October 30, 2009
Ricketts plans Fenway-style reno of Wrigley
Tom Ricketts was sworn in as the new owner of the Chicago Cubs today, and gave a long interview to the Chicago Sun-Times, much of it on the matter of the future of Wrigley Field. The upshot: He plans some renovations, costing "significantly less" than $200 million, but nothing that would dramatically change baseball's second-oldest ballpark as it nears its 100th anniversary in 2014.
Ricketts said he intends to work out "a five- to seven-year plan" for renovations during each offseason, most of it focused on the building's interior and adjacent plots of land, not the seating areas:
I see that bowl staying essentially the way it is. People like that. You're close to the field, good sight lines, it's good. Behind that, in the stadium will be better amenities, and you'll feel more comfortable when you get up to go get food or go to the restroom or anything like that...
We can look at more washrooms, we can look at some of the congestion on the concourses, we can look at a few other things that will make it a little easier for fans in the short run.
And while Ricketts called the current Wrigley skyboxes "Stalin-esque," he said he has no plans to add lots of corporate seating: "One of the nice things about Wrigley, we have great corporate sponsors, but it's not really a corporate place. It's not a corporate experience. It's not like sky boxes are driving the revenue here. And that's just fine with us."
If all this sounds reminiscent of the Boston Red Sox owners' recent renovation of Fenway Park, Ricketts made the connection explicit, saying that "to be able to rehab your stadium and improve it in kind of just the offseason, that's something that we have to strive to emulate. We have to do that.
You can't copy every page of the playbook, but certainly they've done stuff that we would try to emulate."
Ricketts added that he has "no plans" to ask for any taxpayer dollars (though we'll see if he pursues historic preservation tax credits, as the Red Sox did), and made clear that the state takeover plan that helped get Rod Blagojevich in such hot water is dead. And he also let slip some details of what that $400 million "renovation" would have entailed:
The proposal that the state was considering—and we really weren't very much a part of these discussions at all—was to basically keep the marquee and store the scoreboard for a year, and tear everything else down.
Their thought was that they would basically take it down for a year or two and just keep the brick walls, basically keep the shell, and redo the whole inside. In another park or another situation that might be an answer that's useful. But here, I just don't see it. You have all these people who have spent all this time and money over the last 10 or 15 years building new stadiums to look old. Well, why don't we just take our old stadium and fix it up a little bit?
The other thing is I just don't think it would be the right thing to do.
All in all, Ricketts sounds like he's eager to follow John Henry's lead in doing a ballpark renovation that is more preservation and upgrade of the fan experience than an attempt to modernize Wrigley. And hey — if he needs a project manager, you know there's a good one available.
Paulson puts kibosh on Beaverton Beavers
This just in: Portland Beavers owner Merritt "Son of TARPman" Paulson has pulled out of his proposed deal with Beaverton for a minor-league baseball stadium. His explanation: There isn't enough time to get a stadium built there by 2011.
As explanations go, this is pretty unexplanatory: That would have been a tight timetable to get a Beaverton stadium done in any case, and it's not like any other cities are further ahead with their stadium plans. More likely: All the Beaverton city council members hating on the plan, combined with behind-the-scenes talks with other cities, caused Paulson to figure he'd be better off putting his money on another horse, whatever that may be.
Portland City Commissioner Randy Leonard told the Portland Business Journal that the news doesn't threaten Portland's agreement to renovate PGE Park to be soccer-only for Paulson's Timbers. Which is exactly the opposite of what Paulson said two weeks ago, but then this is a guy whose lines in the sand change every other week.
Beaverton stadium deal "a terrible return"
Don Bauder of the San Diego Reader is one of the best writers on stadium issues in the nation, and this week he takes on the Portland Beavers stadium proposal in Beaverton, Oregon. (The Beavers are a San Diego Padres farm club.) He notes that in addition to the $35 million in stadium construction that Beaverton taxpayers would be on the hook for, the city would have to provide parking spaces for fans:
[Councilmember Betty Bode] figures that 1500 spaces would cost around $37.5 million. In claiming the tax bite will be small, proponents are using "phony figures," says Bode.
Rob Drake, who was Beaverton mayor for four terms (1993-2008), says that even if the number of spaces is cut to 750, parking would still come to $20 million.
Drake also wonders what would happen to Beaverton if nearby Portland got a major-league team before the stadium was paid off. Sports economist Roger Noll, meanwhile, rips apart our old friend Economic Research Associates' economic impact report, and says of the Beaverton project: "It's a terrible return — obviously not worth it."
KJ announces Kings committee, arena principles
Apparently not satisfied with the idea of selling quarter-million-dollar PSLs, Sacramento Mayor Kevin Johnson has a new idea for building a new Kings arena: He's convening a task force to solicit ideas for funding an arena. He doesn't know who'll be on the task force yet, but it's apparently based on one that former Sacramento Mayor Joe Serna Jr. formed in 1996 to bring major-league baseball to Sacramento, and since that worked out so well ... oh, wait.
Judging from the text of his speech, Johnson's self-appointed role yesterday seemed to be that of motivational speaker: "Look out those windows. Let yourself dream. You will see there are many options — options everywhere. Let's get after them." But the mayor also set out what he called four "guiding principals" (that's how his blog spells it) for arena negotiations:
Rule Number One: Taxpayer Comes First. The deal must make sense for taxpayers.
Rule Number Two: City Will Not Be Used As Leverage. We won't be a stalking horse for another city.
Rule Number Three: We Will Negotiate On Even Terms. We will have the best lawyers and consultants.
And Rule Number Four: We Must Think In and Out of The Box. Our arena will be an engine for economic development, not just a pretty building.
Well, there's a first time for everything, I suppose. Once the task force issues its findings, be sure to check back here for how well they match up with KJ's scorecard.
NY to sell Nets arena bonds in three weeks, maybe
Reuters reports that New York's state-run Empire State Development Corporation has set the week of November 16 for selling $700 million of construction bonds for a Nets arena in Brooklyn. Read the fine print, though, and it's less certain than that:
"The expectation is that they will be issued," [ESDC CFO Frances Walton] said. This would not be first time that bonds have been issued despite "legal challenges," Walton said.
"We have begun discussions with ratings agencies," she said.
In other words, things are still where they were two weeks ago, with the state and Nets owner Bruce Ratner trying to convince bond rating agencies and insurers that these bonds are safe despite the growing number of lawsuits against it. And as bond expert Michael D.D. White points out on his Noticing New York blog, there's a long list of loose ends that should give pause to bond agencies, and bond buyers.
Meanwhile, Norman Oder at Atlantic Yards Report notes that today is the planned opening day for the Atlantic Yards arena, according to the construction schedule issued in December 2006. Missed it by that much...
Yankee fans only disguised as empty seats
Newsday has solved the mystery of the empty field-level seats at the Yankees' new stadium for World Series games, which had puzzled and enraged bloggers: According to sports business writer Neil Best:
As has been the case throughout the season, empty seats do not necessarily mean unsold ones.
Many fans with prime tickets spend parts of the game inside an adjacent restaurant with a lavish food spread that comes with the steep price of admission.
The fact it was misting much of the night Wednesday and that the Yankees went down meekly against the Phillies' Cliff Lee only encouraged fans to wander and graze.
So people are still buying multi-thousand-dollar seats for World Series games — they're just not sitting in them. Now that's the kind of fans that David Miller likes.
October 29, 2009
Sports bubble watch: Jets slash (some) prices
Another New York sports team is following the Yankees' lead in slashing ticket prices, but only for the middle class of seats — though, given the prices being discussed, maybe "the upper-upper-middle class" would be a better way of putting it. (Stadium seating pretty much bottoms out these days at the real middle class.) The New York Jets have announced they're cutting prices for seats in the Mezzanine Club at their new stadium opening next year, from $400-$500 down to $195-$395. The Mezzanine Club is the middle deck on either side of the field, amounting to about 7,000 of the new stadium's 80,000 seats.
"The jump from $120 a ticket or $150 a ticket to $400 just put it out of reach for a lot of people who did want to experience the clubs," Jets VP Matt Higgins told AP. "We came to the conclusion that these prices are really 2007 prices in a 2009 world."
Bleacher Report, though, notes that you still have to shell out a seat license fee — of between $5,000 and $25,000 per ticket — for the rights to even buy the tickets. Given the trouble the team has had finding buyers for their PSLs — buyers who weren't just bidding as a publicity stunt, anyway — it'll be interesting to see if half-price tickets with a $5,000 down payment are any more 2009.
October 28, 2009
Rain good for Yanks eateries; Yanks eateries bad for Bronx neighbors
While baseball fans await a rain-drenched opening game of the World Series — though Jay-Z was postponed, the TV schedule won't let the games stop for mere weather — rest easy that at least somebody will be happy if it pours:
David Miller, chief operating officer of NYY Steak, the high-end chop house at Yankee Stadium, couldn't be happier with the dreary forecast.
"Rain and cold drive up business at the restaurant by at least 20%," he said. The eatery, open year-round, was already one third full by 2:30 Wednesday afternoon.
Crain's New York further notes that during last week's playoff games between the Yankees and the Angels, the steakhouse was almost empty during games as "fans stayed in their seats to watch the game instead of watching it on television screens in the restaurant." Clearly the Yanks need to play less exciting games — or, failing that, make it more unpleasant to watch the game from the seats. Not that they're not trying hard on that already.
Meanwhile, all that spending at the steakhouse and the other stadium eateries isn't doing much for local businesses, who complain that between the economy, competition from all the new in-stadium shopping, and the relocation of the stadium farther from much of the busiest shopping strip, their business is down dramatically:
"We had high expectations with the new stadium and everything," said Concourse Card Shop manager Nicolas Castillo. But so far? It's "a lot worse," he said, with business down more than 50 percent.
At Yankee Tavern, where the floor is tiled to look like Yankee pinstripes, business is off about 20 percent, said owner Joe Bastone.
This, of course, was the whole point of building a new stadium — to bring fan spending inside the gates, so that all those dollars would pass through team hands — something that was recognized at the time by local merchants, who largely opposed the building of the new stadium. The one bright spot in the WCBS-TV report: Bastone says that over the course of the season, his receipts have gradually increased, presumably as the novelty of the in-stadium food vendors (and their sky-high prices) wears off.
UPDATE: WNYC-FM has a similar report on 161st Street merchants. Best line: "Yankee fan George Figueroa says he forgets he's at a ballpark. 'You walk around and it's like you're not even in a game. It's like you're in a mall.'" That's gotta be music to David Miller's ears...
Sacramento considers PSLs as latest last-ditch arena finance scheme
The latest plan for filling Sacramento's Kings arena funding black hole: Personal seat licenses! Because nobody's ever thought of that before!
The Sacramento Bee writes that city officials have "met twice" with Chicago-based Stadium Capital Financing Group, which thinks that PSLs would be just the ticket:
An official with Stadium Capital estimated it would take fewer than 2,000 seat sales in Sacramento — in an arena with 18,000-plus seats — to finance construction of what could be a $500 million facility.
Let's do some quick math here: For 2,000 seat sales to fund a $500 million stadium, the average PSL price would have to be ... only $250,000. That's twelve times the top price that the New York Giants are charging for PSLs at their new stadium next year — and you can't get Giants tickets without shelling out for a PSL, whereas Kings fans would be able to sit in the other 16,000 seats with no down payment.
Mayor Kevin Johnson, meanwhile, is expected to give a press conference tomorrow calling for alternate proposals for a Kings arena and its funding. Maybe a bake sale?
Cavs owner uses home opener to stump for casinos
If you ever wonder why rich people continue to buy sports teams even as they complain that they lose money — aside from the Beeston Dictum — how's this for an ancillary benefit: Cleveland Cavaliers owner Dan Gilbert got to appear on video screens during his team's home opener to urge fans to vote in favor of legalized casinos in Ohio. "Keep the jobs here. Keep the tax dollars here," Gilbert told the sellout crowd, who'd already received handouts urging the same thing.
Not mentioned by Gilbert, so far as I can tell: That the referendum would give his company exclusive rights to build casinos in Cleveland and Cincinnati. It's nice to have your own captive audience.
Santa Clara approves no-bid contract for 49ers
How a bill becomes a law, California version: First, a football team seeking an exemption from competitive bidding rules for its new stadium gives $1,000 in campaign money to a state senator, who then guts one of her own bills and replaces it with language that does what the team wants. Then the state assembly votes to approve it. Then the state senate, which didn't want to seem pushy by voting first on its own bill, approves it too.
This brings us to last night, when the Santa Clara city council voted 5-2 to take advantage of the new state law and hire a 49ers stadium contractor with no competitive bidding, and without the voter referendum that is usually required to do so. There will still be a vote, mind you, but only on whether to do the project as a whole, not on whether to give the 49ers a pass on competitive bidding for the stadium contractor.
And if you're still reading at this point, good for you. As a reward, here's a video of Dutch people singing on a boat.
October 27, 2009
The interminable Phoenix Coyotes sale saga may be almost over, or at least entering a new phase, after team owner Jerry Moyes yesterday reached an agreement to sell the bankrupt franchise to the NHL for $140 million. The deal still has to be signed off on by bankruptcy court judge Redfield Baum, but barring complaints from other creditors — say, Wayne Gretzky — that's expected to be resolved in the next few days.
If the NHL does end up with full control of the Coyotes, expect to see a repeat of MLB's Montreal Expos relocation bidding war, with the caveat that in the Coyotes' case, the league has promised to spend at least the next year looking for local ownership. Of course, given that the two leading "local" owners are a guy from Chicago who wants Glendale to pay him to keep playing there and a group that wants to play home games in Canada, it's still likely to end up as a multi-city subsidy-grubbing campaign. Stay tuned.
Developer: I wouldn't touch Sacramento arena plan
John Semcken of Majestic Realty took some time off from luring NFL teams to L.A. recently to throw some cold water on Sacramento's plans for a new Kings arena at Cal Expo, telling the Sacramento Bee: "There is not a developer I know in the country who would do it, especially in today's economy." No, really?
The best line in the article, though, went to Cal Expo board member Gil Albiani, who summed up the financing woes of the $1.9 billion development project: "There is a black hole out there that has to be filled with money." Curse that Large Hadron Collider!
Louisville study: New arena makes sun rise in east each day
Louisville's downtown arena has helped generate more than $100 million in nearby investment and construction, according to an economic impact analysis released Monday.
If you're a regular reader of this site, you've probably already guessed that this "analysis" was conducted by an entity with a stake in making the arena project look good (the Kentucky State Fair Board, which will run the place once it opens next year), and that the methodology was not quite as robust as one would like — in this case, they simply totaled up all the construction going on in the immediate vicinity, and then counted that all as "generated" by the arena, even in cases where developers told the Louisville Courier-Journal that they would have done the projects anyway.
Stay tuned for my own economic impact study showing how my purchase of new curtains helped lead to the construction of millions of square feet of new condo towers.
Stossel gets stadium swindle half-right
Libertarian commentator John Stossel has a bit of a fact-challenged record, but he mostly gets it right in a blog post for Fox Business on the new New York Yankees stadium fiasco, noting that federal taxpayers (including Red Sox fans) helped pay for it, and the often-overlooked opportunity cost of what else could have been done with the tax money. That is, until he gets up to this part:
Years ago, when I did a TV special called "Freeloaders," Chicago White Sox owner Jerry Reinsdorf said I shouldn't blame him for taking the handout:"You mean, if somebody walks up to you and hands you money, you shouldn't take it? The fact is — I was offered this stadium by elected officials."Bingo. It's like Robin Hood in reverse.
What Stossel didn't ask Reinsdorf: Does it still count as an "offer" when it comes after you threatened to move the team to Tampa Bay if you didn't get the cash? As Reinsdorf later explained, "A savvy negotiator creates leverage. People had to think we were going to leave Chicago."
But then, you'd kind of expect that Stossel would pin the blame on wasteful government rather than greedy sports team owners, given that this is a guy who's on the record as saying that greed is good.
October 26, 2009
B.C. Place reno cost more than doubles
The latest numbers are finally in on the ongoing renovation of Vancouver's B.C. Place, and it's a bit higher than the $200 million first estimated last year: The new figure is a staggering $523 million, including $458 million to install a retractable roof. "It will be an icon that will be a symbol that will be recognized around the world as Vancouver," said David Podmore, chair of the provincial BC Pavilion Corporation that owns the dome — presumably speaking of the refurbished stadium, not the price tag.
How all this will be paid for is a bit unclear: The province of British Columbia is lending PavCo the money for the project, which must be paid back within 40 years. PavCo says it'll do so by selling naming rights and developing land near the stadium — but the naming rights market is in the toilet right now, and the province has estimated that land development would only raise $100 million total. (The government says it will be able to increase the number of dates the stadium is rented out by 20%, and that this would nearly triple revenues; forgive me my skepticism at this math.) I don't pretend to be an expert on crown corporations, but it seems like there's at least some risk that PavCo will have to go back to B.C. for a bailout down the road — unless the B.C. Lions and Vancouver Whitecaps are intending to pay really, really high rent.
Yanks' latest stadium problem: Crumbling ramps
While the New York Yankees were winning the A.L. pennant this weekend, they were getting bad news about their six-month-old stadium, which turns out to have cracks in some of its concrete ramps. While a team spokesperson said the cracks were "cosmetic" and don't pose a safety hazard, the New York Times cited unnamed sources as saying that repairs could cost several million dollars.
While no one's saying for sure, the widespread speculation is that the faulty concrete may be related to the city's ongoing concrete-inspection scandal, in which inspectors have been accused of charging for quality tests that they never performed, and which has widened to include allegations of mobsters working as city building inspectors. The new Yankee Stadium has previously been established to be one of the buildings inspected by the now-indicted Testwell Laboratories — along with the Freedom Tower — but city officials insisted at the time that it was unlikely to cause hazards because, in the Times' words, "most of the concrete poured in New York is of a high quality."
Not mentioned in any of the articles: Who'll be on the hook for paying the cost of fixing the stadium ramps, as well as any other problems that arise. The Yankees agreed to pay all maintenance costs for the new stadium (in exchange for not paying any rent), so presumably they'll be paying for the patch job. But given that this is a project that involved one city agency, one private contractor, and at least two construction contractors — one of which has previously been accused of mob ties — I wouldn't be at all surprised to see some lawsuits down the road over this.
October 23, 2009
Meadowlands to swap Nets to Newark for concerts?
The question of why the New Jersey Sports and Exposition Authority would let the New Jersey Nets out of their $8 million penalty clause for moving out of the Izod Center early may have just been answered: The Bergen Record reports that the state is in discussions with the owners of the New Jersey Devils on a deal that would, in effect, trade the Nets to Newark in exchange for more concerts for the Meadowlands.
"I think this deal works for the Devils in terms of getting another tenant, if it comes to pass," state economic czar Jerry Zaro told the Record. "It works for the Nets, and it works for Izod, because it's incontestable how well they stage family events and concerts."
This could actually make sense for both sides, especially if concentrating all the sports at one site and most of the concerts at the other reduces the ill effects of arena glut. And the Nets would get to stop offering fans free M&Ms to get them to come to games.
Atlanta suburb votes down Falcons stadium before it's even proposed
Atlanta Falcons owner Arthur Blank has barely even started his new stadium campaign, and already prospective sites are taking themselves out of the running: The tiny city of Doraville (best known, it appears, for being the birthplace of The Atlanta Rhythm Section) voted this week to oppose any plans to build a Falcons stadium on the site of the city's shuttered GM plant. "The county seems to think a stadium would be a wonderful thing," Doraville Mayor Ray Jenkins told the Atlanta Journal-Constitution. "Our citizens overwhelmingly are not for that." Not that anyone has actually proposed a stadium there — DeKalb County supposedly has a "conceptual plan" for one, but hasn't made anything public — but better safe than sorry.
In a press conference in Industry, CA, Governor Arnold Schwarzenegger announced that he has signed the environmental exemption bill for Majestic Realty's proposed stadium development. "This is the best kind of action state government can create — action that cuts red tape, generates jobs, is environmentally friendly and brings a continued economic boost to California," he added.
It is curious that such an environmentally friendly project requires an environmental exemption.
Maria Elena Durazo, head of the Los Angeles County Federation of Labor, repeated Majestic's guarantee that stadium employees, including parking attendants, will be paid middle class wages. According to payscale.com, this would mean the middle class begins at $7.65 per hour.
Yanks sued for seat bait-and-switch
Looks like the Yankees' new stadium isn't the only one with overpriced seats: A fan who purchased two seats from the old Yankee Stadium is suing the team and its memorabilia partner, Steiner Sports, saying he shelled out $2000 for specific seats and instead got a repainted, reassembled mess:
When Lefkus' seats arrived, nearly three months after he placed the order, he was dismayed to discover that his seats were refurbished. According to the complaint, "their original paint was stripped and the seats were repainted in a different hue from original." He alleges that, during the dismantling, seats "were not properly cataloged or organized and as a result seats sold as specific seat pairs could not in fact have been provided because [Steiner] did not adequately record which seat parts came from which locations and because the seats themselves were dismantled and later reassembled without regard to which seat part went with which seats."
Maybe turning over the sale of Yankee Stadium memorabilia to the experts wasn't such a great idea after all.
Marlins garage cost lowered, sorta
Stop the presses: The Miami City Commission actually did something yesterday, lowering the cost of the Florida Marlins parking garage the city has to build from $41 million over budget to only $26 million over budget. Though when you read the fine print, maybe "doing something" is a bit of an overstatement:
[Commissioner Marc] Sarnoff suggested lowering the financing cost to $120 million. [City Manager Pete] Hernandez said he'd negotiate terms with project managers and others to lower the cost. If it's not possible, he and Sarnoff agreed, the administration would return to the commission asking for more money.
{Commissioners [Joe] Sanchez, [Angel] Gonzalez and Sarnoff accepted the motion.
Also yesterday, the commission rejected using $6 million in tax-free federal stimulus bonds to pay a share of the garage cost, which is more or less trivial in terms of the overall cost (the city would have saved maybe $2 million in the long run), but which allowed Commissioner Michelle Spence-Jones to assert that she wanted stimulus funding to be used strictly for neighborhood recovery: "I don't want one penny, one quarter, one dollar, or one piece of lint to go toward the Marlins stadium, period." I guess no one offered her a quid pro quo this time.
October 22, 2009
Nets considering Newark move (temporarily)
New Jersey Nets officials have told the Newark Star-Ledger the team is considering a move to Newark as early as next year — but only a temporary one, until a new arena in Brooklyn can be completed. The deal, say the Star-Ledger's unnamed team sources, would be contingent on getting out of an $8 million penalty that the Nets have to pay to their current landlords at the Meadowlands if they move anywhere but Brooklyn before 2013.
Of course, a more permanent Nets move to Newark has long been bandied about, and it's certainly possible to spin a conspiracy theory that this is the Nets trying to figure a way to get their state landlords to let them out of the penalty clause by pretending that Newark is just a waypoint on the road to Brooklyn (or, more plausibly, as a fallback in case the Brooklyn deal falls through). Why the New Jersey Sports and Exposition Authority would agree to let them out of the payment, I have no clue, but I guess you can't blame an unnamed source for trying.
Marlins garage already $41m over budget
Whuh-oh. The Florida Marlins' new stadium has only been under construction for three months, and already there are cost overruns: The accompanying parking garage, it turns out, will cost $135 million, not $94 million as originally budgeted. The Miami city commission is set to vote on the pricier garage bonds today, which should make for fine web streaming entertainment as always.
The garage financing is actually a confusing tangle: The Marlins are paying the city $10 per space for the rights to 5,850 parking garage spaces, which the Miami Herald says will "cover construction costs over the life of the bond issue," though it's not clear whether they mean the original $94 million cost or the new $135 million figure — by my calculations, it'd only come to about $5 million a year, which wouldn't be enough to cover either. And in any case, the Marlins' rent isn't going up as the cost goes up, which means the extra $41 million in bond cost will be all on taxpayers. Marc Sarnoff's proposal to make the team guarantee garage cost overruns must be sounding real good about now.
Raleigh mayor wants to replace 10-year-old arena
Dog-bites-man story of the week: An online poll (in other words, not worth the electrons it's printed on) of Raleigh residents shows they're overwhelmingly opposed to Mayor Charles Meeker's proposal to replace the Carolina Hurricanes' RBC Center, which only just opened ten years ago. Nearly 70% of those voting said they were opposed to building a new downtown arena, while 28% were in favor; 2% for some reason chose to take the poll despite not having an opinion.
To be fair, Meeker doesn't want to replace the RBC Center until 2019, at which point it will be a mind-numbing 20 years old. At this rate, sports stadiums and arenas are going to have a shorter expected lifespan than cats.
October 21, 2009
Illinois mini-ballparks seek public bonds
A group of private investors in Romeoville, Illinois, is looking to build miniature versions of Fenway Park, Wrigley Field, Yankee Stadium, Minute Maid Park, and U.S. Cellular Field for youth baseball — and wants the village of Romeoville to sell $4 million in bonds to finance the deal. The private group, ML&B, says it would pay $320,000 in annual rent, which should be enough to pay off the bonds, but the Chicago Tribune reports that the village would own the site, which presumably means ML&B would be exempt from paying property taxes, just like the real fake Yankee Stadium.
The Trib further observes that while the developers make all kinds of claims about the economic activity to be generated by Little Leaguers flocking to Romeoville, there's no guarantee that this will actually happen. (ML&B is apparently expecting to charge $750 per person per day to play on its fields, which seems slightly, shall we say, insane.) The paper notes:
Operators of the Sears Centre Arena in Hoffman Estates, for instance, estimated when it was built in 2005 that more than 125 events a year would gross more than $10 million a year. Four years later, the arena is losing money, its only regular event is lingerie football and taxpayers in the village could be on the hook for the $55 million bond issued to pay for it, plus millions more in interest.
That certainly sounds dire, but who's to say that lingerie football can't become a viable anchor tenant? After all, some of the players have actually dated real football players.
October 20, 2009
Quebec floats $400m arena, all with public money
Quebec City Mayor Régis Labeaume says he wants to build a $400 million arena to lure the NHL back to his city for the first time since the Nordiques left for Denver in 1995. He doesn't want to pay for building it, mind you — Labeaume has offered to kick in $50 million, but is expecting the provincial and federal governments to pay for the rest, saying they've spent similar sums building sports facilities for other cities. (Nothing's leaping to mind that was of that scale, but maybe Labeaume has a lenient notion of similar.)
"The current Colisee is a relic from another era," said Labeaume. "The time has come to offer our population a modern arena... A modern nordic city needs a modern arena." (I know, I know — presumably it made more sense in French.) Ex-Nordiques owner Marcel Aubut chimed in that NHL commissioner Gary Bettman told him that a new arena to replace the 59-year-old Colisee was the only way to get the league to return.
No one involved, including Bettman, gave any indication of where a new team would come from &mdash though there are several NHL teams thought to be interested in relocating — but Labeaume said construction wasn't contingent on having an actual team to play there. Here we go again...
October 19, 2009
Another lawsuit for Atlantic Yards
Opponents of the Atlantic Yards arena project in Brooklyn have filed another lawsuit against it — yes, different from the one filed last Tuesday, and also different from the one that had an appeals court hearing last Wednesday. The latest suit is against the state-run Empire State Development Corporation, charging that in revising its agreement with developer and New Jersey Nets owner Bruce Ratner it's breached its own project agreement in several ways: no longer clearing up "blight" (since the last of developer Bruce Ratner's rent payments on the arena land wouldn't be paid until 2030), making affordable housing contingent on public subsidies, and changing plans without conducting a new appraisal.
Whether any of this will hold up in court is anyone's guess, but it can't be making the bond insurers happy.
October 16, 2009
WSJ: Atlantic Yards bond sale a "toss-up"
The Wall Street Journal's Serena Ng and Matthew Futterman have weighed in on the question of whether New Jersey Nets owner Bruce Ratner will be able to sell bonds for his planned Brooklyn arena what with two lawsuits pending, and their verdict is: It "looks like a toss-up." The key, they write, is whether Ratner will be able to buy bond insurance, which would cover bond buyers in case the lawsuits are successful and the whole project has to be canceled:
Goldman Sachs Group and Barclays bankers have spent weeks in discussions with three credit-rating services and bond insurer Assured Guaranty Ltd. over ratings and terms on the bonds. The developers are hoping for an investment-grade credit rating on the bonds and to issue them at annual interest rates of roughly 6.5%. Whether the debt will be insured -- which could be key to selling the bonds -- remains uncertain, as debates continue about the arena's revenue-earning potential.
Assured, they note, is effectively the only bond insurer left in town after the financial meltdown, and cite a source as saying that the arena bankers "balked" at some of the demands Assured made in order to guarantee the bonds. It's unclear whether Ratner would be able to sell his planned $700 million worth of arena bonds — the largest sports venue bond sale since the economic crash — without insurance. "It would certainly be harder to sell the bonds if they don't have insurance," bond analyst Matt Fabian told the Journal, but added that the market has rebounded somewhat for junk-rated municipal debt.
Ratner could normally wait out Assured, as well as the turbulent bond market, but remember, he has a deadline: If the bonds aren't sold by December 31, his tax-exempt bond approval turns into a pumpkin, and the bonds really become unsellable. Assured, then, has Ratner over a barrel and surely knows it — that must be one fun negotiating table right about now.
Industry NFL stadium gets its environmental exemption
The California state senate has approved an exemption from state environmental laws for Ed Roski's City of Industry football stadium. The L.A. Times report notes that this was after the senate president was "unsuccessful in negotiating an agreement that would have a citizens group drop its lawsuit" against the stadium — given that the exemption effectively nullified the lawsuit, this must have been one of those "jump or I'll push you" negotiations.
In any case, let the move threats begin! Er, continue!
October 15, 2009
Paulson threatens Timbers deal if Beavers don't get new home
The Portland Beavers and the city of Beaverton announced a tentative stadium agreement this week, and Beavers owner decided to mark the occasion the old-fashioned way — with a threat. "If I don't get a baseball deal done, I'm not going to finalize the deal with Portland," Paulson told the Beaverton city council Tuesday night. "So MLS will not come to Portland unless I do a deal for a new baseball park." Which is a change from what he said four months ago, but new times demand new threats.
As for the mystery of how a Beaverton ballpark, that seems to have been resolved. According to The Oregonian:
In Beaverton, Paulson would pay $9 million upfront and make annual rent and ticket-tax payments for 25 years, beginning at more than $870,000. The city would sell revenue bonds to cover $50 million, to be repaid through higher property and utility taxes.
Taxpayers would be on the hook for about 60 percent of total project costs.
That's a bit oblique, but what it seems to be saying is that: For a $59 million stadium, Paulson would kick in $9 million in cash and pay off about $15 million in bonds; the other $35 million would come out of taxpayers' pockets.
A citizens' group calling itself Let Our Voters Vote has launched a petition drive to force a public referendum on the stadium project. Mayor Denny Doyle has already countered by arguing that the monthly cost of a stadium would be less than half the price of a movie ticket; it's got to be only a matter of time before somebody translates that into pennies.
Schoolchildren protest relocation for stadium
Protesters angry that two schools were displaced for a new stadium — and that a new school they were promised in return has not appeared — have blockaded the stadium construction site, forcing work to stop. Why haven't you heard about this? Probably because it's happening in Mpumalanga Province, South Africa, the site of one of the stadiums being built for the 2010 World Cup. The Sowetan newspaper reports that police fired rubber bullets into a crowd of students, some as young as six years old, who were protesting at the site.
A local government official promised the schools would be built in the next couple of years, saying: "Their problems will soon be over and we request them to concentrate on learning rather than strikes." I can't be the only one who sees the irony here.
Field of Schemes has been a lot of things — a book, a website, a shadow puppet play written in rhyming couplets — but I'm pretty sure this is the first time we've become a point of contention in a mayoral campaign.
In any case, a big Field of Schemes welcome to those viewers who were watching the St. Petersburg mayoral debates, and if you're interested in what we've had to say about your fair city's current stadium controversy, here you go.
October 13, 2009
New lawsuit targets Ratner's Atlantic Yards land buy
With just one day to go before New York state's top court holds its hearing on the final eminent domain case against Bruce Ratner's Atlantic Yards project, another court challenge has emerged: Four local elected officials, the New York Public Interest Research Group, and the ubiquitous Develop Don't Destroy Brooklyn are suing the Metropolitan Transportation Authority over its agreement this summer to sell land to Ratner for a cut-rate price. (An even more cut-rate price than the MTA originally agreed to, that is.) By reducing Ratner's payments without seeking an independent appraisal or competitive bidding, the suit charges, the authority violated the state Public Authorities Accountability Act of 2005, which wasn't in place when the original sale to Ratner occurred, but was when the deal was rejiggered this June.
The suit is seeking to "annul" the land sale, which would, obviously, threaten to kill the entire project, which includes an arena for the Nets and a bunch of housing and office towers, though it remains unclear when or if Ratner would ever be getting around to building the other stuff. The real question now is whether another lawsuit will make it too expensive for Ratner to get bond insurance so he can start selling arena bonds this month as planned.
More on this as it develops. In the meantime, the lesson here may be: If you're going to try a legally questionable move to gain public (and private) land for your arena project, you might not want to choose a site right in the middle of one of the city's highest concentrations of lawyers.
October 12, 2009
As goes AIG, so goes Houston's sports authority?
The disarray of the world financial system continues to hit the stadium world: The latest victim looks to be the Harris County-Houston Sports Authority, which could see huge hikes in its bond payments on Minute Maid Park, Reliant Stadium, and the Toyota Center thanks to the collapse of the esoteric financial instruments known as credit default interest rate swaps. (You may recall CDSs for bringing down a little company called AIG.) Without going into all the technical details — which, frankly, I'm not sure I understand even after reading more about default swaps than is really healthy [UPDATE: Apparently I really didn't understand, as I mistook credit default swaps, which sunk AIG, for interest rate swaps, which threaten to sink the Sports Authority; everything else I wrote here is still valid, though] — the upshot is that in order to undo the bad financing, the sports authority will have to pay off its stadium debt early, with annual debt service expected to rise from $62.3 million to $83.7 million over the next two years.
That's troublesome, because the authority only collected $79.3 million total in 2008 — and tax revenues, which depend on things like car rental and hotels that are highly dependent on a booming economy, look to be dropping. "I'm deeply concerned about the financial stability of the sports authority and all its bonded indebtedness," former authority chair Jack Rains told Bloomberg News (which somehow managed to give Janet Jackson's "wardrobe malfunction" equal mention in its article). "When you borrow for 30 years, you have to do prudent things, and they didn't."
If the shortfall comes true, the sports authority could end up having to go to the county for a bailout. And we know how well that's worked in the past.
Throw it away and get a new one
Quote of the week, from Seattle hoops blogger M. Haubs in a review of the new documentary Sonicsgate:
Many fans have difficulty accepting that Key Arena is an inadequate venue, given that it's a great place to watch a game and is less than 15 years old in its current incarnation.
These fans are mistaken, continues Haub, because they fail to recognize that Key Arena can't "maximize the varied revenue streams" that newer arenas can offer. Which is true enough as far as it goes — but is "doesn't generate as much profit as the tenant would like" really the new definition of "inadequate"?
ESPN buys $1200 Yankee tickets so you don't have to
If you've been wondering what those crazy-expensive field-level seats are like at Fake Yankee Stadium, ESPN writer Wright Thompson dropped $1200 so he could tell you firsthand. His verdict: It's great to watch the game from up close, hot dogs go great with a $200 bottle of French wine, and cops are nicer to you when they think you're rich people.
Thompson comes up with a novel theory for the outrageous Yankees ticket prices, saying it's thanks to Wall Street brokers who in recent years became willing to pay just about anything for good tickets, since they were using them as deductible entertainment expenses (Thompson calls them "bribes") to sweet-talk other brokers into conducting deals. But after a bunch of equity traders were caught with free hotel rooms, hookers, and a midget — it's always the midget that gets the headlines — the SEC cracked down, with potentiall huge consequences for the Yankees:
To get out front of the SEC, many firms have instituted their own internal controls requiring gifts worth more than $100 to be reported. A computer program has been purchased by more than 200 companies that, for the first time, allows statistics to be kept on ticket use, including how much business each one brings in.
So ... just as companies were trying to limit extravagant spending, the Yankees came out with the most extravagant tickets in the history of sports, designed in part for a group of people who could no longer buy them. "They killed the golden goose," a former Bear Stearns guy says. "When the new prices came out, everybody said, 'Are you kidding? We can't even give these to clients.'" ...
Yankees games went from something small to something like a trip to the Masters. One buy-sider told me: "I've been offered really good seats a couple of times, but I haven't taken tickets from a broker in the new stadium. I'd feel like I owed the guy."
Meanwhile, Thompson wonders if all the sky-high ticket pricing could risk turning off those who are there for the game, not for the derivatives. He cites ESPN pollster Rich Luker as saying the sports industry is in "harvest mode," and could be in danger of alienating its fan base for good:
A recent poll discovered an unsettling trend emerging for the first time. American families whose household income is $75,000 or less now have zero dollars of discretionary income. According to Luker, that means about 75 percent of the country can never responsibly afford to go to a live professional sporting event. Franchises want them to be fans, to buy the gear and pull for their teams and watch the telecasts the leagues are paid billions for. But they don't need them to come to their stadiums. There are, right now, plenty of rich people who love games. The prices reflect that. The reason sporting events cost so much now, Luker's research shows, is because they are designed to be affordable only to those making $150,000 or more a year.
Luker's stats show, continues Thompson: "For the first time, the largest number of sports fans aren't 12- to 17-year-old boys. The baby boomers are the group that shows the greatest increase in a love of sports, and they'll be dying soon."
All in all, a fascinating read, though I'm not entirely sure about all its conclusions. (My own research points to the massive surge in wealth towards the richest Americans since the Reagan tax cuts for the top income brackets — the increase in in the number of "rich people who love games," in other words — as most to blame for rising ticket prices.) And it's fun to hear about such perks as about the bottomless pile of Twizzlers available to high rollers, without having to plunk down $1200 to visit it.
San Jose adds NBA to phantom team wishlist
As if San Jose and Santa Clara County didn't have enough on their plate, now the San Jose city council is set to vote on a memorandum on understanding for bringing an NBA team to town, should an NBA team be found that wants to move into HP Pavilion. The San Jose Mercury News reports that San Jose Sharks owner Greg Jamison, who operates the Pavilion, has met with the owners of the Sacramento Kings, though it gave no details of how serious the talks were, and it seems unlikely that the Kings owners would settle for being tenants in a two-team arena when their dreams are still alive of getting an arena of their own in Sacramento.
San Jose chief development officer Paul Krutko said, according to the Merc News, that any new team would require "modifications" to the Pavilion, to be paid for by a "public/private partnership." More details, one hopes, will be available in the MOU, once the council takes it up next month.
Winston-Salem: Okay, that stadium didn't work out so well
City leaders in Winston-Salem say that they've learned their lesson now that their plan to put $12 million into a $22.6 million stadium for the single-A Dash baseball team has ballooned to a $40.7 million stadium, plus $8 million in land costs, all of it publicly funded. The Dash owner, it seems, ran out of money after his business partner got divorced from his sister-in-law, and the city was left on the hook for the entire stadium cost. "From an economical, financial side of any project going forward, there were definitely lessons learned from this project that we wouldn't want to repeat," city finance director Denise Bell told the Winston-Salem Journal. "There has never been city oversight in projects like this."
Better late than never, I suppose. Though you'd think Winston-Salem would have already learned this lesson in 2004, when it gave Dell Computers more than $250 million in tax breaks (including, according to Good Jobs First, "a computer manufacturing tax credit, job investment grants, tobacco settlement fund grants, training incentives, transportation infrastructure grants, workforce development grants, sales tax refunds, waiver of property tax for 15 years and 200 acres of free land") for a computer plant that only cost half that to build — a plant, incidentally, that Dell just announced it is closing, laying off all 905 workers.
In any case, it's not too late for other cities to learn the lessons of Winston-Salem. Says city manager Lee Garrity: "If we do any more projects like this where there is any upfront money, we will require extensive due diligence of the financial capacity of the developer and a market analysis. We would put in reporting on the status of construction and significant clawbacks if it is not done on time." But that's what they all say.
October 09, 2009
Here comes the next stadium wave
Blame it on Cowboys Stadium, or blame it on Ed Roski, but there certainly seems to be a rush of teams looking to get back on the new-stadium line these days, despite having old stadiums that aren't even of legal drinking age.
The latest is Atlanta Falcons owner Arthur Blank, who yesterday reiterated that he wants a new home to replace the 17-year-old Georgia Dome, ideally as soon as the dome's bonds are paid off, which could be as soon as 2015. "The Falcons are falling behind other teams in the NFL in terms of the experience for our fans," Blank told reporters, in what has to be an allusion to the Cowboys' new building. The Falcons owner was previously reported to be scouting sites around Atlanta for a new building; he says it would be paid for by a mix of public and private funds, which doesn't actually explain anything, but sounds good in the papers.
Also upping the ante: NFL VP Frank Supovitz, who the day before told the Greater Miami Chamber of Commerce that the Miami Dolphins' 25-year-old Land Shark Stadium — don't worry, only a couple more months of this before we can go back to calling it Dolphins Stadium — may not be modern enough to host more Super Bowls after this season. "You have to look at what the other cities are offering in terms of comfort," said Supovitz, noting that in Miami fans and players are actually exposed to the weather. "I'm not going to have anyone rained on in North Texas. They're not going to get rained on in Indianapolis." Dolphins CEO Mike Dee said the team is "working with the NFL to see what should be done," which is certainly a nice way of casting the league as Bad Cop should the team demand a new or vastly renovated stadium.
Then there's Milwaukee, where the Bradley Center just turned 21 years old last week, and Ulice Payne, the chair of the arena's board of directors, declared Tuesday that the buildinghas only eight years left before it turns into a pumpkin. (Among Payne's complaints: Its scoreboard is 14 years old, and it has ceramic tiles, which are so 1990s.) Bucks owner Herb Kohl hasn't commented yet, but he's previously proclaimed his desire for a new, younger facility. As for Payne, he first got involved in sports as a member of Miller Park's board, which he then parlayed into a turn as CEO of the Brewers — so it's always possible he's just angling for a job in basketball this time.
October 08, 2009
If you ever wanted your own domed stadium, wait no longer: The city of Pontiac, Michigan is has started taking bids for the Silverdome, which has been pretty much unused since the Detroit Lions moved out in 2002. There's no minimum bid, but keep in mind that the place costs $1.5 million a year just to maintain, so it probably wouldn't make the best starter home. That, and the 200-foot ceilings.
October 07, 2009
Baltimore mayor seeks pitch to D.C. United
If you've been feeling bad for D.C. United that they're all dressed up to move with no place to go after their D.C. and Prince George's County stadium plans collapsed, then raise a glass to Baltimore Mayor Sheila Dixon, who's asked the Maryland Stadium Authority to consider building a soccer stadium near Camden Yards. A spokesperson for Dixon told the Baltimore Sun that it is, in the Sun's words, "uncertain how the stadium might be financed."
Dixon's preferred site, apparently, would be this place, which has been in the works for years but has been slow to find developers who actually want to build condos there. Where's Stringer Bell when you need him?
L.A. developers target six (or seven) NFL teams
Majestic Realty stadium czar John Semcken has officially announced his hit list for NFL franchises to lure to Los Angeles, and it looks like the L.A. Times guessed right:
Semcken said new talks would begin after the Super Bowl in February, and may involve the Jacksonville Jaguars, the Buffalo Bills, the Minnesota Vikings, the St. Louis Rams, the Chargers and the Oakland Raiders.
The San Francisco 49ers could also be pursued if a vote for a new stadium in Santa Clara fails.
Semcken said a new stadium could open in 2013, but a team could be relocated as early as next year or the year after, playing at a temporary site for the first couple of years.
In related news, Majestic owner Ed Roski has lost $1 billion of his $2.5 billion net worth in the last year, according to Forbes, thanks to the California real estate crash. Stadium consultant Marc Ganis calls this "significant"; Majestic says it's just a flesh wound.
Sports bubble watch: NBA, Yankees cut prices
More signs that the crazy inflation in sports ticket prices has found a ceiling:
- The New York Yankees provided more details on their previously announced ticket price cuts for 2010: They'll lower prices for their most expensive seats, the Legends Suite tickets behind home plate, from $2500 a game to a mere $1500, while some tickets in the $500-$1000 range (the ones that the Yanks had trouble selling this season) also will see price drops.
- NBA commissioner David Stern says he expects NBA revenues to drop in the coming season, and says a large part of the reason is price cuts that teams have instituted to keep fannies in the seats. "I would love to get it closer to 2-1/2 percent, but I don't think we're going to because our teams have cut their ticket prices or frozen them, so as a result, even if we have good attendance, we'll be taking in less revenue at the gate, and that's an important component. And that's OK. We're responding to our fans."
October 06, 2009
California Senate mulls get-out-of-lawsuit-free card for Roski
The proposed city of Industry football stadium could clear its biggest remaining hurdle in the next two weeks, as the California state senate takes up a bill to allow developer Ed Roski's Majestic Realty to evade environmental laws to move ahead with the project. (A citizen group's lawsuit charges that Majestic should conduct a new environmental impact study, since the original one planned for commercial warehouses on the site, not a stadium; instead, it was amended with a "supplemental" report.) Environmental groups are now worried that if the Majestic loophole is approved, this will, in the words of one, lead to "a crop of bills in December" seeking similar exemptions from state law for other projects.
(Note, by the way, that this is different from the tax-increment financing bill proposed earlier in the year that also would have aided the Majestic stadium project. That one died over the summer.)
And here come the Minnesota Vikings stadium subsidy bills! First up: Rep. Tom Hackbarth, who wants to install slot machines at two horse-racing tracks and use the proceeds to fund a new football stadium. He'd need to have a voter referendum to amend the state constitution first — a similar idea for the Twins was already soundly rejected in 1997 — and according to the St. Paul Pioneer Press, "Hackbarth said he hasn't talked with legislative leaders, the Vikings or Gov. Tim Pawlenty." But he did manage to get his name in the newspaper next to "Vikings," and that's what's important.
October 05, 2009
Wang unleashes Islanders move threat
Sure enough, the New York Islanders arena situation blew up big-time over the weekend, with team owner Charles Wang announcing that since no deal was in place by the time of Saturday's season opener, management planned to "explore all our options," including moving the team out of Long Island.
The center of the dispute is over getting zoning approval from the tiny town of Hempstead for Wang's multi-billion-dollar Lighthouse development project, which would include a rebuilt Nassau Coliseum for the Islanders. Wang contends that Hempstead officials are dragging their feet on giving approvals for the project, which has been in the works for years; Hempstead supervisors retort that they're still waiting for answers from Wang about what exactly the project would entail. In the latest twist, supervisor Kate Murray called Wang on Friday asking for a meeting to discuss the project, Wang told her it was too late for discussions, Murray passed this on to Newsday, and Wang declared that now he felt he couldn't trust Murray: "I don't want to say you can't, but it's difficult."
As to where else the Islanders might go, that's an excellent question: You may recall that the NHL is already looking at having one franchise in search of a home. A league source insisted to Fanhouse that six suitors were ready to woo the Islanders, but named only two: Kansas City and the New York City borough of Queens. Queens doesn't have an arena, though, and as we've discussed here, Kansas City's arena is run by AEG, which has an incentive not to offer a sweetheart deal to get a team to relocate.
And before anyone asks: The Atlantic Yards arena in Brooklyn has been "value engineered" to have too small a floor for a hockey rink. So that ain't happening either, not without Bruce Ratner finding more money under the sofa cushions.
Pawlenty: Now let's talk Vikings stadium!
And there goes the other shoe: One day after Minnesota Vikings VP Lester Bagley hinted ownership would move the team if it didn't get a new stadium, Minnesota Gov. Tim Pawlenty declared that the Metrodome's "time is fading," and "we've got to figure out a way to keep the Vikings here." Pawlenty, a rumored 2012 presidential candidate, hedged on whether or how much public money he'd devote to the cause, but it certainly sounds like the looming NFL stadium in Los Angeles has gotten the Vikings' demands moved off the back burner.
Day of reckoning nearing for Atlantic Yards?
New Jersey Nets owner Bruce Ratner told the New York Observer last week that he plans to start selling $700 million in bonds for his Atlantic Yards arena in Brooklyn in "about two weeks." (Another $200 million, you'll recall, is slated to be funded by Russian billionaire Mikhail Prokhorov, the guy he's selling the Nets to.)
While usually selling bonds is the final step in the arena-building process, in this case Ratner is intentionally jumping the gun a bit: He has to have bonds in place by the end of the year to qualify them for tax-exempt status before the IRS authorization turns into a pumpkin. To cover the fact that he's still engaged in at least one lawsuit over the arena project — an appeals court hearing is set for October 14 — Ratner is reportedly getting bond insurance that will reimburse bondholders in case the whole project falls apart. (Prokhorov has a get-out-of-purchase-free card in his deal for if that happens.)
There's one other wild card here, which is that the New York City Independent Budget Office has projected that even under the expiring IRS rules, the arena project wouldn't generate enough property tax value to justify $700 million in tax-free bonds. (If you really want to know what property tax valuations have to do with tax-free bonds, start here.) It'll be interesting to see if Ratner has to take out bond insurance for the possibility of the IRS rejecting some of his tax-exempt bonds as well — and if at some point he needs to find another Russian billionaire to pay for it.
October 02, 2009
Islanders sign long-term lease, immediately threaten to move
The New York Islanders' long-simmering Lighthouse project (no actual lighthouses included) looks ready to blow up again. Yesterday, Isles owner Charles Wang and Nassau County Executive Tom Suozzi agreed to a long-term lease that would keep the team at a renovated Nassau Coliseum through 2030 — then Wang turned around and said he was cutting off talks unless the development project was immediately approved: "This is not the point to start negotiating anything. It's yes or no."
The threat was levied at the Hempstead town board, which has yet to agree to zoning changes to allow Wang and partner Scott Rechler to build the $3.8 billion Lighthouse project, which would include a hotel, office buildings, and a convention center, on what's currently public land around the arena. (Under the new lease, Wang would spend $320 million of his own money to renovate Nassau Coliseum, plus pay $1.5 million in rent, but would get to lease 77 acres of county-owned land for $1.) Wang has given the town board until tomorrow to approve the zoning, and fumed that if the board didn't vote by then — something that seems all but certain, since it doesn't have any meetings scheduled today or tomorrow — he "would construe that as a no." This could be a very interesting weekend.
L.A. NFL stadium move threats spreading faster than swine flu
Forget the Dallas Cowboys' snazzy new stadium — what's really sparking renewed stadium demands across the nation is the spreading fear that a new stadium in the Los Angeles area could lure an NFL team or two to relocate. The latest team to take advantage: the Minnesota Vikings, whose VP for stadium wheedling Lester Bagley told the St. Paul Pioneer Press they're preparing a new push for $700 million in stadium subsidies, and added this only slightly veiled threat: "If the answer is no, then why would you own a team in this market?"
The Vikings have "no interest in extending our lease at the Metrodome" beyond 2011, said Bagley, who added for emphasis, in case anyone failed to make the connection: "The clock is ticking, and the lease is coming due. The state can't afford to have us become free agents."
Meanwhile, in Jacksonville, Jaguars owner Wayne Weaver is apparently attempting to develop a more home-grown move threat, saying he might move one home game to Orlando's Citrus Bowl — though he added that it would need renovations to "accommodate the kind of revenues you have to derive out of an NFL stadium." This at the same time that Weaver is trying to get additional public money from Jacksonville to renovate his team's current home. Bring out the whipsaw!
AEG's sweetheart Sprint Center lease: the breakdown
After all the confusion over exactly how arena managers AEG and Kansas City are splitting money from the Sprint Center, Justin Kendall of K.C.'s alt-weekly The Pitch was kind enough to send over the actual section of the lease that spells this out. And it's an eye-opener, as much as any document that includes phrases like "All Prior Fiscal Years' Six Million Dollar Amortization Payment Cash Flow Deficiency" can be said to open anyone's eyes.
I'm no contract lawyer, but if I'm reading this correctly, here's the way all profits from the Sprint Center are disbursed:
- The first $347,000 a year goes to pay back the six million dollars in cost overruns that AEG and Kansas City rang up for the arena, split 80/20 between the city and AEG, plus an interest rate of 4%.
- The next $6.7 million a year goes to pay back AEG's $50 million share of the pre-overrun arena cost. AEG, however, gets paid back at an interest rate of 12%.
- Next, AEG gets enough money to earn it a guaranteed 16% return (including those interest payments on its $50 mil) on its initial investment. As an added bonus, if there wasn't enough to earn it a 16% return in some prior year, AEG can take out extra in subsequent years.
- After that, $3 million (total, not annual) is put aside for a Capital Reserve Fund. And finally, if there's anything left, it's split 50/50 between AEG and the city. Little wonder that AEG president Tim Leiweke called this a "throwaway provision," and said his lawyers predicted they'd never earn enough to have to pay it.
What's missing here? Well, while AEG gets a guarantee of being made whole on its $50 million investment, plus 12% interest, plus 4% more in profit on top of that, the city of Kansas City is on the hook for $216 million in arena bonds — amounting to $13.8 million a year in bond payments, K.C. budget director Troy Schulte tells Kendall. While an occasional $1.8 million windfall, as the city got last year when the Sprint Center had an exceptionally good year, is nice, it's still a drop in the bucket on that debt.
In other words, AEG may have been an excellent choice for an arena manager, one that has used its clout to fill the Sprint Center with plenty of concerts. But in landing someone to run their new barn, Kansas City gave away the farm.
