February 25, 2008
MSG to stay put after all?
The plan to build a new Madison Square Garden inside a landmarked post office building - at unspecified public expense - has gone from on hold to "in danger of collapse" along with the entire Penn Station redevelopment plan, according to the New York Times' Charles Bagli. The reason, he writes:
The project has grown in size and complexity, and the estimated cost of the new station has tripled, to $3 billion. There is squabbling between developers, the Garden, government officials, community groups and preservationists over the designs and how much the public would benefit. And now negotiations have stalled, despite three years of planning and lobbying in Albany and Washington, the officials and executives said.
Bagli reports that even if the plan does move forward, it would likely be without the arena component: "Frustrated by the delays and rising costs, Madison Square Garden has revived plans to renovate the 30-year-old arena instead of relocating. Garden officials have told real estate executives and civic leaders that they plan to announce the renovation plans in early March."
As goes Dallas, so goes Oklahoma City
With a little over a week to go before Oklahoma City voters decide a March 4 referendum on a $122 million arena upgrade, the Oklahoman newspaper has urged a "yes" vote, saying that bringing the Seattle Sonics to town would help "our city continue the momentum that's been more than a decade in the making" and "signal to others in the region, indeed around the country, that Oklahoma City is more than just that place where the awful bombing happened, and instead is a vibrant and growing city that wants to grow even more." The Oklahoman editorial continues:
Opponents of the March 4 proposition lean heavily on class envy arguments, saying the team's wealthy owners - all Oklahoma City businessmen - should pay for arena upgrades and a practice site if they want their team here. The reality is that taxpayer-funded facilities are the norm in pro cities. From Jerry Jones' new home for the Dallas Cowboys to George Steinbrenner's new Yankee Stadium, public dollars are helping pay at least some of the freight.
Leaving aside whether it's "class envy" to complain about the rich getting a free ride at the expense of everyone else, this pretty much comes down to: "All the kids are doing it!"
February 21, 2008
County passes Marlins stadium bill - kinda
And it's official: The Miami-Dade County commission has just voted 9-3 to approve the Florida Marlins' stadium plan, which would use about $360 million in public funding towards a $525 million stadium. With the Miami city commission having approved the plan earlier today, that should be the last piece of the puzzle for the Marlins' long-awaited stadium dreams...
...except that, as the Associated Press reports:
Several issues, including the particularly thorny matter of deciding if city or county police and fire departments will be patrolling the new facility, remain unresolved. An agreement on the police-fire staffing front must be struck within 30 days, or the plan - and maybe the Marlins franchise - would likely be doomed.
"This has to be resolved within 30 days ... so therefore, the inability to resolve this political issue kills baseball in South Florida," Major League Baseball president Bob DuPuy said. "That's the consequence."
Is it still an ultimatum when they make the same threat every year? Maybe it's a penultimatum.
Marlins win city vote
The Florida Marlins won this morning's Miami city commission vote on a new stadium, by a 4-1 margin. City commissioners were reportedly pleased by the stadium financial report they received last weekend, or at least by the opportunity to use lots of baseball talk:
"Today, we are in the ninth inning," city commission Chairman Joe Sanchez said. "The bases are loaded. We have two outs, we're three runs down, we have two strikes, and I believe we have a great opportunity to hit this ball out of the ballpark."
The county commission should be meeting right about now - more word on what inning they're in as it becomes available.
Meetings, meetings everywhere
The stadium legislative season is in full swing in Florida, with meetings today to help decide the fate of the Florida Marlins and Tampa Bay Rays proposals.
The Miami city and county commissions are set to vote today on the Marlins' $525 million stadium proposal, which would cost about $360 million in public money; taxpayers would also pay to build a $94 million parking garage, though parking fees are supposed to pay off that cost. The city commission was scheduled to vote at 9 a.m., with the county to follow at 1 p.m. (I'll post updates here as I hear them.)
Today's Miami Herald gives a good breakdown of the Marlins' financial plan, including something that reporters all too often overlook: an examination not just of the up-front costs, but of how stadium revenues will be split, noting: "Despite being on the hook for one-fourth of the $619 million construction job, the Marlins receive all stadium-generated revenue." Herald reporter Charles Rabin adds that plan also does not indicate how to pay for required infrastructure improvements to move utilities and improve roadways to the stadium site, nor how the Marlins would pay for stadium cost overruns (which are on them), nor what happens if the parking garage goes over budget (which is on the city).
Enough city and county commissioners still say they're undecided that the vote outcome is unclear. If it does pass, Clemson economics professor Robert Tollison tells the Herald, it could be thanks to the complicated funding scheme, which relies heavily on tourist taxes and shuffling money around between different government agencies: "I think it's sort of classic interest group politics. You've got a very defused [Ed. Note: He probably actually said "diffuse"] group of people [paying]. Lots of them aren't even residents of Florida. Politically, it's a perfect storm."
In Tampa, meanwhile, the first public hearing on the Rays' $450 million stadium plan, which could cost taxpayers up to $300 million in subsidies, is scheduled for tonight at 6:30. Opponents are set to wear red, supporters white; the St. Petersburg Times is promising running updates on its Rays blog.
February 18, 2008
Pols gripe over Marlins stadium details
Miami-Dade County commissioners got their first look at the latest Florida Marlins stadium proposal this weekend in advance of Thursday's planned vote, and several of them expressed their qualms to the Miami Herald:
- "It's hijacking Peter to pay Paul," said commissioner Joe Martinez of the financing scheme that would redirect money from redeveloping poor neighborhoods to free up cash for the stadium.
- Commissioner Carlos Gimenez wondered why the Marlins owners would only be putting in $155 million, about 30 percent, when the city government would be paying for, among other things, the full cost of a $94 million stadium parking garage. He also was displeased by a clause that would give the city and county use of a luxury suite for one-third of home games: "I don't really want a free suite."
- Commissioner Katy Sorenson noted that the county would be required to waive its green building codes for the project, or pay the added cost itself for environmental enhancements. "We've barely began our sustainable buildings program - long behind more progressive communities - and we're already ready to throw it under the bus," she said.
- Other commissioners raised questions about liability if the team is unable to cover cost overruns, and guarantees that the money will be used to pay better players, not increase team profits. "I'm looking at moving this forward, but I have some reservations and they need to be resolved," said commissioner Sally Heyman.
Both Sorenson, who opposes the stadium deal, and county commission chair Bruno Barreiro, who backs it, said they expected it to be approved by the commission this Thursday. Given the number of details yet to be worked out, though, it's still possible that the vote will be postponed, just like last time.
February 16, 2008
Marlins reported to have struck stadium deal
Sarah Talalay of the South Florida Sun-Sentinel, who is usually reliable about these things, reports that the Florida Marlins have reached agreement on a $515 million stadium deal with city and county leaders:
The deal calls for the county and city to contribute $360 million mainly in tourist taxes and a $50 million general obligation bond Miami-Dade voters approved in 2004 to renovate the Orange Bowl, but which will instead be moved to the ballpark project. The Marlins are to contribute $155 million.
That's essentially the same deal the parties agreed to back in December, leaving it an open question whether the county still intends to ask for sales tax rebates to help finance its share. (The state has historically been not so hot on kicking in money for a Marlins deal.) Other open questions: what happens with those lawsuits against the deal; and whether the city and county commissions will be more eager to approve this plan than they were two months ago. According to Talalay, both are scheduled to vote next Thursday.
On the matter of why taxpayers are being asked to shell out $360 million for a new baseball stadium, Talalay explains:
The team says it needs its own home because it pays rent at Dolphin Stadium, where its lease expires after the 2010 season, and receives only percentages of revenue from parking, concessions and advertising signage.
Coincidentally, I also pay rent at my current home, my lease expires soon, and I don't get any revenue from parking or ad signage. Dear Miami-Dade County: I take Paypal.
February 15, 2008
D.C. mayor: Aw, heck, let's build a soccer stadium after all
So much for D.C. Mayor Adrian Fenty's refusal to provide subsidies for a D.C. United stadium: The mayor told city council members yesterday he was considering spending $150 million of city money on a soccer stadium, using taxes put in place for the Washington Nationals baseball stadium. Providing $40 million worth of city land for the project would raise the total public cost to $190 million, according to the Washington Post. (The D.C. Examiner sets it at $230 million, but it's not clear where it gets the higher number.)
Fenty said he'd only support a stadium if it were a "public-private partnership," and a D.C. United spokeswoman said there would be a "significant equity infusion" from the team's owners. But the total estimated construction cost of the stadium is $200 million, meaning at most D.C. United could be kicking in a quarter of the tab.
The coalition that opposed the Nationals stadium deal has begun circulating a sign-on letter calling on D.C. residents and others to tell the mayor they "oppose using precious public funds to subsidize professional sports, especially at a time when the city is facing tremendous budget restraints," and noting that "If baseball stadium revenues can be diverted to a soccer stadium, they can be diverted to any purpose," such as literacy programs, which currently get less than $10 million a year in city funds.
February 11, 2008
"Free Lunch": Stadium subsidies provide all of sports' profits
Pulitzer-winning New York Times tax reporter David Cay Johnston is out with his latest book, "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)" - the whole book is worth reading, but of particular interest to FoS readers is that it includes a healthy sampling of stadium shenanigans, especially those perpetrated by one George Steinbrenner and one George W. Bush.
What I want to call attention to today, though - and not just because I'm referenced in it - is a section where Johnston puts together two disparate sets of financial numbers to draw a startling, and so far as I know novel, conclusion:
"Government spending on sports facilities now soaks up more than $2 billion a year," Neil deMause, author of the book and Web site Field of Schemes told Congress in 2007.
According to Forbes magazine, the Big Four sports had revenues in 2006 of $16.7 billion. They counted a tenth of that, slightly less than $1.7 billion, as operating income, which is one way to measure profits.
Putting together the estimates by Forbes and deMause shows that the entire operating profit of the commercial sports industry comes from the taxpayers. The subsidies, in fact, cover a third of a billion dollars in operating losses before this boost from the taxpayers pushes the industry into the black.
It's not quite as simple as that: For one thing, even if the government is spending $2 billion a year on sports facilities, that doesn't necessarily mean sports team owners are getting $2 billion a year in value from it - as I've noted many times before, sports facilities seldom generate enough new revenues to pay back their own construction costs. (And Johnston himself notes later in the book that sports teams seem not to be capturing the entire value of their received subsidies.) Still, it's a pretty impressive illustration of the degree to which the sports industry is no longer about making money by selling a product to its fans; it's about making money by using its product's popularity to extort cash from taxpayers.
February 10, 2008
AP: Stadium costing more? Raise naming-rights fees!
There's bad sports journalism, and then there's above and beyond the call of willful ignorance. In an article on how stadium naming-rights deals are getting more lucrative, Associated Press writer Janet Frankston Lorin somehow manages to write this sentence with a straight face:
Naming rights prices are escalating for several reasons: public support to build stadiums is waning, player salaries are increasing, and stadium construction costs are rising.
Now, let's think this through, Lorin is expecting us to believe one of two things
- That companies looking to buy naming rights are such an easy mark that all a sports team owner has to say is, "I know $20 million a year sounds like a lot, but what about my needs?" and they'll happily whip out a checkbook, or:
- That sports team owners care so little about profits that they'll sell naming rights for dirt cheap - just to neighborly, doncha know - unless their hands is forced by those dirty old players and taxpayers.
A far more likely explanation is one expressed elsewhere in the article: That there have been several record naming-rights deals because lots of teams with huge markets (the New York Mets, Dallas Cowboys, New York Jets and Giants, etc.) have been building stadiums of late. But the notion that corporations tend to charge what they can get for something - not what they need to pay off their debts - is still hard to grasp for too many journalists. Maybe all those years of hearing owners gripe that players salaries are to blame for high ticket prices has permanently damaged their logic circuits.
February 08, 2008
Yankees stadium cost passes $1.8B
Before leading a press tour of the New York Yankees' under-construction stadium (to judge from the press coverage that resulted, Kool-Aid was liberally dispensed), team president Lonn Trost revealed that the price tag for the structure itself had risen from $1 billion to $1.3 billion, mostly thanks to additions like a snazzier video screen and more lavish concession stands. Add in the $340 million in new parking garages and $200 million in parkland to replace what was demolished to make way for the new stadium, and the whole project is now somewhere north of $1.8 billion.
Trost was unspecific about how the new additions would be paid for, though when asked if the team was getting additional financing for the extra costs, he replied, "We will be." If the added costs come out of the Yankees' pockets (or more likely, the pockets of concessionaires and scoreboard advertisers who will pony up higher fees), that would bring the team's expense after tax breaks and other subsidies to around $700 million, or still less than what the public is putting in. And taxpayers, needless to say, won't be getting any money from ads on the spiffy new scoreboard.
February 01, 2008
Philly, St. Louis neighbors promise soccer stadiums
For anyone tempted to think that public stadium funding is on the wane, consider that this week has brought news of two different cities clamoring to build soccer stadiums for teams that don't even exist yet. In Collinsville, Illinois, just across the Mississippi River from St. Louis, the city council on Monday approved using tax increment financing (where any new tax revenues are kicked back to the developers of the project) for an 18,500-seat soccer stadium; this was followed by yesterday's announcement by Pennsylvania Gov. Ed Rendell of $47 million in state funding towards a project that would include a 18,500-seat soccer stadium in Chester, just down the Delaware River from Philadelphia.
And who will play in these stadiums? MLS has said it wants to add a 16th team, but likely not until 2010 - and it can't play in both St. Louis and Philadelphia. (Well, it probably can't, anyway.) This means the two cities will be left in a bidding war to see who can offer the sweetest deal to the league to win the expansion franchise - possibly what league president Mark Abbott was referring to when he told the Philadelphia Inquirer there was still more work to do before a decision can be made. Doesn't anybody ever learn the lesson about building on spec?
