July 27, 2006

Yanks billed taxpayers for lobbyists

When the New York Yankees successfully extracted $400 million and change in taxpayer money for a new Bronx stadium earlier this year, everyone knew that it was their big-money lobbyists who'd helped grease the skids for the deal. But the big money the Yanks were spending, it turns out, wasn't their own: As I report in this week's Village Voice, George Steinbrenner & Co. have used city money to pay for their own lobbyists to pressure city and state officials to approve the stadium plan.

The trick is in a lease clause granted by then-New York City mayor Rudy Giuliani in 2001, during his final week of office. That clause allowed the Yanks (and the Mets) to deduct up to $5 million a year in "stadium planning" costs from their rent payments to the city. And in addition to such items as lead architect's Earl Santee's $350-an-hour fee and consultant meals at the team's own Stadium Club, the Yankees apparently decided that hiring well-connected state politicos to talk up city and state officials qualified as a "planning cost" that the public should be billed for.

Neither the Yankees nor city officials have been willing to comment on these revelations, though the city Parks Department and comptroller's office did confirm that neither of their agencies, which had oversight on the lease, bothered to audit what the Yankees were doing with their "planning" deduction. (In particular, Yankees president Randy Levine ducked calls from my Metro NY colleague Patrick Arden, which is a shame, as I'd love to know what Levine, a former Giuliani deputy mayor, thinks about the fact that city residents paid 30% of his salary for the time he spent working to screw them out of public parkland.)

I'll be following this story in the coming weeks; in the meantime, you can contact current mayor Michael Bloomberg at the usual place.

D.C. stadium could top $700m

The D.C. mayor's office has announced that the city could be forced to spend between $44 million and $98 million in additional public funds if the current plan to build parking garages for the Washington Nationals stadium isn't finalized by mid-August.

That would boost the total public cost of the stadium to around $700 million, and mean that the last-second spending cap extracted by dissident city councilmembers wasn't worth the paper it was hastily scribbled on. Under the current fallback plan proposed by D.C. CFO Natwar Gandhi, the council would have to vote to approve the additional funds, but given that the city would be in default of its lease with the Nats if it didn't build the parking, fat chance of the council saying no.

What's that you say? Why didn't the council stand up and set a firm spending cap before signing the lease obligating it to build whatever the Nats ownership demands, regardless of the cost? What kind of party-pooper would have proposed something like that?

Kings deal could violate law, math

The biggest problem facing the Sacramento Kings arena vote this November might not even be the fact that two-thirds of local voters oppose the project - rather, it's that the way the public vote is taking place could be illegal.

To get around a requirement that sales-tax hikes to fund specific projects be approved by two-thirds of voters, arena backers have proposed a pair of conjoined ballot measures: one to raise the Sacramento County sales tax, and the other to devote the resulting money to a Kings arena. But while a 1998 state court ruling allowed this sleight-of-hand, a state measure (passed before the court ruling, but subsequent to the case being ruled on), Proposition 218, significantly tightened up the vote requirements - and since this would be the first attempt to challenge that proposition, notes the Sacramento Bee, anti-tax groups are waiting to pounce with lawsuits should the arena measure pass.

In related news, Sacramento Bee columnist Daniel Weintraub has done the math that we discussed here previously (actually, it was Weintraub who helped tip me off to this present-value problem in an e-mail last week) and found that the Kings owners would only be putting up about 13% of the arena costs, not the 25-30% they claimed. The problem, writes Weintraub: "The deal's sponsors are comparing two very different kinds of numbers. One is the upfront cost of building the arena, which will fall entirely on the taxpayers. The other is the Kings' contribution to the project, which will be spread over 30 years."

The upshot: The Kings' $122 million contribution to the $470 million (or so) project would only be worth about $61 million, since so much of it would be paid decades from now, when it would be worth less, in present-value terms. Or to look at it the other way around, the Kings would spend $122 million over 30 years, but the public's costs, including interest payments, would add up to more than $900 million over that span of time.

Either way, it's the same answer: The team would only be on the hook for about half what its owners claims, while receiving all revenue from the arena. As Weintraub concludes, "That's not a very good way to start a campaign to persuade the voters to raise their taxes and give the money to millionaires in shorts."

Please stand by

I've been on vacation this week - "vacation" being defined as a place with only dial-up access - so I've fallen a bit behind with the news updates here. I'm going to attempt to remedy this, but please remain patient. (Things should return to normal next week.)

July 22, 2006

Putting the "wreck" in "Paper of Record"

The New York Times finally got around to reporting on the Yankees' stadium bond approval today - only three days late - but it doesn't look like they made much use of the extra research time.

First, reporter Timothy Williams repeats the myth that Yankee Stadium will be "partly torn down" once the new stadium is complete (it will actually be completely razed). Then Williams writes, citing a spokesperson for the city Economic Development Corporation, that in addition to paying off $945 million in stadium bonds, "the Yankees will pay rent on the city-owned stadium" - actually, the team's "rent" payments will go to pay off the taxable share of the bonds, while the city treasury will get nada.

All of which was explained by David Cay Johnston back in April in an article for ... the New York Times. But why read your own paper when there are city officials' press statements to regurgitate?

July 21, 2006

Kings, Nats, Magic, Niners news

Way too much news today and I'm on deadline (see the Village Voice website on Tuesday afternoon for the fruits of this labor), so let's get right to a bullet-point Friday:

• More details have emerged on the latest Sacramento Kings arena proposal, though the whole mess is so complicated that it's still pretty murky. The total arena cost would be between $470 million and $540 million; the Kings owners would repay $72 million in existing debt to the city for construction of Arco Arena, in part by selling off the land under the arena once it's been razed; the Kings would pay $4 million a year in rent for 30 years, plus arena operations costs, estimated at $10-12 million a year; the arena would be owned by the city, so presumably not be subject to property taxes. Clearly, the vast bulk of the construction bond costs - would would likely total $35 million a year or so - would fall on the public purse, but it's going to take a bit to crunch the numbers and come up with an exact breakdown of who's paying what. Stay tuned.
• Major League Baseball has declared that the Washington, D.C. government is in default of its lease deal for the new Washington Nationals stadium, insisting that the project has already missed key deadlines - an MLB lawyer calling this "a recipe for causing the Project to be late, over budget and substandard in quality, and susceptible to costly and unnecessary disputes between the Team and the Commission." (Lawyers like to capitalize nouns.) The leading theories are that this is either a maneuver to light a fire under the D.C. government to move faster on stadium construction - which would also be a recipe for going over budget - or an attempt to establish a paper trail should the dispute end up in court. Either way, it's apparently holding up the official sale of the Nats to new owners Ted Lerner and Stan Kasten, which was announced in May but still hasn't been finalized.
• In case you missed the big vote on Tuesday, Florida's Orange County commission voted 6-1 to hike hotel taxes by 1%, with some of the proceeds earmarked for new and renovated pro sports facilities. With the Orlando Magic pushing for a new $350 million arena and other downtown interests demanding a $252 million renovation to the Citrus Bowl, however, the hotel tax alone is unlikely to make the nut: "I don't think this ordinance gets us there," county commissioner Homer Hartage told the Orlando Sentinel. "There's a tremendous amount of work still to be done."
• The San Francisco 49ers announced their plans for a new stadium, which they say will cost between $600 million and $800 million and could be financed by unspecified private funds, and would be expandable to host the Olympics. That certainly sounds familiar.

July 20, 2006

Sacramento to vote on sales-tax hike for Kings arena

The Sacramento Bee is reporting that the city and county of Sacramento have agreed with owners of the Kings on a 0.25% sales-tax hike to fund a new arena.

The Bee doesn't say how much the arena would cost, though it does give hints: The tax would generate $1.2 billion "over a period of years" (gee, thanks), with half the proceeds going to the public's share of the arena, the other half to the city and county. The Maloof brothers, owners of the Kings, would pay between 25% and 30% of the total cost, taxpayers the rest.

The deal would next go before county voters in November, and here's a twist: The Bee cites a "source knowledgeable about the deal" as saying that the Maloofs have agreed to pay $20 million toward immediate costs, including those of holding the election itself. So far as I know, this would be the first time that a sports team owner has paid to have a referendum held since Microsoft billionaire Paul Allen spent $4.2 million on a Seattle Seahawks stadium vote in 1997. (After spending an additional $6.3 million on campaign ads, he won.)

July 19, 2006

IRS okays NYC stadium bonds

The Internal Revenue Service has ruled in favor of the Mets' and Yankees' tax-exempt bond plan to finance new stadiums. (See my previous Village Voice online article for why there's good reason to believe this is illegal.) This eliminates the final government hurdle for the twin $2 billion stadium deals, and while neither team has announced a groundbreaking date, it can't be far away.

Unless a planned lawsuit by Bronx residents is successful in getting a court injunction against the construction - environmental lawyer Antonia Bryson, who's representing the group, calls it "one of clearest environmental justice issues I've ever seen" - it looks likely that the century-old Macombs Dam Park will be demolished in coming months to make way for a new stadium, with Yankee Stadium and Shea Stadium to follow in the winter of 2008-09.

In lieu of flowers, please post memorial messages in the Comments section below.

July 18, 2006

Sonics sold, Oklahoma-bound?

In a move that significantly ups the ante over the team's arena demands, the Seattle Sonics and Storm were sold today for $350 million to Oklahoma businessman Clayton Bennett, the leader of an investment group put together to acquire an NBA franchise for Oklahoma City.

Outgoing owner (and Starbucks baron) Howard Schultz immediately declared, "I honestly believe this group wants to stay in Seattle. Moving the team is not their intent." For his part, Bennett promised that he would keep the teams in Seattle for the next 12 months - a convenient time span, given that the New Orleans Hornets are scheduled to finish up their unplanned two-year stay in Oklahoma in 2007, and return to New Orleans.

The threat of a move promises to make for an interesting year as the Sonics step up their push for a taxpayer-subsidized upgrade to, or replacement for, KeyArena, which was last renovated way back in 1994, when "Cheers" was still on the air, for chrissakes. The Seattle Times reports that Schultz rejected three city proposals for arena improvements:

• A $198 million expansion of KeyArena, of which the Sonics would pay $49 million.
• A $149 million expansion, with the team to pay $37 million.
• A $50 million renovation, all with public money, but with no public vote required.

The Times further reports that "the options would have given the Sonics $8 million to $20 million a year in additional revenue" by keeping luxury-suite revenue that's currently split with the city. Investing $49 million to get a return of even $8 million a year seems like a no-brainer - but then, investing $0 to get $8 million a year is even better, if you can swing it.

Meanwhile, the group Citizens for More Important Things is awaiting word on the 20,000 petition signatures it submitted to get a referendum on the November ballot to block city funding of sports projects, unless the public gets a return on its investment. With 78% of Seattleites saying they'd prefer to let the Sonics leave town than to give them public money, it should be an interesting vote, if it happens.

July 17, 2006

Park Service gives okay to Yankees project?

New Yorkers For Parks is reporting that the National Park Service has given its approval to the Yankees' plan to use federally funded parkland as the site of their new stadium. If true, it clears one of two remaining hurdles for the project (not the last hurdle, as NY4P erroneously reports): The Internal Revenue Service still needs to sign off on the use of tax-exempt bonds for the project, though it's possible the financing could be re-jiggered even if the IRS gives the thumbs-down on the current plan.

It also means a near-certain lawsuit over the NPS ruling, since local neighborhood activists have long objected that the new parkland being created is not of equal "value and utility" to the old parks, given that residents would have to cross a highway to get to much of it.

More on this in the morning...

NEXT MORNING: Looks like it's official. Lawsuit to follow.

July 14, 2006

D.C. digs up more parking spots

The District of Columbia says it's found 9,000 more parking spaces that could serve the new Washington Nationals stadium, providing plenty of space for sellout crowds. The catch: The city doesn't control all the lots (the Washington Post actually calls them "potential parking spaces," which sight unseen makes me wonder if some are just vacant lots that could be used for parking), and some are as far as a 15-minute walk from the stadium site, which apparently would be an insurmountable hike for the car-dependent.

Meanwhile, the new Nats owners are quickly proving themselves sore winners when it comes to the stadium plans, as team execs have griped to the press about everything from lack of sufficient access roads to lack of parking. "It's not simply enough to build a stadium, plop it down and hope that it works," team president Stan Kasten told the Washington Post. "Part of that is having the ability to get there easily and to park conveniently. That's part of what will draw people there. If they think they can't get there, they will stay away."

So much for promises that the Nats stadium would be an example of "green construction." But then, as preservationist blogger Richard Layman notes, neither Kasten nor team owner Ted Lerner has a very good track record when it comes to smart growth.

Casino bidders pledge Pens funds

Two more bidders for a Pittsburgh slots casino license - Forest City Enterprises and PITG Gaming LLC - have pledged to pay $7.5 million toward a Penguins arena if they win the license. The two had held off on committing a firm dollar amount, but presumably were afraid that Pens backers would push to deny them a shot at the license otherwise.

In any case, the future payments would be worth only about a third as much as the $290 million in cash that the third bidder, Isle of Capri, has pledged; the rest, according to Gov. Ed Rendell's "Plan B," would include $7 million a year in state money, and $8.5 million in cash plus $4.1 million a year in team contributions. That'd come to about $67 million worth of arena being paid off by the team, but Penguins execs, needless to say, prefer the deal where they don't have to pay anything; team president Ken Sawyer yesterday declared the Isle of Capri offer to be "by far the best one for the city and the region."

Louisville approves arena funds ... or not

The Louisville city council voted yesterday to approve the construction of a city-funded downtown basketball arena to be the new home of the University of Louisville's hoops squads, but several questions still remain.

First off is how much city money will be involved. The Louisville Courier-Journal reports that city taxpayers will be on the hook for "between $196 million and $216 million over 30 years," which in present-value terms is worth about $90 million. However, if the arena doesn't break even - and they seldom do - the city could be on the hook for an additional $3.5 million a year, bringing the present-value city cost to about $140 million.

In addition, the council tacked on a provision that would allow local construction unions to have input on the arena's construction - prompting an immediate outcry from local Republican leaders, who called on Mayor Jerry Abramson to veto the bill, even after some of them had voted for it. Kentucky Gov. Ernie Fletcher said he had "concerns" about the labor provision, and some local African-American leaders complained that it might lock minorities out of jobs, presumably because the local unions are white-dominated, and the local minority-run businesses are non-union.

"Tonight we go home wondering what's going to happen tomorrow," council president Kevin Kramer declared last night. Doesn't everybody? Well, almost everybody?

July 13, 2006

Too old to rock 'n' roll, too young to die

The 83-year-old Yankee Stadium may "fail to reflect the glamour" of the Yankees, as New York Mayor Mike Bloomberg insisted last year, but apparently it's just fine to play host to one of baseball's showcase events, MLB commissioner Bud Selig telling reporters on Tuesday that he's considering playing the All-Star Game there in 2008, which if all goes according to the team's plans, would be the last summer before the historic ballpark meets the wrecking ball. "It's a very intriguing possibility," said Selig, who previously has used All-Star hosting privileges as a carrot to encourage cities to build new stadiums.

New York Daily News columnist Bill Madden adds:

It's believed as soon as the Yankees get final approval on the remaining tax and land issues in the next 3-4 weeks, Selig will formally announce the nostalgic All-Star send-off for the House That Ruth Built.

A final decision in three to four weeks seems unlikely, as by all accounts the state of New York still hasn't even submitted its required application to the National Park Service to get permission to build a stadium on federally funded parkland. Add in the mysterious ways of the Internal Revenue Service, which still must sign off on the stadium bonds, and at this rate, the Yankees will be lucky to break ground before wintertime - which means Selig might want to hold open the 2009 All-Star slot for the House That Ruth Built's finale, just in case.

Live and uncensored

Just a note that I'm going to be doing a live chat at baseballprospectus.com tomorrow at 1 pm Eastern time. All questions about baseball (stadiums or otherwise) are welcome, though if somebody just has to know what I think the fate of the Sacramento Kings will be, I'll try to push the envelope.

July 12, 2006

Selig: Blah blah blah stadium

MLB overlord Bud Selig at last year's All-Star Game:

"[The Florida Marlins keep saying they still think they're going to get something done, they need to get something done. If they're optimistic and hopeful, I am, too. ... I'm always concerned about teams that need new stadiums, and it's obvious they do. That's not a secret. Somehow there has to be the political will and the private-sector will to get a stadium built. I mean, they are struggling mightily."

Bud at this year's All-Star Game:

"It's a market that we should be in. But it's a bad ballpark with a bad lease. They need a new stadium. I know people get tired of me saying that."

Selig failed to explain why, if the Marlins have such a raw deal in an otherwise good market, they can't just borrow their own damn money to build the stadium (or at least to cover the $100 million funding gap in the current plan), and pay themselves back out of the manna that would rain from heaven in the new place. (They'd need to put manna collectors on top of the retractable roof, I guess.) Even if M's owner Jeffrey Loria's credit isn't good enough, maybe Selig could introduce him to one of his banker pals...

S.F. mayor floats Olympic stadium for 49ers

It happens every four years: The Olympics come calling, and stadium plans rain from the sky like giant, expensive hailstones. Last month it was Chicago; this month, San Francisco, where Mayor Gavin Newsom has proposed building a long-discussed 49ers football stadium to play host to the opening ceremonies of the 2016 Summer Games.

Who would pay for it? Take it away, Gavin:

"It's a broad-strokes vision," Newsom said. "If we get into the second round, we are assuming that round will then require a level of specificity that will force us to make more declarative commitments."

San Francisco Chronicle columnist Ray Ratto further notes that "Newsom is no more going to be mayor of San Francisco in 10 years than the reincarnated Emperor Norton," which isn't quite fair - if Newsom can land the 2016 Olympics when the IOC makes its decision three summers from now, it'll be up to his future City Hall counterpart to get the damn thing built one way or another. Still, I can't disagree with Ratto's conclusion about the stadium plan: "We'll believe it is worth laughing at when we see it."

D.C. approves garage plan; Nats disapprove

The D.C city council unanimously approved selling a plot of land near the new Washington Nationals stadium for $61 million to developer Herb Miller, who would build the parking-garages-wrapped-in-condos development that Mayor Anthony Williams wants. (Guess councilmember Carol Schwartz decided she could live with voting for a bill she didn't like. Again.)

Nats president Stan Kasten has derided the Miller plan as "speculative," which is code for "we want our parking spaces ready on time, by gum, and we don't care whether they're above or below ground or wrapped in condos or in pastrami." (You may doubt me about the pastrami, but who's the one who knows how to read code here, hmm?) It's hard to see why he's worried, though: D.C.'s contract with the Nationals requires the city to provide 1,225 parking spaces by the time the stadium opens, so Kasten will get his asphalt one way or another; the Washington Post reports that the city is considering "[paving] over some of the land to create temporary surface-level parking that would give Miller more time to finish, if necessary."

Have we hit $700 million yet?

Kings arena confab debates price tag

More information about the Sacramento Kings arena talks has leaked out, after the first day of revived negotiations at (you can't make this up) the Fantasy Tower in Las Vegas:

Before the two (or four if you count the city, county, Kings, and NBA) sides can even get down to discussing how to split the arena costs, they have to agree on what they are. The Kings owners the Maloof brothers have floated a $400 million arena; government officials are wondering why the team can't emulate the Memphis Grizzlies, who built - or rather, had built for them and then moved into at no cost to themselves - the FedEx Forum in 2004 for a mere $250 million.

The answer, Sacramento developer Tony Giannoni (who also attended the meeting - okay, five sides) told the Sacramento Bee, is multifold:

In an interview before negotiations began at 2 p.m., Giannoni said the costs of copper, concrete and steel have shot upward, fueled by competition with Pacific Rim countries.

In Sacramento, another major cost escalator on projects over $25 million is a city requirement that workers be paid Bay Area-scale wages, Giannoni said.

Giannoni has estimated that construction costs overall have increased 30 percent in the last three years. In one of his projects, a planned second tower to his Meridian Plaza downtown, costs have escalated 67 percent in four years, he said. ...

Beyond the inflation and wage issues, Giannoni said that seismic requirements represent a big cost that Memphis did not face. "It's less stringent there, less concrete and steel required," he said.