May 30, 2008
StL stadium chief: Replace dome, or lose Rams
Thirteen years ago, the city of St. Louis lured the then-Los Angeles Rams to their city by building the TWA Dome (now the Edward Jones Dome), entirely with public money. As we wrote at the time in the first edition of Field of Schemes, the total subsidy would end up amounting to $1.07 billion over 30 years:
That amounts to a public cost of $36 million a year, while the Rams' annual revenues are expected to leap by more than $15 million. And according to the team's brand-new lease, if the stadium does not remain among the most lavish in football for another ten years, the Rams can then leave town for more lucrative turf - or demand further improvements.
Cut to the front page of today's St. Louis Post-Dispatch:
If St. Louis intends to meet its lease agreement by providing the Rams with a venue that ranks in the top 25 percent of the NFL by 2015, the city - and the taxpayers - must commit to building a state-of-the-art stadium. One in which the cost could hit 10 figures.
So says Convention and Visitors Commission Chairman Dan Dierdorf publicly, as do several other principals privately.
The NFL stadiums under construction in Indianapolis; Arlington, Texas; and East Rutherford, N.J., are "going to be the cream of the crop, and they're going to be no more than five or six years old" by 2015, Dierdorf said. "What do you do to a 20-year-old building to make it the equal of a brand-new $1 billion stadium?"
This, in a nutshell, is why so-called "state-of-the-art" clauses in stadium deals are a nightmare for cities, and a boon to team owners. The only thing the people of St. Louis are getting in exchange for their $36 million a year (plus $30 million in renovations currently underway) is the presence of a football team for 30 years - thanks to that well-placed clause, though, they're now facing another round of stadium blackmail when the paint is barely dry from the first one. (In case anyone failed to get the message, the Post-Dispatch noted that Rams owner Chip Rosenbloom revealed he has been "approached by several people" about selling the team and relocating it elsewhere.) In Cincinnati, the Bengals lease is even more onerous, specifying that the county must install any new technologies in use by 14 other NFL teams, up to and including "holographic replay systems."
"I don't think anybody could've imagined that the boom in stadium development would've happened," Rams lawyer Bob Wallace told the P-D. Clearly somebody did on the Rams' side, though, or else they wouldn't have thought to insert that clause into the lease. The trick now will be for St. Louis to avoid having to be on the hook for yet another stadium before it's even paid off half the old one.
May 29, 2008
D.C. council revives $150m soccer subsidy plan
That plan to spend $150 million in city money on a D.C. United stadium is back again, with three city council members now readying legislation to be introduced at next Tuesday's council meeting. (If anyone wants to watch the festivities, it will almost certainly be webcast here.) The sponsors are an odd threesome in stadium politics: Jack Evans, who was the main cheerleader for the Nationals stadium deal, and Vincent Gray and Marion Barry, who were two of the three councilmembers who were elected in 2004 on an anti-stadium platform (and who later cast the key votes to rescue the Nats deal).
Among those who've voiced opposition to the deal are D.C. Chief Financial Officer Natwar M. Gandhi, who's worried the added debt would push the city over the threshold where Wall Street would start downgrading its bonds; Washington Post columnist Marc Fisher, who says a soccer team just doesn't play enough games to be a good economic anchor; and councilmember Mary Cheh, who said, "I just don't think we should be an ATM for sporting authorities, unless they can make a compelling case to me." (You can't be a D.C. councilperson unless you know how to hedge.)
D.C. United's response, meanwhile, has been to say $150 million's not enough, how about $225 million? No, no, come on, do it properly.
London-to-Chicago Olympic stadium shift all wet
It sounded either brilliant or crazy: London Olympic officials, according to the Guardian, were in talks with Chicago Olympic organizers to reuse temporary seating from the 2012 Games for the 2016 Games, should they land in Illinois:
The Guardian has learned that 55,000 seats from London's 80,000-seat arena could be transported to Washington Park in the Illinois city and used to enlarge a planned, 7,500-capacity community arena into Chicago's main Olympic stadium.
The tactic of recycling the Olympic stadium has been billed as the first step in a new approach to the games, which could become more like a travelling circus to keep costs down and allow poorer countries to play host.
The Chicago Tribune says: crazy. Chicago and London officials insist that while they've talked about maybe reusing some structural steel from the London Olympic stadium, there's no talk of moving seats, let alone entire seating sections: "Seats don't make a lot of sense. They are readily available and readily disposable," Chicago 2016 operations director Doug Arnot told the Trib. "The time, trouble, effort and expense to move them overseas make it unlikely for that to ever happen." Okay, then what about this idea?
Yanks parks cost more, take longer
The New York Times reported earlier this week what readers of this site already knew: The new parks to replace the ones buried under the Yankees' new stadium are behind schedule and over budget. The parks cost estimate, Parks Department spokesperson Jama Adams told the Times, is now $174 million, down slightly from a $190 million estimate two months ago, but said it might still go up; work still hasn't started on most of the new parks, meanwhile, most of which now aren't slated to open until 2011. The original city environmental impact report issued in early 2006 promised that "by 2009, all of the replacement parkland and recreational facilities would be constructed."
May 17, 2008
Poking holes in the Rays' fabric roof dreams
More reaction in today's St. Petersburg Times on the Tampa Bay Rays stadium plan:
- St. Petersburg city council member Herb Polson, who was a city official who worked on the financing of Tropicana Field two decades ago: "I think there is an awful lot to figure out in a very short time. ... The developers' proposals still have holes in them. Who is going to cover the demolition costs? Who is going to pay if there is environmental damage underneath the Tropicana?"
- Times columnist Howard Troxler: "If the developer is really going to build all this neat-o stuff on Tropicana Field, hundreds of millions of dollars worth added to the tax rolls, how come we can't get any guarantee at all? ... An ironclad guarantee that the property-tax revenue, or an equivalent required payment from somebody, always covers the public's share of the debt. If what the Rays and the developers claim is true, this shouldn't be a problem — heck, it shouldn't even be a close call. It should be like dickering over floor mats once we've agreed to buy the car."
- Finally, four stadium experts weigh in on the financial plan: me, and economists Mark Rosentraub, Victor Matheson, and He Who Shall Not Be Named. Guess which one of the four thinks it's a good idea?
British Columbia officials announced yesterday plans for a major renovation of the 25-year-old B.C. Place in advance of it hosting opening and closing ceremonies for the 2010 Winter Olympics. One item won't be completed until after the Olympics: Installing a new roof, supported by "36 50-metre masts" - in American, that would presumably be 102 164-foot poles - to replace the fabric one that sprung a leak last year. (Presumably this would make B.C. Place no longer the world's largest air-supported roofed stadium.)
Also not yet completed: a price tag for the project, which the Globe and Mail reports some projections have placed at $200 million. (In American, that's $200 million.) David Podmore, chair of PavCo, the province-owned corporation that owns the stadium, says he expects to have firmer figures in about five months.
May 16, 2008
Rays present vague stadium numbers
The Tampa Bay Rays released their stadium financing plan yesterday - if a nine-page Powerpoint presentation can really be considered a financing plan. The highlights:
- The team would pay for $150 million on construction costs, likely via rent payments over the course of their lease.
- Pinellas County would put in $100 million from a hotel tax currently being used to pay off debt on Tropicana Field. (The tax would be extended by another 30 years, until as late as 2047.)
- State sales tax money, also currently going toward the Trop debt, would contribute another $75 million.
- $55 million would come from parking revenues at the new stadium, though asked about how this would work, team president Matt Silverman replied, "The short answer is we don't know."
- To replace the funds being diverted from debt service on the old stadium, the city would get $70 million from a developer who would purchase the Trop site and turn it into housing, retail, and office space.
The Rays are selling this as "no new taxes," but that's stretching things: In addition to diverting existing taxes to new uses, extending the hotel tax for 30 years would obviously be new public tax money. Rays stadium czar Michael Kalt also told the St. Petersburg city council that this would be "one of the highest percentages of non-public dollars that would go into a ballpark facility anywhere" - again, stretching things (depending on how you count, it looks like the private share would be in the 40-55% range), though given that only four baseball stadiums in recent memory (the new stadiums for the San Francisco Giants, St. Louis Cardinals, and New York Mets and Yankees) have even approached 50% private money, that's not a very high bar to set.
Other outstanding questions: Who would get any additional funds from the sale of the Trop site, and what happens if no developer is found (or any developer demands subsidies of their own)? When the Rays say they'll pay cost overruns, does that include on land on infrastructure as well, which have ended up costing other cities big-time? Would the team pay rent, and/or property taxes, at the new stadium? And while the Rays promise a windfall of new tax revenue from the development of the Trop site, would would be the new costs for schools, transit, and police and fire services for the new housing and offices that would be built there?
The Rays are hoping that the city council will place this proposal on the November ballot for voter approval - hopefully by then they'll provide more answers to these questions. The Tampa Tribune - whose managing editor, according to one former staffer, told his reporters during a debate over a Buccaneers football stadium that "our coverage of the stadium will be limited to finding solutions for it to be built" - reported that after yesterday's presentation, "city leaders were still not ready to commit to the proposal." Ungrateful bastards.
May 15, 2008
Omaha Royals: If you build it, we won't stay
This is one of the strangest stories I've seen in a while: The minor-league Omaha Royals are threatening to leave town if the city builds a new stadium. Yeah, you read that right - if the city does build a new stadium. The problem, according to the Omaha World-Herald: The new stadium is being built for the College World Series (which was itself threatening to move if it didn't get a new home), and "the Royals and the team's league have expressed numerous concerns about Omaha's new stadium, including its larger-than-they-desire size and the financial plan in the new lease." No details on what the Royals don't like about the lease, though it has previously been reported that some stadium revenues would be used to defray construction costs, so maybe the Royals are worried there wouldn't be enough left over for them.
49ers mull stadium on obscure garbage dump
The San Francisco 49ers have confirmed that they're looking into the city of Brisbane as a fallback option if negotiations to build a new stadium in Santa Clara fall through. How serious an option is an open question, though, given that Brisbane doesn't have any money to contribute to the deal, and that the owner of most of the site - a former garbage dump - thinks it's a lousy idea:
"It's not what we envision for the site," [Universal Paragon Corp. development director] Jonathan Scharfman] said. "We can't currently see the economic driver in a project that would trade 80 acres of developable land for a stadium that requires fairly significant subsidy."
With the 49ers engaged in intense negotiations with the city of Santa Clara - right now neither side is budging on filling the project's budget hole - and facing a June 3 vote on approving a stadium deal in San Francisco, though, it's probably any semi-legitimate fallback option in a storm.
May 11, 2008
Weekend update: Spurs win more arena cash, OKC threatens Sonics suit
A few items of note from the last couple of days:
- Voters in San Antonio approved by a 57%-43% margin Saturday an extension of hotel and car-rental taxes that will provide the Spurs with an estimated $75 million for upgrades to their six-year-old, publicly built arena. Guess that half a million bucks in campaign spending was worth it.
- So former Seattle Sonics owner (and Starbucks baron) Howard Schultz is suing to get the team back, eh? Well, now Oklahoma City officials say they'll sue him right back if he buys the team and doesn't move it to their city. In a letter to Schultz's attorney on Thursday, the city's attorney wrote that he expects any owner of the Sonics to honor the "contractual obligation to relocate to Oklahoma City and to play home games at the Ford Center for the duration of the term of the lease." Or maybe they could just have the lawyers meet at midcourt and make closing arguments - it'd be more entertaining than watching the Sonics.
- The NBA and Sacramento's Cal Expo announced Friday that they're officially reopening negotiations for a Kings basketball arena to be built on the state fairgrounds as part of a $650 million development. Writes Sacramento Bee columnist Marcos Breton in an otherwise upbeat article: :Even if passed, the document will not be legally binding. And it does not address the biggest obstacle: How do you pay for an arena without a new tax?" Excellent question.
- The city of Santa Clara now says it doesn't need Great America's approval to build a 49ers football stadium on the amusement park's parking lot, so long as it replaces the parking elsewhere, according to the terms of the lease for the city-owned land. (Great America's owners didn't immediately challenge this interpretation; read into that what you may.) That would require a new parking garage, though, adding to the project's existing $51 million budget hole.
- Buried in a long New York Times article on the coming demolition of Tiger Stadium (which, incidentally, misrepresents the Tiger Stadium Fan Club's 1990s "hugs" of the structure to protest plans for a new park as being by "a booster club") is news that U.S. Senator Carl Levin says he'll seek federal funding to help preserve a section of the 96-year-old ballpark if the Old Tiger Stadium Conservancy is able to raise $369,000 toward that goal by its June 1 deadline. I'd direct you where to send donations if you have $369,000 under your sofa cushions, but the Conservancy still hasn't managed to get its website up and running. (Hint: You can get them for free these days.)
May 05, 2008
Brooklyn arena fate still up in air
In the wake of last week's rumor that the New Jersey Nets could be headed to Newark instead of Brooklyn, plus Saturday's neighborhood rally to demand that the state call a halt to the faltering Brooklyn project, Nets owner Bruce Ratner fired back with an op-ed in the Daily News insisting that he's moving ahead with construction. Headlined "Atlantic Yards dead? Dream on," Ratner's essay insisted:
We're still building all 6,400 units of housing - including 2,250 affordable units. We're still building the iconic Miss Brooklyn tower and the state-of-the-art Barclays Center, the future home of the Nets.
Twenty-four hour later, though, Ratner revealed that the Miss Brooklyn tower had been dumped, in exchange for a smaller office-only building creatively titled "B1." (The Brownstoner blog notes that the size reduction has actually been in the works for over a year, but this still represents a significantly new design, which the Gothamist blog dubs "Miss Jenga.")
The real question remains whether to believe Ratner's assurances that the $950 million arena will break ground later this year, or whether this is just a last-ditch effort to attract investors to a project that was designed for better economic times. If the latter, and Ratner falls short and the arena never gets built, I argue iin an op-ed in today's Metro New York, that might end up being the best thing for Brooklyn.
Spurs seek another $75M in tax money
The owners of the San Antonio Spurs have spent $500,000 on the campaign for a May 10 referendum that would extend the Bexar County venue tax on hotels and car rentals. That may sound like a lot of money, but the potential payoff is far greater: The San Antonio Express-News reports that the Spurs' AT&T Center - built in 2002 with $175 million in venue tax money - could rake in an additional $75 million from an extended tax.
Continues the Express-News:
Spurs management and county officials have said upgrades to the arena will be necessary to increase revenue streams to pay for the player salaries that have brought the team four championships.
According to Forbes, the Spurs are currently the NBA's 10th most valuable franchise out of 30, and 11th in annual profits, thanks in large part to those four championships, not to mention the last infusion of venue tax money. A more honest accounting, then, would be that the upgrades are "necessary to increase revenue streams so that player salaries are paid by public taxes, not out of our profits" - but that doesn't sound as good in a referendum campaign.
May 01, 2008
Nets-to-Newark move in the works?
It's been rumored before, but today's Newark Star-Ledger has the first published reports of talks to move to New Jersey Nets to Newark's Prudential Arena instead of to Brooklyn's troubled Atlantic Yards project. The Star-Ledger reports that New Jersey Devils owner Jeffrey Vanderbeek and Newark mayor Cory Booker are working on putting together an investment group to buy the Nets, and have held preliminary meetings with Nets owner Bruce Ratner and his development company about such a plan.
Being second fiddle to an NHL team usually isn't as enticing a prospect as having your own arena, but there are some special circumstances here: The Nets are currently losing an estimated $40 million a year playing in the Meadowlands, and are stuck there at least another two seasons before a Brooklyn arena could be ready. And they're facing an increasingly tougher financial road there as well, despite heavy public subsidies. As George Zoffinger, former head of Jersey's sports authority, told the Star-Ledger: "When you start to spend north of $500 million for an arena, you can't generate the cash flow necessary to generate a decent return on the investment. If the number is $900 million, it's absolutely, positively not viable from an economic standpoint."
Ratner, meanwhile, insists the team isn't for sale, which could be read either way: It could be meant as a sign of reassurance to Brooklyn legislators who might be wondering if they should pull the plug on Atlantic Yards; or, you might wonder whether, if Ratner's really serious about getting more money out of Brooklyn, he wouldn't want to raise the specter of a Newark move to up the ante. I wouldn't hazard a guess, but it's worth noting the Nets wouldn't be the first team to stay in New Jersey after initially insisting it was not an option.
Bills to rake in loonies in TO
So much for jokes about Canadians using Monopoly money: The Buffalo Bills estimate they're going to earn almost $10 million in revenues for each of eight games they'll play in Toronto over the next five years, about double what they bring in from games in Buffalo. Given this, suggests Globe and Mail columnist Stephen Brunt, it's extremely likely that even the Bills will be playing at least some games in Toronto for the foreseeable future, if they don't move there entirely:
Permanent franchise relocation is a whole other issue, which has already been much discussed. (Wilson, who is 89, has said he won't sell the club before his death, and his estate would be bound to sell it to the highest bidder, which, given the economics, is less likely to be someone committed to keeping the Bills in Buffalo than someone intent on moving them to wealthier climes.) ...
Since the Bills will already be here, in part, and since the Toronto money would be helping them stay alive, no one is going to force them to end their Canadian enterprise. When the time comes not too far down the road for a new stadium to be built, U.S. politicians would be forced into a very expensive game of put up or shut up.
The province of British Columbia is reportedly considering building a retractable roof for the B.C. Place stadium, to replace the inflatable roof that collapsed in a storm early last year. (It's since been patched.) A new roof is estimated to cost as much as $250 million, and would risk rush charges as it would need to be completed for the 2010 Winter Olympics, but never worry - as CTV reports:
PavCo chairman David Podmore has said any costs linked to the upgrades will be recovered through the sale of property around the facility to condominium developers.
And if they didn't build the roof, you couldn't develop that land and using the condo money for other purposes, because ... um, that part must have been left out of the web version of the story. An inadvertant omission, I'm sure.
