January 29, 2010
St. Pete to Rays stadium study group: Wrong answer! Go away now!
Whoopsie! Looks like that Tampa Bay Rays stadium commission stepped on the wrong toes when it suggested building a new stadium closer to Tampa, possibly in north Pinellas County or even Hillsborough County across the bay. The city of St. Petersburg, where the Rays currently play and which pulled together the A Baseball Community committee in the first place, is now telling the task force it doesn't want to meet with them to discuss their findings. "Any relationship the city may have had with ABC has been effectively severed," city attorney John Wolfe and city administrator Rick Mussett wrote to the city council this week, and other local officials concurred:
Council Chairwoman Leslie Curran said she would not put the ABC presentation on the agenda.
The coalition "kind of took on a life of its own,'' she said. "The purpose of it to begin with, as far as I understand, was to focus on St. Petersburg, and I'm not willing to bring any idea forward that goes outside the city."
New Mayor Bill Foster concurred.
"The city is not going to do anything that indicates we don't still believe that Tropicana Field is a suitable stadium,'' he said.
As amusing as it is for a city to refuse to read a report that it itself commissioned, what all this means for the Rays' stadium push is a bit unclear. On the one hand, the team has a long-term lease at Tropicana Field, and would undoubtedly need St. Pete's cooperation to extricate itself from the lease in exchange for returning the land to the city for development, as was floated once before. On the other hand, the specter of a move across the bay has at least gotten St. Pete eager to talk — both Curran and Foster invited Rays management to contact them directly about stadium talks. On the third hand, it seems like the Rays owners themselves would like to relocate closer to Tampa, so a new opportunity to open talks to stay in St. Pete might not be what they were hoping for.
Given all that, it's probably not surprising that Rays VP for stadium wheedling Michael Kalt issued a terse one-line statement that "We are not prepared to share our reaction at this time." Or maybe he's just too busy plotting his secret move to New Jersey.
A's owner gnashing teeth over slow pace of MLB study
It's been ten whole months now since Bud Selig appointed a three-man commission to investigate whether the Oakland A's can move to San Jose, and apparently A's owner Lew Wolff is getting impatient. At least, he's antsy enough to tell the San Jose Mercury News have unnamed sources tell the San Jose Mercury News that Selig's commission should get on with it already.
In fact, as far as Merc News columnist Mark Purdy is concerned, if MLB doesn't act soon — and act to approve a San Jose move — the team could be headed out of California:
Bottom line: Wolff has not yet reached the boiling point where he's threatening to leave the Bay Area — or, more likely, sell to another owner who would move the team out of Northern California. But the teapot is building steam. It's hot stove season in more ways than one. Time to tend to this burner, commissioner.
Old threats never die, it seems, no matter how many times owners cry wolf. I hope at least Purdy is getting a pay raise for his honest reporting.
January 28, 2010
Consultant to San Diego: All the other cities fund NFL stadiums, you should too!
The San Diego Chargers have announced they won't be opting out of their Qualcomm Stadium lease this fall, an action that comes as exactly zero surprise, since no new stadiums (including the proposed one east of Los Angeles) would be ready in time for them to move this year anyway. Add in that the penalty the Chargers would have to pay to break their lease plummets from $53 million this year to $26 million in 2011 and ... why is this worthy of a 600-word news story again?
Also falling in the dubious news category is the report given by "sports financing consultant" Mitchell Ziets yesterday to San Diego development officials, in which he concluded that significant public financing would be needed for a new Chargers stadium. His evidence? The 11 NFL stadiums built since 2002 had an average of 55% of their costs paid for by the public. He added that a new stadium would only work "if it makes sense for everybody," but apparently didn't actually attempt to calculate, say, what a stadium would cost or how it would benefit the city.
Given that the city of San Diego is paying Ziets $160,000 for his consulting services, you have to hope Ziets bought a really nice calculator to come up with that 55% figure. Though I suppose it's still more exhaustive research than reading Bret Easton Ellis.
Dolphins float new hotel tax for stadium reno subsidies
The owners of the Miami Dolphins have come up with a plan to get that $250 million for stadium improvements that they don't want to pay for: Increased hotel taxes. This would require action by the state legislature, since state law caps tourist taxes at 6%, and Miami-Dade County is already up against the cap.
County approval would also be required, though, and Miami-Dade County Mayor Carlos Alvarez has already come out against the hotel-tax plan, or any taxpayer spending at all: "I would not be supportive of any public funding for the renovation of the Dolphins' stadium," he told the Miami Herald. "Now is not the time." Add in that a raised hotel tax would be a target for dozens of sports and arts groups if the state approved it — "Do you know how many people are going to jump on that bandwagon?" one former hotel association executive told the Herald — and you can probably file this one under "trial balloon" for now.
Of course, even trial balloons have their uses, and this one did provide the Dolphins a chance to get the alleged urgency of stadium renovations into the newspaper — the 2014 Super Bowl isn't going to host itself, you know! "The clock is ticking to show we have some movement,'' Dolphins lobbyist Ron Book told the Herald. "Certainly we have to have something to show the owners, to show what we are doing to keep the stadium in a position that they find acceptable." Or else people just might have to find another reason to visit Miami in February.
January 26, 2010
Detroit News: Joe Louis needs more women's restrooms, let's build a new arena
With the owners of the Detroit Red Wings having chosen to opt out of their lease at Joe Louis Arena this July, it's about time for the drumbeat of new-arena articles to begin. And indeed, they're in full swing: Last week it was speculation that the Wings could move in with the Pistons in Auburn Hills short-term, then work on building a new downtown arena together. Today, it's a report — like the earlier one, also from the Detroit News — that surveys the state of Joe Louis Arena and finds it to be "beyond repair."
The exact list of charges: The concrete steps need to be fixed, there are inadequate restrooms, seats are too cramped, and parking is inadequate. The Wings, report the News, "say it would cost them $10 million in renovations to remain at The Joe." Wait a minute — $10 million? Shouldn't that headline actually read: "As lease winds down, Joe Louis Arena could be repaired for a fraction of what a new arena would cost"?
K.C. risked defaulting on Royals lease in 2009
Hey, remember how Kansas City agreed to spend $425 million on stadium renovations a few years back in exchange for the Royals and Chiefs agreeing to stay in town for another 25 years? Looks like somebody should have read the fine print: Thanks to a tussle between the city and state over who'll pay $4 million a year in ongoing upkeep and improvement costs to Kauffman Stadium and Arrowhead Stadium, the city nearly defaulted on its lease last year, to the point where Royals management had drafted a letter declaring the city in default. If that happened, the teams could leave before the 25 years were up, effectively making the entire $425 million expense worthless — except inasmuch as having nicer digs would give them less reason to want to leave. Still, it's a worthwhile reminder that leases are only as good as their fine print — something K.C. could have learned just by looking across the state.
Indy Biz Journal: NFL playoff games rule!
It's playoff season, which means it must be time for another article touting the economic benefits of your team making the playoffs. Today's entry comes courtesy of the Indianapolis Business Journal, which, typical of these articles, doesn't actually attempt to quantify the impact of the Colts' Super Bowl run, but throws out lots of anecdotal evidence like "Sales [of Colts caps and shirts] were so strong, the stadium shop stayed open until 11 p.m., about five hours after the game ended"!
Of course, money spent on Peyton Manning shirts is money not spent on something else — unless Colts fans have set aside money in special team merchandise accounts — so a lot of that money is just being redirected from somewhere else in the regional economy. (Hotel spending, which is also up, is a bit more of a legit gain, since typically hotel-room stays in the dead of winter in Indianapolis are pretty minimal.) Indianapolis Convention & Visitors Association CEO Don Welsh exulted to the Business Journal: "You can't overemphasize how good something like this Colts run is for the city, not only in terms of direct visitor spending but exposure." Well, sure you can. That's why we're supposed to have journalists, to evaluate just how much emphasis is warranted, according to the actual numbers. Remember journalists?
Portland to delay stadium financing until after stadium is complete?
The Portland city council is set to vote tomorrow on an agreement with Timbers owner Merritt Paulson to convert PGE Park to soccer-only, and inveterate blogger Bojack notes something odd about the deal: The city would apparently hold off on issuing bonds to pay for the renovation until the construction is already complete, instead using a short-term line of credit to pay initial costs, then later deciding whether to pay them off with bonds or cash. Bojack says that as a result, "Portland taxpayers won't get to see (or pass on) the terms of the mortgage until after the stadium project is finished" — and, more important, wouldn't have the opportunity to file a petition challenge to the bonds, because the project would already be complete by then. Tomorrow should be an interesting city council meeting.
Rays study hits all the stadium-playbook arguments
The A Baseball Community coalition (I just can't get enough of that name), the group of local business leaders put together by the city of St. Petersburg to support the Rays' stadium push, issued their final report yesterday, and it looked much like their earlier interim report: The Rays need a new stadium! And they need one closer to the area's population center in Tampa, a conclusion the group already reached last July.
As for why the Rays need a new stadium, the ABC report gives plenty of reasons. Now, way back in the first edition of the book Field of Schemes, we put together a list of arguments that teams and their boosters typically make for new stadium construction — a sort of stadium-seekers' playbook. (The chapter is entitled "The Art of the Steal.") How well did ABC hit all the typical rationales? Let's count:
- The Home-Field Disadvantage: The 20-year-old Tropicana Field, says the report, is "nearing the end of its economically useful life" thanks to insufficiently lavish concessions concourses and luxury boxes. This term — "economically obsolete" — has become a popular shorthand for "No, the place isn't falling down, but we could make more money in a new one."
- Faking a Move: The report warns that "the region now faces the risk of losing its baseball team at some point in the future," a scenario that it warns could cause "irreparable damage to the economic, social and cultural well-being of the region." Notwithstanding that thanks to the Rays' tough lease, that couldn't be a threat for at least a decade.
- Leveling the Playing Field: The Rays need a new stadium "to stay consistently competitive," according to the St. Petersburg Times' summary of the report, which is kind of a funny argument to make just a little over a year after the team went to the World Series. Though it may explain why Rays officials have started muttering darkly that the team may need to trade Carl Crawford and Carlos Pena if revenues don't pick up in the near term.
- Playing the Numbers: It doesn't look like the ABC report directly stresses the alleged economic benefits of building a stadium, though St. Petersburg Mayor Bill Foster did reply by calling the Rays an "economic driver for our city." Whether they're enough of an economic driver to be worth a new $550 million stadium even while the old one is still being paid off is left as an exercise for readers.
Left unstated in all this is where the money for a new stadium is going to come from — all involved seem to agree that now's not the time to talk about that, given that Florida is in the depths of an economic crisis. ABC chief Jeff Lyash, rather, suggested that this was the time to "actively build consensus and put a plan in place, so when conditions are supportive of raising revenue, we are ready to move." In other words, the goal of the report is to lay the groundwork now for a new stadium, in particular establishing that it's a "need" that must be addressed sooner or later, so that the team can begin floating specific plans once the state has some money again.
To its credit, the St. Pete Times ran a pros-and-cons box with opposition responses to the ABC arguments, including "Economic impact studies are often overblown," "Many fans like the Trop," and "Seventeen years remain on the Trop agreement." The big question here, though, is: Is it worth it to publicly subsidize a new stadium for the Rays, and if not, is it worth it for the Rays to build a new stadium on their own? To say that the team would be happier in a brand-spanking-new building so long as they didn't pay for it isn't news; the real test is whether there's really $550 million worth of benefits to go around (to both public and team) if one were built. If not, then no amount of economic recovery is going to make it a good deal, and it might be worth exploring cheaper options, like renovating the Trop — or starting a Fundable page to help pay Carl Crawford's contract.
January 25, 2010
Kings arena land swap to involve TIF subsidies?
More details are emerging about the Sacramento Kings' proposed crazy three-way land swap arena deal, and they put the emphasis on the "crazy." The Sacramento Bee (whose direct link to the full article is broken) calls the plan "audacious," "fragile," and "still-evolving"; it also gives a hint at some of the public subsidies that would be required:
The development team is counting on concessions from the city. The arena site would be a parcel of city-owned land at the railyard. The city also would be expected to donate 100 acres it owns near Arco for the new fairgrounds, Kamilos said. The developers also plan to ask the city for other forms of financial aid.
Without endorsing any of the proposals, Assistant City Manager John Dangberg acknowledged that any arena deal would likely require "a significant public investment," including land grants. To support the project, the city would consider contributing some of the tax dollars generated by the deal, he said. That way, the city wouldn't have to raise taxes.
That's right, it's our old friend TIFs. And while local officials like to tout the free-lunch aspects of tax increment financing — it's money that otherwise wouldn't exist! — they avert their eyes to the less salutary aspects, like the fact that new development brings new public service costs that those new property tax revenues are normally expected to cover, or that TIF-subsidized sites can siphon off development from other local sites that would otherwise pay full property taxes.
In any case, the land swap plan sounds like it's still pretty up in the air — one of the developers behind it tells the Bee that "We're hoping there is a land-development opportunity as part of this ... Cal Expo or something else." It may just be a trial balloon, but the NBA's designation of the plan as its favorite means that it's the balloon that everyone has their eyes on.
Vikings float suburban stadium, federal stimulus subsidies
It was a momentous weekend for the Minnesota Vikings in more ways than one: On Friday, team execs floated a new stadium plan featuring — you guessed it — federal stimulus subsidies.
A new wrinkle developed in the Minnesota Vikings' stadium strategy on Friday, when team officials said they are looking at federal stimulus money to help them build a new home that just might be located in the suburbs. ...
To help finance the deal, the Vikings are exploring federal Build America Bonds, along with a possible 2 percent increase in the hospitality tax across the seven-county metro area.
Build America Bonds are a seriously weird financial instrument: Designed to kick-start those "shovel-ready" construction projects we've heard so much about, they're not tax-free like typical federall subsidized bonds. Rather, they achieve the same effect by having the federal government match 35% of the payments to bondholders — effectively allowing the local government that issues the bonds to offer a lower interest rate, since bondholders are getting a bonus on top of that. In its first year local governments issued about $50 billion in Build America Bonds, putting the feds on the hook for about $1 billion a year in subsidies, a number that will rise as more bonds are issued.
Vikings stadium executive Lester Bagley says that Build America Bonds could be used for about $1 million a year in stadium bond payments, which is a really piddly amount on a projected $870 million stadium. A state budget official also told the Minneapolis Star Tribune that it would have to study whether an NFL stadium could be considered a "governmental purpose" under federal tax law. You know that stadium-hungry teams are going to be watching this one with bated breath.
If nothing else, from the sound of this suburban gambit, it seems as if Bagley is trying to set up a bidding war among Minneapolis and the surrounding suburbs to be the Vikes' new home. (Not that that worked so well last time.) At least they don't seem to be waving the Los Angeles threat too overtly — though Bagley did warn last week, in typical non-threat threat fashion, that "it's clear that in order to retain the Vikings for the next generation in Minnesota, we have to resolve our stadium issue."
January 22, 2010
Santa Clara 49ers vote set for June (maybe)
As expected, the Santa Clarans for Economic Progress petitions to hold a public vote on building a stadium for the San Francisco 49ers have been found to be valid. (Or a random sampling of them were, anyway. You know, this could have saved us all a lot of time ten years ago.) Now the referendum, as written by the group (and its sponsors, the 49ers), will automatically go on the ballot for a previously scheduled special election on June 8.
Or maybe not, as the San Jose Mercury News has switched gears and now reports that the Santa Clara city council will decide on Tuesday when the vote will take place. Though the same article says that it will take a simple majority of voters "to approve building a $937 NFL stadium in the city," so fact-checking (or proofreading) may not be the Merc News' strong point.
January 21, 2010
Wizards break ground, economic impact study rejoices
In case you've been holding your breath waiting to see if the Kansas City, Kansas council would approve the Wizards' already-in-the-works stadium plan, it did so on Tuesday. The team, wasting no time, immediately broke ground yesterday on the project, which is to include an 18,000-seat soccer-only stadium to be ready for the 2012 season.
MLSnet, the soccer league's web arm, reports:
The economic impact of the development was the most talked-about issue during the course of the board's meeting. Every speaking member praised the impact the project would have on Wyandotte County, in terms of both money and job creation.
Between the stadium, offices, and field complex, OnGoal, LLC's development is expected to create over 8,000 new jobs in the Wyandotte County area, with a total economic impact of over $500 million annually.
Ignore the "economic impact" numbers, which are meaningless, and focus on the job figures: With the public set to provide $147 million in sales tax rebates for the overall project, that'd come to under $20,000 per new job created, which is actually pretty reasonable as economic development projects go. The big question, of course, is whether all 8,000 jobs (most of which presumably wouldn't be Wizards-related) would really be "new," or if some of them would have located elsewhere in Wyandotte County without the subsidy. And there's also the question of whether the county could do just as well by spending its sales tax money on something else — especially given the recent findings that the most effective job creation measure may be giving money to the unemployed.
January 20, 2010
Maryland approves Baltimore soccer stadium study
Baltimore Mayor Sheila Dixon's idea of building a soccer stadium in South Baltimore took another baby step forward yesterday, as the Maryland Stadium Authority approved spending $100,000 to study the possibility of a new stadium for either D.C. United or the minor-league Crystal Palace Baltimore. Or rather, to "explore the benefits" of building a 17,000- to 20,000-seat stadium, for which you'd presumably need to know stuff like how much it would cost and who would pay for it — but given typical economic impact studies, maybe not.
January 19, 2010
Dolphins stadium gets yet another new name
The building formerly known as Dolphin Stadium has signed a new five-year naming rights deal under which it will be redubbed "Sun Life Stadium." That means when viewers tune in for the Super Bowl next month, they'll hear repeated references to ... a newspaper chain? A fruit drink? Whoever had "Canadian insurance company" in the pool, you're a winner!
The Miami Herald says that this will be the building's seventh name in 23 years, but a bunch of those were minor changes (Pro Player Park to Pro Player Stadium, Dolphins Stadium to Dolphin Stadium), making this the first major naming rights resale for the place since Pro Player went bankrupt. The interesting bit here, though, is that Sun Life coughed up a relatively high $7.5 million a year for naming rights, showing that a used stadium name may actually be worth something after all — at least, if it means guaranteed screen time during a Super Bowl.
Portugal told to consider razing new soccer stadiums
Further evidence that stadiums built for mega-events like the Olympics and the World Cup are white elephants as soon as they're built: Elected officials in Aveiro and Leiria, Portugal are saying those cities should consider demolishing stadiums built for the 2004 European soccer championships to save on maintenance costs and make way for more useful development.
To be fair, it doesn't sound like either city is going to jump at this idea, and either way, razing the stadiums isn't going to wipe out the $214 million in construction debt the two cities took on. And replacing them with shopping malls or business centers, as former Portuguese economy minister Augusto Mateus suggests, isn't necessarily going to help, given that those could end up just diverting development that would otherwise happen elsewhere. (Caveat: I'm not as up on the latest in Portuguese land use politics as I really should be.) Still, that they're even having this debate should be a bit of a red flag to cities being told that new stadiums will help put their cities on the map — once again, be careful of "on the map" for what.
January 18, 2010
NBA choo-choo-chooses railyard land swap as best Kings plan
The city of Sacramento may be kicking around seven proposals for a new Kings arena, but the NBA has already declared its favorite — and it's not the one from downtown developer Thomas Enterprises that seemed to be the safe choice of local pundits. Rather, the league is backing something called the Sacramento Convergence, a complicated land-swap deal that would build an arena on city-controlled land at the downtown railyards, transfer the Arco Arena site and adjacent property to the state for a new state fairgrounds, and sell the current Cal Expo site to developer Gerry Kamilos for redevelopment.
As if that weren't confusing enough, the financial details of the project as reported are still murky: The Sacramento Business Journal says that the "initial phase" would cost up to $700 million, and that the Kings owners "would commit $300 million to the financing of the project, paying $10 million a year for 30 years" — though as anyone who's taken out a mortgage should know, that's not actually the same thing. (Depending on the interest rate, it would at most pay off $150 million in up-front costs.) Also not reported: how much money would be brought in by selling the Cal Expo site, which as we've seen is key to this kind of land-swap deal.
For their part, both Mayor Kevin Johnson and the head of his arena task force say they're still exploring all options, and aren't going to back a plan just because the NBA likes it. Which raises the question: Why the heck did the NBA even pick a favorite at this point, when on the face of it they shouldn't care who builds an arena, so long as it gets done without money their (or the Kings') money? John Moag, the former Maryland Stadium Authority chief who's been named the league's point man on the Sacramento arena push, told the Sacramento Bee that he liked the Convergence project because it included private partners "who are going to show me the money" — but if they're going to put up capital, they're going to want revenue back as well, so it doesn't actually help the project's bottom line.
Of course, maybe they're just hoping to steer clear of some of the more fanciful proposals, like the one for a riverfront arena whose restaurateur mastermind told the Bee, "Our river would literally come alive." Yikes!
January 14, 2010
Marlins garage back within budget
So it turns out the Miami City Commission really did manage to keep the Florida Marlins parking garage price tag within their budget, as today they approved $92 million in bonds to fund the project, after initial estimates had been as high as $135 million. The trick? They "renegotiated the cost" with the construction firm, according to the Miami Herald. Makes you wonder what else cities could get cheaper if they stopped just paying whatever bill they were handed.
January 13, 2010
49ers file Santa Clara stadium petitions; vote in June?
The Santa Clara 49ers stadium took another step closer to a public vote yesterday, as the team-backed group Santa Clarans for Economic Progress submitted 8,043 signatures towards putting an initiative on the ballot. If at least 4,640 of the signatures are found valid, the city council has the choice of putting it on the ballot in June, or waiting until the regular election in November; if it clears 6,970 valid names, the vote automatically takes place in June.
There's been a ton of debate among Santa Clarans (several of whom have posted comments on this site) about whether the paid signature gatherers were misinforming people about the purpose of the petitions. (The city council has the option of putting its own referendum on the ballot if the 49ers don't, which would potentially provide more public disclosure and safeguards.) It's not immediately clear if this is grounds for challenging the petition signatures, or indeed what you can do if you've signed the petition and now wish you hadn't.
Vancouver library mandates Olympics-only ads
Speaking of the questionable benefits of sports mega-events, here's another one: Public libraries forced to cater to Olympic advertisers!
An internal memo obtained by The Tyee advises Vancouver Public Library branches to protect Olympic sponsors.
"Do not have Pepsi or Dairy Queen sponsor your event," read guidelines sent to VPL branch heads and supervisory staff last fall. "Coke and McDonald's are the Olympic sponsors. If you are planning a kids' event and approaching sponsors, approach McDonald's and not another well-known fast-food outlet."
VPL marketing director Jean Kavanagh added that the ban extends to such things as audio-visual equipment made by non-sponsors: "I would get some tape and put it over the 'Sony.' Just a little piece of tape."
The city of Vancouver says this is the library's call, but given that it already passed its own legislation banning "unauthorized" signs near Olympic venues, it's kind of abandoned the moral high ground here.
January 12, 2010
You can re-enter Fremont in the Oakland A's sweepstakes after the city — as predicted here last summer — has pitched the now-closing NUMMI auto plant site as a possible stadium site. This is adjacent to the Warm Springs site that was previously rejected, in part because of opposition from NUMMI.
The Fremont plan is still a bit hazy, but would apparently involve the city buying the 370-acre property with redevelopment funds (i.e., bonds based on kicking back future property taxes, aka TIFs), building roads and other infrastructure, then handing over 120 acres to the A's for a stadium. No word on whether the A's would pay rent on the site, though it's probably ominous that Mayor Bob Wasserman called a ballpark a potential "catalyst for development," which in these cases usually means "loss leader."
The one new twist is that the plan would be put up to a public vote in November, something that previous Fremont plans would not have. The Fremont Citizens Network, whose protests helped kill the earlier plans last year, has vowed to defeat this one too, with president Kathy McDonald promising, "If this ridiculous thing actually goes to a vote in November, I guarantee that our campaign will not only be about defeating this proposal, but replacing a few heads."
Meanwhile, Oakland city leaders are still pushing for their own stadium plans, with local political bigwigs starting the nonprofit group Let's Go Oakland! to stump for a stadium at one of four sites. They already have 30,216 Facebook fans, so look out, San Jose!
January 11, 2010
Economist: Don't expect windfall from World Cup
Nice piece from ABC News on Friday of the dubious benefits of hosting the World Cup, on which South Africa is spending $1.7 billion for new stadiums. A large part of the article consists of quotes from sports economist Rob Baade, who notes that his studies of such "mega-events" show they're not worth all they're cracked up to be in economic terms:
Before the Summer Olympics in 2004, the excitement among business owners in Athens, Greece was palpable, Baade recalled. After the Games? Not so much.
"They all told me they wouldn't do it again," he said, "because the infrastructure that is so critical to creating something in the way of an economic legacy was really disruptive to the normal flow of economic activity, so much so that some business owners said their revenues were down by 80 to 90 percent as a games...When you disrupt commercial activity, you've got to consider that as a cost."
"When you put all those things together, that's a pretty lengthy list," he cautioned. "We really found that mega-events do not provide the kind of boost that apologists for the games argue will occur as a consequence. Things don't materialize as a lot of people hope and think."
Not to be dissuaded, sports consultant Lee-Anne Bac of Grant Thornton played the "intangibles" card, saying the real benefit would be that the World Cup "really starts to put South Africa on the map." But as I'm sure Baade would be quick to point out, there is such a thing as bad publicity.
January 07, 2010
Dolphins release plans for "umbrella" they say they don't need
The Miami Dolphins have revealed what they want to spend their $250 million in stadium renovation money on: Giant umbrella!
Okay, to be fair, team execs actually said they have no idea how much the umbrella (what normal humans usually call a "roof" or an "overhang") would cost:
"This is not a plan that has been priced out," Dolphins CEO Mike Dee told a South Florida Super Bowl Host subcommittee appointed to review the proposal. "We're not at a point where we've figured out financing or figured out how to make it work. But we want to leave no stone unturned to see how we can work it out."
Dee also said, according to the Miami Herald, that "the Dolphins do not need the stadium improvements for regular season games, and that it was up to local Super Bowl organizers to decide if the renovations are worth pursuing." Translation: We just drew the pictures of the superumbrella, don't expect us to actually help pay for it.
Sacramento arena would create literally dozens of jobs
Sacramento's arena task force has come out with its job creation estimates for a new Kings arena, and the survey (by Sacramento consultants Capitol Public Finance Group) says ... 229 permanent jobs. For a $300 million building, of which no one is saying how much would be paid for with public funds.
I've been pretty critical of the Sacramento Bee's reporting in the past, so I give them full credit now for doing what too many newspapers don't, and actually trying to assess what economic impact projections actually mean. In this case, the Bee rang up Stanford economist Roger Noll, who didn't mince words:
Stanford University economist Roger Noll called the report "remarkably honest" but said it doesn't bolster the case for a new arena.
"Two hundred jobs is nothing," said Noll, referring to the permanent jobs the report estimates would be created. "You induce Macy's to open another store and you get that."
A critical issue, Noll said, is how the arena is financed. If taxpayers pay the bulk, that takes dollars out of their pockets, blunting at least some of the economic benefit. "How much are you willing to pay to get 200 jobs?" he asked.
To try to put some actual numbers to this: If the public put up all $300 million of the arena costs (even assuming the arena only costs $300 million, which seems low by recent standards), that would come to $1.4 million spent per new job created — in a job development world where anything over $50,000 per job qualifies as "execrable." And as for the issue of taking dollars out of local pockets, recall that when Kansas City was first proposing using tax money to pay for stadium renovations, it was calculated that a three-eighths of a percent sales-tax hike would cost each local resident $25 a year. Now that's something that should be included in every economic analysis — or at the very least, in newspaper coverage thereof.
January 06, 2010
Roski: L.A. wants Bills, Jaguars
Developer Ed Roski's Majestic Realty has narrowed down its wish list of teams to relocate to its planned L.A.-area stadium, with managing partner John Semcken now saying the Buffalo Bills and Jacksonville Jaguars are at the top of the relocation list.
"Jacksonville and Buffalo are two teams in very, very small markets," Semcken told the Associated Press. "They are teams that have either outdated stadiums or are having trouble filling their stadiums or both." He added that Majestic won't contact the San Francisco 49ers, San Diego Chargers or Minnesota Vikings as long as they're pursuing stadium plans of their own — which is probably just fine with those teams' owners, as they'll only want to use L.A. as a bogeyman to help in their hometown stadium demands (or, at most, as a fallback in case those stadium plans fall through).
Of course, market size hasn't generally been a prime consideration in the NFL, since so much of its revenue comes from national TV contracts and the like, not local sources — which is how L.A. wound up with no teams in the first place, for that matter, since a revenue-packed (for the time, anyway) stadium in middle-sized St. Louis was more appealing than a less-snazzy one in the nation's second largest city. That may change a smidge under the new revenue sharing rules, but not a ton, so it's unlikely that either the Bills or the Jaguars will be leaping at this opportunity unless Roski shows them some serious coin in terms of stadium revenue that they'll be able to get at the new digs.
And that likely means luring two teams to spread out the construction costs a bit, which means getting two owners to stop just using Roski for leverage and actually agree to move to L.A., at least one of whom would have to sell majority ownership to Roski since that's what he's insisting on ... all of which is to say, just because Roski has filled out his Christmas card list, don't expect to see flying reindeer in the immediate future.
Rose Bowl renovation: your tax dollars at work?
For those of you angered that our folks in Congress meet every so often to discuss the college football championship fiasco, consider that one reason a $163 million renovation of the Rose Bowl is being pushed forward is the possibility of tapping stimulus funds as one reason for doing so. The Rose Bowl with its huge capacity will host this year's college football championship game on January 7.
A New York Times report on New Year's Day suggested that Rose Bowl folks fear going in the same direction as the Orange Bowl (the wrecking ball) if something is not done, but Times reporter Billy Witz explains that plans to merge renovations with an NFL team met with a variety of obstacles. Among them, community opposition, with many having recollections of Raider fans converging on LA in strange and intimidating costumes before Al Davis took his ball and moved back to Oakland, as well as concerns that a Soldier Field-style renovation might occur. In that instance, the historic facility lost its landmark status, and rightfully so.
To avoid that problem, the Rose Bowl's general manager, Darryl Dunn, has brought in Janet Marie Smith, best known for Camden Yards planning and Fenway renovation. As for why stimulus funds might be needed, Dunn indicated that they'd go after donors and look to events, but said, "We're a stadium....We don't have an alumni base." The Rose Bowl currently owes $43 million on earlier renovation projects, so the $163 million renovation, if it moved forward, would push the renovation costs well above the $200 million mark. It is still small compared to the high price of recent professional sport venue construction, but 200 million bucks isn't chicken feed either.
For those who are outraged by this, consider that you can fire up your TV this evening and watch the GMAC bowl, sponsored by a recipient of federal bailout money, and a few days later enjoy the Citi BCS Championship Game, sponsored, once again sponsored by a beneficiary of bailout funds. The Rose Bowl hopes to sponsor many more BCS games after renovations take place. If taxpayers seem to be funding the college football championship tournament both directly and indirectly, maybe we ought to have a little more of a role in fixing the mess!
Dolphins to seek $250m for stadium upgrades
Other shoe: dropped.
Only months after Miami-Dade commissioners agreed to borrow $490 million for a new Florida Marlins baseball stadium, local leaders and the Miami Dolphins are contemplating a push to seek public money to help fund $250 million in renovations to the football venue.
If you've read economist Phil Porter's work before, you'll know that the only way Miami makes back $250 million landing additional Super Bowls (which is the goal of the renovations — apparently at the last one held there, some fans got wet when it rained) is if Peyton Manning leaves his wallet lying around. If there's a silver lining here, it's that the money might be taken from convention center hotel funding, which is a similarly terrible idea.
And hey, speaking of Porter, here he is in the Miami Herald story on the Dolphins' demands:
Philip Porter, an economics professor at the University of South Florida in Tampa, said a Super Bowl amounts to a fiscal blip for large economies. That's particularly true for popular winter tourism destinations like South Florida, which can count on packed hotels in February even without a Super Bowl.
"If you wanted economic impact, you'd do a lot better taking the money you would spend on a stadium and drop it out of a helicopter," he said.
That's a good point, and — hey, waitaminnit. Helicopter? Allen Sanderson, call your trademark attorney!
Predators' lease to blow up on Nashville?
I can only partly make head or tail of what's going on here, but: Nashville Predators executives are scheduled to meet with city officials this week to discuss whether the team is in default of its brand new lease on the Sommet Center. At issue is apparently a lien the federal government has placed on principal owner David Freeman for non-payment of taxes, and a lawsuit the team has filed against The Sommet Group to get out of its naming-rights agreement on the arena.
It doesn't exactly make sense that the city would declare the Predators in default of their lease at a time when they're trying to hold them to it, but the Nashville Business Journal has a bit more of an explanation:
Authority members are adamant that they do not want to force a showdown with the team by declaring a default, seeking $50 million in liquidated damages and eliminating the city's National Hockey League franchise. The issue is complicated, however, by the fact that the team may have the ability to exercise an early termination clause later this year, which would require a payment of just $20 million.
In short, if the authority does not declare a default and team decides to leave Nashville anyway, taxpayers would be out $30 million.
Two lessons here: One, don't give teams out clauses in their leases unless you want them to be held over your heads as negotiating threats (as we've seen before). Two, the NHL really will let just anybody become a team owner.
January 05, 2010
More dubious firms got Citi Field contracts
Because everyone is emailing me about it: The New York Post ran an "exclusive" report yesterday that the Mets used contractors with suspected mob ties in the construction of Citi Field:
The Mets shelled out $51.6 million in taxpayer money to contractors shunned by the city for their ties to the Mafia, labor corruption or bribery, The Post has learned.
At least seven contractors the city avoids were hired by the team to build Citi Field between 2006 and 2009, according to government records.
The tainted companies were paid from a $91 million pot the city Economic Development Corp. gave to the Mets.
This is big news — or at least, it was back in April, when the New York Times first reported it. The Post did uncover some additional names of questionable companies that worked on Citi Field, though these were because of bribery allegations and other unethical practices, not specifically mob ties. But then, the Post has a notoriously hazy notion of what constitutes an "exclusive."
January 04, 2010
Cowboys Stadium good for some businesses, bad for others
You can't be much more wishy-washy than calling a new stadium "a godsend for some and a nightmare for others," but the Dallas Morning News has tried, evenly balancing positive and negative quotes from store owners in the vicinity of the Cowboys' new stadium. Sample couplet:
[Olenjack's Grille] general manager Adam Jones said his restaurant has "embraced the stadium since Day One." He said Sundays and Mondays were traditionally slow, but now he sometimes doubles his business. The stadium is about three-quarters of a mile away. ... "It's been fantastic for us," Jones said.
The stadium's impact has been particularly surprising to [Mi Tierra Latin Fusion] restaurateur Damaris Torres. At a mile and a half from the stadium, she thought she might get a few extra customers to drop in for Cuban sandwiches and guava turnovers. Instead, diners have stayed away, many of them worried about potential traffic jams, she said. That has driven down business an average of 40 percent when the Cowboys play at home.
It'd be nice to see the News make some attempt at coming up with conclusions from its survey: Is the stadium helping more businesses than it's hurting? Are there particular geographic areas, or types of businesses, that benefit more than others? But that's probably too much to expect from today's time-pressed journalists.
Cheesy promotion to blow up Texas Stadium
In a move that takes corporate sponsorship to new depths, the city of Irving, Texas has sold naming rights to the demolition of the Cowboys' old Texas Stadium to Kraft Foods, thus guaranteeing that the 39-year-old stadium will end its life in a "Cheddar Explosion." The winner of a kids' essay contest will get to push the plunger — no word yet from Kraft on whether the topic will be Why I Hate The Cowboys or Why I Like To Blow Stuff Up Real Good.
The take for Irving on all this: $75,000 in cash, plus an equal amount of delicious Kraft products. Total cost of the demolition: $5.8 million. I guess every bit counts...
Giants group demands A's guarantee stadium benefits
Stand for San Jose, the San Francisco Giants-funded group fighting the Oakland A's possible move to the South Bay, issued a demand last week that the A's agree to make up any shortfalls in promised economic benefits from a new San Jose stadium. In a letter to San Jose Mayor Chuck Reed, the group said that the A's owners shouldn't be allowed to "attempt a hidden-ball trick to conceal the true costs to taxpayers."
There are two ways of looking at this: On the one hand, it's a savvy way to point out that economic benefit studies are, by and large, a load of crap. On the other, it's a largely meaningless request — actually measuring "economic impact" is more art than science, especially when you take into account things like spending that is diverted from one part of town to another (the substitution effect). So even if the A's owners agreed to such a provision, it would be fairly easy for them to concoct some numbers that showed the stadium was living up to its promises.
In any case, as eminent Stanford sports economist Roger Noll tells the San Jose Mercury News, there's no way the A's will agree to this: "Economic impact statements have a huge amount of uncertainty in them. No one would guarantee their validity. It's like somebody came in with the Farmer's Almanac and said, 'On Oct. 17, it will rain.' You can't guarantee it for me." Still, it's a nice way to poke fun at the Farmer's Almanac.
