Field of Schemes

December 26, 2007

No, not that kind of Ford Center rehab

If you ever read anything speculating on the "shelf life" of pro sports facilities, look no further than Oklahoma City, where Mayor Mick Cornett announced last week a March 4 referendum to spend more than $100 million, funded by extension of a sales-tax surcharge, on upgrades to the Ford Center. That'd be the Ford Center that opened all the way back in June 2002, making it perhaps the first five-and-a-half-year-old ever in need of a facelift. (Best straight-faced headline on this is from the Oklahoman: "Mayor says tax will make arena like new.")

Cornett's argument is that with perhaps $125 million in improvements tacked on to the arena's original $90 million price tag, the city could have a state-of-the-art arena at a cheaper cost than the last idea floated, which was to tear it down and build a whole new building. On the downside, Cornett is proposing again building on spec, without a major sports team signed as a tenant - and that's a recipe for extortionate lease demands, possibly including even more public spending on upgrades, as Oklahoma City already found out once.

Cornett did promise that the arena upgrades will be put off if the Seattle Sonics don't agree to move to Oklahoma City, saying, "We're not going to build something we don't need." The trick, then, will be to approve the upgrades, use them to convince the NBA to approve a Sonics move during an April vote, wait out Seattle's lawsuit trying to hold the Sonics to their lease through 2010, and then negotiate a lease with the team that doesn't give away the store. Given Cornett's performance striking a deal with the Hornets, there's not a lot of reason for optimism, but I guess anything's possible.

December 20, 2007

Dade County neither approves nor doesn't approve Marlins stadium

The Florida Marlins stadium plan's headlong rush though the legislative process hit a speed bump today, as the Miami-Dade County commission voted to put off a vote on the $525 million stadium project until January. Earlier in the day, commission chair Bruno Barreiro had said he might defer the vote "so all parties - the city, the county and the team - can hash things out, take a breather" - implying that there's still more back-room dealing to be done before the deal can be done.

Commissioners instead spent the time debating whether it was a good idea for city and county officials to receive 22 free season tickets and two free luxury suites at a new stadium, with some saying it smacked of payoffs, others that tickets were fine but not suites, and others that suites are fine but not season tickets. The Miami Herald, meanwhile, helpfully pointed out that the free-ticket deal was no more egregious than the Washington Nationals' deal with D.C., which really isn't what you want to use as a benchmark.

New York to scuttle convention center plans?

The ever-escalating expansion of New York's Javits Convention Center is apparently dead, according to a report in today's New York Sun. With cost estimates now at more than $3 billion - "three times more than what the public was let on," as state assemblymember Richard Brodsky put it - state officials are expected to announce today that the expansion plan will be scaled back to a more modest renovation, according to the Sun's David Lombino.

There is likely much rejoicing in one corner of San Antonio today. Now the only question is why the city is still intent on building a $2 billion subway extension to lead to an expanded convention center and football stadium that won't exist?

Santa Clara faces 49ers stadium shortfall

The Santa Clara city council got its first detailed look at the finances of the $854 million San Francisco 49ers stadium proposal Tuesday night. The highlights:

The city will be on the hook for $222 million in costs, including building a new parking garage and moving an electrical substation, but the redevelopment agency funds and hotel taxes that have been proposed to be pay for it would raise only $171 million. 49ers CFO Larry MacNeil said the city could fill the gap with proceeds from non-football events and naming-rights money - though since the team has also said it would use naming-rights money to help pay for its own share, it's not entirely clear what MacNeil was talking about.
Cedar Fair, the owners of the Great America amusement park whose parking lot is the intended site of the new stadium, have softened a bit on their opposition to the project now that it would use an overflow parking lot rather than their main lot, but still presented a list of conditions before they would okay the plan, including that the team and city reimburse them for lost revenue from days they had to close to avoid being overwhelmed by traffic from 49ers fans. Cedar Fair also wants a share of parking revenues from the new stadium (since football fans would be using their parking lots), cutting into funds currently slated to pay off stadium construction costs.
Santa Clara city policy is that companies should pay rent on leased city land; MacNeil told the council, "We don't believe the deal will support those additional payments from the team."
The city is only projecting to get $19 million in new tax revenues from the project over 30 years, while its redevelopment agency would lose $90 million over the same time span. "We feel the return on investment to the city should be better than what the numbers indicate," city manager Jennifer Sparacino told the council.

The city council could vote on whether to move forward with the 49ers stadium plan at its January 15 meeting.

December 19, 2007

Dade County doesn't approve Marlins stadium?

Apparently when Miami-Dade County commissioners voted yesterday to spend $249 million on a Florida Marlins stadium last night, they weren't actually voting to spend money on a Marlins stadium. Rather, they were voting to expand the city's Community Redevelopment Agencies, funneling off local tax revenue to pay off debt on the city's performing arts center, as well as building new museums and other stuff; that in turn would free up tourist tax money, which could be spent on a stadium. But the county won't vote on actually spending money on a stadium until tomorrow, at which point commissioners are expecting to see a "stadium agreement" spelling out more details of the deal. Though not all details, because some still won't be worked out until after the vote.

Confused yet? Then you'll want to overlook the fact that the Miami city commission, which approved its own $121 million in stadium spending last week, would still need to vote whether to approve the stadium agreement. And you certainly won't want to dwell on the AP headline saying the state legislature has to sign off on the deal as well - especially since there's nothing in the AP story itself saying this, meaning it's pretty likely that an AP editor just didn't read the story closely enough before writing the headline.

Said county commissioner Natacha Seijas yesterday as she prepared to vote on the new development scheme just one day after first hearing about it - hey, that sounds familiar - "This is way too much for us to try and absorb today." My sentiments exactly.

December 18, 2007

Dade County approves Marlins stadium

At 6:57 pm, the Dade County commission voted 9-4 in favor of a new Florida Marlins stadium project, part of a $3 billion package of projects that include a new performing arts center, museums, and other gewgaws. The vote, coming five days after the Miami city commission approved its own stadium bill - and barely a week after the new stadium-funding deal was first proposed - effectively would commit local taxpayers to plunk down $370 million of the $525 million cost of a new Marlins stadium on the site of the Orange Bowl.

What happens next is slightly unclear: There doesn't appear to be a lease agreed on, for one thing, and while Miami Herald adds that the two commissions still must approve the stadium project in further votes, and that "some of those votes could happen later Tuesday, some not for years." Marlins execs have talked about opening a new stadium by 2010, which would seem to require that the team put shovels in the ground, like, yesterday. More news as it develops, but clearly this is the closest that Jeffrey Loria and David Samson's stadium quest has come to fruition in their many years of trying.

December 13, 2007

Illinois to consider buying Wrigley?

With the Tribune Company set to sell off the Chicago Cubs and Wrigley Field, the state of Illinois is reportedly in talks to buy the historic ballpark for an undetermined price. The Chicago Tribune says there's no indication how the state would pay for the purchase (which it says could cost "hundreds of millions of dollars"), but speculated that the sale of naming rights might be one way to do it.

Chicago Mayor Richard Daley immediately tore into the rumored deal, saying it would amount to "taxpayers helping out the Cubs ... They've made money every year. It's very profitable and some way, we're supposed to bail them out?"

As far as bailouts go, though, it isn't a matter of who owns the ballpark, but who owns the revenues. If the state were to pay, say, $200 million for Wrigley, and get $20 million a year back in rent from the team, that'd be arguably a good deal. (Leaving aside for the moment whether it would take the stadium off the city tax rolls.) If it paid $200 million and the Cubs said, "Thanks - don't forget to water the ivy," then not so much.

Given that the current Cubs finances are a tangled mess of insider deals between the Tribune-owned team, Tribune-owned ballpark, and Tribune-owned cable company (not to mention Tribune-owned ticket scalpers), it's unlikely any outsiders even know what the lease deal is between the Cubs and their stadium, let alone whether it would remain intact once they were owned by separate entities. Once we know that, then we can have some sense of whether this is a legitimate taxpayer expense, or just making baseball's 5th richest team even richer.

Marlins stadium talks heat up - no, really this time

It took three and a half years, but the Florida Marlins may have finally figured out how to close that $30 million funding gap on their half-billion-dollar stadium without asking the state for it. ('Cause that sure wasn't working.) Today the Miami city commission approved a plan to build a $525 million, retractable-roofed stadium entirely with city, county, and team money on the current site of the Orange Bowl. If the Miami-Dade County commission follows suit on Tuesday, and all the details are worked out, officials say construction could begin in time to open a new stadium by April 2010. (Given that that's only a little over two years away and they'd need to demolish the existing Orange Bowl first, that seems ambitious, but you can't blame a girl for trying.)

How did the parties involved find a way to come up with the missing money, especially when the current price tag is actually $35 million more than it was just last spring? The newspaper coverage hasn't exactly been forthcoming about spelling it out, so let's try to break it down, one payor at a time:

The Marlins owners, instead of putting in $45 million up front and paying off $162 million in county bonds via annual rent payments, would put in $155 million up front, and nothing more.
Under the old plan, the county would have paid for $145 million in bonds out of its own pocket. Instead it will now put in $249 million, mostly from tourist tax dollars, partly from general revenues.
The city would spend $121 million, again mostly from tourist tax revenues, instead of $108 million under the previous proposal.

In short, then, the secret to the new stadium deal is: The county got rolled. Even if you count the $50 million in Orange Bowl renovation funds that would be redirected to the Marlins project as found money (which it isn't really, because that money could have been redirected elsewhere instead), it's still putting $54 million more than it had pledged previously, allowing the funding gap to be filled and the Marlins to reduce their own expenses by about a quarter. Guess Bob DuPuy is a better haggler than I gave him credit for.

That's not all, though. Another part of the plan would involve building a $100 million soccer stadium, for a team that doesn't exist yet, half of which would be paid for by Major League Soccer and half by it's not clear who, which would somehow, in the Miami Herald's words, "become a funding source for a 6,000-car parking garage the city is responsible for building to support the ballpark." If you followed that, you're a better person than I.

Some of the biggest outstanding questions about the two-day-old deal:

Will the county sign off on the deal? At the Tuesday meeting where the plan was first proposed, county commissioner Carlos Gimenez grumped to reporters: "Now we're at $155 million [in team contribution]. That's all I've got to say."
Since the new deal would apparently use some Community Redevelopment Agency funds, would that run afoul of the requirement that that money be used only in "blighted" areas?
Will the Marlins agree to put in $155 million cash, or is this one more gift horse they will look in the mouth? Asked this question yesterday, Fish president David Samson replied, "That's a tough question. I do not have a gut instinct," adding, "It's a complicated agreement, which we just got yesterday." Translation: No, you can't look at my cards.

December 11, 2007

"No new taxes"

There have been a spate of stadium and arena stories in the news in recent days, all with a similar theme: how to get the public to pay for them without making it look like, you know, the public is paying for them.

Manitoba Premier Gary Doer said he'd be willing to redirect property tax revenues from a new Winnipeg Blue Bombers stadium to help the team's private owners pay off construction costs. (The Bombers are currently community-owned, but Canadian media baron David Asper is negotiating to buy them.) This is what's known in the U.S. as "tax increment financing," or a TIF; lord knows what they call it there.
Lexington, Kentucky is considering plans to replace Rupp Arena with a "state-of-the-art" building (presumably meaning including luxury suites, which the 31-year-old Rupp lacks) to host University of Kentucky basketball games. The cost hasn't been revealed, but the city would pay for it by designating a new downtown TIF district.
The Kansas City Wizards soccer team are looking to get a new stadium as part of a downtown development project on the Bannister Mall site, but K.C. Mayor Mark Funkhouser says he opposes the funding plan, which would use a so-called "Super TIF" that would redirect all tax revenue from the district to the project, not just the increased increment. (Shouldn't that really be a TF?) "I want to see the Three Trails redevelopment happen," said Funkhouser. "But I don't intend to support the current plan without more thorough discussion and, at least, the removal of the Super TIF requirement, which redirects 100 percent of any new property, sales and earnings taxes back to the project."

As I've written before, the problem with TIF is that while it's sold as a free lunch - "without this project, the city wouldn't be getting these tax revenues, so there's no real cost to the public" - it can end up costing taxpayers in many ways: when increased consumer spending in a TIF district siphons off spending in an area where tax revenue actually goes to the municipality, for example, or when developers demand TIF subsidies for projects they would have initiated anyway. In the end, TIFs make about as much sense as me going to the store and demanding that I get my sales tax rebated, on the grounds that if I didn't make the purchase, the government wouldn't collect any sales tax - the main difference being that I seldom have a team of lobbyists and p.r. flunkies with me when I go to Rite-Aid.

And speaking of p.r., let's close with Nashville finance director Richard Riebeling, explaining during a discussion of proposed lease givebacks for the Predators how people who pay taxes aren't necessarily taxpayers:

"I think the important thing is that taxpayers can be assured that no taxpayer dollars - no property tax dollars - are being used to cover the additional cost of this transaction. It's coming from hotel, motel tax."

Unless, of course, the hotelgoers refuse to pay it, arguing that if they'd stayed home, the city wouldn't be collecting it. This could go on forever!

December 04, 2007

No Vikes stadium bid till 2009

Minnesota Gov. Tim Pawlenty and state legislative leaders made it all but official yesterday: There will be no Vikings stadium bill in 2008. "We've got other priorities right now," said Pawlenty, while state house speaker Margaret Anderson Kelliher called a stadium-finance bill "highly unlikely" with Minnesota facing a $373 million deficit.

Of course, given that Vikes owner Zygi Wilf had all but called off his stadium push for a year after the I-35 bridge collapse this past summer, this should come as news to pretty much no one. Besides, just because there's no stadium bill doesn't mean the lobbying has to go on hiatus - just look at NFL VP Eric Grubman, who even while acknowledging to the Minneapolis Star Tribune that fast action was unlikely, not-so-obliquely warned of the dangers of waiting too long:

"What we're faced with is that this is the best time to build and it's not going to get any better. All that will happen as we get closer to the expiration of the lease is that speculation will erupt and outside parties will attempt to introduce themselves. So the NFL wants to make all of our 32 teams as successful as they can be in their home markets. We think that benefits everyone."

Spoken like a true Vercotti brother.

December 03, 2007

Field of Schemes: The Next Generation

The galleys are proofread, the index is done, and the cover is designed (see image at right), which means the new edition of Field of Schemes is just around the corner. The official release date is April 1, but starting around February pre-orders should be available from the University of Nebraska Press/Bison Books site.

For those of you who've already read the original edition, this is a massive expansion, with four hefty chapters of new material covering stadium battles in Washington, D.C, New York City, Boston, and elsewhere, as well as annotations giving updates on the first twelve chapters. And for those of you who haven't read the original, this edition will provide you with all the ammunition you need to analyze the claims of local sports-subsidy boosters - or, at nearly 400 pages, merely to throw at them.

So buy early and buy often. And if you're a member of the media looking for review or advance press copies, drop me a line and I'll put you in touch with the appropriate parties.