouldn't say which four cities these were; off the record, a "baseball official" (you think DuPuy at least puts on a pair of sunglasses or something when he switches characters?) confirmed what you've no doubt guessed: they're D.C., Northern Virginia, Norfolk and Las Vegas. Portland and Monterrey, we have some lovely parting gifts.

Meanwhile, ESPN's Jayson Stark notes that things could get dicey for a 2005 move if things drag on much longer, as appears inevitable. First off, September 1 is the deadline for submitting the 2005 schedule, and the longer the delay, the more difficult travel arrangements could become next spring. (Can you picture those Philadelphia-to-Las-Vegas-to-New-York road trips?) Also, writes Stark, "MLB has been told that RFK Stadium would, ideally, require six months of work to become an acceptable big-league facility. That means a decision would, realistically, need to be made by mid-September." All those holding your breath, raise your hands. (Put your hand down, Jayson. And breathe.)

Expos Watch, cont'd

Today it's the Washington Times' turn to report on the non-goings-on in the Montreal Expos relocation saga. Eric Fisher reports that negotiations between MLB and D.C. and Northern Virginia are continuing, with both regions preparing "term sheets" outlining stadium-finance plans. These wouldn't be binding, however, and either plan would still require legislative action, with an uncertain outcome.

According to "industry sources," writes Fisher, "the latest hope is to have word within four to six weeks. The wait for a decision, however, could extend into October." Say, does that look to you more like a bush or a shrub...?

Arlington stadium breakdown

More details have emerged on Arlington's plan for a $650 million Dallas Cowboys stadium, which passed the city council yesterday and will now head before voters in November:

89% of the city's $350 million contribution, or $19.6 million a year, would come from a 0.5% sales-tax hike. The rest would come from hotel and car-rental taxes.
The Cowboys would pay about $2 million a year in rent, plus another $500,000 from naming-rights fees.
The Cowboys would get an additional $5.5 million in parking surcharges and ticket taxes, which would be counted as part of their "private" contribution. Since these fees are generally considered by economists to come out of team revenues - a 10% ticket tax means a team can get away with charging 10% less for tickets - it's actually defensible to consider this not a public subsidy. If it is counted as part of the taxpayers' share, though, the public cost would rise to more than $400 million.

(Incidentally, if you see the Dallas Morning News' statement that the stadium would cost taxpayers $648 million, ignore it, as it's nonsense: Much of that would be in year 2030 dollars, so it's comparing apples to heavily discounted apples. Present value: It's not just a good idea, it's ... well, it's a really good idea. Journalists, take note.)

August 17, 2004

Crossing all the S's

Don't blame Baltimore Orioles owner Peter Angelos for the glacial pace of the Montreal Expos relocation saga, says MLB COO Bob DuPuy. "The main obstacle is sorting out the complexities of the various offers," DuPuy told USA Today. Yeah, we know just what complexities you mean, Bob.

Meanwhile, Angelos is still insisting his territorial rights aren't for sale, saying yesterday: "My position hasn't changed. That's for sure. That's exactly where we are." That Angelos doesn't actually own territorial rights to Washington, D.C., hasn't stopped him from threatening to block an Expos move - and for that matter, given that a three-quarters vote of team owners is sufficient to approve either relocation or overriding a team's territorial rights, it may not matter that much in any case, especially given that Angelos knows his way around a courtroom. Poutine in April, anyone?

Arlington to vote on Cowboys stadium funds

The city of Arlington has officially unveiled its plan to spend $325 million on a new $650 million stadium for the Dallas Cowboys, the second-most valuable team in U.S. sports. The Arlington City Council is expected to vote today on a plan to hike sales, hotel and rental-car taxes to pay for the project; if passed as expected, the stadium taxes would go before voters in November for final approval. The local libertarian group DFW Review is spearheading opposition.

According to the Houston Chronicle, some Dallas elected officials are lambasting Mayor Laura Miller for "losing" the team to nearby Arlington (the Cowboys currently play in Irving, yet another Dallas suburb). At least some local pols, though, are crediting Miller with saving her city $325 million, even if it will cost local fans a few minutes' extra drive to the game. "I wouldn't vote to give [Cowboys owner] Jerry Jones one red cent," Dallas councilman Mitchell Rasansky told the Chronicle. "They aren't going to change the name to the Arlington Cowboys or the Texas Cowboys. It's taken them 40 years to build the name."

NYers to Olympics: Drop dead

New York Post sportswriter Mike Vaccaro says he's spoken to 418 New York residents about the prospect of the Big Apple landing the Olympics, and has yet to find anyone who's enthusiastic. Among the typical comments, writes Vaccaro:

"I'll move to Arizona."

"Why not just paint a target on the Empire State Building and skip the middle man?"

"I haven't rooted this hard for England, France and Russia since World War II."

Those wishing to add their opinions to Vaccaro's informal poll are invited to write him at writebackvac@aol.com.

August 16, 2004

A Grizzly discovery

Department of Bad Lease Deals, Tennessee Division: When the city of Memphis agreed to build the $250 million FedEx Forum to lure the Grizzlies from Vancouver, one of the lease enticements was a "non-compete clause" with the Pyramid, built by Memphis in 1991. While the city scrambles to find concerts and other events to fill the Pyramid, this clause guarantees the Grizzlies the right to veto any events there - a right, explains the Memphis Commercial Appeal in an editorial, "the organization possesses whether there is an event the same night at the Forum or not." The editorial says it hopes the Grizzlies will use the clause "judiciously," but admits that there's nothing stopping the team from doing otherwise, except for the risk of bad publicity.

That Commercial Appeal editorial also contains one of the more comical misunderstandings of municipal economics to come down Google News of late:

All of which creates a strict test of when it would be wise for the Grizzlies to exercise the no-compete clause: when the staging of an event at The Pyramid or the Coliseum would divert entertainment dollars from the Forum.

If that's the case, exercising the right not only benefits the Grizzlies but the taxpayers as well. Sales taxes and other revenue generated at the FedExForum will help pay off bonds used to finance construction of the $250 million arena.

So let's get this straight: If the Dixie Chicks play at FedExForum and the state collects sales tax money and uses it to pay off arena bonds, that's a good thing; if they play at the Pyramid and the state collects sales tax money and uses it to, oh, keep public schools open, that's a bad thing?

August 15, 2004

Paul Allen: Above the law?

Guess you don't get a $21 billion net worth by voluntarily following the rules. When the Washington state legislature agreed to give Microsoft co-founder $300 million in public money for a new Seattle Seahawks stadium in 1997, it attached a requirement that Allen open the books of his football team to public examination. Now, after a years-long battle, it appears that Allen may be allowed to ignore this provision, as the state attorney general's office is leaving it up to legislators whether to enforce the clause. As the Tacoma News Tribune's Peter Callaghan writes: "Legislative leaders now have a choice of doing nothing or taking on a billionaire who has already given more than $100,000 to legislative campaigns. Odds are heavily in favor of them doing nothing."

The 1997 law seems clear on the face of it, requiring "the team affiliate to publicly disclose, on an annual basis, an audited profit-and-loss financial statement." While the law defined "team affiliate" as "a professional football team that will use the stadium and exhibition center, and any affiliate of the team designated by the team," Allen chose only to open the books of First & Goal, the shell corporation he created to manage the stadium, without revealing the finances of the Seahawks themselves. The state Public Stadium Authority backed Allen's contention, arguing (and I quote, thanks to the Seattle Weekly): "The word and can mean either and or or, depending on the context within which it is used." Apparently there's one grammar for the rich and another for the poor, as well.

August 14, 2004

Olympics to "break even," lose billions

With the Athens Olympics kicking off yesterday, it's time to check in on how the much-troubled 2004 Summer Games are doing on the fiscal front:

"People speak of a deficit, but nobody right now knows the exact figures. ... In Athens we expect to either break even or be in profit and that profit will be spent to promote sport." -IOC president Jacques Rogge
"With concern rising about whether the city would be prepared for the games, the Greek Government went on a massive spending spree to complete transport and sports venues, pushing out the total cost of the Olympics to E7 billion [about $8.75 billion]. ... The total games budget is now hopelessly over the initial estimates of E4.6 billion. ... Greece's State Accounting Office has already admitted that the country's budget deficit for the first six months of the year was 26 per cent higher than the same period last year, hitting E8.7 billion. ... Greece will severely tighten public spending after the games. European Union finance ministers recently gave Greece until November 5 to announce tough new measures to bring the country's budget deficit under control." -The Australian newspaper

Uh, right. The discrepancy seems to be in how the counting is done: Rogge says the $2.4 billion operations budget of the Games will break even, but that doesn't include the far higher construction and security costs (the Athens security budget alone is $1.5 billion) that Greece is incurring. This is the same juggling of the books that enabled the IOC to claim the 2000 Sydney Olympics broke even - while an independent audit by the state government found that they lost $1.5 billion.

Profit or puffery?

An economic consultant's report that a $650 million Dallas Cowboys stadium in Arlington would generate benefits for the city has Mayor Robert Cluck enthused about the project, but other economists are skeptical. Smith College economist Andy Zimbalist told the Dallas Morning News that the report "gives every appearance of being the standard puffery that you get in these types of economic impact reports. They use an inappropriate methodology, faulty assumptions and come up with projections that are meaningless."

The report by Economics Research Associates projects that a stadium would create $238 million a year in "economic impact," a figure that includes all money spent at or around a facility, whether or not it benefits the public. (If a team doubles its ticket prices, for example, that counts as double the economic activity, even if the money just goes into the owner's pocket.) As for more direct public benefits, ERA predicts a mere $2.9 million a year in increased tax revenues - at a public cost of about $325 million - and the creation of 807 long-term jobs, which would come to more than $400,000 in expense per job created, one of the worst ratios in economic-development history.

August 13, 2004

Future cloudy, try again later

The incredible predictive powers of USA Today columnist Bob Nightengale are on display again this week, as he peerlessly prognosticates that Bud Selig "will announce in the next month that the Expos will play at least the next two seasons at RFK Stadium in Washington, D.C." It would be a bizarre announcement for several reasons, not least because with Virginia's stadium-funding bill due to expire at the end of 2004, a conditional move to RFK would effectively be the same as handing the team to D.C. without a stadium-funding vote there.

Unless, of course, Selig figures it would give him two more years to play footsie with the other Expos candidates, without the extended embarrassment (and red ink) of more seasons in Montreal. A couple of years ago, I half-jokingly suggested to friends that MLB should take the Expos on an extended audition, playing ten games a year in each of eight cities, with whoever gets the biggest turnout winning the franchise; if Nightengale is right - which would be a first - Selig may be coming around to a similar idea.

In other Expos news, the Washington Post has a long article today analyzing Las Vegas' bid for the team, and concluding that it's in even worse shape than anyone thought: The "private financing" for a stadium has yet to be identified, the site originally pitched to MLB is no longer available, and Mayor Oscar Goodman has reneged on his promise that casinos would disallow betting on a Las Vegas team. Furthermore, the stadium would need to be in use close to 200 days a year - unheard of for a baseball park - to have a shot at breaking even. "It doesn't pencil out," one local businessman told the Post. "There's absolutely no there there."

August 11, 2004

Save Wrigley?

Oy, here we go: In the wake of last month's falling concrete at Wrigley Field, Chicago's former public works director is insisting that the baseball shrine is "at or near the end of its useful life," not to mention lacking "certain basic amenities ... such as year-round restaurants and gift shops." The Cubs have always insisted that they're happy at Wrigley - which, incidentally, underwent significant renovations in the 1980s - but this bears watching, especially given recent revelations about MLB's new-stadium incentives.

Seulement dites "non"

MLB grand vizier Bud Selig has been keeping a brave face about the fate of the Montreal Expos, with the Washington Times reporting recently that even if a decision isn't reached until early September, a stadium bill could be passed in a month or so. Virginia House Speaker William Howell begs to differ, noting that his state's funding plan calls for state-backed "moral obligation" bonds that would require legislative approval, approval that Howell vows won't be easy to get.

Add in that the D.C. city council has expressed its own misgivings about stadium financing, and you can see why Selig & Co. are hesitant to anoint a winner in the Expos sweepstakes. Call me crazy, but I'm making plans for Opening Day 2005 in Montreal.

Ratner Nets purchase $60m short

After last week's mixed signals from the New York Post and Newsday, trusty Matt Futterman of the Newark Star-Ledger has the real scoop on Bruce Ratner's pending purchase of the New Jersey Nets: After three key investors dropped out, Ratner was left $60 million short of his $300 million purchase price. His solution? Send current owners a letter telling them they're going to be stuck with 20% of the team for the foreseeable future.

One current owner told Futterman: "I thought we were going to get our money and now we're told we have to hang onto the team. What good does that do us?" No comment yet from the prospective owners who bid more than $250 million for the team last December, only to lose out to "high bidder" Ratner.

August 10, 2004

Arlington makes Cowboys pitch

The city of Arlington has submitted an official proposal to the Dallas Cowboys for a new $650 million football stadium; while full details weren't released, it's expected to involve raising hotel, car-rental, and sales taxes to help buy the team a new stadium. If the Cowboys approve, the city council is expected to put the tax hikes on the ballot for a November vote.

One other hurdle could be a cost-benefit study - by someone identified by the Dallas Morning News only as "a Los Angeles consulting firm" - that the council is scheduled to receive and discuss this Friday. (I'd think it would make more sense to read the report before submitting my offer to the Cowboys, but hey, that's just me.) Mayor Robert Cluck said the city would only pursue the stadium if would bring economic benefits; he didn't indicate whether making a nice view from the highway would count.

August 07, 2004

Bloomberg to IBO: Shaddup, you

Following Thursday's Independent Budget Office's report charging that the city's Hudson Yards development project would cost at least $1.3 billion more than necessary, New York Mayor Michael Bloomberg fired back yesterday on his weekly radio show: "These are just professional screamers. If you listen to some of them, you wonder whether they went to school." Deadpanned the New York Post: "A look at the IBO Web site reveals that Theresa Devine, the author of the report, has a Ph.D. in economics from Cornell."

August 06, 2004

Soccer news from all over

Dave Checketts' as-yet-unnamed Utah soccer franchise is off and running in search of public stadium funds, pitting Salt Lake City against its suburbs in the bidding to build a $20 million home for the club. In Ohio, meanwhile, where the bucks are looser, the prospective owners of a Cleveland-area MLS team have said it'll take $110 million to build a soccer stadium; they've offered to pay $20 million themselves, with the rest coming from public sources, possibly either a real-estate sales tax or a TIF.

Hudson Yards end run to cost NYC billions?

The New York City Independent Budget Office, which last month issued a warning that the Jets had overstated the likely benefits of their proposed Manhattan stadium, yesterday released another report (PDF file here) on the accompanying Hudson Yards plan, and it wasn't a pretty picture.

According to the IBO analysis, the city's plan to use PILOT payments generated by new development in the district - designed to avoid legislative oversight of the plan - would cost the city an additional $1.3 billion over time, compared to using the normal capital budget. The IBO report also notes that because the plan would rely on future office development to pay back bonds issued now, even a small delay in either construction of a new subway line (which would account for the bulk of the $2.8 billion in bonds) or accompanying office space could have dire fiscal consequences for the city, noting: "There is essentially no room for slack before 2020." (Of course, delays in building a new subway line could never happen in New York.)

Other findings from the IBO report:

To fill the 28 million square feet of new office space planned for Hudson Yards, the city projected an annual growth in office employment of 0.9% a year - one-and-a-half times the actual historic growth rate. "If the quantity of office space demanded in Midtown is just two-thirds of the projected quantity," says the report, "the plan�s assumptions imply that new Midtown construction could satisfy the full demand�leaving no excess demand for Hudson Yards to fill."
The 15-20% property-tax discount to developers - discussed in my Village Voice article earlier this week - would actually be higher in the initial years of the project, with additional tax breaks of as much as 40% to encourage early adopters.

Kings balk at arena cap

The Sacramento city council voted last night to put a funding plan for a new Kings arena on the March 2005 ballot - and the Kings promptly turned it down. Upset that the council had capped the public's share of costs at $175 million, Kings president John Thomas walked out of the council meeting, handing out a pre-written statement that "after four years of exhaustive work on this, it is now apparent that neither the city nor our business can produce the revenues necessary to make that dream come true."

Kings owners Joe and Gavin Maloof have repeated said they're not interested in threatening to leave town if a new arena isn't built - the team is actually the 12th most valuable in the NBA, despite playing in one of its smaller markets - instead leaving that to arena booster Tony Giannoni, who told the Sacramento Bee: "Without a new facility, the Kings can't stay in this community for more than the next five or six years." With Kansas City set to build a new arena without a team to play in it, it'd be pretty ironic if the Kings threatened to go back to its old home twenty years after skipping town.

Whimper for your buck

With Dallas Cowboys owner Jerry Jones angling to have the city of Arlington help build him a new stadium, the Dallas Morning News has taken a look at the economic impact of that city's baseball stadium, Ameriquest Field (previously the Ballpark at Arlington), ten years after it opened its doors. Their conclusion: a "review of economic benchmarks found scant support for the decade-old arguments that the Texas Rangers' stadium would be a mighty economic engine." In fact, the Arlington economy grew more slowly than surrounding communities over the last ten years, and promised retail development around the stadium failed to materialize.

Asked how much tax revenue the city received from the stadium, Arlington Mayor Robert Cluck replied, "I can't really tell you," before adding: "Citizens love the ballpark. It can be seen from I-30. It's a source of pride."

August 05, 2004

Membership has its privileges

The city of Arlington, Texas - best known for increasing the net worth of a certain future U.S. president - continues to talk with the Dallas Cowboys about using tax dollars to pay as much as half the cost of a new $650 million stadium, with a voter referendum possible in November. As to whether billionaire Cowboys owner Jerry Jones shouldn't just be paying the whole cost himself, Fort Worth Star-Telegram columnist O.K. Carter explains:

Yes, Jones should pay totally for any stadium. But he doesn't have to, doesn't want to and, therefore, will not. As with most hard questions, there's a theoretical answer -- he should pay -- and a real answer -- he doesn't have to. Any of a half-dozen franchise-hungry cities in the country will happily cough up a big chunk of the tab for the Cowboys.

Of course, this is the same O.K. Carter who back in May wrote:

They simply can't use the old "give us a new stadium or we'll leave" threat. They've become one of the most valuable sports franchises on the planet because of that "Dallas" in front of their name. Even if they left, the thunder we'd hear would be the sound of air crashing into the empty space left by a half-dozen other franchises trying to be the first to fill the Cowboys' vacuum. No, the Cowboys are stuck here, no matter what.

Note to O.K.: You might want to read your own clippings every once in a while.

Busch Stadium to replace Busch Stadium

The St. Louis Cardinals announced yesterday that their new stadium will be called Busch Stadium, after a naming-rights agreement with the beer giant and former team owner. Busch Stadium will replace Busch Stadium, which was built in 1966 to replace Busch Stadium (which was originally Sportsman's Park, in those innocent days when you could name buildings after something so amorphous as a "sportsman"). Financial terms were not disclosed, so there's no way to know how this plays into the Cards' $387.5 million stadium finance plan.

August 04, 2004

Yankees stadium-finance FAQ

And here we go again, answering real questions from fictionalized readers...

Q: Why are you saying that George Steinbrenner would be using "other teams' money" to pay for the Yankees' new $750 million stadium? Isn't it a legitimate business practice for companies to deduct expenses before reporting income?

Yes, and it would be here too, if baseball had "income-sharing" instead of "revenue-sharing." The way the 2002 collective bargaining agreement works, teams pay a percentage of their gross local revenues (i.e., before expenses) to the league, which redistributes the cash to low-revenue teams. This was the big concession that the union granted to owners in order to avoid a strike: by reduces the value of putting fannies in the seats (a $10 million-a-year player suddenly has to sell $16 million a year in tickets to earn his value to the team, since $6 million of that gets sent to other teams), a flat-percentage revenue-sharing plan makes owners less willing to spend money on players, thus reducing both player salaries and competitive balance, as Doug Pappas presciently predicted.

There is, however, an exception to the "before expenses" rule: Teams can deduct "stadium operations costs" before calculating their revenue for sharing purposes. And, as has recently been revealed, teams are allowed to count stadium debt as a "stadium operations cost." This means that any money spent on stadiums is effectively a deduction against revenue-sharing, allowing the team owner - in this case, Steinbrenner - to reduce his revenue-sharing check by millions of dollars a year, even if his actual revenue stays exactly the same.

A quick thought experiment reveals why this could end up creating a huge incentive for teams to knock down their old stadiums and build new ones, even if they're not needed. Let's say Joe Owner has a choice between two options: He can sign Barry Bonds Jr., the world's first shortstop-pitcher with a 1.000 on-base percentage, to a 30-year, $750 million contract, hoping that enough fans will come out to see him that he'll make his money back. Or he can spend that $750 million on a new stadium, knowing that he'll immediately recoup $300 million of that in reduced revenue-sharing, leaving only $450 million to be made back in increased ticket sales. Which would you pick?

Q: This only works for high-revenue teams like the Yankees, though, right? Say, the Florida Marlins couldn't take use this dodge, since they don't pay revenue-sharing?

Actually, they could. The Marlins pay revenue-sharing the same as the Yankees, and they also receive revenue-sharing checks based on their revenues - the less money they make, the bigger the check. In fact, as Andy Zimbalist has calculated it in his book May The Best Team Win, the Marlins actually end up paying a higher marginal "tax rate" than the Yankees, meaning they'd benefit even more from a stadium-debt deduction. If nothing else, this should encourage Miami officials in their efforts to get Marlins owner Jeffrey Loria to cover the remaining $30 million stadium-finance gap with his own money.

Q: I still don't get your argument. The Yankees earned this money themselves, so how is getting to keep it a subsidy?

The same way it's a subsidy when Cablevision gets to keep the money it earns as owners of the Knicks and Rangers instead of paying property taxes. A tax break - or a revenue-sharing break - is just as much a subsidy as being paid cash money.

Q: Okay, so other baseball teams would be getting stuck with about $300 million of the cost. What about the public?

No one really knows. Cost estimates of the "infrastructure improvements" the Yankees are asking for have settled in at the $300 to $400 million range, to build a parking garage, clear Macombs Dam Park and create replacement parkland, and add a commuter railroad station. (The Bronx Borough President's conference center/hotel plan now appears to be separate, at least for the time being.) How would this money be raised? Would the public get revenues from the garage or would the Yankees or a private developer? Would the Yankees pay rent? Property taxes? All this is as yet a mystery.

The one thing we know for sure is that the Mets will be demanding a subsidy of equal value, so whatever the Yankees' public subsidy demand ends up being, double it.

Ratner's Nets purchase doesn't hit a snag?

Or maybe not: Newsday is now reporting (in its print edition - can't find it online) that Bruce Ratner has too finalized his bid for the New Jersey Nets, signing papers last Friday and sending them off to the NBA for approval. Quoting an unnamed "source close to the Nets," the news item claimed that "Ratner is confident the deal will close by the middle of this month." Guess we'll just have to wait and see.

Hidden costs of Hudson Yards

For a rundown of some of the possible hidden costs of New York's Hudson Yards stadium-plus-convention-center-plus-dessert-topping project, including property-tax breaks for developers and the pitfalls of a $1.4 billion convention center expansion, see my article in today's Village Voice. Also watch this space for a longer interview with convention-center expert Heywood Sanders, coming soon.

K.C. okays arena tax

Kansas City voters approved hotel and rental-car tax surcharges to raise $143 million toward a new arena yesterday, with the measure passing by a 57-43% margin. The arena, which would be part of a downtown "entertainment district," is planned for a 2006 opening.

As for who would play there, that's another question. K.C. has said it hopes to lure an NHL or NBA franchise, but the history of sports facilities built "on spec" without an existing tenant is not promising: Cities have often had to wait years, and then offer additional enticements such as discounted rents and further renovations, in order to fill vacant space. In K.C.'s case, this would be especially problematic, as Sprint's $62.5 million naming-rights offer drops by $20 million if no big-league tenant is present, opening a funding hole in the plan.

Ratner's Nets purchase hits snag

While Bruce Ratner's arena plans remain in legislative limbo, his plans to move the New Jersey Nets to Brooklyn may have hit a snag from an unexpected direction: Several executives at Goldman Sachs who were to be part of his investment group have dropped out in recent days, leaving him scrambling to come up with the $300 million purchase price. The New York Post, which broke the story, quoted a "Nets insider" as saying these were "the principle guys in the deal." Does that make Ratner the unprincipled guy?

August 03, 2004

Congress mulls giving $2B tax break to sports teams

Talk about a lesson to read the fine print. The New York Times reported yesterday that a bill already passed by both the U.S. House and Senate would give sports franchise owners a $2 billion tax break by allowing them to depreciate the full purchase price of their teams.

The quick and dirty summary: For almost 50 years, sports teams have been taking advantage of a tax rule that allows them to "depreciate" their players over time, as if they were worn-out industrial machinery. (There are several problems with this - young players generally improve with time, teams already claim as an expense the costs of scouting and otherwise acquiring new players, etc. - but the IRS hasn't complained thus far.) Since it's essentially unknowable how much of a team's value is contained in its players, Congress finally acted in 1976, saying that over the course of five years, owners could write off as depreciation 50% of the price they paid for the team. The bill currently before Congress would ramp that all the way up to 100%, spread out over 15 years. The result, according to the Times, would be "a $2 billion windfall to franchise values," at the expense of the federal treasury.

The bill is headed for a conference committee of the House and Senate, with a final vote in both houses expected sometime in September. If you'd like to share your feelings on this with your elected representatives, you know where to reach them.

August 01, 2004

Angelos not for sale?

Baltimore Orioles owner Peter Angelos has reportedly told MLB officials he won't allow the Montreal Expos to move to Washington, D.C., or Northern Virginia at any price. "The answer is no," Angelos reportedly told MLB high priest Bud Selig. "You don't destroy a franchise in return for some kind of cash payment." Other reports had Angelos claiming a team in the D.C. area would cost the O's $40 million a year in lost revenue, which would mean it would take something like a $700 million buyout for Angelos to be made whole - far more than the Expos are expected to sell for.

If these reports are true, Selig is in a pickle: No other cities have made firm offers of public stadium money, which was the whole point of this years-long debacle in the first place (though there are still rumors of a casino-funded stadium in Las Vegas). A three-quarters vote of other team owners would allow Selig to rescind the Orioles' territorial rights by force, but he'd then face a certain lawsuit, especially considering how Angelos made his money.

What Selig really needs at this point is to find a major metropolitan area with a solid baseball fan base, and an existing major-league-ready stadium that can be an interim home for a team. Yeah, too bad there isn't anyplace like that available.

Steinbrenner's down with OPM

The New York Yankees' latest stadium plans may represent somewhat of a discount for city taxpayers, but that doesn't mean George Steinbrenner is ready to ante up his own money. Rather, by exploiting a loophole in baseball's revenue-sharing plan, he's set to stick other big-league teams with about $300 million of his own stadium costs - a precedent that could set other teams like the Red Sox or Dodgers scrambling for new digs as well. For the full story, see my article at baseballprospectus.com (no subscription required).

Mets: Us too!

It's official: The New York Mets say if the Yankees get a new stadium, they want one, too. "I guarantee anything they get, we'll get," Mets COO Jeff Wilpon told the Daily News, no doubt remembering that his team's lease guarantees this. Wilpon suggested that since the Mets might not need the $300-450 million in "infrastructure" costs the Yankees are asking for, the city could instead put that much cash into paying for a new Mets stadium. This free ride for the city is getting more and more expensive.

In other news, Yankees fans interviewed by Newsday were mostly opposed to the new stadium plan, with one calling it a "disgrace" to tear down the historic ballpark, and another noting, "Joe DiMaggio, Mickey Mantle and Babe Ruth didn't play across the street." Even Yankee manager Joe Torre sounded less than thrilled by his boss' plans, telling the Daily News: "I think they've done great things with new ballparks and giving them personality, but this place especially, with all the championships and players who have come through here, you know it would lose some of the mystique that this is where it all happened."