Field of Schemes
sports stadium news and analysis

  

This is an archived version of a Field of Schemes article. Comments on this page are closed. To find the current version of the article with updated comments, click here.

March 14, 2005

Send money or we'll room with the Jets

All the kids are doing it! First it was the New York Giants owners dropping hints that they'd move in with the Jets in Manhattan if they couldn't get a new stadium in New Jersey (threats they later backed away from); now, the We Don't Need No Stinking City Name MetroStars might head for the big city if their plans for an $84 million soccer-only stadium in Harrison, N.J. fall through. The sticking point: New Jersey officials want team owner Anschutz Entertainment - which owns roughly every team in MLS - to promise to pay off the state's half of stadium costs if the league folds before the construction bonds are paid off. MLS season-ticket holders, be forewarned: The guy who owns half the teams in the sport isn't willing to bet $42 million that the league will still be around in 30 years.

Actually, to be fair, it wasn't Anschutz who was making the move-in-with-the-Jets threat, but rather MLS commissioner Don Garber, who told the AP: "This is not about leverage." Looking that up in my Big Book of Sports Owner Euphemisms, that's translates as, let's see, here we are: This is about leverage.

COMMENTS

The Metrostars really do need their own stadium. It's the only way they will be able to make a profit in this sport environment. However for whatever reason NJ state officials don't seem to want to get a deal done any time soon. The Meadowlands is a dead entity as far as I am concerned. I would only support a groundshare of the Metrostars and Jets if the soccer team were given the ability to make a profit at the west side stadium, something that is currently IMPOSSIBLE at Giants Stadium right now. So, Neil, your thoughts?

Posted by Bertell Ollman on March 15, 2005 03:36 AM

So what if they can't make a profit? I can't make a profit playing sports, either, but no one has suggested that New Jersey has an obligation to help me out.

Posted by katre on March 15, 2005 09:19 AM

To be fair on the "we don't need no stinking city name", NJ has passed what is probably the cheesiest law of all time, requiring that a team have NJ in the name if it has NY. So for a season, Metro were saddled with "NY/NJ MetroStars" before they decided to go this way.

Posted by Stan on March 15, 2005 11:48 AM

On the profit issue katre brings up, yes, the NYC area hardly need the Metro around. However, the presence of soccer in the right stadium really will have events that bring people in from out of town. It the average MetroStars regular season game won't, but MLS Cup Finals, National Team matches, and International matches will (I once drove with friends from DC to Pittburgh to see one, and I'm looking for good excuses to visit NY and spend some tourist dollars). It can also host community events, and it is understood that as part of the eventual agreement that the Metro will fork over the venue a minimum number of times for community events. It will also be a good concert venue, since it will be smaller than most of the outdoor facilities around (and AEG owns one of the two major concert promotion companies, so you can ebt on concerts being held there).

Posted by Stan on March 15, 2005 11:55 AM

Of all the things to complain about in the New York area, I think the fact that the only 20,000-seat concert facilities are all indoors has got to be at the bottom of the list. As for tourist dollars, for $42 million you could hire a fleet of buses to drive around the country and give people free rides to Manhattan, and you'd get better bang for your buck than building a soccer stadium. Anyway, katre is absolutely right - clearly Phil Anschutz doesn't think building a stadium is profitable, or he'd be doing so himself; I'm not sure why he thinks New Jersey taxpayers should be dumber than him.

Posted by Neil on March 15, 2005 02:16 PM

I don't think it's that Anschutz doesn't think it'd be profitable. He has a profitable one in LA.

There's a lack of trust here that's rightly earned. The NJSEA isn't pleasant to deal with and as the Giants will tell you don't keep their promises. This is 2 teams now saying they had a deal in sight only for extra conditions to be demanded last minute.

If Anschutz builds this himself it 1) takes away from his ability to borrow money for other investments 2) sets a precedent MLS doesn't want (Bridgeview - outside Chicago is funding a stadium 100% itself), 3) provides an easy source of taxable money for NJ. If NJ has no stake in the stadium, what's to stop them from seeing the stadium as a place they can put in a "special tax" and cover their losses elsewhere in the budget. NJSEA has got to be one of the only sports authorities out there that operates at a PROFIT. While Tampa and other cities are pouring 100% money into stadiums and hoping for fringe benefits to ultimately indirectly pay off the cost, NJSEA itself is in the black (about 18 million a year IIRC). That's why Giants Stadium isn't paid off.

Anschutz has lost probably somewhere pushing 100 million or more on soccer already. Ultimately the goal is to have single owners for each team, but that won't be a sign of poor committment from AEG. AEG started with one team (Colorado who they no longer own). AEG privately funded one stadium, got one publicly funded, are on the brink of getting another one built (DC), and are pushing hard for stadiums in NJ & San Jose. I think they're pretty confident in the league.

But anyway the leagues viability should be obvious. Salaries are roughly 2 million a year per team. The league got a 10 year $150 million deal from Adidas (2/3 in cash). They're expanding (billionaire for Mexican LA market and a proven sports executive in summer major league sports deprived Salt Lake). The teams with stadiums are on their own profitable and paying off their stadiums (LA and Columbus). Once all the teams get stadiums, the leagues profitability and viability will be plainly obvious even to the biggest detractors. But the albatross of the Giants Stadium lease is about the biggest hurdle towards turning the corner so don't be surprised if the team plays elsewhere. Being a 3rd tenant (at best) in a 30 year-old stadium with football lines all over the field, artificial turf, and poor public transportation won't be worth it much longer. Harrison is PATH accessible, and located right by "Soccer Town USA" in Kearny, NJ (high soccer friendly immigrant population right there). I still suspect the deal will get done.

But I agree that this talk about the Jets stadium is about leverage.

Posted by swedcrip on March 15, 2005 03:36 PM

I tried to put in paragraphs but it didn't seem to "take". Might want to work on that feature?

Posted by swedcrip on March 15, 2005 03:37 PM

It's intentional, to discourage people from pasting 500-word comments.

Posted by Neil on March 15, 2005 09:54 PM

Anyway, swedcrip, your argument seems to come down to: "Anschutz can make more money if he doesn't have to pay for his stadium, and the NJSEA is trying to drive a hard bargain." I don't think we're in disagreement on the facts there, just on which piece to be morally outraged by.

Posted by Neil on March 15, 2005 09:58 PM

20,000-seat stadiums can absolutely serve several purposes beyond just soccer, which is the real genius behind Anschutz's enthusiasm for such facilities (besides his personal interest in boosting soccer).

Yes, soccer is the lead tenant (and what's wrong with that?), but there's plenty of of other things to keep such facilities humming. Concerts are obvious - will definitely fill a void in the NY/NJ area, for sure. So is also-growing Major League Lacrosse, which just added a team for '05 in Los Angeles, playing in. . . the Anschutz-funded Home Depot Center. Along with not one but *two* MLS franchises (Galaxy and Chivas USA), and miscellaneous other sports events (rugby, college) and concerts.

20,000-seaters make the economics of "smaller" sports like soccer and lacrosse work, with the concert business providing an ongoing annuity to smooth out the bumps. Seems like smart business to me.

But then again, NJSEA isn't a business.

Posted by Tim on March 15, 2005 11:41 PM

I think you missed part of my argument consisting of other points. It sometimes takes 500+ words to counter the false spin you put on some of these news items. NJSEA is looking for a profit. AEG doesn't want to give them one, they don't have to give them one. It's also about risk. Put that money in a "lockbox" and I can almost guarantee you the NJSEA will find a way to get its hands on it despite the stadium being paid off according to original plans.

Posted by swedcrip on March 16, 2005 03:15 AM

Anshultz wants stadiums so he can host concerts. AEG is building a 'stable" of talent and they tour them in AEG conrolled facilities (i.e. Clearchannel). Its a racket

Posted by pdaddy on March 16, 2005 03:17 PM

If Anschutz wants to build a stadium/concert facility, more power to him. If he wants state money for it, though, he damn well should give them a decent return on investment (or "profit," as you put it). I mean, if he thinks the state is being so unreasonable, why doesn't he just go borrow the money from a bank instead?

Posted by Neil on March 16, 2005 05:57 PM

Cause if he doesn't work with the NJSEA what's to stop them from taxing him out of business if he comes in as competition to their arena in the Meadowlands?

The idea of putting the money into a "lockbox" that the NJSEA says they'll be happy to return later ... I don't think Anschutz became a multibillionaire by agreeing to such deals. At some point he might as well write NJ a blank check the way they negotiate.

How many governmental sports authorities directly profit from their investments? I think most would be thrilled to break even and get their money back.

Posted by swedcrip on March 16, 2005 07:46 PM

If they just "break even," that's gross malfeasance with the public's money, because there are plenty of things New Jersey could be using that money for that would provide public gain. (Hell, they could put the money in a savings account and use the interest to fix potholes.) As for the tax issue, the NJSEA doesn't have the power to levy taxes, only the legislature does. And a tax on luxury boxes would hurt the NJSEA's arena just as much as it would Anschutz, so... what was your point again?

Posted by Neil on March 16, 2005 11:41 PM

sorry for my grammar but by "them" I was a little more inclusive than just the NJSEA. If it's ultimately a pot of money the state wants to get its hands on, I'd bet another branch of the same government would be cooperative to the NJSEA. There's a battle going on now about the "property value" of Columbus's soccer stadium.

I believe the latest proposals between the Metrostars and the state included a "ticket surcharge". http://www.nj.com/search/index.ssf?/base/sports-0/1109139044141640.xml?starledger?sps

I'm not sure who collects this "tax" but if the state can levy taxes directed at certain products, I'd guess they could target the stadium and not the arena but whatever. That article runs through both sides very well. I'm clearly not the expert here on the technicalities, but wouldn't you think that given what NJ politics is, that Anschutz wouldn't care to storm in and build a stadium to compete with the arena without clearing it with the state? I guess we disagree that the demand they set aside profits until the whole thing is paid off is excessive. And back to your first point, I guess you don't put much value on the "public value" of actually having the team. On much of this I think we can agree to disagree, but I started all these rants cause I think your statement "The guy who owns half the teams in the sport isn't willing to bet $42 million that the league will still be around in 30 years." was a little much. Oversimplification leading to a conclusion I don't agree with, but again here we can agree to disagree.

Posted by swedcrip on March 17, 2005 12:06 AM

what a lot of this comes down to is 5 years of negotiations and several years being "60-90 days" away from a final deal. I'll chalk much of it up to the AEG point man being inept, but a very possible take is that Zoffinger isn't negotiating in good faith. He doesn't want the deal to happen so reoccuring obstacles get thrown in and deals get last minute added conditions that derail things back to the start. There's certainly frustation on many sides of this but given the limited take we have, we can reach our own conclusions here. It may be just leverage but at a certain point leaving NJ may have to be an option.

Posted by swedcrip on March 17, 2005 12:13 AM

There is absolutely no trust involved when dealing with Zoffinger from the MFO point of view. The Metro fans hat ZOffinger. The Metro Front office hates Zoffinger, and he probably knows this as well. He absolutely does not want Harrison to happen.

Posted by Bertell Ollman on March 17, 2005 12:22 AM

I've spoken to Zoffinger a couple of times, and he doesn't strike me as deceitful, though he is clearly a tough, tough negotiator. All this stuff with both the MetroStars and the Giants smells to me like the usual sniping you get in the late stages of any negotiations - I'll be really surprised if they don't resolve both deals eventually, especially since it seems like they're so close on the big issues.

Posted by Neil on March 17, 2005 10:50 AM

Do you have any further insight on what is happening with the Harrison deal for the Metrostars??

Posted by Bertell Ollman on March 21, 2005 10:42 PM

Yes, but I haven't posted it to the site because it's a SECRET!!

Posted by Neil on March 22, 2005 08:03 PM

Well, the Metros GM just said that he is meeting witht he Jersey people on March 30th, and expects the deal to be either ironed out then, or cut the severs..... your input?

Posted by Bertell Ollman on March 22, 2005 09:07 PM

If you've read Field of Schemes, you'll remember this tactic from the stadium playbook: "The Two-Minute Warning." Setting deadlines is a time-honored tradition; so is setting new ones when the first ones don't work out to one's liking.

Posted by Neil on March 23, 2005 10:02 AM

Well, we've been dealing with the 60 to 90 day syndrome with the Metros and NJ for over 2 years now. I'm inclined not to beleive a word any of them say. But if you've got some additional info...... :-)

Posted by Bertell Ollman on March 23, 2005 05:40 PM

Latest News Items

CONTACT US FOR AD RATES