February 25, 2011
Sacramento Kings ask for extension on Anaheim move request
The Sacramento Kings owners have asked the NBA for a delay of next Tuesday's filing deadline for relocation requests, saying they want (in the words of an NBA press statement) "the opportunity to discuss their options with the Board of Governors at its April 14-15 meeting." It's widely expected the request will be granted.
The question now becomes: What are they waiting for? Sacramento Mayor Kevin Johnson declared yesterday, "This means one thing. They are trying to cut a deal to leave." And added, "They haven't cut a deal yet, or they wouldn't need an extension."
All of which seems unarguable, but what, then, is the holdup in working out a deal? Several sports business experts tell the Sacramento Bee that an Anaheim move might not be as easy as it sounds: Former A's and 49ers exec Andy Dolich notes that the Los Angeles Lakers and Clippers are likely to oppose the Kings relocating to Southern California, and those teams "have significant influence" around the NBA.
Stanford sports economist Roger Noll, meanwhile, notes that in additional to working out a lease in Anaheim and any relocation fee due the Lakers and Clippers, the Maloofs would also have to figure out a broadcast deal: "You want to make sure your options are as good as what you have in Sacramento." Which sounds like a no-brainer — Orange County has more than double the population of Sacramento County — but again, having existing teams around complicates matters, as we've seen before.
For now, it looks like the Maloofs are hedging their bets, trying to get Sacramento city officials and the Anaheim Ducks owners to, in effect, bid against each other to provide the Kings with a home. The trick will come when it's time to pick a winner, especially if neither partner in this game of chicken has budged much, or if the Lakers and Clippers can really throw up significant roadblocks among the NBA owners. But for now, kicking the can down the road is the better part of valor.
Oilers arena plan floats PSLs, but Katz having none of it
Edmonton city officials released their Update on Advancing the Downtown Arena report yesterday, and it included their tentative financing plans for an Oilers arena. Namely:
- $125 million from a ticket tax;
- $125 million from a Community Revitalization Levy (i.e., kickbacks of local tax revenues, i.e., a TIF);
- $100 million from Oilers owner Daryl Katz;
- $100 million from the sale of personal seat licenses.
I'm not actually sure that adds up to the requisite $450 million — the $125 million in ticket-tax money appears to be spread over 20 years, which means it'd pay off far less than that in up-front bonds. But in any case, this plan looks to be quickly going nowhere, as Katz hates the idea of PSLs, and hasn't committed to the ticket tax either. Which makes sense, since both of those would effectively come out of his pocket, and if he wanted to build an arena with his own money, he wouldn't be asking taxpayers to do it for him, now would he?
Metrodome roof repair cost: $25m
The Minneapolis Metrodome roof repair is expected to cost $25 million, according to the St. Paul Pioneer Press:
The paradox of spending millions to fix the aging Dome as campaigns grow for a new stadium is the result of the Vikings still having a year left on their Metrodome lease — and no new stadium could be built for several years.
This afternoon, the Metropolitan Sports Facilities Commission, which owns the Dome, will likely award New York-based Birdair Inc. a contract to remove the existing roof and install a new one in time — officials hope — for the Vikings preseason.
It's not exactly a "paradox": The Vikings want a new stadium, but they don't have one yet (and won't for several years, since it not only has to be approved but, you know, built), so they have to fix the old one first. And anyway, the roof repair will be covered by insurance, except for a $25,000 deductible.
Bill Lester, director of the state sports commission, says he hopes the repairs will be done by the start of preseason, assuming "we don't get a tsunami or something else that delays the work." I knew global warming was getting bad, but this is ridiculous...
February 24, 2011
Today's Kings-to-Anaheim rumors
Speaking of rumors, talk continues to heat up that the Sacramento Kings are headed to Anaheim. The reality, though, is murkier:
- Orange County Register columnist Randy Youngman reports that "there are growing indications that the Maloofs will ask for an extension on the deadline because of unresolved issues as the protracted negotiations continue with Henry Samueli's lieutenants at Anaheim Arena Management, the company that operates Honda Center for the City of Anaheim." That actually doesn't sound like an acceleration of move talks so much as a snag, but Youngman insists that a final deal is expected in March, or maybe April.
- SoCal sports business expert David Carter notes that while the Kings would be a tenant in somebody else's building in Anaheim, and the third team in the greater L.A. market, "you could make an argument that you're better off being a junior tenant in a more compelling building, in a more compelling market, than being a big fish in a small pond."
- Mayor KJ says the Anaheim move is "more than rumors," though given he's still trying to drum up support for a new arena in Sacramento, he would say that.
- Mark Kreidler of ESPN.com is tweeting like crazy on the topic, with most notable tweets including: "Kings will ask for and receive extension from the NBA to consider the Anaheim deal. Am told the league also wants time -- not sold on OC.", "Kings extension on relocation could well run through the end of the season. The NBA doesn't really have set parameters, I'm told." and "Understand that what comes to me from Maloof-approved sources can be spin. That's expected. But extension is real enough and will happen."
I have zero inside information, but what all this sounds like is that the Maloofs are engaged in talks to move to Anaheim, but nobody's sure if they can work out a deal that will make them, Samueli, and the NBA happy all at once. But if nothing else, playing footsie with Anaheim can help turn up the heat on the Sacramento city council to approve an arena deal, especially if the footsie can be dragged out for months. It's all about the leverage.
Sportswriters generate "contraction" threat from thin air
How a random thought becomes a meme, lesson #327:
- A sportswriter, in this case Ken Rosenthal of FoxSports, needs something to write about on a slow news day, as they all are during spring training. He writes: "Don't be surprised if the 'C' word — contraction — returns to the baseball lexicon soon. I'm already hearing rumblings that certain big-market teams want to drop the A's and Rays, even though the idea stands little chance of actually becoming reality." Plus several hundred more words, with the only actual "rumblings" being from Hank Steinbrenner and Larry Lucchino, each of whom, Rosenthal notes, didn't actually mention contraction.
- FoxSports doubles down on Rosenthal's speculation by headlining the story "A's, Rays must relocate or face contraction." (Later changed to "Contraction's not the answer for MLB," though the original is still visible in the title bar.)
- St. Petersburg Times sports columnist John Romano writes that "Contraction, once again, is in the news," where "in the news" means "in Ken Rosenthal's column." After another several hundred words, Romano concludes that while contraction isn't likely soon, "that threat will continue to grow day by day, dollar by dollar and empty seat by empty seat. Whether you want to acknowledge it or not, Tampa Bay is now on the clock." The Times' headline: "Threat to contract Tampa Bay Rays may be gaining credibility."
- Ray Ratto writes a column decrying all this talk of contraction, which he says is a terrible idea.
I covered all the reasons MLB contraction is extremely unlikely ever to happen ten years ago, and most of those arguments still hold true today. Romano does point out that with increased revenue sharing, there's more money to be recouped by buying out struggling franchises; however, team owners are also going to want more to be bought out now than in 2001 (in part because revenue sharing makes even low-revenue teams potentially profitable), and there's a simpler solution, which is just to reduce revenue-sharing payments — which is, no doubt, what Steinbrenner is really after. And in any case, any attempt at contraction would still prompt a labor war plus a wave of antitrust suits — with Florida having some of the toughest case law around antitrust issues, which is in part why MLB gave the state the Rays to begin with after blocking the San Francisco Giants from moving to Tampa Bay.
For now, then, I think it's safe to declare this a non-story. But expect to see lots more of it in coming weeks, especially if the Rays ownership keeps trying to heat up his soft sell stadium campaign, and MLB gets an early start on saber-rattling for the next collective bargaining agreement.
February 23, 2011
Falcons, stadium authority start talks
The Atlanta Falcons and the Georgia World Congress Center Authority say they've entered into a memorandum of understanding about building a new $700 million stadium just north of the authority-owned Georgia Dome. Unlike some MOUs, though, this one apparently just means they're officially beginning negotiations:
The next step, officials said, will be for Falcons and GWCCA leaders firm up plans for the facility, iron out revenue sharing, work out how much the state and the Falcons will pay toward construction and determine lease terms.
Also in the mix could be naming rights for the facility, the field and the scoreboard.
Mere details!
Authority officials said initial plans are for taxpayers to kick in about half the construction cost, though obviously a ton depends on whether revenues like naming rights count towards the public's share or the team's share. The Georgia Dome would remain standing, which seems fair enough since it would only be 25 years old when the new stadium opens in 2017 as currently planned; still, does any city really need two football stadiums half a mile apart? Even if you accept the argument that the city needs a dome to host the occasional NCAA Final Four, that's going to make for an awful lot of maintenance costs to be paid for with a tiny handful of events. Yet another reason not to take this too seriously until we see the actual numbers.
Santa Clara council appoints selves as stadium authority, but still short $40m
The Santa Clara city council moved last night to protect their San Francisco 49ers stadium plan from Gov. Jerry Brown's threat to eliminate regional development authorities by voting unanimously to appoint a new stadium authority made up of ... themselves.
"What we want to do through these actions is confirm the very excellent programs that our redevelopment agency has been able to bring to the city of Santa Clara," Santa Clara City Manager Jennifer Sparacino told KGO-TV.
What the council can't confirm, however, is the $40 million worth of tax money that the Santa Clara RDA was expected to kick in to the 49ers stadium — if Brown succeeds in eliminating the RDAs, that money goes back into the general fund. "We're counting on those funds, we're expecting that investment to be there," said 49ers spokesperson Lisa Lang; Santa Clara Mayor Jamie Matthews said there's no Plan B if the RDA money is taken away.
Added Matthews: "Are you at a time out before you can continue the game? No, We're at the longest yard at the end zone." Does that make Gov. Brown Warden Hazen?
February 22, 2011
Mondale floats Vikes stadium on newspaper land
As David Brauer of MinnPost puts it, "Whoa, Nellie — get ready for the mother of all journalistic conflicts of interest!" Minnesota state stadium chief Ted Mondale has found another possible Vikings stadium site, and, well, take it away, Minneapolis Star Tribune:
The head of the Metropolitan Sports Facilities Commission on Tuesday said there's a fifth option for a Vikings stadium — the Star Tribune land next to the Metrodome.
It's an option that has been around for a while, but Ted Mondale's comments to reporters at a commercial real estate forum in Bloomington was the first public confirmation in the latest round of new stadium chatter.
The idea would be to buy the Star Tribune land, knock down the buildings and leave the Metrodome standing to have two facilities and not lose revenue, Mondale said.
"I think it's definitely a potential option that the Vikings or the public would buy that site," he said.
Gotta love that "Vikings or the public" — you know, somebody. No firm word on how much buying the site would run, though the Star Trib reports that the Vikings offered $45 million for at least part of the land in 2007 before backing off.
Brauer notes that the paper doesn't really need all its downtown property, after the massive downsizing that jettisoned much of the editorial staff a few years back, leading to the journalistic vacuum and reporting labor glut that helped create MinnPost. All we need now is for MinnPost to move into the vacated Metrodome once the Vikes leave, and the circle will be complete...
Saskatchewan: If feds won't fund our stadium, we won't build one
The Saskatchewan provincial government now says it will abandon plans for a new Roughriders stadium if federal funding isn't forthcoming by next week:
In a letter to federal Finance Minister Jim Flaherty, provincial cabinet minister Ken Cheveldayoff writes that the province is at a "critical point in the decision process and associated timeline for the project."
The province has been looking to Ottawa to pick up about 25 per cent of the cost of the proposed $431-million multi-purpose entertainment facility. Saskatchewan has made an application to PPP Canada, a federal Crown which supports public-private partnerships, for the funds.
Not that Saskatchewan knows who'd pay for the rest of it, but that's a mere detail. As is the fact that the Canadian federal government has said that it wants nothing to do with stadium funding.
Presumably the goal here is to make one last desperation play for P3 funding, then blame the feds for torpedoing the stadium if they don't come through. Assuming anyone in Regina will care much — the team is community-owned, so it's not like fans need to worry about it moving to Saskatoon.
February 21, 2011
Kings-to-Anaheim rumors heat up after Stern mumbles something about it
And in other trumped-up move threat news, the news media is awash in renewed speculation about a possible Sacramento Kings move to Anaheim after NBA commissioner David Stern confirmed that move talks had taken place during an All-Star Game press conference on Saturday.
Normally I'd be quick to blame Stern for saber-rattling, but it looks like in this case he was asked about a Kings-to-Anaheim move and did his best to duck the question, saying:
"I do know, because I read in the newspapers, that they are supposed to have had discussions with Orange County, and they have," Stern said. "I don't know whether they are ongoing. No one has told me that they have been tabled and no one has told me that they are ongoing."
And then the sports media went all kerflooey.
So what's the reality here? Well, the Kings do have a March 1 deadline to decide whether to apply to the NBA to relocate for next season, so presumably any talks that are ongoing are going on with a bit more urgency (though that assumes that there will be a next season). It's still unclear whether a move would work out financially, though — a Kings official said owners Joe and Gavin Maloof would no longer be getting a $100 million loan from Anaheim Ducks owner Henry Samueli, and the Maloofs would be stuck with an empty arena in Sacramento.
Not that it couldn't happen, but I'm still skeptical that there's enough added revenue in an Anaheim move to make this a slam dunk for the Maloofs. Which could mean that they punt the March 1 deadline, especially given the labor situation, and wait till next year. Guess we'll know more next week.
Bettman hauls out every last argument for Oilers arena
League commissioners demanding new homes for their teams shouldn't be news at this point, and yet it is. And so, Canadian papers were all abuzz this weekend over NHL commissioner Gary Bettman's declaration that "it's obviously essential that the [Edmonton] Oilers have a new arena. ... There's no question about it, they're not going to stay in this building."
Continued Bettman:
"This is not comparable to what our teams typically play in, anymore," Bettman said. "The revenue streams are not comparable to what goes on in new arenas.
"This building, by any standard, is antiquated and outdated. For a team to be competitive across the board, including its revenue streams, it needs to be in a competitive arena, and this one isn't."
Bettman added that "for a market of this size, what [Oilers owner Daryl Katz] is doing borders on being generous, as opposed to being an investment." He said in a small-market city like Edmonton a mix of public and private money is necessary to make the project sustainable.
Let's see, there's the move threat, the obsolescence claim, the "team can't compete charge" — yep, Bettman hit the stadium playbook trifecta! He didn't complain about the quality of the chef's salads, but you can't have everything.
Edmonton city councillor Amarjeet Sohi immediately fired back at Bettman, saying yesterday, "'Either you build the arena or we are going to leave.' — I think that is totally inappropriate. What he stated I think undermines the good will and undermines the negotiations that are going on now." Which is, of course, why the NHL had Bettman say it and not Katz. Somebody needs a refresher course in good cop/bad cop.
February 19, 2011
Ramsey County considering Vikings sales tax
Ramsey County officials are apparently exploring a half-cent sales tax hike as a funding mechanism for a Minnesota Vikings stadium, asking at least three state legislators if they'd support such a plan. "[They said], 'How'd you feel about a sales tax [increase]?', and I said, 'Not real good,'" state representative Carol McFarlane told the Minneapolis Star Tribune, before adding, "I'm being open-minded."
State representative Nora Slawik, meanwhile, said no specific sales tax figures were proposed, but said, "There are ways to structure it that I would be open to. In this economy, it's really important to look at any project that would bring in a lot of jobs, and I think the Vikings stadium has the potential to do that."
Okay, since you opened the door, Rep. Slawik, let's discuss the job impact of a half-cent sales tax increase. Back in 2006, the Kansas City Star noted that a 3/8 of a percent sales-tax hike would have the effect of taking $25 a year out of the pockets of county residents. If that holds true for Minnesota and scales proportionately — it's the weekend and I'm on a borrowed dodgy WiFi connection, so I don't have any way of easily checking at the moment — that means a half-cent sales tax hike would depress the economy of 500,000-person Ramsey County by about $16.5 million a year.
Not that I think taxes should never be raise, or even that sales taxes should never be raised (though they're both regressive and a bad thing to raise at a time when people still need all the encouragement they can to spend money). But in evaluating the economic effects of a project, you need to look at both the pros and the cons. One hopes that the Minnesota state legislature is smart enough to know this.
Lucchino says Fenway to last another 40-50 years
In discussing the completion of the Boston Red Sox' 10-year renovation plan for Fenway Park with reporters yesterday, team president Larry Lucchino promised that the nation's oldest major-league ballpark would be around for the long haul, or at least the medium haul:
Team president Larry Lucchino said the major projects are done. Engineers have told the ownership group that the structure has 40-50 years of life remaining.
In other words, if you're waiting for a new ballpark you're going to be waiting for a long time. "There is nothing in the plans," Lucchino said."
I'm not clear on what it means to say that "the structure has 40-50 years" to go — Fenway is all brick and steel, which if maintained should last pretty much forever. (Or can be replaced, as the Red Sox did with some steel beams during the current renovation.) But anyway, none of the current Red Sox management are going to be alive 50 years from now, so take this as a promise that Fenway will remain unscathed on their watch.
Meanwhile, 2012 is the ballpark's 100th anniversary, which if I'm counting right will make it the first stadium in baseball history to reach the century mark. Not bad for a building that was declared "economically obsolete" just 12 years ago.
L.A. deputy mayor: We don't need to know AEG's finances
The Los Angeles Times ran its first analysis of the AEG stadium proposal yesterday (or maybe today — who can tell with these kids today and their crazy web publication times?), and concluded that it's hard to evaluate the plan when we don't know what the company's internal finances would look like. "You need to understand the finances [and] make sure the split for the costs and the split for the revenues are fairly equitable," said some guy who's studied stadium deals for 16 years (points to self, clears throat). "[City officials] can at the very least use [their] leverage to demand information."
Actually existing city officials seem not so much interested in that course of action. "I think it's more than fair that [AEG] earn a return on that investment," city Blue Ribbon Commission chair Austin Beutner told the times after meeting with AEG officials on Thursday. As for how much of a return they get, he said, "I don't know that that's necessarily relevant to this exercise." And this is the one guy on the panel without previous ties to AEG.
Anyway, if you're not convinced by the notion that those who get the lions' share of the benefit from a stadium should put up an equal percentage of the costs, there's the opportunity cost argument: "Just because it's the government doesn't mean they shouldn't be thinking, 'What are the alternative uses? What is the real value of using that land?'" economist Dennis Coates told the Times. "Government should be very dubious of companies coming and saying, 'We're going to give you all this stuff and it won't cost you a penny.'" But how could that possibly go wrong?
February 17, 2011
AEG offers to be "to be determined" rent on stadium land
Well, this is kinda sorta interesting: AEG submitted its official transaction outline for its proposed $1.35 billion stadium project last night, and included among the potential city revenues was "rent from a proposed ground lease," according the L.A. Times. How much rent? Well, whereas previously it was thought that AEG would only pay a token $1 a year, now the company is offering to pay ... an amount "to be determined"! Woo?
AEG president Tim Leiweke also wrote in an accompanying letter that the stadium would not "divert existing tax revenues," which is usually code for tax-increment financing — in other words, diverting new tax revenues. Which is, in fact, exactly what Leiweke wants to do to help pay off the city's $350 million share of the project:
Although few new details and numbers were included in the proposal, AEG said the city bonds would be repaid using the land lease, fees on stadium tickets, fees on Staples Center tickets, new parking revenue and new advertising revenue from signs that would be installed on the convention center.
The bonds also would be repaid with increased revenue from sales taxes, business licenses taxes, utility taxes and property taxes generated by the stadium and the new, more marketable convention center operation, according to the plan.
In other L.A. stadium news, the city's Blue Ribbon Panel met for the first time today, and immediately set to work insisting that isn't a problem that almost the whole panel is made of up people who've done business with AEG. "Just because they've known someone in the past, I don't think prejudices them in any way shape or form," deputy mayor Austen Beutner told the Associated Press, before insisting that AEG didn't have a hand in picking the panel. Which, you know, hadn't even occurred to me until he suggested it, but now...
Ratner: I thought Nets arena was dead in '08
Hey, remember this blast from the past?
With the economy infreefalla wee pickle and bank credit nearly impossible to get, people are starting to consider what this will mean for the sports-stadium biz. On the hot seat today: the New Jersey Nets' planned Atlantic Yards arena project in Brooklyn, for which Goldman Sachs had promised that $950 million in financing would be in place by today. Yesterday, asked by the Newark Star-Ledger about the status of the Nets financing, the former investment bank issued a terse "no comment."
It turns out the Star-Ledger and I weren't the only ones wondering about this at the time: Nets part-owner Bruce Ratner tells the Daily News today that there was a time he doubted the arena would ever get built: "Yeah, in October of '08. Like a lot of people, I didn't know if we'd all be on breadlines. Goldman Sachs and Barclays Bank were always our underwriters. Greg Carey at Goldman, always a very optimistic guy, told me in October and November there was no financing available at all."
Of course, as I also wrote back then, "It's things like this [the collapsing real estate market] that are more likely to have a lasting impact on stadium and arena projects: Banks will start lending money again eventually, but the lousy economy is likely to last for years." The banks eventually started lending again, Ratner found a guy who was more interested in owning a basketball team than making money on a real-estate deal, and as of today the arena is taking shape, with about half the main vertical support girders in place. (More or less—I last walked past it on Monday.) Still, it's a reminder of how narrow the margin of victory (or defeat) can be in sports construction deals.
February 16, 2011
Sternberg to Tampa Bay: I'd love to stay, I must be going
Tampa Bay Rays owner Stuart Sternberg, in an interview with the St. Petersburg Times about his currently stalled new-stadium campaign:
At this point, a lot of people would ask "for how long?" It was a year ago when Sternberg suggested there were five markets better than this one that did not have baseball. Given that, it is easy to wonder if the Rays are closer to moving their franchise than they were then.
"Not at all," he said. "We are dead-set on making it work here. I have not been approached by any other area as far as moving the team, and I would not engage in any discussions about it."
Tampa Bay Rays owner Stuart Sternberg, four paragraphs later:
"Every year that goes by increases the possibility that we won't be here. We can't keep kicking the can down the road. I'm not a guy who kicks the can down the road. If there is something inevitable, you have to deal with it. At some point, my partners in baseball are going to throw their hands up in the air and say 'enough is enough.'"
Ladies and gentlemen, your 2011 Academy Award winner for Best Chutzpah.
Ramsey legislators call Vikings stadium non-plan "foolhardy"
Ramsey County doesn't even have a Minnesota Vikings stadium plan yet, and already people are lining up to oppose it: 11 state legislators from Ramsey County issued a letter calling a stadium "foolhardy," and the head of the St. Paul Republican Party demanded that any stadium plan be put to a voter referendum.
This plan probably isn't going anywhere, but as a stalking horse to drum up legislative support for a Minneapolis stadium &mdash or at least to turn the debate from "Should the public subsidize a stadium?" to "Where should we build it?" — it'll still do nicely.
Beane to leave if A's don't get new stadium?
The Oakland A's continue to break new ground in the field of "why we need a new stadium" arguments, following up the "our infield is too lumpy to appeal to free agents" gambit with a new tack:
In fact, [GM Billy] Beane's friends say this is his last go-round — if the A's aren't allowed to move to San Jose, he'll officially pass the baton to assistant David Forst and look for a Plan B for the rest of his professional life. It's anyone's guess what would be next for Beane; remember, this is the same executive who turned down what should've been a dream job, controlling the Red Sox.
To be fair, this is Fox Sports' Bob Klapisch spreading the rumor, not Beane or the A's. Still, it's a pretty odd rumor: Beane is actually a part-owner of the A's now, so presumably he'd have the same incentive as majority owner Lew Wolff to wait out the endgame of the current stadium battles in hopes of grabbing the brass ring. If all possibilities of a new stadium went up in smoke, it's reasonable that both Wolff and Beane might want to move along — but then, in stadium battles, it's never over till it's over.
AEG fiddles with stadium plan while news columns burn
Little action but much talk on the AEG L.A. NFL stadium front:
- AEG reps and union leaders met with Governor Jerry Brown yesterday to, in the words of Maria Elena Durazo, the executive secretary-treasurer of the Los Angeles County Federation of Labor, "make the case for why this project is so important to help put working families back to work in good jobs." Brown, according to the L.A. Times, "was noncommittal."
- Times sports columnist T.J. Simers says he's "turned off" by AEG's "arrogance" in trying to "jam a new stadium down everyone's throats because he says it will be good for L.A." and getting "huffy and dismissive" about its own potential for profits. All of which may well be true, but it leaves the impression that Simers would be happy to let AEG have $350 million in public if he just asked more politely.
- ESPN's Mark Kreidler writes that the NFL will miss the leverage that having an empty L.A. market has given to other teams in demanding stadium deals from their hometowns.
- The oddly named USC journalism school site Neon Tommy thinks that AEG should pay attention to the lessons of the Sprint Center in Kansas City, which AEG also operates, and which has been unable to lure an anchor sports tenant. Of course, in K.C. this doesn't matter much to AEG thanks to its sweetheart lease, but in L.A., notes Neon Tommy, "to pay off [its] massive investments, AEG would need to make $50-60 million per year from the stadium and surrounding L.A. Live complex," which is more than the vast majority of NFL teams turned in operating revenue last year. Also, "AEG made off like bandits in keeping much of the sponsorship and suite revenue from Sprint Center, but it may have to share a good portion of its $700 million Farmers Insurance naming rights deal with potential teams if it wants a tenant on Sundays." Remind me why they're doing this again?
February 14, 2011
Could the Mets' Madoff woes torpedo Citi Field bonds?
I haven't had much to say here about the New York Mets owners' Bernie Madoff-related financial woes, but there is one potential way they could have a major impact on stadium issues: In the unlikely (but not that unlikely) case that the Mets owners declare bankruptcy, the payments on Citi Field stadium bonds would be thrown into disarray.
As I just wrote this morning for the Village Voice website:
To get people to nonetheless buy these bonds backed by nothing more than the promise of the Wilpons, the Mets took out bond insurance with a company called Ambac Assurance Corporation, which pledged to pay out if the Mets defaulted. Which would have worked great, except that Ambac — like so many of the financial insurers caught up in the economic meltdown — filed for Chapter 11 in November, and doesn't actually have $500 million to pay out to anybody. And after Ambac, there's nobody: Anyone who bought Mets stadium bonds thinking that their money was safe with the nation's third most valuable baseball team would be left holding worthless paper.
At that point, the [city Industrial Development Agency] would be faced with a choice: Tap the city treasury to make good on the bonds, or risk future bond buyers growing wary of city-related bond offerings. Disclaimers about "faith and credit" be damned, it'd be a tough call for an agency already facing one high-profile stadium-related default.
Do I really expect this to happen? Probably not. But nobody expected the Texas Rangers to end up in bankruptcy court either. It's a situation that bears watching, let's just say that.
February 11, 2011
This week (or so) in me: Super Bowl stories
I've been trying to be better here about posting links to news articles where I've commented on stadium and arena issues — maybe if I try to do it weekly, I'll have more success. Anyway, two recent articles of note:
- In Tuesday's Washington Post, sports columnist Sally Jenkins took on the overpriced world of the modern Super Bowl, or as she calls it, Jerry World: "In Jerry World, the state of Texas spends $31 million to host the Super Bowl, even as deficits force public school cuts. In Jerry World, it can cost $900 just to park. In Jerry World, fans pay hundreds of dollars to stand outside the stadium." My contribution: "That's revolutionary if you can sell tickets to not actually watch the game. ... So obviously everybody is saying, 'Hey, we want to get one of those.'"
- In last Thursday's Wall Street Journal, Mark Yost took advantage of Super Bowl week to conduct a look at NFL stadiums whose debt has outlived their teams, including some (like Indianapolis' RCA Dome) where the stadium is demolished but the debt lives on. I try to put all this in some context, including an attempt to explain why it doesn't really matter when you pay off debt, though I suspect the quote got a bit mangled in editing; key unmangled quote: "The only thing limiting how soon owners will ask for a new stadium is chutzpah."
Vikings to talk Arden Hills, lottery money
Today's news out of Minnesota, where Vikings stadium plans continue to creep forwards, or maybe sideways:
- The Ramsey County Commission is expected to vote next week to officially open talks with the Vikings about a stadium at the Arden Hills ammo plant site. Now all they need is a financing plan, a way to convince two neighboring counties to kick in, and the agreement of the Vikings that that's where they want to play. Mere details.
- Vikings stadium kingpin Lester Bagley has suggested using football-themed lottery proceeds to help pay for a stadium. Problem 1: That money is currently going to existing state projects. Problem 2: After paying for prizes and overhead, the take from the Vikings lottery would only amount to a couple of million dollars a year. So far no response from state officials that I can tell.
- Sid Hartman was right after all: The Metrodome roof will need to be replaced, at a cost of $19 million (to be covered by insurance). The trick now is getting it ready by the start of exhibition football — yeah, right — in August; to that end, the stadium commission is expected to pick a contractor by February 25.
February 10, 2011
Quebec: Screw it, we'll just pay all $400m for an NHL arena
Not even three weeks after declaring that he'd look for a new source of funding for a Quebec hockey arena, Quebec City Mayor Regis Labeaume announced today that the source would be ... himself. Okay, really his city's and province's taxpayers. Ladies and gentlemen, your Plan B:
Quebec's government Thursday announced it would pour $200 million into a new coliseum in Quebec City, whose raison d'etre is drawing back a National Hockey League team, something the NHL has warned is not guaranteed.
It amounts to a near 50-50 financing arrangement with Quebec City for the estimated $400 million venue, placing the burden almost entirely on taxpayers.
"An arena financed with 100 per cent public money is unacceptable," said Claire Joly, executive director of the Quebec Taxpayers League. "There are a lot of people who want an arena and a hockey team in Quebec City, but not at any price."
The risk for Quebec City is going up dramatically. It had originally committed $50 million. Now it's on the hook for $187 million. (A group of citizens has raised $13 million to "reserve" seats in the new venue.)
The federal government hasn't ruled out chipping in as well, but nobody's holding their breath that they'll do so, especially not when the latest idea floated — allowing cities to use existing federal gas-tax payments on arenas — drew jeers from city officials, who rightly point out that allowing them to use money they already have isn't much of a federal subsidy. Meanwhile, that offer from Quebecor's Pierre Karl Peladeau to put in "tens of millions of dollars" was apparently rejected, as neither Labeaume nor Quebec Premier Jean Charest said anything about private money.
What they did indicate, though, was that in exchange for paying 100% of the arena costs, the city and province would be looking to get a cut of the vig. From the Globe and Mail:
Future private revenue from the Quebec City arena will be evenly split between the city and the province. This includes the commercial naming rights for the building, marketing revenues, and operating rights. All of this could total several million dollars a year, according to the mayor.
That's all well and good, and it's nice to see elected officials putting naming rights money in the "taxpayer" pile instead of letting teams get away with considering it their private stash (something they do even when the building the name is going on is owned by the public). Still, "several million dollars a year" is going to be a drop in the bucket in paying off $400 million in arena bonds, unless 30 counts as "several" in Canada. And that's even assuming that a team relocating to Quebec — remember, this arena doesn't have even a glimmer of a tenant yet — agrees to turn over those revenues to its public landlord.
All in all, it's a stunning amount of money for public officials to commit, especially in a nation which doesn't have nearly the same history of funneling taxpayer dollars to sports teams as the U.S. And to do it on spec, without a team in place — as I've noted before, you might as well stick a "kick me" sign on your back.
Sacramento council: Never mind, we can wait for arena details
So it looks like when the Sacramento city council declared two weeks ago that it wanted answers within two weeks on which Kings arena plans were actually viable, it was only joshing: On Tuesday night, the council reversed course and re-anointed ICON-Taylor as the preferred developer, giving that team an additional 90 days to figure out how to pay for its plan. Spake Sacramento councilmember Steve Cohn:
"While I appreciate dreams and visions that people have for whatever sites they want to promote, I have to say, for me, it comes down to financing. I want straight answers, and I want the best possible team to get straight answers. Based on what I've seen, I think those answers can best come from the ICON-Taylor group."
According to the Sacramento Press, council staffers will read over whatever ICON-Taylor comes up with in May and report back to the council in July. Which is a nice exercise in kicking the can down the road, anyway; the test will be to see whether the Kings owners up the ante in the meantime by asking the NBA for permission to move to greener pastures.
Minnesota stadium chief proposes new stadium agency
My radio pal Ted Mondale, the chair of Minnesota's Metropolitan Sports Facilities Commission, has taken time out to propose a single umbrella agency to oversee the state's multiple stadiums and arenas, saying it would be more efficient and help reduce the ability of teams to play cities off against each other. "I think there's a pretty broad consensus that we, as a region, have not done well" in stadium negotiations, Mondale told the Minneapolis Star Tribune.
It's a noble goal, albeit kind of an odd one for a guy whose main goal is getting yet another stadium built, this one for the Vikings. I'm also slightly skeptical that consolidating stadium and arena operations in a single agency would do much to end the economic war among the cities, given that it's legislators who battle it out over this stuff, not bureaucrats; but hey, anything's worth a shot.
Meanwhile, the Star Tribune reports that engineers will tell the MSFC today that the Metrodome roof can't be repaired and needs a full replacement, at a cost of $18 million. (Though it should probably be taken with a large grain of salt, given that the reporter here is Sid Hartman.) The MSFC has insurance to cover the $18 million cost, and if they start now there should be time to finish the work before the NFL preseason begins — ha ha ha ha — in August, so not much to worry about here, really, though I'm sure that won't stop some people.
February 09, 2011
L.A. council, AEG go toe-to-toe over downtown stadium
Lots of fireworks yesterday in AEG's ongoing campaign for a new Los Angeles NFL stadium:
- City councilmember Paul Krekorian submitted a resolution to "oppose any legislation that would subvert or accelerate the CEQA process for a proposed NFL stadium in Downtown Los Angeles." (CEQA is the environmental review process that Ed Roski's City of Industry stadium successfully evaded in 2009.) The resolution doesn't actually have any teeth, but would at least send a message to the state legislature that the council doesn't want to let AEG off the hook in this regard.
- AEG CEO TIm Leiweke promised that "the city's never going to have to pay a penny [for a downtown stadium] — and we're going to guarantee it," adding, "Will everyone just take a deep breath and have a little faith that we're not going to lie to people? We're going to do the right thing. Calm down." And: "This is people trying to scare people. And it's a shame. Because we have a 30% unemployment rate in this city, for the construction industry. And if people think that's going to be solved by sitting here and throwing rocks, they're wrong." And: "Almost every other community in the world would be throwing parades. But here we shoot."
It wasn't clear whether Leiweke's "not one penny" pledge applied to the $350 million convention center reconstruction that would be necessary to make way for the new stadium. Or how exactly AEG proposes to pay off the convention center bonds legally. But if you prefer heat over light, it was a great day to be reading the L.A. papers.
Minneapolis seeks $150m Target Center renovation
In yet another sign that sports stadiums and arenas are the gifts that keep on costing money, Minneapolis Mayor R.T. Rybak is looking for $150 million in state money to renovate the Timberwolves' Target Center, which was built in 1990 and just renovated in 2004. The improvements this time around would include two large glass atriums, a new restaurant, and a complete remodeling of the inside to "make the building more attractive to traveling concerts and shows," according to the Associated Press.
As for what's in it for Minnesota to attract more traveling concerts and shows, that's not so clear: The Target Center is managed by AEG, and while a quick scan of the operating agreement makes it look like the city gets a cut of revenues, it's going to be tough to generate enough new money to pay off $150 million in renovations. I'm sure Rybak will cite increased economic activity outside the arena as a justification, but as we've seen time and time again, much of that would only be cannibalized from elsewhere in town, or at least elsewhere in the state — it's not like a ton of people are going to be driving in from North Dakota to see the latest Limp Bizkit tour.
In any event, it doesn't look like the Target Center reno plans are going anywhere for the moment: Rybak didn't even include them in this year's legislative funding requests. Still, elected officials seem eager to include the arena with the Vikings stadium and a new St. Paul Saints stadium on the state's agenda sooner than later: "I think there will be an effort to at least throw out the idea of a solution for all of these facilities," Minneapolis City Council President Barbara Johnson told the Minneapolis Star Tribune. "A broader solution has to be found." Be afraid, be very afraid.
Penguins, preservationists battle over demolition of Civic Arena
On the heels of the Steelers' Super Bowl defeat, the Pittsburgh Post-Gazette has rapidly shifted gears, making yesterday's lead the future of the Mellon Arena, a facility that has not been used since June 2010.
The arena, initially called the Civic Arena until a naming rights deal was struck with a financial services firm, was the production location of that all-time film classic, The Fish That Saved Pittsburgh. The Penguins moved into the new Consol Arena in August 2010, after receiving developmental rights to the old arena property in a 2007 deal with state, city, and county officials.
Though the Sports and Exhibition Authority voted unanimously on September 16, 2010 to have the arena demolished, a group of preservationists has remained a fly in the ointment, and at least one board member said the authority's decision does not have to be final if someone proposes a better idea. That has given opponents of demolition some hope, but the meetings underway now are likely to lead to eventual demolition, unless there is a dramatic public outcry. The historic preservationists look at the lack of a highly specific plan to move forward as an opportunity to gain landmark status for the arena, which was built with a retractable roof before any other arena or stadium tried the idea.
According to the Post-Gazette, the planning process could take nine months or more, suggesting that the Penguins don't have a too much of a game plan as to what to do here. A spokesperson for Pittsburgh's mayor said that these "pre-application" meetings were established to "cut through red tape" and ensure that developers and the various agencies involved are on the same page. Historic preservationists were not mentioned in that part of the story, though. That may mean a wrecking ball will soon follow, but stay tuned.
February 08, 2011
L.A. stadium panel packed with AEG pals
The seasoned local business leaders picked by the mayor to analyze plans for a downtown NFL stadium on the public's behalf seem to have one thing in common: deep financial, political and civic ties with the company promoting the venue.
The article, by the Associated Press' Jacob Adelman, goes on to describe how six out of Los Angeles Mayor Antonio Villaraigosa's eight picks for the panel investigating AEG's downtown L.A. stadium plan has received campaign contributions from AEG or otherwise done business with them in recent years. Asks Robert Stern, president of L.A.'s Center for Governmental Studies in Los Angeles: "The question is: Is this commission designed to watch out for taxpayers, or is it designed to make sure the stadium gets built?"
To be fair, it's hard to be a major player in L.A. without having crossed paths with AEG, whose long tentacles reach into every corner of the entertainment industry. But that just points up one reason why stadium deals, which typically involve a major local developer or business titan, often get a less-than-jaundiced analysis from the local political classes: When you've done lunch with pretty much everybody who's anybody in town, you don't have to worry all that much that your golf buddies are going to look that hard at your financials.
The alternative, of course, would be to appoint somebody from outside the usual political sphere who has a track record of analyzing economic benefits. But that'd be crazy talk.
February 07, 2011
A's to have to pay off S.J. Giants for move?
If you're a subscriber to the San Jose/Silicon Valley Business Journal (and who isn't?), you can read their article today on how the Oakland A's could have to pay a territorial rights fee to the San Jose A's Giants on top of whatever they pay to the San Francisco Giants if they want to relocate to San Jose. If you're not a subscriber, you can read the newballpark.org summary here.
The upshot: The San Jose single-A team could demand a payout of about $4 million, according to Stanford economist Roger Noll, on top of $20-30 million that the parent club would be in line for. If that's all that's at stake, then it's hard to see why it's such a holdup — even $34 million wouldn't be a whole lot of money when you're talking about a $461 million stadium — but maybe Giants owner Bill Neukom disagrees with Noll about the asking price.
Speaking of Noll, I spoke with him last week for this article about revenue sharing, and he expressed the opinion that the Giants would make out just as well as the A's in an Oakland-to-San Jose franchise shift, given that they'd effectively gain the East Bay market in exchange for the South Bay. (You can drive from the East Bay to San Jose to see a baseball game, but you really don't want to, especially at rush hour.) I'm less sure of this — if the East Bay is such a great market compared to the South Bay, why is A's owner Lew Wolff so eager to abandon it? — but Noll is one of the smartest sports economists in the country, so it's certainly a point worth considering.
And in any case, Noll agrees that Neukom still isn't going to give away territorial rights cheaply, just because he doesn't have to, and he knows that Wolff wants them. So as I said two weeks ago, unless Bud Selig is willing to lock both sides in a room and not let them out until they've agreed on a number, this isn't likely to get settled anytime soon.
New photos of Marlins stadium show big honking roof
In Miami, the Marlins' bagel slicer is well under way, en route to an April 2012 completion date. The Miami New Times has photos.
Not much I can say from a few aerial photos, except that it looks as if, like whatever they're calling Bank One Ballpark these days, the new Marlins stadium will get precious little direct sunlight thanks to that big sliding roof. Which, given the projections for Florida's summer heat index under climate change, might actually be an even better use of the roof than keeping off the occasional summer rain shower.
February 03, 2011
Los Angeles council approves AEG stadium study group
The Los Angeles city council approved taking the first steps toward an AEG-built downtown stadium yesterday, voting to form a working group to open negotiations with the developer, while — my favorite — "accept[ing] $250,000 from the company for an independent financial account of the potential deal." Because nothing says "independent" like a check from the project's main sponsor.
So far the council seems fairly positive about the plan, if you don't count the one councilmember who worried that "one wrong step and we could push the city into bankruptcy." Man, who invited that guy to the party?
Majestic floats Vegas stadium, hints at NBA, NHL teams
Not content with planning an NFL stadium in Los Angeles, AEG Majestic has set its sights on Las Vegas as well, where it is proposing a 40,000-seat domed stadium for the UNLV football team. And, apparently, other uses as well:
The plans also include refurbishing the Thomas & Mack Center, home to the UNLV basketball team. The domed stadium would house the basketball team and UNLV's football team, and be adjustable to seat fewer people for smaller events.
Craig Cavileer, president of the Majestic-owned Silverton casino, said the company has had no material discussions with the NBA, NHL or any other league about putting a team in the new stadium. He said the deal would not hinge on having a professional team in its stadium.
"It'll be ready for that, but it's not contingent on that," Cavileer said.
Good thing it's not, because let's be blunt: Putting an NBA or NHL team in a 40,000-seat stadium is not going to happen, "adjustable" or not. Those leagues have already been through that in the years that teams played in buildings like the Alamodome, and have made abundantly clear that what a condition of approving a team is a state-of-the-art arena, not a retrofitted stadium.
Still, it makes a good selling point for sportswriters slavering for local pro sports to cover. Not that any of them would be that gullible, right?
February 02, 2011
How much is a Vikings stadium worth?
My MPR appearance has concluded; you can listen to my recorded archive of the whole show here. It was an enlightening hour of conversation, with not just myself and Minnesota state stadium czar Ted Mondale, but also the incomparable Judith Grant Long, compiler of the world's best database on stadium costs and subsidies and author of the hopefully soon-to-be-released book "Full Count" on the same subject.
Mondale, in particular, was far more cautious about his promises of getting a Vikings deal done than I've heard him in the past, repeatedly stressing that Gov. Mark Dayton would only do a deal if it generated "public benefits." He also, of course, cycled through the main pro-stadium arguments, saying that a new stadium was needed to keep the Vikings in town (while later backtracking and saying that move threats were not "helpful to the cause"), asserting that keeping the Vikings would have economic benefits (Mondale claimed $18-20 million in annual benefits to the city of Minneapolis, though he didn't cite a source), saying it's important for the team to remain "economically competitive," and so on.
One of his most telling statements, I thought, came about five minutes into he segment, when the MPR host asked why the Vikings owners shouldn't just build a stadium themselves, given all the windfall profits they'd earn. Mondale's response:
"I don't think it's economically viable to think that the Vikings are going to pay for the entire new stadium. Because I don't think it fits within the value of what they are going to get back."
Read that again: The Vikings wouldn't build a new stadium with their own cash because they'd lose money on the deal. It's confirmation, in other words, that most new stadiums don't actually make money; they're actually big money losers, which can only allow teams to turn a profit if there's a public subsidy.
The big questions, then, is whether there are enough public benefits, in increased tax revenues, job creation, and just the feel-good-ness of having a pro team to root for, to make a subsidy worth it. Or rather, to better state the question: What level of subsidy can be justified in terms of real tangible public benefits?
Here's where Long gave us an intriguing glimpse at the findings of her new book:
"My prescription on [stadium] deals is that the average deal in the U.S. over the last 25 years has been a 75/25: public 75, private 25. And my best deal is actually a flipflop: 25 public, and 75 private. And my rationale actually tries to gather up some of the things that Mr. Mondale has suggested, which I believe are true — there is some benefit associated with having a stadium. And so how do we try to figure out what the correct formula is?
"My 25 percent tries to bring in the urban redevelopment component, the civic image/civic pride, the idea that having a sports team is an amenity — by the way, it doesn't even crack the top ten of important amenities for people looking for jobs, but it is in the top fifteen. So there are some benefits, but let's try to keep the benefits proportional in the deal."
I haven't seen Long's latest research yet, but from what I've found myself, that certainly sounds like in the right ballpark: Teams get about three-quarters of the benefits of a new stadium, whereas the public gets (at best) one-quarter. The question I then asked on the air: What happens if, with a price tag of nearly $1 billion, a 25/75 split turns out to be too rich for the blood of the Vikings and the taxpayers?
Mondale replied that it's entirely possible that a new stadium deal can't be made to work. It'll be very interesting to see if he says the same thing when push comes to shove in the state legislature later this spring.
Minnesota Public Radio, today, 9 am Central
Quick programming note: I'll be appearing on Minnesota Public Radio today in the 9 to 10 am hour (Central time &mdash that's 10 to 11 Eastern), discussing the Minnesota Vikings stadium situation. Ted Mondale, the state official appointed to lead the push to build a new stadium, will be another guest, so expect fireworks, or at least some heated debate.
Those of you who actually live in Minnesota and listen to old-fashioned radios, I assume you know what channel to turn to. For everyone else, you can listen online here.
February 01, 2011
Hamilton Tiger-Cats get their (mostly) new stadium
And it's official: The Hamilton Tiger-Cats will be getting a rebuilt Ivor Wynne Stadium, after the Hamilton city council voted to approve the deal last night, with just hours to spare before a February 1 deadline to get a stadium plan in place or risk losing the 2015 Pan Am Games. A Pan Am announcement is now expected for today.
And what of that $38.6 million funding gap? The council province dealt with that on Sunday, agreeing to kick in an additional $22.5 million to get the deal finalized. (Yeah, I know those numbers aren't the same — apparently the cost estimate was also reduced by $2.5 million, but that still doesn't explain it. Chalk it up to Canadian math.)
The upshot of this denouement? After rejecting earlier stadium plans because they would require additional city funds, Hamilton okayed a deal that would require additional city funds — just not quite as much. The TiCats, meanwhile, will be getting a virtually new stadium virtually free. It's not the worst deal for the public in stadium-subsidy history, but it's not exactly a victory, either — except inasmuch that both the Hamiton city council and I can stop thinking about it quite so much now.
AEG stadium to get $1B, 30-year naming rights deal?
That rumored naming-rights deal for an AEG-built Los Angeles NFL stadium is now ... well, still rumored, but now rumored to be done instead of "close." According to the Associated Press, Farmers Insurance will pay $700 million over 30 years for naming rights to the as-yet-nonexistent stadium, plus an additional $300 million if it plays host to two NFL teams.
AP calls this "a stadium deal worth up to $1 billion," which isn't really right: $1 billion would be the maximum nominal value (adding up all the yearly payments), but that isn't the same thing as present value. (Using the nominal value is like saying the value of your mortgage to the bank is the total of all your monthly payments over the next 30 years.) If my Excel skills can be trusted at this time of the morning, the actual value of the naming-rights deal in terms of "how much of the up-front stadium construction cost could this pay off?" is around $500 million max, $350 million for a one-team deal — still far from chicken feed, but not enough to pay for the whole thing as the headline might lead you to believe.
Nonetheless, this would be the largest naming-rights deal in history by a fair margin, which if nothing else indicates that the naming rights bubble has reinflated. Whether the curse will be restored with it remains to be seen.
