April 29, 2007
Legislative gridlock for Marlins, Magic subsidies?
Good news for the owners of the Florida Marlins and Orlando Magic: The Florida state house of representatives voted on Thursday to approve a $2 million a year tax break for 30 years to pay off $30 million worth of stadium costs for a new Marlins stadium in Miami. The next day, the state house voted to approve a similar package for the Magic. Both teams have already gotten tax breaks of this size, but former Marlins owner absconded with his, and the Magic, well, they figure why build an arena with just one tax break when two will do?
Bad news for the Marlins and Magic owners: The Florida state senate is considered unlikely to pass either measure before the legislative session ends this Friday. "There still is about half the chamber against this issue," Senate majority leader Dan Webster told the South Florida Sun-Sentinel. "It's an uphill battle, no matter what." Which would be either good news or bad news for Floridians, depending on how much public money you think it's worth to keep the local gazillionaire happy.
Sonics' Vegas footsie: a timeline
The story so far of what's happened since the Washington state legislature killed a $300 million arena funding bill for the Seattle Sonics two weeks ago:
- A week ago Friday, NBA commissioner David Stern said he'd appoint a committee of league owners to study Las Vegas' proposal to host an NBA team. Citing the Sonics' "disappointing week" at the legislature, Stern said, "There's no current Plan B. There's a willingness by the team to meet with any and all who are in Seattle."
- Last Wednesday, Sonics owner Clay Bennett told the board of Seattle's Convention and Visitors Bureau that if the team moves, Las Vegas is a more likely destination than his hometown of Oklahoma City. "It was about money," Seattle councilmember Jan Drago, who was at the board meeting, told the Seattle Times. "They can't make a return on their investment in Oklahoma ... he really expected to end up in Vegas."
- All hell broke loose in the sports media.
- Asked by ESPN's Jim Gray on Friday for his reaction to Bennett's statement that Las Vegas was the Sonics' likely destination, Stern snapped, "I don't think he said that. ... I think he'll withdraw that."
- Bennett issued a statement backtracking slightly from his Wednesday comments, saying his priority was to remain in Seattle, and that Oklahoma City was still an option for relocation: "We know Oklahoma City and we know what this remarkable marketplace can do, based on the way it exceeded all expectations over the past two years. We have said all along, as has NBA commissioner David Stern, Oklahoma City deserves an NBA team, and, we would add, a WNBA team."
Sonics spokesperson Jim Kneeland's explanation of the whole brouhaha: "That whole Las Vegas thing came out of the fact he was asked a question about it being a forgone conclusion the team was heading to Oklahoma City, and he said, 'We're looking hard at Las Vegas right now.' It kind of grew out of that whole notion. He didn't walk in to make a grand announcement."
An equally likely explanation: Bennett knows that Oklahoma City is too small to be a viable alternative to Seattle, and wants to keep his options open, if for no other reason than to maintain a credible move threat to keep Washington state legislators antsy about losing their team. Stern, meanwhile, while not wanting to undercut Bennett's leverage, has his own agenda: He doesn't want Vegas to think that it can get an NBA team without banning betting on pro basketball games, which is a deal-breaker for the commish. So we get this careful dance, where Bennett is able to drop Las Vegas' name as a possible relocation site, so long as he doesn't anoint it the "frontrunner."
Vegas Mayor Oscar Goodman, meanwhile, issued a statement of his own, saying, "The whole world knows Las Vegas thirsts for a NBA franchise. But we're not going to put ourselves in the position where we could be used as a pawn because people know our desire." Too late.
April 25, 2007
San Jose mayor: Let's feed Sharks
While Santa Clara debates flinging $180 million at the San Francisco 49ers for an uncertain payoff, nearby San Jose's Mayor Chuck Reed has endorsed spending $8.25 million on upgrades to the San Jose Sharks' HP Pavilion. The money would be used, reports the San Jose Mercury News, for such items as a new "scoreboard, sound system and flashing light display to ring the arena's interior."
The upgrades, explained Reed, are needed to "maintain the viability of the building"; he added, "You have to spend money to make money." And how would the city make money on its investment? Through "rent and naming rights payments," reports the Merc News - though those are both fixed sums according to the Sharks' lease, so the city wouldn't actually benefit directly no matter how many nights the arena is booked.
Deputy city manager Dan McFadden tried a slightly different tack: "The benefit to us in keeping the building busy is that it's the primary economic activity for the restaurants and other businesses downtown." San Jose's city sales tax rate appears to be 1% (the state collects another 7.25%), which means that to recoup its $8.25 million investment, the additional arena patrons lured by the arena improvements would have to spend somewhere on the order of $60 million a year at downtown restaurants - or about as much the entire Sharks fan base spends on hockey games. But, hey, who doesn't like flashing light displays?
49ers stadium now at $854m - sort of
The San Francisco 49ers owners issued their financial plan for a stadium in Santa Clara yesterday, and the estimated price tag was down somewhat, to $854 million. Depending on how you count, that is. An additional $111 million is estimated for "inflation costs," according to the San Jose Mercury News, a number that will "absolutely" change, said Niners CFO Larry MacNeil - though he didn't say whether it would change up or down.
As for how the stadium would be paid for, team officials provided this breakdown:
- A newly formed stadium authority would pay for $330 million of construction costs, using revenues from the stadium itself: ticket and parking taxes, seat licenses, concessions revenues, and naming rights.
- The 49ers and NFL would provide $363 million; it's unclear whether this would be an up-front cash payment or bond payments over time.
- The city of Santa Clara would kick in $160 million, plus an additional $20-30 million to relocate an electrical substation that's currently on the proposed stadium site. In return, the city would get half of all revenues from non-NFL events at the stadium; MacNeil estimated this could amount to $3 million a year in revenue if the city booked 14 or more concerts and college football games, which 1) seems like a reach given how few stadium tours are held each year, and 2) even then would be enough to pay off less than $40 million of the city's stadium costs.
All in all, it doesn't look like too terrible a deal for taxpayers - probably about on a par with New Jersey's New York Jets/Giants deal, which was solidly mediocre from the public's perspective. That said, there are still plenty of details left to be revealed: The Niners would pay cost overruns on the stadium, but what about for land and infrastructure? If the city owns the stadium, does that mean the 49ers don't have to pay property taxes? How exactly will operating costs be paid off - the Merc News reports says "stadium revenues" would be used, but who would be collecting those? - and will the team pay rent? And what about that San Francisco-owned Hetch Hetchy pipeline? As we also learned from the New Jersey deal, a lot can go on in the fine print.
April 24, 2007
Niners, Vikes pitch almost-$1B stadiums
Catching up on stadium news from the last few days:
- The San Francisco 49ers owners are set to announce today their financing plan for a now-$950 million stadium in Santa Clara, though "plan" might be a bit of a misnomer: According to the San Francisco Chronicle's Matier and Ross, the team will ask for $180 million in city subsidies, without specifying how those public funds will be raised. Three possible options: giving the Niners development rights to additional land, a TIF, or tapping the city's utility fund - with Matier and Ross reporting that nobody with the 49ers believes the first two "would generate anywhere near the $180 million needed to swing the deal."
- Billion-dollar stadiums seem to be all the rage: The latest plans for a Minnesota Vikings stadium in downtown Minneapolis come in at $954 million, though unlike the 49ers', this one would have a retractable roof. (Some renderings here.) The state-run Metropolitan Sports Facilities Commission, which issued the new proposal, didn't bother to include a financing plan at all; MSFC director Bill Lester, bidding for the coveted Field of Schemes Understatement of the Year Award, told the Downtown Journal, "We understand that's a huge gap."
- The Sacramento Kings owners are reportedly set to make another run at a new arena, with Sacramento county supervisor Roger Dickinson telling a local TV station: "I don't think anyone right now is contemplating any direct public funding being part of the equation." Operative word: direct.
- New Jersey Nets owner Bruce Ratner has reportedly begun demolition of more buildings to clear the way for his planned umpteen-billion-dollar Atlantic Yards arena-and-development project in Brooklyn, though I haven't gotten down there yet to see for myself. Opponents of the plan, including local city council representative Letitia James, rallied against the demolitions yesterday morning, noting that several lawsuits are still pending challenging the project's legality.
Finally, I did manage to check out the progress of the new New York Mets stadium this weekend. (Photo here.) If anyone can figure out what those giant concrete towers are for - stairwells? elevator shafts? - please drop me a line.
April 17, 2007
WA legislature says no to Sonics funds
As expected, the Washington state legislature decided yesterday to drop consideration of a bill to provide the Seattle Sonics with $300 million in funding for a new arena, after a meeting of legislative leaders showed it didn't have enough support to pass. "We are not going to vote on anything this session," announced House Majority Leader Lynn Kessler last night.
The big question now: Does Sonics owner Clayton Bennett come back next year with another arena plan, or does he pack up the team and relocate, likely to his hometown of Oklahoma City? Bennett certainly hinted at the latter, saying in a statement, "Clearly at this time the Sonics and Storm have little hope of remaining in the Puget Sound region." According to Bennett's purchase agreement for the team, he can decide starting November 1 to move the team for the 2008-09 season (a Sonics spokesperson called it a "deadline," but it's not really), but it could cost him a bundle to do so, since his lease runs through 2010. Seattle finance director Dwight Dively told the Seattle Post-Intelligencer that the city would "demand substantial financial damages," including not only lost rent payments for the additional two years, but the loss of tax revenues from fan spending before and after games - bringing up the ironic possibility of the Sonics' own inflated economic impact figures being used against them in lease settlement negotiations.
Add in that the Oklahoma City metro area is only about a third the size of Seattle, and a Sonics move may not be quite as imminent as Bennett would like you to believe. I'll be surprised if there isn't at least one more last-ditch effort to extract arena funds from Washington state - or perhaps King County, a la the Minnesota Twins model - before the moving vans start backing up to KeyArena.
April 12, 2007
Twins stadium moves ahead (kinda)
The Minnesota Twins released the designs for their new stadium today - see renderings here if you've always wondered what Kauffman Stadium in K.C. would look like with three layers of luxury seating crammed in - amid talk that the months-old stalemate with property owners on the proposed stadium site could soon be resolved. On Tuesday, the Hennepin County board of commissioners approved spending $13 million to do a "quick take" of the land by eminent domain, which they hope will enable site preparation work to begin next month.
Doing a quick take, though, still doesn't resolve the underlying problem, which is that the landowners want more for their property - as much as $10 million more - than the county says it's worth. If they win in court, and drive the total land acquisition cost above the county's $90 million spending cap, no one knows what will happen, though there's certainly historical precedent for an educated guess.
None of which stopped the Twins' best pal, Minneapolis Star Tribune columnist Sid Hartman, from declaring today that only "minor issues" are left to resolve before a Twins groundbreaking. And what minor issues would those be? As Hennepin commissioner Mike Opat told Hartman: "We have to reroute the [train] tracks, and the railroad has tentatively approved that, and then there's some [insurance] liability issues that the Twins have to work out with the railroad. And then we have some purchasing details we have to work out. But all of those, I think, show some progress."
Funny thing - "purchasing details" are also the only thing that stands between me and buying this.
April 10, 2007
Everything new is old again
I missed this one when it ran last week, but I'm not sure I would have believed my eyes if I'd seen it: According to The Oklahoman newspaper, Seattle Sonics owner and Oklahoma City native Clay Bennett declared recently that OKC's Ford Center "is fine for the immediate future, but the city eventually will need a new building." The Ford Center will turn five years old this June.
A few years back - while the Ford Center was still under construction, in fact - economist Rod Fort told me, "I don't see anything wrong, from an owner's perspective, with the idea of a new stadium every year." At the time, I thought he was joking, but now...
April 08, 2007
Fish shun Orange Bowl site
With the Florida Marlins having their best shot at a stadium deal ever, the team's owners have, naturally enough, decided to look a $283 million gift horse in the mouth. On Friday, Fish owner Jeffrey Loria declared that a downtown Miami site "would be much more beneficial for the franchise and the fans," while his stepson, team president David Samson, said, "Our sole focus is completing a deal downtown." This likely sets up a showdown with the Miami-Dade County commission, which is more interested in a new baseball stadium on the site of the Orange Bowl, even while the battle over stadium funding continues in the state legislature. Never let it be said that Loria and Samson were afraid of opening up a second front.
April 06, 2007
Ilitch mulling new Red Wings arena?
Mike Ilitch, the Little Caesar's Pizza baron who successfully got the city of Detroit and state of Michigan to help pay for his Detroit Tigers' new stadium in 2000, is now rumored to be angling for a new arena for his Red Wings NHL team as well. The latest evidence: Ilitch is getting a state grant to demolish a building on the site near Comerica Park where he reportedly wants to build an arena. (No, I don't know why the state of Michigan gives out grants to demolish buildings, either.) Reports the Detroit News: "The Ilitches have not said how they would finance the project." Because that'd be telling.
Another lawsuit in Brooklyn
Yet another lawsuit has been filed against the multi-billion-dollar Atlantic Yards project, which would include a new arena for the New Jersey Nets. (And cost city and state taxpayers $305 million in cash plus an undetermined amount of tax breaks.) The latest suit, filed by the Council of Brooklyn Neighborhoods, a coalition of neighborhood groups, charges that the environmental impact statement for the project was insufficient, ignoring both public complaints and likely impacts in areas such as traffic and security concerns. Three other lawsuits are pending, challenging the taking of land for the project by eminent domain, demanding the release of developer Bruce Ratner's financial plan, and charging the state with failing to have an independent environmental monitor on site as required by law.
Construction work has begun on the project - albeit very slowly - while everyone involved waits for the legal challenges to be resolved. At least it's made for a fun Passover.
April 05, 2007
Journalists do their job - film at 11
I spend a fair bit of time bashing bad journalism on this site, so it's a nice change of pace to give credit to those who do their jobs well. Two teams, the San Francisco 49ers and Seattle Sonics, came out with economic impact projections for their proposed new buildings yesterday - and instead of merely reporting what was handed to them in a clear plastic binder, the local papers actually examined these documents as claims that can be (gasp!) independently verified.
The 49ers, who are seeking $180 million in public funds from the city of Santa Clara toward what's now a proposed $950 million stadium ("the most expensive open-air NFL stadium ever built," according to the San Jose Mercury News, though actually the new Jets/Giants stadium in New Jersey is far pricier), released a study by the Minneapolis-based consulting firm Conventions, Sports & Leisure that claimed the stadium would: create 2,230 permanent jobs, generate $249 million in annual economic activity (i.e., money spent within the county limits), and create $12.3 million in new annual county tax revenue. Mercury News reporters Mike Swift and Julie Patel then dug behind the numbers, noting:
The report's authors ... said they were unable to provide any information on what portion of the jobs created would be part-time or seasonal jobs. So there's no way to know how many of the 920 new annual jobs forecast for the city of Santa Clara, for example, would be full-time.
The report also did not include an estimate of the local costs of the stadium - everything from road wear, car accidents, vandalism and environmental impacts of stadium crowds. Some economists say such costs are frequently omitted from stadium economic studies, but should be included to provide a full economic picture. ...
The economic impact is based on the premise that new jobs would be filled by residents of Santa Clara County or the city of Santa Clara - in effect that construction workers and stadium employees would not take their paychecks home to Oakland or Los Banos or somewhere else outside Santa Clara County.
All excellent points. One other that they might have noted: $12.3 million a year is barely enough to pay off an investment of $180 million (plus interest), so even by the Niners' own figures, the stadium is at best a break-even proposition for the county. (And for the city, which would get a mere $800,000 a year in new tax revenue but would be stuck with all the public costs, it would be a disaster.)
Up in the Seattle suburb of Renton, meanwhile, it was the city itself that commissioned a report, by local consultants Berk & Associates, into the tax revenue potential of a new $500 million Sonics arena. While the city touted the report as showing an arena "has significant economic potential," the Seattle Times' Jim Brunner and Ralph Thomas reported the findings differently: The arena "probably would not turn a profit for the state or King County," generating between between $78 million and $152 million worth of new taxes over 25 years while costing taxpayers $300 million; for the city, it would generate $20.5 million worth of taxes against $100 million in construction costs. (Sonics spokesperson Jim Kneeland's classic reply: "It's not a profit-making venture, and the county shouldn't look at it as a profit-making venture.") The Seattle Post-Intelligencer went for a marginally more optimistic spin, reporting that "under the most optimistic of circumstances, a new arena for the Sonics would help support 5,799 jobs and generate $340 million in taxes," before revealing that this would require that the arena:
hosts 223 events and becomes home to a National Hockey League team, two major conventions and five corporate meetings. That projection also assumes the Sonics and Storm will make the playoffs at least every other year and the arena attracts a significant NCAA event every other year.
The P-I didn't say whether it would also require crows to fly upside-down.
In possibly related news, the Sonics arena bill now might not even get voted on by the state legislature, since it looks to have zero chance of passing the state house, where speaker Frank Chopp is a diehard opponent. The state legislative session ends April 22.
