December 26, 2008
After team folds, Fresno looks for someone to sue
Another lesson in spending public money in exchange for a team signing a long-term lease: The city of Fresno spent $5 million upgrading its Selland Arena last year in order to get the minor-league Fresno Falcons team to sign a 20-year lease. Barely a year later, the Falcons folded mid-season. Now the city is considering a lawsuit to recoup its lost $180,000 a year in Falcons rent payments.
Good luck with that. According to the Fresno Bee:
Brian Glover, a partner in Fresno Hockey Club, LLC, the Falcons' owner, on Tuesday evening said the owners will gladly sign over all of the team's assets to the city. He said those assets include the Falcons' ECHL league membership and a team van.
City attorney James Sanchez says his office is currently researching whether any investors in the Falcons might be subject to a lawsuit.
Money-losing Coyotes inch closer to bailout demand
Things are looking even worse for the debt-ridden Phoenix Coyotes, as they've reportedly taken an advance on league revenue from the NHL after pledging virtually all of the team's other revenues as collateral on an $80 million loan. And it looks like the team is even closer to asking its public landlords for a bailout, according to the Globe and Mail:
A third source said the Coyotes have already approached the city of Glendale about renegotiating their 30-year lease at Jobing.com Arena. While the lease does give the team most of the revenue from the arena operations, there are items such as parking in which the city takes money from the Coyotes.
The only way the team can break its lease and relocate is by declaring bankruptcy.
Let this be a reminder to cities considering building arenas in exchange for "ironclad" agreements that the team won't move: It's always possible to play the threat card, lease or no lease.
December 23, 2008
I'll still be updating this site over the holidays, but posts may be a bit more sporadic than normal. (As will readers, if history is any guide.) If you're trapped by the freeze-thaw-freeze cycle and looking for reading material, you can always check out my long interview at Baseball Digest Daily about the Yanks, Mets, and other stadium deals.
December 20, 2008
The RCA Dome, built in 1984 to lure the Colts to Indianapolis, was imploded this morning. But its debt lives on.
December 19, 2008
From Sarah Talalay's Business of Sports Blog for the South Florida Sun-Sentinel:
With no real news on the state of ballpark negotiations, the Marlins announced today they have launched a new Web site dedicated to news of the ballpark.
The site is here, though chunks of it are still under construction. (Unlike the ballpark itself, which still needs final government approval of its contracts, likely next month.) But at least you can learn about how Vaporware Field is "creating an exciting buzz among baseball fans throughout the country"!
December 18, 2008
City of Industry to vote on $500m in 'infrastructure' for NFL
I've been so caught up in New York shenanigans that I've fallen behind in keeping up with developments on the other side of the country. Fortunately, FoS correspondent David Dyte picks up the slack:
At a time when the NFL is cutting jobs in Los Angeles, Ed Roski Jr. and John Semcken still believe in miracles. The Whittier Daily News reports that the Industry, California, city council has scheduled a January ballot measure to issue $500 million in bonds for infrastructure. Presumably this will support Roski and Semcken's proposed $800 million football stadium, which still lacks a tenant. The bonds would be repaid via property taxes. Five other measures on the ballot include one granting the city the power to award public works contracts without a bid process. For a city of just 777 residents, this is big business indeed.
Chiefs get another $25m in tax breaks
The Kansas City Chiefs got their money:
The Missouri Development Finance Board unanimously approved $25 million in state tax credits Tuesday for what is expected to be a $50 million project to build a new indoor training facility at Missouri Western State University in St. Joseph, improve Arrowhead Stadium and make infrastructure upgrades at the Truman Sports Complex.
The Kansas City Star adds: "Unlike many projects receiving tax credits, all the work done on this one will benefit publicly owned facilities: The sports complex is owned by Jackson County, while the training center will be the property of Missouri Western." Yet another example of journalists not understanding that you don't benefit from owning a stadium, you benefit from controlling its revenues.
Nets arena architects get the ax
Frank Gehry, who's still allegedly designing the Atlantic Yards project that New Jersey Nets owner Bruce Ratner is allegedly building in Brooklyn, has laid off his entire architectural team working on the project. The reason? Ratner "refused to pay Gehry additional costs for design revisions," according to a source cited in the New York Daily News. Asked whether there was still design work left unfinished, a Ratner spokesperson told the News: "The answer is yes, of course there is design work left to be done, and, no, there are no new images to release." Maybe they can get some interns to design it.
Meanwhile, the New York Observer reports that whether Atlantic Yards will ever be built is "very much an open question":
Bruce Ratner, the Brooklyn-based cousin of Chuck Ratner who runs Atlantic Yards, seems to be rushing to patch a leaky dam. According to multiple people familiar with discussions, his subsidiary company, Forest City Ratner, is attempting to cobble together extra money; trying to speed up tens of millions of dollars it is owed by public entities; delay tens of millions in payments it owes to both the public and private sectors; and tack on new subsidy programs for the housing piece of the project. Earlier this month, Bruce Ratner abruptly shut down preliminary construction efforts related to the NBA arena in an apparent attempt to preserve cash.
At a glance, Atlantic Yards would certainly seem a prime candidate for collapse. The project had an unusually low margin of return back in 2006 - according to state and Forest City figures from the time, at the height of the real estate boom - as Mr. Ratner slathered on promises and concessions in an attempt to win political support. Since, several key assumptions changed in Mr. Ratner's disfavor, surely challenging the project's financials.
Ratner is also reported to have told investors during a conference call, "When we get - and we believe we will - successfully through the last of the litigation in 2009, we'll evaluate the market at the time, and see what our next steps are." Sounds like "down the drain" is looking more and more accurate.
December 17, 2008
'Smoking gun' in Yanks land value probe?
New York state assemblymember Richard Brodsky claims he's found a "smoking gun" showing that New York City officials tampered with land value assessment of the Yankees' new stadium, to allow them to use their PILOT scheme to get tax-exempt financing. Of course, Brodsky's claimed this before, but this time he has a point: E-mail records he obtained from the city show that a city tax assessor submitted a land value of $26.8 million on March 10, 2006, then 12 days later came back with a figure of $204 million - accompanied by the note, "Here is the write-up with the changes you requested."
There are other curious nuggets in the e-mails that suggest funny business in the city finance department - for more, read Juan Gonzalez' piece in today's Daily News, as well as my own followup article on the Village Voice website. The upshot: The IRS is now going to have to decide on whether to audit the city's assessment, and then, if they find "material misrepresentations," whether to toss out the bonds' tax-free status. If they do, CC Sabathia could be the least of the Yanks' expenses.
December 16, 2008
Edmonton mayor floats Oilers arena
Edmonton Mayor Stephen Mandel says he'll soon announce a financing plan for a new Oilers hockey arena, expected to cost about $450 million, plus land acquisition costs. As much as 70% of the cost would be paid for by public bonds, but Mandel says "no current property tax dollars" would be used. The trick? Future property taxes would be just fine, so Mandel could propose, say, a "community revitalization" tax on all future developments in Edmonton to finance the public's share.
Reaction so far isn't exactly overwhelmingly favorable, with the city council grousing that it's been kept out of the loop, and the Edmonton Sun's Andrew Hanon writing today:
But here's the thing: there's a global economic recession going on. Compared to other parts of the country, Edmonton has been relatively insulated from the economic deep freeze. But is this really the best time to finance a major -- and entirely unnecessary -- construction project with income that might or might not be there?
Chiefs ask for $25m more from Missouri
In exchange for getting $425 million in state sales-tax money to renovate their existing stadiums in 2006, the Kansas City Chiefs and Royals agreed not to ask for any more state money during the course of their new 30-year leases. The renovated stadiums won't even be open for another two years, and already the Chiefs are, you guessed it, asking for more money: this time, $25 million for additional work at Arrowhead Stadium, plus an indoor training facility in nearby St. Joseph.
A spokesperson for Lt. Gov. Peter Kinder told the St. Louis Post-Dispatch that it was okay for the Chiefs to ask for more state money after they'd promised not to, because "they've redefined the scope of the project. These are new things with St. Joseph." And Kinder, apparently, gets to decide the matter with just a few of his closest friends:
Kinder heads the Missouri Development Finance Board, which is slated to consider the plan today.
Stadium subsidies have been controversial in the Legislature, so they have been increasingly routed through the obscure finance board. It is made up of eight people appointed by the governor, three Cabinet heads and the lieutenant governor.
Goodell starts Raiders stadium ball rolling
NFL commissioner Roger Goodell said on Sunday that he's working on a "long-term" plan to help the Oakland Raiders get a new stadium:
"It's clear, and I think everyone accepts it, that something has to get done here with a new stadium at some point. And I've had a chance to talk to some of the leadership here about how we can help in that process. ... If you look at where our stadium situation is, San Diego is trying to address a stadium situation, San Francisco, the Oakland Raiders. So collectively, we have to try to address these matters on a statewide level as well in our local communities."
Goodell also added that having the Raiders share a new stadium with the San Francisco 49ers, a la the New York Jets and Giants, would be (duh) "complicated."
No details, in other words, which means we're still at the trial-balloon phase of any Raiders stadium push. Still, it makes you wonder: If the Raiders are going to get their own stadium, why can't the A's just stay put at the Coliseum and knock down Mount Davis once the Raiders are gone?
December 12, 2008
Someone at The Simpsons has been reading Field of Schemes
Watch the episode in question here.
December 11, 2008
Fremont site owner: Keep those A's offa our lawn
If the original site targeted by the Oakland A's for a new stadium in Fremont wasn't dead before, it sure looks to be now, as the site's owner declared itself "strongly opposed" to the stadium project. While the A's have approval of Cisco Systems, which holds a long-term lease on the site, the opposition by Catellus Development Corp., which also owns an adjacent shopping center, makes it extremely unlikely that the city of Fremont would approve the deal.
That leaves the Warm Springs site elsewhere in Fremont, but that has its own problems. In particular, Jennifer Lin of the East Bay Alliance for a Sustainable Economy tells me that the new site does not appear to be in a redevelopment area - meaning it wouldn't be eligible for tax increment financing. This means the A's would be entirely reliant on finding someone to lend them money using as collateral a condo development at the Catellus site that may or may not happen - that's the kind of mortgage that might have gotten approved in 2005, but not so much today.
MLB unelected strongman Bud Selig, meanwhile, threw additional uncertainty into the A's fate yesterday by sending A's owner Lew Wolff a letter giving him permission to consider "other communities" if the Fremont plans fail. Alameda County Supervisor Scott Haggerty told the San Jose Mercury News that A's officials told him they interpreted this to mean that San Jose was now open for consideration, the San Francisco Giants' territorial rights be damned; A's officials denied this. Further updates once everybody's on the same page of their scripts.
Despite being declared dead in June and now part of a criminal investigation, the proposal for the state of Illinois to buy Wrigley Field from the Cubs is apparently alive and well. The Chicago Tribune (owners of the Cubs, and employers of the editorial board whose members Gov. Rod Blagojevich wanted fired in exchange for signing off on the deal) reports that preliminary talks are back on, focused on having the Illinois Finance Authority buy the 94-year-old ballpark in a deal that the Trib says could be "worth $200 million to $300 million."
Who exactly would end up paying what in the end, though, is less clear. The original proposal back in January was for the state to buy the stadium for $1, then sell bonds to pay for a major renovation. Now, it sounds as if the IFA would instead sell bonds to pay for the purchase itself, with the Cubs paying rent that would cover the bond costs.
So if the state gets a ballpark, and the Cubs pay off the purchase price themselves, who gets hurt? Federal taxpayers, mostly. The Cubs are expecting to save $100 million in capital gains taxes on the deal, plus maybe $50 million in (mostly federal) tax savings by having the state issue tax-exempt bonds, plus another $50 million by no longer having to pay property tax. At that point, they might not even care about a renovation - especially since schmancy new stadium accoutrements aren't exactly raking in the dough right now.
The Tribune further reports that the governor could pull off this deal without going through the state legislature, which could make things interesting. Now all they need is a governor.
December 10, 2008
Between the Blagojevich-Wrigley Field story and the latest Yankees and Mets tax-free bond demands, I'm having a busy couple of days on the radio. If you missed me on Seattle's KOMO or Culture Shocks with Barry Lynn yesterday, you can catch me today at 12:40 pm Central time on WCCO in Minneapolis, or tomorrow morning at 6:45 am Eastern time on New York's WBAI. The Barry Lynn appearance is also archived here.
December 09, 2008
Illinois gov sought to trade stadium aid for editorial spin
In case you somehow haven't heard, Illinois Gov. Rod Blagojevich has been arrested and charged with a bunch of mean, nasty, ugly things, including trying to sell Barack Obama's former U.S. Senate seat in exchange for high-paid jobs for himself and his wife. It's another item of Blagojevich's rap sheet that makes this newsworthy here, though: The governor is reported to have threatened to withhold his support for the Tribune Corp.'s proposal to sell Wrigley Field to the state unless the Chicago Tribune fired members of its editorial board that had been critical of the governor; according to one report, Blagojevich's actual words to his chief of staff were: "our recommendation is fire all those [expletive] people, get 'em the [expletive] out of there and get us some editorial support."
The Wrigley sale, you'll recall, would have cost local governments as much as $50 million in lost property taxes, plus perhaps $80 million in subsidies for tax-exempt bonds, most of which would have come out of the federal treasury. A November phone call intercepted by investigators now reveals that chief of staff John Harris told the governor the Cubs would be looking to save $100 million in capital gains tax as well, bringing the total public cost to in excess of $200 million.
Though you have to hand it to Blagojevich in one way: At least, unlike most governors, he asked for something in exchange for a stadium deal.
Yanks, Mets request new tax-free bonds
"As Stadiums' Costs Rise, City Agrees to New Bond Offerings" is the headline in today's New York Times, but that actually confuses two different pieces of news in the accompanying story.
- First off, the teams have finally made their official request for those long-rumored additional tax-free bonds. The totals: $259 million for the New York Yankees, $83 million for the Mets. (The Yanks are also asking for an extra $111 million in taxable bonds.) The AP reports that the new bonds are expected to cost the city $16 million for the Yankees, but nothing for the Mets "because that financing was already figured into the plan approved in 2006 as a 'contingency'." Presumably those figures are from the city's official filing, because they sure don't match the numbers I got previously from the city Independent Budget Office ($16 million actually sounds high for the city cost, though way low when you include loss of state and federal tax revenues); I'll have more here once I find out where these figures come from.
- The city has released new figures for estimated costs of new parks to replace those eliminated for the Yanks' new stadium, though it's hard to tell exactly how much if any they've gone up: The Times says $194.7 million for new parkland, $39 million towards a new Metro-North station, $32.3 million for "infrastructure and street work," and "a $10.4 million increase in the cost of street lighting, as well as increased design, engineering and construction-management costs" (no new total provided); back in June, the city gave me figures of $177 million for parkland , $34.5 for infrastructure/street, $39 million for Metro-North, and $30.4 million for "soft costs," so it's somewhat apples-to-oranges here. Again, more information as it becomes available.
December 08, 2008
Gwinnett County, GA, is considering eliminating emergency medical services and slashing staffing to deal with a deficit of between $35 and $43 million - a figure, notes the Sabernomics blog, very similar to what the county is spending on a new minor-league stadium for the Atlanta Braves' AAA team. That's not entirely fair - the stadium is a one-shot deal, the other budget items are recurring expenses - but it's still a reminder that sometimes it really is a choice of "schools or stadiums."
Not helping matter is that Gwinnett was counting on getting $500,000 a year from a naming-rights sponsor for the new ballpark, and those are hard to come by these days. (I like "take-no-prisoners economy," by the way - bonus points for you, Atlanta Journal-Constitution.) And it gets worse:
The county projected selling naming rights for $800,000, but a portion of the proceeds would go to the Braves. If the county can’t make a deal by September, the Braves get to sell the rights and keep more of the money.
Can somebody please tell me who started this tradition of having the dumbest guy in the office negotiate the stadium lease?
December 07, 2008
Despite getting a new taxpayer-financed arena in 2003, the Phoenix Coyotes are reportedly set to lose between $25 and $35 million this year, and according to the Globe and Mail, owner Jerry Moyes "could be forced to put it into bankruptcy."
Of course, we've heard team owners cry poverty before; what's interesting here is the report's suggestion that the Coyotes could reduce their red ink by "renegotiating the lease so the club could receive subsidies from the city and more revenue from the arena," as the Nashville Predators did last year. That's right: Just five years after getting a new home, in the middle of a recession, a hockey team could be readying itself to go back to the public for more money. If this works, you have to expect it'll catch on, especially given what looks like a dire near-term economic future.
And speaking of dire, the Arena Football League could be on the verge of folding: Already the last few weeks it's lost one team and its commissioner, and its 2009 schedule and dispersal draft have been delayed without explanation. (Unless you count "The AFL is working on long-term structural improvements" as explanation.) One hopes that any economic impact consultants who included "Can get arena football franchise" as a reason for funding a new arena are feeling a bit foolish right now.
December 03, 2008
A's to consider Warm Springs site?
This is from San Francisco Chronicle rumormongers Matier and Ross, but they've been right before: Oakland A's owner Lew Wolff is reportedly ready to consider relocating his proposed stadium to a site adjacent to the new Warm Springs BART station, scheduled to open in 2014.
That would allay concerns about traffic nightmares on I-880, but would seem to put financing plans back at square one, given that there wouldn't be room for Wolff's planned "ballpark village" that was supposed to help fund stadium construction; I'm also not clear on whether the new site, like the old, is in a redevelopment zone and would be eligible for tax-increment financing. (I'm checking.) In other words, don't be holding your breath for a 2012 opening.
December 02, 2008
Orlando projects face bond troubles
More credit crunch fallout: Orlando has "postponed indefinitely" plans to sell bonds to renovate and build sports and arts facilities, thanks to both soaring interest rates and gloomy forecasts for the tourist taxes being counted on to help pay them off. "Just as our finance team was starting to meet, the financial markets blew up," Orlando CFO Rebecca Sutton told the Orlando Sentinel.
As of now, the $175 million renovation of the Citrus Bowl is planned to start in 2010 with completion the following year, but could be delayed further. Construction of a $425 million performing arts center is supposedly going ahead with short-term debt, in the hopes that the city can refinance later, which sounds suspiciously like what got us in this mess in the first place. Financing for the Magic's new $480 million arena is apparently mostly complete, so that should open as scheduled in 2010 - though the Sentinel reports that "tremors in the financial markets ... caused a four-month delay and a higher-than-expected interest rate," which means the city will end up with higher annual costs.
Though none of this is exactly happy news, there is a silver lining here, which is that if the Citrus Bowl project is scrapped, Orlando will have whatever remains of its hotel taxes left to spend on something more immediately useful than a shinier football stadium. Unless, of course, it blows it all trying to refinance that arts center debt.
