June 28, 2007
Bricks and taxes: More hidden NYC subsidies
The New York Mets sent out a survey to fans last week asking if they'd consider buying personally inscribed commemorative bricks that would be placed outside the team's new stadium when it opens in 2009. As I report in this week's Village Voice, though the city of New York will own the stadium - and, presumably, the bricks - it wouldn't get any revenues from the brick sale, just as taxpayers won't see a dime from Citigroup's $400 million naming rights deal for the new building.
While this isn't a city cost - the brick money wouldn't exist without the new stadium - it is a city subsidy, since the Mets are getting control of a revenue stream that would otherwise flow to city coffers. (While the Mets won't talk about pricing, other teams have raised as much as several million dollars by this method.) It's also fairly unprecedented: I haven't been able to confirm that it's the first case of a team selling brick sponsorships at a publicly owned stadium, but in all the other examples I've been able to find (Lambeau Field, Busch Stadium, the Staples Center, and a whole slew of college facilities) it's the landlord collecting the payments, not the tenant.
One borough to the south, meanwhile, the Atlantic Yards project that includes an arena for the would-be Brooklyn Nets is getting additional tax breaks, courtesy of the revised affordable-housing program approved by the state legislature last week. While other new buildings in brownstone Brooklyn will have to include 20% affordable apartments to get city property tax exemptions, the Atlantic Yards project would be allowed to credit its buildings with no affordable units with the affordable units in neighboring buildings - a special provision estimated to be worth at least $100 million. No one is saying how Nets owner Bruce Ratner managed to get this special treatment, but it's pretty easy to guess.
June 26, 2007
Throw another $40M on the Colts fire
More evidence that friends don't let friends read newspapers called "Star": The Indianapolis Star reports that the new Colts stadium will cost as much as an extra $40 million over its previous $675 million price tag, thanks to increased costs for steel, insurance and environmental cleanup. (As was predicted last August.) Not to worry, though, writes Star reporter Karen Eschbacher, because "officials say they won’t need new taxes to pay for it."
And how will the state perform this feat of free lunchdom? Because "taxes used to pay for construction are coming in stronger than anticipated," explains Eschbacher, the additional revenues can be used to sell more stadium bonds. What she doesn't mention is that this means if the stadium cost hadn't gone up, the state could have used the higher-than-expected revenues to pay off stadium bonds sooner - freeing up state money for other uses, including cutting taxes, if it likes. So "officials say they'll just dig deeper into existing state funds" would have been a more accurate (if less dramatic) lede.
Eschbacher also goes on to note:
While the stadium project needs more money, officials point out that the additional money will simply bring them back to the price tag that was originally projected.
The overall budget for the stadium and convention center projects originally included $90 million in contingencies for unforeseen expenses.
But that number got chopped to $50 million so the rest could go toward a lease termination payment the city owed the Colts.
So it gets the state back to the stadium price tag that was expected, but not the subsidy price tag, which is still going up by $40 million. And that's before we even get into the $10 million a year operational subsidy that the state still hasn't worked out.
Total stadium subsidy critics and/or independent experts quoted in the article, incidentally: zero.
June 22, 2007
Tiger Stadium gets reprieve
Tiger Stadium, which was first declared obsolete by Detroit Tigers management back in the 1980s and which has stood empty since the Tigers left for Comerica Park after 1999, got another last-minute stay of execution yesterday. The Detroit city planning commission decided not to act on a proposal to tear down the 95-year-old ballpark, saying that the city had failed to come up with a realistic plan for what to do with the site once the stadium was demolished.
As noted here back in March, the city still hasn't found a developer for its proposed condo development, after several years of searching. It did get a proposal to convert the ballpark into a minor-league facility, but rejected that without comment.
At yesterday's hearing, though, commissioners took note not just of the haziness of the city's plans, but of the continued public support for trying to preserve Tiger Stadium, with commissioner David Cason saying, "There's a lot of sentiment you can't put a price tag on." For now, that sentiment has helped buy at least a bit of breathing room for preservation advocates: The planning commission now isn't expected to act until after a scheduled July 9 city council hearing on Tiger Stadium.
Vikings stadium to hit $1B?
Here's a new twist on the "two-minute warning" stadium gambit: Minneapolis' Metropolitan Sports Facilities Commission warned yesterday that the price tag for a new Minnesota Vikings stadium could hit $995 million by 2009. And this, mind you, from an agency that wants a stadium built: If the state legislature approves a stadium next year, it reported, taxpayers can get one for the bargain price of just $954 million!
Of course, given that a dollar today is worth marginally more than a dollar next year (not so much because of inflation as because you can invest it and earn interest on it in the interim), the state would arguably be better off holding onto the money and eating the added cost. (And that's ignoring, of course, the third option: Not giving the Vikings the money at all.) But that's not the kind of analysis that makes for snappy headlines.
June 20, 2007
Red Wings dilemma: Sweetheart lease, or door #2?
Get ready for another sports facility funding battle in Detroit: Red Wings owner Mike Ilitch (who also owns the Tigers, Little Caesar's Pizza, and a giant machine that can block the sun's rays from reaching Detroit) has until August 16 to decide whether to renew his lease to Joe Louis Arena and Cobo Hall for another 20 years, and all indications are he intends to use this as an opportunity to squeeze more money out of his home town.
The big question facing Ilitch is whether he'll really risk giving up what the Detroit News calls "the most lucrative [lease] in the NHL" to take his chances on a new arena deal. Under the current lease, Ilitch pays just $450,000 a year for exclusive rights to the two arenas, and gets property tax breaks as well; the city imposes a 10% ticket tax and gets a cut of concessions of luxury suites, but under the terms of the lease, must give up even those if the lease is renewed.
You might think this would give the city of Detroit leverage in refusing to cough up city dollars towards a new arena, since Ilitch is sitting on such a gold mine already. If so, you would not be a writer for the Detroit News, whose reporter David Josar speculated that a new arena "would still be too costly without government assistance - especially since the Ilitches pay bargain-basement rent for control of the Joe and Cobo." This is perhaps a first in the history of sports subsidy deals: We need public money because we need to compete with the subsidy deal we're already getting.
Of course, the Red Wings are also availing themselves of more traditional tactics like the non-threat threat, telling the media that while they'd prefer to stay in downtown Detroit (wink, wink), they're looking at "numerous locations" for a new arena. One local TV station, noting that Ilitch already owns suburban land that could be used for a site, has already suggested the "Farmington Hills option" as one the Wings might pursue. I wonder: Is getting the nightly news to issue your threats for you part of the official rules?
June 17, 2007
Great America says no to 49ers plan
Hold everything! Turns out that the owners of Great America, whose Santa Clara parking lot the San Francisco 49ers have targeted to be the site of their new $950 million stadium, aren't on board with the plan - in fact, a spokesperson told the San Jose Mercury News, "We're saying we're opposed to the development at this point in time. Without having information, we have to begin to assume this could adversely affect our business and our customers at Great America, and that's a concern for us."
While the city owns the land under the parking lot, Great America has a long-term lease on the site, so needless to say, this news throws a major roadblock in the path of the 49ers' stadium plans. (While Great Adventure could just be posturing to get a payoff or some other concessions, it's not promising for the Niners that they say this is the first they've heard from Great America in three months.) Santa Clara Mayor Patricia Mahan understated to the Merc News: "It is one of those major things we have to work out."
June 10, 2007
Two, three, many Superdomes!
The Louisiana state house passed a nonbinding resolution that what the storm-damaged New Orleans East needs is: a football stadium. The area's state representative, Austin Badon, is pushing for building a $700 million home for the New Orleans Saints on the site of the Lake Forest Plaza mall, which was inundated by Katrina and later demolished.
Though Saints owner Tom Benson has promised to stay at the Superdome through 2010 - thanks in part to the millions of dollars a year the state is paying him to do so - and the dome is already getting a $200 million makeover courtesy of taxpayers, Badon says there's no time like to present to start thinking about how to plow even more state dollars into sports: "This issue is going to be thrust upon us. We have to be proactive before we reach the 11th hour." Because why wait to be blackmailed when you can blackmail yourself first?
June 08, 2007
Tiger Stadium, cheap Nats tickets marked for death
Catching up on some news items over the past few days:
- The board of the Detroit Economic Development Corporation voted to demolish Tiger Stadium by September 2008, with the plan next going to the city council for approval in July. A nonprofit group called The Old Tiger Stadium Conservancy is working on a plan to preserve part of the grandstand behind home plate, but if it can't figure out how to finance it, the whole stadium would come down. "The site would be used as a mixed-use site for retail and residential project, with new construction to begin in April 2009," reports the Detroit News, neatly ignoring that the city still hasn't found a developer interested in doing so.
- The last-place Washington Nationals announced that the top ticket price at their new stadium opening in 2008 will be $400, up from $140 at RFK Stadium. The average season ticket, meanwhile, will rise from $21 a game to $30 a game. The Nats president Stan Kasten claimed the pricier high-end seats will allow the team to keep low-end seats cheaper, telling the Washington Post that, in the paper's words, "tickets farthest away from the action, in the outfield and upper deck, will cost between $5 and $20." By comparison, seats in RFK's much more spacious - and closer to the action - upper deck top out for most games at $16.
- A poll of Edmonton residents found that 56% oppose a new downtown arena for the Oilers, with about two-thirds saying no public money should be used on the project. Arena advocate Mayor Stephen Mandel insisted the city could find "a creative way to do it" without tax money, then suggested using both property taxes and provincial and federal infrastructure money - all of which were public sources last I checked.
- Canada's National Post reports that the nation's Competition Bureau is reportedly studying whether the NHL is illegally blocking a move of the Nashville Predators to Hamilton, Ontario, in violation of Canadian antitrust laws. It's not quite that NAFTA lawsuit we were waiting for, but it's something.
June 02, 2007
Consultants: 49ers stadium would be good for city - or not
I spoke too soon. Northern California's ink-stained wretches may have done a decent job analyzing the claims of the San Francisco 49ers' consultants that a new stadium would be an economic boon for Santa Clara, but now that local tourist agencies and the city of Santa Clara have each issued their own studies, attention to detail has been the first casualty. Among the news reports in the last 24 hours:
- Julie Patel of the San Jose Mercury News reported that a study commissioned by the Santa Clara Chamber of Commerce and Convention-Visitors Bureau and the San Jose Convention and Visitors Bureau projected the creation of 3,665 new jobs and an "economic benefit to the area of $650 million. That's more than double the team's projection of $249 million." What area? Over how many years? And is that "economic activity" (spending within the region) or actual fiscal impact (new taxes collected)? No answer...
- The San Jose Business Journal sheds a bit more light on the visitors bureaus' study (conducted by UNC-Charlotte economics professor John Connaughton, whose previous claim to fame was estimating that a major-league baseball stadium in North Carolina would generate $140 million a year while saying of economists who have found little or no benefit from new stadiums, "I question their sincerity"), noting that "it expected the annual tax impact of ongoing stadium operations to be $7.4 million, not including state taxes." That's actually $5 million a year less than the 49ers' consultants estimated.
- Patel and colleague Mike Swift were back to report on the city of Santa Clara's economic impact study (conducted by Keyser Marston Associates, who as near as I can tell are a real estate firm, not economists), calling the report a "major boost" for the stadium project but not a "rubber stamp," and noting that it "concurs with the team's prediction that the 49ers would generate $85 million annually in economic activity" - presumably within just the city, since the 49ers consultants actually estimated $249 million a year in economic activity countywide.
- San Francisco Chronicle reporter Patrick Hoge, meanwhile, looked at the same Keyser Marston report and headlined a completely different finding: "The city of Santa Clara could make more money leasing land for an office park than for a new San Francisco 49ers football stadium, a city-hired economist says. ... [A] 15-acre Class A office complex would produce $3.3 million in revenue for the city annually, while a stadium would produce just $650,000, slightly less than the $700,000 predicted by the 49ers."
For further descriptions of the elephant, stay tuned.
