September 29, 2006

Magic close to arena deal?

The Orlando Sentinel reports that the Orlando Magic are close to a deal for a new downtown arena, with an official announcement expected as early as today. As for the mystery of the "significant" amount of money that the team had promised to contribute to the $385 million pot, it's apparently $100 million - though only about $40 million of it would be in cash, with the rest coming from future arena revenues and a "credit guarantee," which the Sentinel compared to co-signing a loan.

As for what those future arena revenues would be, nobody's saying just yet - so it's always possible that the Magic intend to count, say, naming-rights fees for a public building as part of their "contribution." It's certainly been done before.

What's lit a fire under the Magic arena talks? According to the Sentinel, "the specter of downtown Orlando losing the arena [to a cheaper location just outside town] appears to have sparked a serious surge in negotiations." Ah, leverage.

Yanks hide behind ADA; NY hides Nets docs

Much afoot around New York's billion-dollars-or-so in subsidies stadium and arena plans:

• While the Yankees told a state judge that they need a new home because "the existing stadium is not in compliance with the Americans with Disabilities Act," the lawyer who sued the team over disabled access in 1999 calls that "bullshit." "They're totally in compliance with the ADA as a result of complying with the settlement agreement," attorney Edward Kopelson told NY Metro. The Yanks are, though, trying to duck the installation of a final 28 wheelchair seats they'd agreed to in the lawsuit settlement agreement, on the grounds that they're devoting all efforts to building the new stadium - and in their letter making this argument, the team revealed that among its stadium consultants is the security firm of ex-mayor Rudy Giuliani, the guy who got the ball rolling on the team's sweetheart stadium deal in the first place.
• The New York state-run Empire State Development Corporation, which is the lead agency for the proposed Atlantic Yards project that would include a Brooklyn arena for the New Jersey Nets, says it's done an "independent economic impact analysis" that shows the project would generate $1.4 billion in profit for taxpayers - but is refusing to release the study, saying it's a proprietary internal document. Nuh-uh, says Robert Freedman of the state Committee on Open Government, which oversees public-disclosure laws: While the law says some internal memos can be withheld, that specifically doesn't apply to "statistical or factual tabulations or data" - though I suppose this leaves open the possibility that the ESDC's economic analysis was done without recourse to statistics or facts...
• In other Nets news, the Council of Brooklyn Neighborhoods response to the state's Atlantic Yards environmental impact statement was released today. It's 229 pages, so no, I haven't read it yet, but you can do so yourself here (PDF file). Happy atonement weekend!

September 26, 2006

Reports of Tiger Stadium's death slightly exaggerated

Tiger Stadium has gotten another temporary reprieve, as Detroit Mayor Kwame Kilpatrick admitted yesterday that "we're moving more slowly than I had thought" with plans to demolish the historic structure and replace it with condos. How much longer the stadium will remain standing, the mayor didn't say, though apparently the city still has yet to hire consultants to determine how to best dismantle the structure (and mine it for any saleable souvenirs to defray demolition costs); and the requests for proposals for condo developers won't go out for another few months, according to Kilpatrick.

And in the clear-as-mud department, we have this from the Detroit News:

Despite the delay, city officials and leaders of the Corktown Development Corp., the private nonprofit that helped Detroit figure out what to do with the stadium, remain in agreement.

"We still have consensus," Kilpatrick said, although he noted that some groups are opposed to redevelopment because they want the stadium fully preserved.

Nets thinking Queens?

The Brooklyn Papers, which won a National Newspaper Association award for its coverage of the Brooklyn Nets arena controversy despite a reporting staff that consists of two people and a squirrel with a manual typewriter, has unearthed another doozy: When Nets owner Bruce Ratner signed an option to extend his current lease at the New Jersey Meadowlands through 2013, he not only included an out clause that would let him move to Brooklyn before then, but one that would allow him to move to Queens as well.

Could there be a secret Plan B to relocate the Nets to Queens if Ratner's contentious Atlantic Yards plan falls through? (The Papers' Gersh Kuntzman speculates that the Sunnyside Yards near Long Island City could be an option.) Or could this just be a way of putting the heat on Brooklyn pols by making them think that they have a competitor for the Nets' affections? I'm inclined to believe the latter, but then, I'm the one who didn't believe the crazy rumors that Ratner would really try to demolish buildings and streets to move them to Brooklyn in the first place.

Maloofs' King-ly demands

So while Sacramento Kings owners Joe and Gavin Maloof may insist that unless they get all the revenue from 8,000 parking spaces and a guarantee that no "competing" restaurants will locate outside a new arena, they'll take their ball and go home, the Sacramento Bee reports that no other team in the NBA has a similar deal. In Memphis, where the Grizzlies' sweetheart deal for a new arena has been held up by the Maloofs as a model for their arena plans, former city aide Tom Jones told the Bee that "I don't know how the city and county could ever agree to those terms."

The Kings owners' excuse? First off, that they were promised these terms by city and county negotiators, though public officials insist that they didn't, and no mention is made of them in the written term sheet agreed to by all parties. Second, according to Kings president John Thomas: "There's a huge difference between this project and virtually any other. We're moving a thriving business into an open field that today is a toxic wasteland." This is the same John Thomas, incidentally, who recently pointed out that most NBA arenas are money-losing enterprises. Dude, enough with the hard sell!

September 22, 2006

Appendices and other addenda

I was out of commission much of this week dealing with a minor family medical emergency (anybody need a spare appendix, slightly used?). We'll return to our regularly scheduled news updates next week - in the meantime, here's an abridged version of this week's events:

• The plan to surround the new Washington Nationals stadium with condo-wrapped parking garages is dead, after the city and developer Herbert Miller were unable to agree on a financing plan. (Guess the Nats owners had something with their complaints that the plan was "speculative.") With the city contractually required to build 1,225 parking space for the Nats, Mayor Anthony Williams is now proposing simply paving over five acres of land north of the stadium to use as a temporary parking lot, but added that this could force the city to bust its $611 million stadium spending cap. (Guess the city council was right to worry that the spending cap was a load of crap, though it would have sounded more sincere if they hadn't voted for it anyway.)
• The campaign for a proposed downtown Sacramento arena may not have a tenant, but it does have $2 million in funds, courtesy of a downtown developer. NBA league officials also chimed in on the controversy this week, saying that it wants to see the Kings and the city agree to an arena financing deal before the plan goes before voters on November 7. Agree on a plan before a vote? Now that's just crazy talk.
• Initiative 91, the referendum to require that any stadium or arena subsidies return a fair-market profit for taxpayers, is officially on the November ballot, after the city council unanimously approved it on Monday. The group Citizens for More Important Things, which collected more than 18,000 signatures to get the measure on the ballot, says this would allow citizens to file lawsuits to challenge any Sonics arena deal that failed to repay the public investment, with interest. One question that I haven't been able to find out yet: Is "return" defined to just include direct cash payments from the arena, or such indirect (and easy-to-fudge) factors as "economic impact"?
• The city council in Blaine, Minnesota is set to consider a resolution to ask for a voter referendum before any sales-tax hike for a new Minnesota Vikings stadium. Bill sponsor Dick Swanson is in a tight race with a stadium-tax opponent for a seat on the county board.
• The Pittsburgh-Allegheny County Sports and Exhibition Authority has just about completed the purchase of land targeted as the site of a potential new arena for the Penguins. Pittsburgh Mayor Luke Ravenstahl is also considering asking prospective buyers of the team to commit to accepting the "Plan B" arena-financing plan proposed by Pennsylvania Gov. Ed Rendell, which the current Pens ownership has so far balked at.
• The "seat option bonds" that helped build the Dallas Cowboys' Texas Stadium in 1971 - basically an early version of personal seat licenses, where fans pay a fee to reserve the right to buy tickets - will finally be repaid in 2008, reports the Dallas News. Though "repaid" is a matter of opinion: Bondholders will get $300 for each $250 bond purchased in 1968, leading one holder of a pair of season tickets to tell the paper: "In 40 years, I make $100 off of them. Isn't that wonderful? Can't beat interest like that."
• The New York Red Bulls broke ground for the nation's most expensive soccer stadium (either $140 million or $220 million, depending on who you believe) on Tuesday in Harrison, New Jersey - giving Harrison a claim to fame other than being the last stop on the PATH train before Newark. Taxpayers will be putting up $120 million of the cost, though the public could make some of it back from parking fees and increased tax receipts.

September 16, 2006

Weekend update: California scheming

This week's leftover news comes with a decided West Coast flavor:

• The Maloof brothers, owners of the Sacramento Kings, have been on a whirlwind media tour to paint themselves as the victims in the failed talks to buy downtown railyards land for a new arena, insisting that city and county negotiators changed the terms of an agreement that, um, hadn't yet been agreed on. (Though some locals can't help noticing that the Maloofs have a tradition of throwing hissy fits.) As for what happens now with the scheduled November arena-funding vote, Joe Maloof told KCRA-TV news: "They're confused. We're confused. Everybody's confused." Can't argue with that.
• Speaking of stage-managed hissy fits, Oakland A's owner Lew Wolff made headlines on Friday by announcing he'd broken off talks for a lease extension on Oakland Coliseum (or whatever corporate name it bears these days). The A's lease now expires after the 2010 season - unless, of course, Wolff decides to reenter negotiations sometime in the next four years. As always, it's all about the leverage.
• The city and county of San Diego tried to make headlines by announcing they were proposing to begin negotiations to create a joint powers authority to build a new stadium for the Chargers - only to have the team blast county officials for not including two other prospective stadium sites, National City and Chula Vista, in the talks. Officials from those cities, meanwhile, said they didn't have a problem with the joint powers plan, which could ultimately be expanded to include them. Poor, poor headline writers.
• The Baltimore Orioles are asking that taxpayers pick up the bulk of the $38 million cost of rebuilding their spring-training home of Fort Lauderdale Stadium; under the plan, Broward County would pay $1 million a year, the state would rebate $500,000 a year in sales taxes, a user fee would supply $350,000 a year, and the team would pay $550,000 a year. And who would get the new revenues from the facility? The South Florida Sun-Sentinel article doesn't say. Clearly the campaign to get journalists to look at both the expense and revenue sides of the ledger in stadium deals is going to take longer than we thought.
• Finally, in the unlikely-homes-for-a-WNBA-franchise department, this week's contestant is: Albuquerque!

September 15, 2006

Money talks, Maloofs walk

Okay, that's not how it was supposed to go. Joe and Gavin Maloof, the owners of the Sacramento Kings, abruptly pulled out of negotiations to buy a swath of downtown rail yards land for a new arena, with Joe telling the Sacramento Bee: "There are no more negotiations; we've already discussed all the issues. They know what we need. We've told them."

This leaves Sacramento County voting on a November ballot proposal to raise sales taxes to build an arena, without anybody to build an arena for. The Maloofs are also reportedly withholding $1.5 million in cash they'd promised to give to the pro-arena campaign until their land demands are met.

The holdup is apparently over whether the city would get to build a retail/entertainment district on the land surrounding the arena, or whether the Maloofs would get it all for parking - though there have been murmurs of concern over the cost of toxic cleanup of the site as well. Interestingly, one Maloof objection may have been over whether competing restaurants would be allowed to operate next door to the arena - and interesting twist on how teams seek new buildings in order to reap the revenues from increased concessions and restaurant space, even while claiming that they will "revitalize" the surrounding neighborhoods.

If the Kings really do pull out, it's hard to imagine anyone backing the arena sales-tax plan, which already faces substantial opposition and promised lawsuits. Okay, hard to imagine except for one guy: Sacramento assistant city manager told the Bee that "I believe this is worth moving forward with in any case. We have a need for an entertainment facility in this region of this size and quality. If the Kings are not a part of it, it is presumed that they are not part of our community." Does this guy really need a reminder of the dangers of building arenas on spec?

September 13, 2006

Magic: We're thinking of an arena number

Orlando Magic officials were scheduled to announce yesterday how much of their own money they'd put up towards a new $385 million arena, and the answer is ... a "significant" amount. For this, we gave you a drumroll?

Magic COO Alex Martins did at least hint at how the team's offer would be calculated, noting that basketball games would fill about 22% of the arena's estimated 200-night-a-year schedule. As the Orlando Sentinel, hand-waving wildly, reports:

Given that rough amount, 22 percent of the $385 million estimated cost to build it downtown would peg the possible team contribution at a high end of roughly $85 million. But even within that $45 to $85 million range, it still not clear what would be provided by the Magic, or what might be raised through added ticket charges to fans, or possibly bigger shares of naming or concession rights the city now retains.

That last point could be the key issue: Not what the Magic are willing to bring to the table, but what they'll ask for in return. Ticket surcharges, most economists agree, mostly end up coming out of team pockets, since a $5 arena surcharge is $5 less that they can otherwise jack up prices. Which is exactly why team owners generally hate them, and prefer to recoup their expenses by grabbing a bigger share of, yes, naming rights, concessions, or parking fees that would otherwise go to the public.

As I stressed to Pat Campbell of Orlando radio station WFLA this morning (and welcome to any WFLA listeners who've wandered over here, by the way), this is why Orlando residents need to keep their eyes not just on the arena costs, but the revenues as well. As I've discussed in the past, teams are increasingly willing to put up more construction money in exchange for subsidies at the back end. It'll be very interesting to see if those end up being "substantial" as well.

September 12, 2006

Cards to St. Louis: Money all gone, send more

As you may recall, part of the St. Louis Cardinals' pitch for $130 million in public money for their new Busch Stadium was that the team would build a "Ballpark Village," including stores and condo towers, on the site of the old Busch Stadium. The new stadium opened in April, but the old site is still a dust pit - and it will remain so, the Cards owners now say, unless they get tax breaks that could be worth as much as $100 million.

In particular, the team would be looking to tap into a state program that allows developers to keep half of the new sales tax revenues from a development (sales tax increment financing, or a STIF), plus having the city kick back increased property-tax revenues to pay for construction costs (more traditional tax increment financing, or a TIF). Mayor Francis Slay seems inclined to approve the package, with top aide Jeff Rainford telling the St. Louis Post-Dispatch: "We want the biggest, most exciting, most transformative project possible" and dismissing critics of further subsidies as "small thinkers."

The whole mess points up the problem with the everything-but-the-kitchen-sink stadium-and-development packages that are becoming increasingly popular, both as public opposition to stadium subsidies rises and as baseball teams try to cash in on MLB's revenue-sharing deduction: Unless you get ironclad commitments for all the development up front, there's no guarantee you won't have to kick in more taxpayer money once it's time to build the "public benefits" part of the project. We've already seen this, in a fashion, in Washington, D.C., where the city is looking at having to increase its total subsidy to more than $700 million to smooth the way for ancillary development; and folks are worried it will happen in Brooklyn, where New Jersey Nets owner Bruce Ratner certainly has a track record of such things.

It's all enough that city officials in Fremont might want to make sure they read the fine print before signing on to Oakland A's owner Lew Wolff's stadium-for-condos plan: Additional charges may apply.

September 10, 2006

Weekend update: Real Salt Lake, 49ers, and more

In which I see if writing a longer intro to one of these sum-up posts is less confusing to the bot that writes the Google News headlines:

• Jordan, Utah parents are not happy to learn that property taxes that normally go to local schools would be diverted to help pay for a new soccer stadium for Real Salt Lake, under the team's current finance plan. One wrote to the local school district: "If this is accepted, I will actively campaign against any sitting member of the school board and look into any potential litigation that could tie up such use of funds." E-mails and phone calls have been 100% negative, says school board member Lynette Phillips.
• The San Francisco 49ers are now considering adding a 12,000-seat arena, possibly for indoor soccer or arena football, to their new stadium project. The 49ers are selling the project as "privately financed," but would seek as-yet unspecified public land and infrastructure subsidies.
• Save Our Parks and the Bronx Council for Environmental Quality have filed a federal lawsuit challenging the National Park Service ruling allowing the New York Yankees to take 22 acres of Bronx parkland to use for their $1.3 billion stadium project. No word on a likely court date, but in any case it will come too late to save Macombs Dam Park, which has already been bulldozed.
• Speaking of lawsuits, the church that owns the L.A. Forum is suing the Anschutz Entertainment Group for antitrust violations, saying AEG, which manages the Forum, has been illegally diverting events to the Staples Center, which AEG owns. Yet another cautionary tale about why arena glut is a dangerous thing.
• Possibly inspired by the success of their neighbors to the north in extracting more public money even after their new stadium was opened, the Tampa Bay Buccaneers are trying to get an extra $12 million from the Tampa Sports Authority; the money was promised for a new training facility, but with the Bucs having decided to build that on their own, they're now looking to get it on a gift certificate.
• Oakland Athletics owner Lew Wolff told the San Jose chamber of commerce recently that he was unlikely to move his team to San Jose, as the San Francisco Giants were unwilling to sell territorial rights to the city. A move to nearby Fremont and name change to "San Jose A's" remains a possibility, leading a cranky Santa Clara County assessor Larry Stone to predict: "The Giants' worst dream will come true. The A's will be marketing to Silicon Valley and San Jose and the Giants are not going to get a dime of compensation."
• Bentonville, Arkansas is considering building a 9,000-seat arena to lure a WNBA team. Write your own punchline.

September 08, 2006

Ratner's Nets arena project is housing-optional

The New York Observer's indefatigable Matthew Schuerman reports that the affordable-housing component of New Jersey Nets owner Bruce Ratner's Brooklyn arena plan - otherwise known as the part that people mostly like about it - may not happen until 2016, if at all:

Construction schedules in a 1,400-page state study of the Atlantic Yards project show that Mr. Ratner is going to build the sexy and lucrative parts of his 22-acre mini-polis first, including a basketball arena for the New Jersey Nets and the tallest tower in Brooklyn.

More than four-fifths of the subsidized housing, as well as seven acres of open space, will begin construction only in the second phase, between 2011 and 2016.

That's only if the project stays on schedule. State Assemblyman James Brennan, who represents neighborhoods to the west of the site, said he believes that Mr. Ratner, the chief executive of Forest City Ratner, will only follow through on the affordable housing if he makes enough money in the first phase.

"The point is that if the venture is not successful or not as successful as planned, much of the affordable housing will be at risk or not happen," Mr. Brennan said. "The real-estate market is softening across the nation, interest rates have gone up, and three million square feet is a lot of feet to sell."