January 29, 2009
Congressguys to Citigroup: "Tear Down That Stadium Sign!"
In the wake of President Obama calling Wall Street firms giving their top execs bonuses while demanding government bailouts "the height of irresponsibility," Democratic Rep. Dennis Kucinich and Republican Rep. Ted Poe have teamed up to demand another Wall Street firm cut back its profligate spending. From the press release:
In November 2006, Citigroup announced they had reached an agreement with the New York Mets to name their new stadium Citi Field. According to the terms of the agreement, Citigroup will pay the New York Mets a total of $400 million over 20 years. Citi Field opens for competition at the commencement of the 2009 baseball season.
Since this time, Citigroup's financial position has changed drastically. As you well know, Citigroup received $25 billion from the first installment of the Capital Purchase Program, authorized by Emergency Economic Stabilization Act. Since then Citigroup has received an additional $20 billion from the Targeted Investment Program as well as a federal guarantee on approximately $306 billion of loans and securities. Additionally, in November 2008 Citigroup announced their intention to cut more than 50,000 jobs from their workforce.
Citigroup is now dependent on the support of the federal government for its survival as an institution. As such, we do not believe Citigroup ought to spend $400 million to name a stadium at the same time that they accept over $350 billion in taxpayer support and guarantees.
We request that you intervene and demand that Citigroup dissolve the agreement they have with the New York Mets. Absent this outcome, we feel strongly that you should compel Citigroup to return immediately all federal monies received to date, as well as cancel all loan guarantees.
The odds on this actually happening are pretty slim - if Citigroup tried to cancel its Mets naming rights deal, Mets owners Fred and Jeff Wilpon would almost certainly sue, "good of the nation" or no. But it certainly makes things more interesting, especially given all the recent speculation on the Wilpons' Madoff-related financial woes.
Colts stadium losing even more money
Remember how the public's costs of operating the Indianapolis Colts' Lucas Oil Stadium were running $10 million a year over initial projections? Well, now it's $20 million. Or maybe $35 million.
"I'm hoping it's a first-year cost and ... not an ongoing type of cost," state senator Luke Kenley told TheIndyChannel.
Kenley probably shouldn't read today's Bond Buyer, then, which mentions: "Part of the problem is the possibility of $15 million in increased costs for the Conesco (sic) Fieldhouse as the National Basketball Association's Pacers renegotiate their lease this year." The Pacers' lease gives them the right to renegotiate after this year; why the city is already anticipating giving them a $15 million a year rent break is beyond me. Even if they are losing money, what are they going to do, move to Kansas City?
If you build it, will they win?
I should probably make a big spreadsheet and run correlations to respond to this, but I'll leave that to someone else with more free time today.
I did, however, do a study for Baseball Between the Numbers that looked at MLB team performance before/after moving into a new stadium, in which I concluded that a new ballpark is worth, on average, 5.5 wins a year to a ballclub. I further noted: "a $500 million stadium is an awfully expensive way to pick up five and a half games in the standings." Unless, of course, somebody else is paying for it - as is the case with the Arizona Cardinals.
Louisiana sues Merrill over Superdome bonds
If you've been wondering what's up with the auction-rate bond crisis, it's still ongoing. In the latest move, Louisiana's stadium authority has sued Merrill Lynch over the bonds it issued to refinance the Superdome, arguing that Merrill was artificially inflating the market for such bonds, and when the market later collapsed, the state was left with millions of dollars a year in added interest payments. They'll have to get in line.
Rethinking Nets arena, watching Mets and Yanks demolition
Busy news day, so all the New York stadium/arena news today needs to share an item:
- George Sweeting of the New York City Independent Budget Office told a Brooklyn Chamber of Commerce meeting this week that the city should "take another look" at its subsidies of the Nets' proposed Atlantic Yards project, noting: "If amenities are scaled back and the overall scale of the project is reduced, it's reasonable to stop and look at whether the city's contributions and the MTA land deal still show a positive in the cost-benefit calculation. ... A lot has changed since 2005, when we found that the arena was basically a break-even proposition." Yeah, no kidding.
- While everyone's been focused on how much it's costing to tear down Yankee Stadium, Shea Stadium is almost gone already. Though for anyone who grew up a Met fan, this is a lot more heart-wrenching.
- Speaking of the escalating Yanks costs, the New York Times ran an article yesterday on the previously reported cost overruns and delays for replacement parks, which was accurate as far as it went. Only one problem: The photo that ran with it was captioned, "The new Macombs Dam Park, atop a parking garage, will have more than seven acres for sports, strolling and other recreation." Unfortunately, the photo isn't of the new Macombs Dam Park, but rather of the smaller, temporary one that's been in place since 2007. The new one actually looks like this right now - which is precisely what Bronx residents are complaining about.
January 27, 2009
Marlins tweak stadium plan, release sketches
Mark your calendars: The Florida Marlins stadium votes that were postponed last week have been rescheduled for Friday, Feb. 13. Miami-Dade County Manager George Burgess also revealed what he called concessions by the Marlins to make the agreement tastier for the public. To wit:
- If team owner Jeffrey Loria sells the team within seven years, the county "would almost double its share of any profits." Analysis: This seems to actually mean that the county would get an increased cut of profits from a sale of the team. Given how clever corporations are at hiding profits, though, I wouldn't hold my breath waiting for a windfall.
- The team's rent of $2.3 million a year will now go up by 2 percent each year. Analysis: This sounds trivial, but thanks to the magic of compound interest, could actually be worth close to $8 million in present value over time. So, no great shakes, but not chicken feed, either.
- Cost overruns thanks to scheduling problems or conflicts with contractors will now be paid for by the team, not the public. Analysis: Nice, but again, I trust the Marlins can figure out how to push any overruns into other columns on the cost spreadsheet - say, "infrastructure," which the county and city are still on the hook for.
In related news - you know it wasn't a coincidence - the Marlins released new renderings of their proposed $455 million stadium, which make it look a bit like Houston's Minute Maid Park, and a bit like... a Palm Pilot with a sliding cover? Bagel slicer? Futuristic bidet? FoS readers, I leave it to you to finish the joke.
Yanks parks overruns due to, um, overruns
The New York City Independent Budget Office has a new report out detailing the costs of replacing the Bronx parks destroyed for the Yankees' new stadium. The Crain's story describes the findings this way:
The cost of replacing more than 22 acres of South Bronx parkland displaced by the new Yankee Stadium has skyrocketed 67% to nearly $195 million, according to a new report by the Independent Budget Office.
That's not news, though - you could have read it here or in the Village Voice last March. The point of the IBO report, rather, is to figure out why costs have skyrocketed. In the IBO's summary:
The factors driving the remaining $16.3 million cost increase are not yet clear because there are portions of the project still out for bids.
- Revised designs of some of the original projects as well as the addition of some new projects that the Bloomberg administration has put under the umbrella of the stadium agreement have added $30.0 million to the cost.
- Unanticipated clean-up of hazardous waste materials and environmental remediation accounted for $7.6 million of the increase, and additional site work and safety increased costs by $10.9 million.
- Construction inflation beyond that assumed by the city accounted for $7.6 million of the increase, while delays in construction added $6.2 million.
In other words, it cost more because, well, it cost more, for all the reasons things end up costing more. The IBO report doesn't address the more interesting question, which is whether the city should have known that its initial estimate was less than two-thirds what it should have been - and if so, if it intentionally lowballed costs to get the deal approved.
There's also a really confusing chart in the IBO report that makes it look like the city is replacing 22 acres of lost parkland with 32 acres of new parks; that figure, however, includes 3 acres of "upgraded" parkland that was already a public park. This should be too trivial to interest anyone, but given how controversial this acreage issue has been, I figured it was worth mentioning.
January 26, 2009
Special to the Times: Rehashed fluff
Yesterday's Seattle Times re-ran a New York Times article on how the Oklahoma City Thunder (formerly the Seattle Sonics) are contributing to their new hometown. "Despite dismal record, the Thunder is contributing to city's booming town status," runs the Seattle paper's headline. And how are they contributing exactly?
Well, we learn that the transfer of the Sonics has been "an unqualified success," that it helps make OKC more attractive to employers because people think, "If I take this job, I get to live in Oklahoma City!", that there's "a big-time excitement here," and that the team's arrival sends "a coast-to-coast signal that this city is primed for the limelight."
The voices behind these sentiments belong to, respectively: NBA commissioner David Stern, OKC Mayor Mick Cornett, Thunder player Desmond Mason, and Times NBA reporter Jonathan Abrams. Also interviewed by the Times: Thunder GM Sam Presti. And that's it - not a single independent economist or urban planner, let alone an actual critic of the Hornets' move.
A more honest headline would have been "Advocates of Sonics Move Say It's Working Out Great For Oklahoma City" - but that's apparently too much honesty for either coast's Times.
January 22, 2009
Both Industry residents vote for NFL stadium funding
Voters in the City of Industry, California, approved the sale of $500 million in bonds on Tuesday for infrastructure to support a new NFL stadium, as well as "retail and office space" and all the other stuff you throw in when you want to convince people your project is "not just a stadium." The preliminary vote count: 60 in favor, 1 opposed.
Yeah, you read that right: Industry is so named because it's almost entirely industrial property, with only 777 residents, most of whom, apparently, can't be bothered to register to vote. Ed Roski, the billionaire behind the football stadium project, has his Majestic Realty headquartered there, a stone's throw from the mall where they filmed the mall scenes for "Back to the Future."
The bonds will, according to press reports, be paid back by property taxes, and I admit I'm not entirely clear how this will work. Last April, the state legislature killed a proposal to divert county property taxes to the city last April for the project; it looks like the city will instead pass its own property-tax surcharge, but in a city with so few residents, it's trickier to determine exactly who will end up paying for this. If anyone out there has a firm grasp on California tax law, please write in.
In any case, the main thing standing in the way of the stadium project now is that Roski doesn't have a team to play in it. And the lawsuit neighboring towns have threatened over traffic concerns. And a few other things.
Another delay for Marlins stadium vote
The city of Miami and Miami-Dade County have put off their vote on final approval of a $515 million stadium for the Florida Marlins, originally scheduled for today, until next month. While AP blames the holiday season and pols' busy schedules around the Presidential inauguration, the Miami Herald smells something (sorry) fishier:
County Commission Chairman Dennis Moss said he won't place a ballpark item on the agenda unless his colleagues have two weeks for a review -- a contrast to the earlier, quick votes that created the funding mechanism for a host of projects that included the stadium.
Critics complained those votes allowed little time for debate. Moss, the recently appointed chair, said he wants to avoid such complaints in considering a special meeting in mid-February.
As of Monday, county and city commissioners had not seen details of the five contracts still to be finalized, though sources said the paperwork was nearly done.
Better late than never, I suppose. The Herald also reveals that the measure requires a two-thirds "supermajority" vote for approval, as the Marlins hired their contractors without going through a public bid process.
Chiefs unveil extra stadium doohickeys
If you were wondering what the Kansas City Chiefs are doing with the extra $25 million in state tax credits they got last month, wonder no more:
The improvements to be completed by August 2010 include:
-$15.5 million to expand the scope of Arrowhead's upper deck, widening it far beyond originally planned with additional concession stands and more public gathering places.
-$4.77 million to increase from eight to 18 the number of elevators for people with disabilities.
-$4.19 million to expand the Hall of Honor.
The other common-area improvements presented Tuesday included $6.2 million for parking lot and road repairs; $7.3 million in concrete coatings; and nearly $400,000 to improve drainage on ramps.
Spain described the expenses as unanticipated ones discovered after the original scope of the project had been set.
Not sure how you "discover" the need for more concession stands, but there you go. The Chiefs will be kicking in $50 million of their own money toward the new expenses, so when Missouri taxpayers admire the new concrete coatings at Arrowhead Stadium, they can rest easy that only one-third of it is made up of their money.
Tiger Stadium preservation clears another hurdle
The plan to save what's left of Tiger Stadium and use it as a baseball museum and youth baseball field took another step forward this week, as the Detroit Economic Development Corp. certified the Old Tiger Stadium Conservancy's financial plan for the project. The projected budget is now $27 million, which could include a $4 million federal earmark from Sen. Carl Levin, as well as up to $11 million in state and federal historic preservation tax credits; as for the rest, according to AP:
Additional funding for the project and predevelopment costs such as architects' fees could come from individual donations, foundation support, loans, other state and federal tax credits and possibly a slice of President Barack Obama's proposed stimulus package, according to [Conservancy secretary Gary] Gillette.
I guess there's worse ways of spending stimulus money.
January 19, 2009
Newsday writer: I love the smell of move threats in the morning
I don't even know what to say about this:
Good for the Islanders for finally standing up for themselves and taking a public stand... At a time when NHL commissioner Gary Bettman had no problem playing the role of the bad guy, urging the Town of Hempstead to move this along, owner Charles Wang sat on the sideline, remaining quiet.
Some praised him for refusing to play the game of public threats, of refusing to scare Islanders fans by threatening to move, but at the same time there's something to be said about saying enough is enough. We all know the Islanders have no future here if something isn't done about Nassau Coliseum. So remaining quiet while nothing was happening with his submitted plans could only last for so long.
That's Newsday sports columnist Jim Baumbach, weighing in on how the Islanders scheduling an exhibition game in Kansas City to get everyone freaked that the team will move there is refreshingly direct. You'd almost think he worked for an NHL owner - oh, wait....
A's: Warm Springs, here we come, maybe
It's official, more or less: Now that their original proposed stadium site in Fremont has bit the dust, the Oakland A's owners are refocusing their efforts on a site next to the Warm Springs BART station that is set to open in Fremont in 2014 ("funding permitting," notes the BART website). A's co-owner Keith Wolff went so far as to say the Warm Springs site is "most likely" the preferred site for now, which in the stadium biz is practically like moving in with all your furniture.
Warm Springs would mean getting away from the traffic worries that have bedeviled the original site (the final straw for that plan, in fact, was when the developer of a neighboring plot complained about the likely traffic nightmare), but would present new problems. Reports the San Jose Mercury News:
But that location, just west of Interstate 680 near the intersection of Osgood Road and Grimmer Boulevard, presents its own hurdles. Many Warm Springs residents oppose the site, fearing the ballpark will cause gridlock and noise.
The team doesn't own any land near the BART site and would have to purchase several lots on which to build the stadium.
Not to mention the fact that the Wolffs would be back to the drawing board for financing, especially since the Warm Springs site apparently wouldn't be eligible for tax-increment financing (i.e., kicking back property taxes to pay for construction) as the old one would have. The Merc News speculates that Warm Springs may just be a stopgap while the A's owners work out a deal in San Jose, but that'd require not just paying for a stadium but also paying off the San Francisco Giants for their territorial rights, which is going to be tough to afford just by selling more Jack Cust t-shirts to Google employees.
For now, the A's will be submitting a revised development application to the city of Fremont, which means going back to the drawing board both with an environmental impact analysis and with public hearings. "By volume, it's a lot of people," Fremont Mayor Bob Wasserman told the Merc News of local opposition. I really hope he meant that they're loud, and not the alternative.
January 16, 2009
Islanders next contestant on "Who's Threatening to Move to K.C.?"
It's now been almost five years since Kansas City announced plans to build a hockey arena without an actual hockey team to play in it. As I wrote at the time:
That sound you just heard was the ka-ching! of cash registers in the souls of NHL owners, smelling a move threat to wave in the faces of local elected officials come August.
The Pittsburgh Penguins already cashed in on that threat, and now it looks like it's the New York Islanders' turn. From TSN:
The Islanders have agreed in principle with the Los Angeles Kings to play an exhibition game in Kansas City in September.
This may not seem like that big of a deal in light of the fact other NHL teams have used Kansas City in recent years as a neutral cite for preseason games.
However, according to league sources this game could be perceived as a veiled threat of potential relocation if plans for a new arena on Long Island aren't soon finalized.
According to "league sources," huh? You mean the same league that has a vested interest in getting teams' hometowns to build them new arenas, by dropping hints that the team will move without one, if necessary? The same league whose commissioner, Gary Bettman, said on the radio Thursday of the Islanders' home, Nassau Coliseum, "That building has to be replaced. And if I were [Isles owner] Charles Wang, I wouldn't sign an extension on that building for a new lease under any circumstances"?
But I'm sure that's all just a coincidence.
Just got word that the New York Yankees' and Mets' $342 million in new tax-free bonds (plus around $30 million in additional tax exemptions) have been approved by the city Industrial Development Agency board. Comptroller William Thompson, as promised, voted against the Yankees bonds; Queens Borough President Helen Marshall's representative abstained on the Yankees portion; and the Mets portion was approved unanimously by the 15-member board.
The $1.8 billion total subsidy figure, then, stands. Unless the Yankees decide they need even fancier bathrooms.
UPDATE: Allison Lack of Good Jobs New York sends word that representatives of the Yankees and Mets were both given time to speak at today's board meeting, even though the time for testimony was supposed to be yesterday's public hearing. Writes Lack: "At all the IDA board meetings Good Jobs New York has attended over the years, never before have we seen project applicants speak in favor of their projects during these meetings."
County to Bengals: How about a bailout for us?
Now here's a pleasant change of pace: Hamilton County Commission President David Pepper says he's considering asking the NFL or the Cincinnati Bengals for a bailout on the team's lease at Paul Brown Stadium, which is set to start costing the county millions of dollars a year in coming years. "It may be a Don Quixote mission, but it's worth raising," Pepper told the Cincinnati Enquirer.
Pleasant, that is, until you read why Pepper needs the bailout: According to the Bengals' lease at the nine-year-old, publicly bought-and-paid-for stadium, the team stops paying rent to the county this year. Starting in 2018, the county pays the team for "any and all expenses of any nature whatsoever incurred by the Team relating to the Stadium Complex." (This is the same lease clause that requires the public to pay for any stadium upgrades that half of other NFL teams have, including but not limited to "holographic replay systems.")
Bengals owner Mike Brown says the lease was front-loaded at the county's request: "We're paying no rent now because we already paid the rent." Though given that the Bengals only agreed to pay $11.7 million total over nine years for use of a $455 million stadium - and still haven't paid some of what the county says they owe - it's hard to argue that the team couldn't afford to cough up a bit more to bail out the local school system.
January 15, 2009
NY Times: Okay, now the Yanks stadium sucks
It's official: Hating on the New York Yankees stadium deal after the fact is the new black. The New York Times - which called the Yanks and Mets deals "a steal" compared to past city proposals back in 2005 - today calls on its editorial page for the latest round of Yankees bonds to be rejected:
Seats for $1,500 a game? Suites fit for the royal family? A scoreboard fit for the Big Board? A fabulous steakhouse and granite ramps (no ordinary cement for this crowd)? This $1 billion-plus pavilion and park financed with a lot of taxpayer help is beginning to sound like something fit for the Wizard of Oz.
To pay for many of these add-ons, the Yankees now want - surprise! - more help from the city. They have asked the Industrial Development Agency for an additional $400 million in tax-free financing to finish the project. Unless the city's leaders show some courage, the agency is expected to rubber-stamp that request by the end of the week, after a pro forma hearing on Thursday.
Mayor Michael Bloomberg and the development agency should renegotiate this latest round of what has always been an incredibly generous deal for one of the richest teams in the country. At a very minimum, they should insist that the Yankees pick up more of the city's share of the project, which now amounts to $362 million.
The Times is silent on the Mets, who according to the latest estimates from the IBO are set to be getting $371 million in public subsidies of their own, and that's without counting their $252 million property-tax exemption. Lucky for them they stayed under the radar by not signing C.C. Sabathia.
The city Industrial Development Agency, meanwhile, held its first and only public hearing before a scheduled vote tomorrow on $453 million in new tax-free bonds (and tens of millions in tax breaks - the IDA hasn't revealed exactly how much) for the two teams. You can read my report from the hearing on the Village Voice website.
January 14, 2009
NYC baseball stadium subsidies: Do I hear $1.8B?
Following today's release of the latest stadium subsidy estimates from the New York City Independent Budget Office, I've updated my Yankees and Mets stadium cost spreadsheet to update, at the end of the day, who's paying for what. New features include a shift to 2009 present value, and, for the first time, itemized sources for all the data listed therein. There will likely be further updates to this chart - a couple of items aren't converted to 2009 dollars, for example - but the big picture is starting to come into focus.
Note that these figures do include the teams' complete exemption from property taxes as a cost to the city (and benefit to the teams), a matter of huge controversy at today's hearing. (After the IBO counted the property-tax break in the "team savings" column but not the "city costs" column, Deputy Mayor Robert Lieber shot off an e-mail to reporters that this "shows that the allegation that the City is forgoing hundreds of millions of dollars in property tax revenue as a result of the deal is utter fiction.") The logic here is that if not for a complex sub-leasing deal for the land under their new stadiums, the Mets and Yankees would normally be required to start paying property taxes after about 20 years in their new homes, so being given a pass on that is effectively the same as the city stuffing wads of future benjamins into their waistbands.
With no further ado, some of the highlights of the revised charts:
- The Yankees' new stadium is now the most expensive ever even imagined, coming in at a staggering $2.3 billion. That includes its attendant parking garages and replacement parkland, but even the stadium construction budget alone is incredible, now standing at $1.56 billion.
- Of that, the public - city, state, and federal taxpayers - are now covering just shy of $1.2 billion, by far the largest stadium subsidy ever. In fact, even discounting the $417 million in property-tax breaks (if you're inclined to agree with Lieber), it's still the largest stadium subsidy ever. The Yankees, meanwhile, would be on the hook for just $670 million, after counting property-tax breaks.
- The Mets project is comparatively thrifty: a mere $830 million, though even that shatters the old record for priciest baseball park. Because it's cheaper, though, and the Mets demanded many of the same tax breaks as the Yankees, the team's total cost at the end of the day is astonishingly low: just $135 million, thanks to a panoply of givebacks that include property-tax breaks, parking-fee rebates, and revenue-sharing deductions courtesy of MLB. The rest is paid predominantly by - you guessed it - you the taxpayer, providing you're a taxpayer somewhere in the U.S. of A.
- Add 'em together and what do you got? Taxpayers will be paying $1.8 billion toward the new stadiums, while the teams will combine for just $805 million in costs. But it's not like the teams could afford to pay more or anything.
All this, of course, is assuming the city's Industrial Development Agency votes on Friday to approve $453 million in new bonds for the two stadiums. If the unthinkable happens and the IDA votes no, look for yet another revised chart over the weekend.
Yanks stadium cost passes $2B, subsidies near $1b
Today's New York state assembly hearing on the Yankees and Mets stadium projects can best be summed up like this: City economic chief Seth Pinsky complained about hearing chair Richard Brodsky calling the city's procedures "Soviet-style," then later quoted Edward R. Murrow to implicitly compare Brodsky to Joe McCarthy; and Brodsky, in his closing statements, offered to take on both Pinsky and Yanks president Randy Levine in a fistfight. Not, in other words, one of democracy's finest moments.
The real story, in any case, came after Levine, Pinsky, and almost everyone else had gone home: Economist George Sweeting of the Independent Budget Office presented new detailed estimates of how much the new stadiums are costing taxpayers in subsidies, and how much the teams are benefiting. I'll be updating my stadium cost spreadsheet with the new numbers shortly, but in the meantime, some highlights: The total cost of the Yanks' new stadium is now well north of $2 billion, with taxpayers picking up $854.7 million of that tab; for the Mets, the cost to the public is now a mere $371.5 million. And that's without even counting the fact that neither team will pay property taxes, ever, thanks to a nifty tax dodge involving public authorities and 99-year subleases.
For more, see my two-part recap on the Village Voice website here and here.
January 13, 2009
Levine, Pinsky to show up to Yanks hearing at gunpoint
New York state assemblymember Richard Brodsky, who you may remember from past fireworks-laden public hearings, has guaranteed that his hastily called hearing tomorrow on the Yankees and Mets stadium financing will have plenty of sturm und drang, by subpoenaing city development chief Seth Pinsky and Yankees president Randy Levine to force their attendance. One can only hope that Levine's testimony will consist of standing on his chair, pointing at Brodsky, and shouting, "Liar, liar, pants on fire!"
Also today, city comptroller William Thompson, who's challenging Michael Bloomberg in this year's mayoral race (Brodsky, for his part, may be preparing a run for attorney general), has called for Thursday's hearing on the stadium bonds to be postponed so that the city can negotiate a better deal: "Incredibly, the Yankees are asking for more money and the city is giving it to them without asking for anything in return." Thompson has one vote on the 15-member IDA board.
I'll be in attendance at both hearings, and will report back here as soon as I get a free moment and an Internet connection. If you don't see any news from me here, you can always check the Village Voice blog to see if I've posted there.
Sports bailout: The drumbeat continues
More on difficulties teams are having financing stadiums amid the economic collapse, and their hopes for the government to ride to their rescue. From Sports Business Journal:
The sullen economy and tight credit markets have made it difficult for teams and municipalities to borrow money to fund projects, which in effect has everybody in the facilities industry searching for answers....
"The problem is if you're not credit-worthy or have creative financing, you won't get a project underwritten today," said Chris Dunlavey, a Washington, D.C.-based consultant. "Private packaging sustained by revenues of a project are being completely disregarded these days."
And then, inevitably, we arrive at the calls for the cavalry to come to the rescue, from a familiar source:
Teams and facility developers acknowledge that sports takes a back seat to the dramatic fallout in other business sectors. However, they are encouraged with President-elect Barack Obama's push for public infrastructure improvements across the country, developments they feel could create momentum for their own projects.
"The bond markets drying up is not a baseball issue but a nation issue," said David Samson, president of the Florida Marlins, a team that spent the past 10 years trying to get a deal done before getting the green light to start building a new ballpark this year. "We don't view that as a risk. If that happens, the Marlins will be the last thing on anybody's mind."
That makes about as much sense as most things Samson has said, but it's still worrisome that the meme of a sports bailout seems to be picking up speed.
The Phoenix Coyotes, meanwhile, are apparently still trying to recoup the $2.70-a-ticket surcharge that is the only revenue the city of Glendale gets in exchange for putting up $180 million of the $220 million cost of the team's arena. (Rent? A share of arena revenues? Get real!) With the Coyotes leveraged up to their ears in debt, though, and hockey commentators openly talking about the team folding, they may actually get a hearing for throwing good public money after bad.
The New York Times hockey blog has a good rundown of the Coyotes mess, which unfortunately goes awry at the end in trying to argue that NHL teams have moved to the U.S. in increasing numbers not because of the league's desire to expand into the Sun Belt, but because they "outgrew" their original hometowns, and were beset by rising player salaries:
To cover those escalating salaries, owners needed new revenue. Since hockey was an arena-based gate-receipts business - as it always has been and continues to be - the owners found that they needed more seats, more amenities, more luxury boxes and, yes, even better parking revenue. Many owners got those things. Not all did.
Norman Green, the North Stars owner, issued the ultimatum and was the first to make good on it, in 1993. Unable to coerce a new deal out of the Twin Cities (and with his local mall business failing and facing a sexual harassment suit in the Minnesota courts), he packed up his team and headed to Dallas. Other teams followed, each with their own local twists, turns and absurdities.
In the case of the Jets/Coyotes, there was political wrangling galore and ever-shifting demands from the Jets owners, led by Winnipegger Barry Shenkarow. The public, some politicians and some in the business community exhausted all avenues to save the Jets. But the civic and commercial forces in Winnipeg could not make it work, and perhaps Shenkarow would never have relented anyway.
The problem with this argument is that even with "more seats, more amenities, more luxury boxes," most new arenas wouldn't have made money overall - if not for government subsidies so that the teams could reap the benefits of those new amenities without worrying their little heads about construction debt. The NHL's shift southward, then, has less to do with greedy players or with Sun Belt colonialism than with the fact that unlike Canada, U.S. cities were willing and ready to build lavish new facilities with public money. For no compensation beyond a piddly $2.70 per ticket.
January 12, 2009
Yanks bond request includes $11m tax break
This seems to have slipped past everyone, or at least me, at the time: Last Tuesday's paperwork on the New York Yankees and Mets tax-free bond requests includes word that the city will also be voting this week on exempting the teams' new stadium costs from mortgage recording and construction sales taxes, as their initial costs were. Estimated cost of the Yanks' new tax breaks to city taxpayers, according to information provided to me by the city Industrial Development Agency: $6 million for the mortgage tax break, $5.1 million for the sales-tax break. (I haven't gotten Mets figures yet from IDA, but they'd presumably be proportionately smaller.) The IDA also estimates $5.2 million in lost city income taxes as a result of the tax-free bonds, which is actually higher than the estimate the Independent Budget Office gave me.
The IDA still says the city would make money on the deal, thanks to what it says would be $7.1 million in tax benefits from new Yankees construction, plus an $11.5 million "capital contribution" that the Yanks have agreed to make to the city parks department. (Which sounds suspiciously like a kickback of the $60 million or so the team would be getting in federal bond subsidies, but that's another story.) I'm still waiting to hear back from the IDA, though, on how much of these benefits wouldn't materialize if the bonds aren't approved, especially considering that construction work on the new stadium is almost complete.
More on this in my column in today's Metro. I'm also going to work on getting an updated stadium cost spreadsheet up in the next day or two.
January 10, 2009
Niners to consider Raiders stadium share?
The San Francisco 49ers on Friday acknowledged that the battered economy likely will slow down their plans to build a new stadium in Santa Clara and now has them willing to discuss a once unthinkable option - sharing a new home with their cross-bay rival, the Raiders.
This isn't the first time the notion of a shared 49ers-Raiders stadium - who knows where - has been floated, but it is the first time the 49ers have publicly said they'd consider it, albeit only if they keep getting nowhere with their own Santa Clara plans. If the teams do end up sharing digs, it could provide another option for the similarly stadium-stymied Oakland A's: Stay put at the Oakland Coliseum and tear down the Raiders-inspired "Mount Davis," which most Bay Areans seem to agree is the only thing that ruined the place for baseball.
January 09, 2009
A's-to-Fremont growing more of a longshot
The Contra Costa Times reports that the Oakland A's talks with ProLogis, owner of their proposed stadium site in Fremont, are going nowhere, with Fremont Mayor Bob Wasserman saying the two sides are so far apart that there's no point in further talks at the moment. (The A's have a deal with Cisco Systems, which holds a lease on the land, but ProLogis last month declared its opposition to the plan, which would effectively block it.) That'd leave the site by the Warm Springs BART station, but Wasserman didn't sound too optimistic there, either:
Wasserman acknowledged that the Warm Springs option had the twin problems of a brand new environmental review and "an upset community, to say the least." Also, the team doesn't own any land there.
Asked to give the odds that the A's would still come to Fremont, Wasserman would only say, "Probably lower than they were."
Add in that the Warm Springs site is not in a redevelopment zone and so would not be eligible for tax-increment financing (kicking back new tax revenues to help pay for construction costs), according to what Jennifer Lin of the East Bay Alliance for a Sustainable Economy tells FoS, and I think we can classify the A's stadium plans as "back to the drawing board."
Royals give fans more bars, TVs
The Kansas City Star takes a look at the renovations to the Royals' Kauffman Stadium underway for the coming season - funded, don't forget, with public sales-tax money - and finds bars, lots of bars. For those who don't find getting sozzled to sufficiently improve their experience of Royals games, there's also a five-hole miniature golf course, and lots of fancy new hardware:
Essentially, you might expect a more full experience - more ribbon boards, an additional board for out-of-town scores, and the ability to walk fully around the field both inside and out of the stadium. If that doesn't help, more than 500 high-definition TVs might.
What, no Playstation 3 consoles? That Kauffman Stadium is outmoded already.
Brooklyn arena: Get cheaper, or get lost
New Jersey Nets owner Bruce Ratner has hired consultants to do "value engineering" on his Brooklyn arena plan, according to the New York Daily News, in a last-ditch effort to save the stalled project. "[Ratner] has to go out and get $1 billion in funding [for the arena]," the News quotes "a source" (that's all it says) as saying. "That's probably not going to happen. It can't be built if that's the price tag."
Ratner actually has a couple of things in his favor in getting the price down: Labor's going to get cheaper in this economy (though less so in a union town like New York), and so will raw materials, as there isn't likely to be a lot of competition for structural steel anytime soon. On the other hand, he's going to have a hard time finding a bank to lend him even half a billion dollars without putting up a kidney or two as collateral. So while the battle of Brooklyn that began five years ago is by no means over, Freddy's can probably allow itself to breathe a little easier tonight.
January 07, 2009
NYC relinquishes suite, issues stadium finance tome
After getting slammed for trading parking and ad revenue at the New York Yankees' new stadium for a luxury suite for city officials, New York Mayor Michael Bloomberg yesterday announced he'd be trading back. No, the city won't get its 250 parking spaces back, but it will get whatever cash the Yanks make from leasing out the suite, less "marketing expenses" - and I'm sure the Yankees will be honest about deducting those.
Meanwhile, in what should have been even bigger news, the city Industrial Development Agency released its paperwork for the $342 million in additional tax-free bonds it will vote on giving the Yanks and Mets next week - except that nowhere in its 116 pages does it actually discuss the costs and benefits of the new bonds, which makes the documents as worthless as the bits they're PDFed on. (Though it's always fun seeing how much the Yankees plan to spend on "bathroom upgrades" to bathrooms that haven't even been built yet.) This should be a fun hearing next Thursday - 10 am, 110 William Street, for anyone in the NYC area who feels like stopping by.
January 06, 2009
The camel's nose, Minnesota edition
Sunday's editorial in the Minneapolis Star Tribune started out so promisingly, noting that with the state facing a $4.85 billion budget deficit over the next two years, "It's hard to restrain a 'You gotta be kidding me' upon hearing that the Minnesota Vikings plan to renew their push this year for a new stadium."
Then you get to the second paragraph:
And yet there is another reality that has to be acknowledged. The Vikings are a valued part of Minnesota life, a recreational opportunity enjoyed not just by those with tickets but by millions around the state, as Nielsen TV ratings and sports bar receipts consistently indicate. At the end of today's playoff game with the Philadelphia Eagles, they will have just 30 regularly scheduled games left to play in the Metrodome. The team's lease is up in 2011. Its value is ranked dead last among all National Football League teams. Revenue-sharing is prompting tough questions from league officials. Concerns about the team leaving are not overblown. It's time to get serious about preventing their departure.
There are a bunch of arguments there, all mashed together into an unappetizing casserole: People love the Vikings. Yes, but presumably they also love schools, and highway bridges, and other things that their tax money could pay for. Sports fans spend at sports bars. Sure, but they'll do that whether they're watching the Vikings or whatever else in on TV on Sunday afternoons - it's not a net benefit to the state unless they're driving into Minnesota from neighboring states to drink, which, come to think of it, you probably don't want to encourage. The team's lease is up in 2011. It's not like the Metrodome is going to evict them, and it's not like the Vikings couldn't buy out three years of a lease if they had a better offer elsewhere, so this is a phony deadline. The Vikings aren't worth much. And this is the taxpayers' problem how, exactly?
There certainly is a risk of the Vikings leaving Minnesota - in the NFL, as I've often said, you could viably site a team in Kuala Lumpur so long as you got a rich stadium deal and your cut of the national TV revenues. (Though given other recent developments, achieving the first half of that deal might not be as easy as the threat-mongers might assume.) The truly scary part, though, is what comes next:
The Vikings are cannily promoting it as an economic stimulus project, and there's a fair argument to be made for that as the Twins and Gophers stadiums near completion.
The Star Trib goes on to say that "political leadership" is needed to answer "the most critical question about the Vikings project: Who pays for it?" - and then rules out Vikings owner Zygi Wilf from paying more than a third of the costs, because that's what he says he's willing to pay. So we've gone from "You've gotta be kidding me" to "This has to happen, we just need to figure out who to stick with the bill" in the course of three paragraphs. Same old Star Trib.
Chester stadium finance still up in the air?
They've already broken ground for the soccer stadium in Chester, PA, but in this economy, a lot of development projects are ending up just holes in the ground. So it drew attention - okay, attention from the Seattle Post-Intelligencer, for some reason - when Nick Sakiewicz, owner of the as-yet-unnamed Philadelphia expansion MLS team that would play there, said Thursday, "We're not even sure the stadium is going to be built. If the [financial] markets tank next month, then we won't build this thing. We'll be out $15 million and everyone goes home."
Friday, Sakiewicz hurriedly backed away from those comments, telling the Delaware County Daily Times, "The market's fine. We feel that we're in pretty good shape. Every day's a new day, but today we feel pretty good about it." So expect the stadium to go forward, so long as we're not headed into a Second Great Depression or anything. Oh, wait.
Mayor threatens to sue over L.A. stadium
FoS correspondent David Dyte has more on the L.A.-area NFL stadium plans:
Backers of the proposed, still teamless NFL stadium in Industry, California, have a tough nut to crack. Joaquin Lim, the mayor of nearby Walnut (population 30,000) has threatened to sue if Industry (population 777) approves a pro-stadium environmental report later this month. Industry's mayor, David Perez, was due to host Lim at a meeting yesterday to discuss the issue. No word yet on how the talks went.
January 02, 2009
Sometimes there's no satisfaction in being right:
With the state and federal governments looking for ways to jump-start the economy, a New Jersey businessman has an ambitious public works project he says will create more than 5,500 jobs and provide $500 million or more to local contractors.
The businessman is Zygi Wilf, principal owner of the Minnesota Vikings.
The project: A $954 million, state-of-the-art stadium for his football team in downtown Minneapolis -- to be constructed using more than $635 million in public money.
Fortunately, the Minneapolis Star Tribune goes on to report that "two legislative leaders laughed out loud" when asked if they'd consider funding a Vikings stadium this session. Let's just hope Wilf doesn't start talking up a stadium as "shovel-ready."
