June 29, 2011
I'm traveling from now until July 4, so posting will be light to nonexistent during that time. If anything important happens in the interim — the Vikings proposing to pay for a new stadium by holding the world's largest bake sale, say — feel free to talk about it yourselves in comments, and I'll chime in on my return.
June 28, 2011
Islanders arena plan documents: Rent payments are solid, economic impact is built on air
Thanks to an alert FoS reader, I can now provide links to the economic impact study for the proposed new New York Islanders arena and the arena lease itself. There's a lot to dig through, but among the highlights:
- The Islanders would be responsible for all maintenance and operations of the arena. This should come as a big relief to Nassau taxpayers, since operations costs can easily come to many millions of dollars a year.
- The arena revenue that the county would get 11.5% of, to use in paying off the arena debt, is defined to include "gross revenues ... in any way related to" hockey games, concerts, or other entertainment, and "shall include, without limitation, ticket revenues and revenues from food, beverage, merchandise and other concessions, novelties, catering, suite licenses and fees, clubs seats, radio broadcast, sponsorshop (including signage and other advertising), internet, ... naming rights, publications, parking and personal seat licenses." Everything except cable TV revenue, in other words, so unless the Islanders owners figure out how to create a sports cable network and assign all their arena revenues to that — maybe that should be until they figure that out — the county would be a full 11.5% partner in the Isles' business.
- That's the good news, all from the lease. The less good news comes from the economic impact statement, where consultant Camoin Associates explains how they projected that the county would end up turning a $2 million a year profit on the deal: "If the Arena is not built, the Islanders have stated that they would leave and the County has said that the Coliseum would eventually close. All economic activity associated with the Islanders would be lost to the County." In other words, the only thing the new arena plan was compared to was scorched earth — and every single dollar currently spent on hockey or concerts at the Coliseum (aside from any concerts that could relocate to a different Nassau venue) would be assumed to disappear from the county economy. There's no indication that Camoin made any attempt to account for the substitution effect — i.e., the possibility that if the Islanders really moved away and the county closed the Coliseum in a fit of pique, a couple from Ronkonkoma denied the ability to buy Motley Crue tickets might just decide to go to the movies locally instead of driving to Brooklyn. (Some Motley Crue fans, anyway. You know, the fair-weather kind.)
So in exchange for spending $26 million a year on an arena, Nassau County taxpayers would expect to get $19 million a year from the Islanders' 11.5% tithe of revenues (assuming revenues are as high as the Islanders project), plus another $9 million in "new" sales, hotel, and entertainment taxes, if you accept Camoin's premise that any money spent at a new arena would be "new." As I said last week, that's not an awful deal, but it's a fair bet that the county will end up losing a few million dollars a year on this deal.
Is that worth it, in order to keep the Islanders in town? We'll see what Nassau County voters say on August 1. Though I'd feel better about it if I thought there was any chance that the campaign ads would actually explain the details of the lease and economic impact report, instead of, well, this.
AEG reshuffles taxes for repaying L.A. stadium bonds
AEG's Tim Leiweke "tweaked" his company's Los Angeles NFL stadium proposal (in the universal assessment of headline writers) yesterday at a Los Angeles town hall meeting. The main new elements in the latest AEG pitch look to be:
- Instead of the city building parking garages, a private operator would, cutting the amount of city bonds needed from $350 million to $300 million.
- Instead of garage revenues going toward paying off the debt, the city would use AEG's ground lease payments on the stadium plus property tax kickbacks (the previously discussed TIF) and existing ad revenue from AEG's ad boards around the convention center. A ticket tax would still be used for the rest of the bond payments.
Leiweke said the new revenue streams would be less risky than parking revenues, and at least it would avoid something akin to the New York Yankees parking garage bond fiasco. It also seems to be mostly taxpayer money, though, albeit much of it money that taxpayers might not receive without the project. Still, the upshot is that AEG wouldn't be paying taxes that other developers normally would have to — or more to the point, would be getting to take their tax payments and use them to pay off their construction costs — which is very much like the Yankees deal.
The new bond payment plan is clearly designed to calm the jitters of L.A. city councilmembers who'll be voting on the deal; L.A. Observed's Bill Boyarsky, for his part, thinks it will do the trick. We should find out more on Thursday, when AEG formally submits the plan to the council, but it sure would be nice if somebody reported on this with more than an AP story so we could have half a clue now.
I fell behind on my RSS feed reading last week, but I'd like to belatedly point readers to my old BP colleague Christina Kahrl's column for ESPN.com on the latest iteration of the Wrigley Field controversy. For those who missed it, earlier this month baseball eminence blanc Peter Gammons went on the radio in Chicago and called Wrigley Field, the near-century-old home of the Chicago Cubs, a "dump," setting off a round of blog chatter on whether Cubs owner Tom Ricketts would, or should, consider tearing it down, moving out, or other blasphemous notions.
Christina's response was, sensibly enough, to actually go to the ballpark, where she filed this report:
Looking around, the wear and tear of long service doesn't seem especially grimy, certainly not relative to years past. Where a decade ago you might run afoul of the stench of stale beer and urine as soon as temps top 80, things on the Ricketts' watch seem much tidier. We didn't have all that far to go -- our seats are in section 224, just a little to the right of home plate. The sun hadn't quite settled into that space between the upper and lower deck, when dusk goes gold and the sun bathes right field and the rooftops beyond in warm light. But it will, and it does, because this cold spring gives us a perfect night for baseball.
From our vantage, only a few square feet of the right-field corner were out of view, so the sightlines were exquisite. ... And we sang the anthem -- a low-key instrumental version, so we got the unusual pleasure of hearing the voices of the thousands of people around us, all singing. There's something a lot more inspiring about this than being drowned out by the speakers. In general, Wrigley's not as noisy as most parks, thanks to the absence of a Jumbotron, meaning that the ambient noise of the game and of the crowd has more opportunity to register -- but also more opportunity to actually have a conversation or two during the course of the ballgame, about the game itself. ...
So where does dumping on Wrigley come from? From the people who work there, and who are used to something better these days. Certainly, those are the people most likely to say something about working in Wrigley and have it become "news." Maybe the Ricketts can punch up the amenities for the players or the press by adding a building on the northwest corner of their block, up on the corner of Clark and Waveland, an idea that has been discussed in the past.
There are two main points here, and they're both ones worth remembering: One, when you hear sportswriters or athletes calling a stadium "outmoded," they're almost certainly referring to the quality of the weight rooms or the postgame buffet — older stadiums can often provide a better fan experience than new ones, especially if you're the kind of fan who prefers seats close to the action and anthem singalongs to cupholders and hi-def video boards. (And, to be fair, some fans do legitimately prefer the latter.) And two, cushy surroundings for those who work at stadiums can be provided without spending half a billion dollars on a new building.
Of course, Gammons himself noted this in his original statement, saying, "They're going to have to spent $200-and-something million on re-renovating Wrigley Field, do what the Boston owners did with Fenway Park." But all anybody hears these days are the four-letter words.
June 24, 2011
Rays stadium: Business leaders huddle, while Sternberg burns
Big news in Tampa Bay, where the St. Petersburg Times headline reads: "Tampa and St. Petersburg join forces to explore new stadium for Tampa Bay Rays." The story goes on to say:
Now business leaders from both sides of the bay have joined forces to try to get a new stadium for the Tampa Bay Rays.
They plan to study the economic impact of baseball, team income and expenses, and possible sources of stadium financing — both public and private.
Oh, business leaders — that's not quite the same thing as city officials working together on a stadium plan. And as the Times story makes clear, that standoff is still in place: "Mayor Bill Foster has said he will discuss new stadium possibilities before the Tropicana Field contract expires in 2027 — but only for locations in or near St. Petersburg. Rays principal owner Stuart Sternberg has said he will not discuss Pinellas locations unless the team also can explore possibilities in Hillsborough County."
For now, it looks like all that will happen is that the two chambers of commerce will issue a "white paper" on stadium ideas by the end of the year, or maybe next year. Which could nudge the discussion in one direction or another, but isn't going to change the underlying standoff, let alone figure out who would pay for a new building.
And speaking of paying, Shadow of the Stadium's Noah Pransky has a peek inside the mind of Rays owner Stuart Sternberg that includes one of the pithiest summaries of the Tampa Bay stadium dilemma I've yet seen:
A new stadium could represent $200 million in value to the Rays, including tens of millions in revenue in each of the first few years. And while Sternberg would put a portion of that money into his own pocket, the rest would undoubtedly go back into the team, creating a better product for fans. He sees it as a win-win.
But the problem is that a new stadium would cost substantially more than $200 million. So Sternberg needs help.
There you have it: A new stadium would cost more than it would bring in — but would help the Rays so long as someone else is paying for it. Of course, this also implies that whoever would be building the stadium could save time and money by just handing over $200 million in cash directly to Sternberg, but that would presumably be considered unseemly.
Pransky sums up: "It's not that Sternberg and the Rays have bad intentions; it's actually the opposite: they really want baseball to survive in Tampa Bay. But business is business and profits must come first." That seems a bit rose-colored, given that if Sternberg's main goal were baseball's survival in Tampa Bay, he would be spending more time on trying to get fans to show up at Tropicana Field instead of complaining about the traffic. A more accurate assessment might be: Sternberg is happy enough to keep the Rays in Tampa Bay, so long as he can rake in the dough at the same rate as other MLB owners who paid way more than the $200 million it cost him to get into the owners' club.
At this point, it seems like the best possible route might be for St. Petersburg Mayor Bill Foster to offer Sternberg a reasonable buyout of his Tropicana Field lease, so long as Sternberg can find another place locally to build a stadium — and can do it without public subsidies. That way St. Pete gets some cash (and is free from the headache of wrangling with an unwilling tenant every year), the taxpayers get protected, and Sternberg can put his money where his mouth is to prove that location is his problem, not the desire for public subsidies. Maybe we'll hear more on possibilities like this from Pransky today, when he's promised the next post in his series will be "What Mayor Bill Foster is Thinking."
Nassau County and the owners of the New York Islanders have announced their lease plan for a new $400 million (or $350 million, or $430 million — accounts vary) arena, a little more than a month before an August 1 public referendum on the project. Previously, Nassau County Executive Edward Mangano had said only that the arena would be paid for by revenues from the team and taxes generated by the arena; now, we have some more details of how that would work. According to Forbes:
The Islanders will pay $14 million a year in rent and based on a study performed by Camoin Associates, the new arena will generate $1.2 billion in additional revenue for the county.
Only not exactly. That $14 million, it turns out, isn't actually rent: Under the lease, the county would pay to build the arena, then would receive 11.5% of the revenue from it, including both Islanders games and other events. The minimum the county would be guaranteed to receive under the lease, even if the Islanders can't sell tickets and arena rock bands stop touring, would be $14 million a year.
Debt service on the arena bonds, meanwhile, would be an estimated $26 million, so the county could lose up to $12 million a year in down years. That Camoin study, though (which is supposedly attached at the Forbes site, though it won't load for me), projects $28.2 million in county revenue the first year, with receipts going up each year after that, which would produce a profit for the county.
Which brings us to problem #2: That county "revenue" includes not just money shared by the Islanders (which is already ill-defined — does it include sales of Islanders jerseys, if the Islanders ever get good enough for anyone to be seen in public wearing Islanders gear?) but "sales, hotel, and entertainment taxes generated from the new arena." So yet again, it's a form of TIF. Except that it's worse than a TIF, because there you're only kicking back the incremental new revenue over what you were getting at the old arena — here, it appears that all the taxes collected at the arena would count as "rent," which is a neat trick if you can talk your landlord into it.
So the county would be paying to build an arena and handing over control of 77 acres of development rights to Islanders owner Charles Wang, and in return would get ... somewhere between a $12 million a year loss and a $2 million (and rising) a year profit, assuming you count as "profit" taxes that any development on the site, including the existing Nassau Coliseum, would be paying anyway.
There are still tons of unknowns about this deal — among other things, I can find no public mention of whether the team or the county would be responsible for arena operating costs — but on first glance, it looks like Nassau County would be taking all the risk, in exchange for just 11.5% of the upside. There are certainly worse arena deals out there, but given the state of arena financing, that's not exactly something to brag about.
June 23, 2011
ESPN beats drum for Rays relocation
There may not be much going on in the Tampa Bay Rays stadium standoff beyond owner Stuart Sternberg's periodic griping to the media, but ESPN is on the case to ensure that no one forgets that the Rays are drawing lousy despite being in ... well, third place, actually.
In any event, for ESPN's Steve Berthiaume this is a clear sign that, as he says in the first line of yesterday's column, "the Tampa Bay Rays must be moved":
The franchise has done the best it can with a suffocating stadium lease. The past three seasons have been the most successful in Rays' history, but those seasons have produced no attendance momentum. In fact, Rays attendance figures and local television ratings this season are in decline. Baseball needs to lower its rope and let the Rays climb out of their sinkhole.
By "suffocating stadium lease," presumably, Berthiaume means that the Rays can't break it and move to ... well, it's not clear where he wants them to move. He at first suggests that the team would be better off across the bridge in Tampa ("'Murder' is how one area baseball fan described the commute to me"), then says that might not be a solution either, given the region's "erratic economy, a unique geography that can make for challenging commutes, a population that's in large part either elderly or transient and limited corporate sponsorship possibilities." Of course, most of the other cities one might consider moving the Rays have similar problems, not to mention no stadiums or thoughts of building one.
Berthiaume calls the current Rays situation "a painful stall that can't last much longer" (citing Sternberg's "enough is enough" threat from February), but if baseball history tells us anything, it's that painful stalls can last a decade if not longer — and given that the Rays look to be turning a profit regardless, it's hard to see the urgency here.
Elsewhere on ESPN, meanwhile, a convoluted column by Howard Bryant blames baseball's "greed" for sticking the Rays with Tropicana Field:
The 1992 failure to bring the Giants to town was the seventh time in seven chances that Tampa Bay lost on attracting a team. Baseball knew the problems, and chose the short-term windfall ($155 million in expansion fees) over long-term health.
The upshot here, presumably, is that Tampa Bay was a lousy baseball market (or at least St. Petersburg is a lousy place for a stadium), but that MLB took the money and ran, leaving the Rays doomed to an existence of ... two division titles in three years and slow but steady profits helped (as is half the league) by revenue-sharing checks? Again, it's not owning the Boston Red Sox and raking in money with a shovel, but then if it were Sternberg wouldn't have gotten the franchise for a bargain price of $200 million.
Bryant goes on to suggest that the Rays should follow the San Francisco Giants' lead and build a new stadium in Tampa with their own money, taking a gamble that Tampa Bay actually is a good market, it's just the stadium that sucks. (It's an interesting argument, though I suspect that the lack of a Silicon Valley next door would prevent the kind of creative private financing that the Giants used to build Pac Bell Park.) Bryant also says lots of stuff about the Oakland A's as well, concluding, as best as I can understand, that MLB should get Frank McCourt to sell the Los Angeles Dodgers to A's owner Lew Wolff so that a new A's owner can work out a stadium deal with Oakland, a city that Wolff, in Bryant's estimation, hates. I'm not exactly sure how that makes sense either — the A's problem is that there may not be enough money in the Bay Area to build a stadium and increase team revenues without either cannibalizing the Giants' income or demanding huge public subsidies that aren't likely to be forthcoming — but I've done enough gratis ESPN fact-checking for one day, so I'll leave that to other folks to kibitz.
June 22, 2011
Went to a Dodger game, and a nap broke out
Bill Plaschke of the Los Angeles Times has a first-person report on buying Dodgers tickets for $2.55 each and going to a half-empty game at Dodger Stadium, which gets you scenes like this:
There were no lines to enter the parking lot, no lines to enter the stadium, and nobody clogging the concourses as we walked to our seats just in time to watch the first of many lousy pitches from Chad Billingsley.
Actually, I don't think those were our seats. Because our section was virtually empty, we could pick any seat we wanted, so we pulled into a middle row and spread out like three people sitting in an empty theater before a bad movie.
We put our feet up on the seat in front of us. We spread our arms across the seats between us. There were no heads to block our view. There was little sound to distract our attention. Down below, the Dodgers and Reds battled each other as if they were Little Leaguers playing for a handful of parents.
It was actually pretty cool. Life in Frank McCourt's Ghost Town is eerie, but it has its advantages.
Plaschke's column is mostly a good reminder that official sales figures don't reflect either actual attendance or actual ticket prices, especially in the age of StubHub. I know I went to a New York Red Bulls game a few weeks back, and sat in what were technically $20 seats, but paid only $5 apiece through a discount program the team runs for my son's AYSO soccer league; and while press reports had it a virtual sellout of the 20,000 seat stadium, there's no way more than 5,000 people were there. (Not that this made it any easier to get in and out of the parking lot.)
We are badly in need of legit attendance figures, especially when cities are basing subsidies on the amount of foot traffic a team is expected to generate — but unless the sports leagues see that as in their best interests, or we get an iPhone app that estimates attendance and lets us crowd-source this, don't hold your breath.
Portland approves $31m in NBDL arena tax breaks
The Maine Red Claws minor-league basketball team has been approved for a 30-year, $31 million tax exemption for a planned $100 million project that will, according to the Portland Press Herald, "include two office buildings, a hotel, an arena/convention center, a concert hall and a parking garage."
No clue how they build all that for $100 million, and also not sure exactly how the financing on this works — press reports say that the city will receive $26.4 million from the project over 30 years, but not whether that's rent payments or expected economic activity or what. One hopes at least that they get the Times in Maine, and read it before approving this deal.
June 20, 2011
Los Angeles caps tax kickbacks for AEG stadium to $175m
The city of Los Angeles yesterday released 13 pages of responses to questions raised by city councilmember Bill Rosendahl about the AEG NFL stadium plan, and the big takeaway, at least according to the Associated Press, is that city revenues could only be used to pay for half the $350 million cost of rebuilding the L.A. Convention Center to make way for the stadium, with the rest coming from private sources.
Of course, AEG has previously said that it would pay off the new convention center bonds (bond payments are expected to run about $25 million a year), but also said that it would want to use "new" city tax revenues generated by convention center visitors for part of this. So what the city of L.A. has effectively done is to cap that portion (which is basically a TIF) at $175 million, meaning AEG's new NFL team would need to generate the other $12.5 million a year through a ticket surcharge. That'd come to an average surcharge of $18 a ticket, which while not undoable at NFL ticket prices, is still a pretty hefty chunk of change.
The exact language used by the city in its memo:
The Ad Hoc Committee established as a negotiating principle that any costs associated with the bonds be fully offset by revenues from private sources and no more than 50% of the actual net new direct General Fund tax revenue generated by the project.
Why 50%, incidentally? Presumably somebody figured that would be only fair: Any new tax revenues get split down the middle, with half going to AEG and half to the city, so everybody benefits. Except, of course, that the city never says how it will be calculating "new direct General Fund tax revenue," or how it will ensure that this revenue is really a result of the new stadium and convention center and not just cannibalizing revenue that would have come in anyway. Maybe that can be something for Rosendahl's next letter.
June 17, 2011
Gap grows $100m wider on Vikings stadium
Today is D-Day for the Minnesota Vikings stadium plan, the deadline set earlier this week by which a deal had to be consummated ... except that it really isn't. A stadium deal only needs to be in place today if the legislature wants to have time for hearings before a special session at the end of the month to pass a state budget, but all indications now are that Gov. Mark Dayton and the legislature are going to keep playing chicken over a government shutdown on June 30, which means there may be no special session, or at least not one until the last possible second. (Best headline goes to NBC Sports: "Vikings stadium plan won't meet meaningless deadline.")
It seems unlikely in the extreme that the roadblocks to a deal could get worked out by then anyway, given that the funding plan has more holes than it takes to fill the Albert Hall:
- First off, there the $131 million in road improvements that would be needed for a stadium in Arden Hills, which the state says it won't pay for, and the Vikings owners say should be paid for with sales tax kickbacks and other government funds.
- Second, the current plan calls for the state to fund part of its share of the stadium cost with taxes on sports memorabilia (which Minnesota's other pro sports teams hate) and an income tax surcharge on football players (which may well be unconstitutional). On top of that, the latest estimates are that the memorabilia tax would bring in only about half as much revenue as had originally been projected, blowing roughly another $100 million hole in the stadium budget.
What to do? ESPN's Kevin Seifert recommends scrapping making the stadium roof retractable, but that would only save $25 million, so it hardly seems worth it. Ditching the roof entirely would cut $206 million, but neither the team nor the state seems interested in that, it would violate the Vikings' agreement with Ramsey County, and the team would get to keep half of the savings regardless. (Though I suppose with everything still up for negotiation, the state could always demand all of the savings from eliminating a roof.) So instead we sit, and wait. Just like 42,000 Minnesota state workers.
June 15, 2011
Vikings stadium meeting agrees on need for more stadium meetings
So the Minnesota bigwigs met yesterday about a Vikings stadium as expected, and also as expected, nothing concrete came of it:
"We had a very productive and constructive meeting," [Gov. Mark] Dayton said, emerging after more than an hour behind closed doors. "The end of this week is essentially the deadline."
As the St. Paul Pioneer Press makes clear, though, there really isn't a deadline, because there's no sign of when a special legislative session might start. (Minnesota still doesn't have a state budget, if you're scoring at home.) In any case, it doesn't sound like much progress was made toward filling the project's $131 million budget gap, let alone the dispute over who would get naming-rights money from the stadium.
Of course, it's always possible that the state and the Vikings will hash something out by Friday, even if it's only a matter of each kicking in a few pennies themselves and kicking a bunch of the missing costs over to the county government or something. But my money is still on everybody punting until 2012. At least, if the ground isn't too hard.
Baltimore to study $900m arena-convention-hotel project
We haven't heard much about Baltimore's plans for a new arena for a few years now, but that seems about to change: The Maryland Stadium Authority is about to conduct a feasibility study of a $900 million plan to build a new arena, a hotel on top of it, and an expanded Baltimore Convention Center.
Willard Hackerman, described by the Baltimore Sun as a "Baltimore construction magnate" (which will always make me think of Stringer Bell), has promised to finance the arena and hotel — or rather, to "engage in creating a private partnership that will privately finance the arena and the hotel," which isn't quite the same thing. It's going to be interesting, to say the least, to see how Hackerman goes about raising private funds to build an arena with no anchor sports tenant, at least until such time that an NBA or NHL team can be identified to relocate there. Did I mention that Hackerman is 92 years old?
In any case, that still leaves the $400 million convention center cost, which as previously established is a ridiculous amount of money to spend on an expanded convention facility unless you're Las Vegas or Orlando. (Editor's note: Baltimore is not Las Vegas or Orlando.) Donald Fry, head of the business-run Greater Baltimore Committee that is pushing this plan, told the Sun (in the newspaper's words) that "he believes the $400 million cost of expanding the convention center could be paid by the city or state or both, by issuing bonds." Which is identical to telling your mortgage broker, "Sure, I can afford to pay for this house — I'm going to use the money I borrow from you!" Any J-school professors out there who can work on drumming it into budding journalists' heads that bonds have to be paid off eventually? Please?
Anyway, once someone figures out who'll pay the $150,000 cost, it looks like we'll have another study to kick around soon. Which, given how the last Baltimore study turned out, is likely to involve a whole lot of kicking.
June 14, 2011
Vikings seek sales-tax kickbacks to pay for stadium road work
The Minnesota Vikings released more details of their rumored TIF plan yesterday, and it turns out to be not just a TIF but a STIF:
The plan calls for redirecting $25 million in federal road funding to the project, and getting $21 million dollars in extra environmental cleanup funds.
"These are credits that we think are attainable," said Vikings vice president Lester Bagley, who rolled out the plan at a Capitol press briefing Monday afternoon.
But those credits alone won't close the gap. For the rest, the team wants Ramsey County or the state to borrow at least $61 million more, to be repaid with existing sales taxes and ticket taxes, as well as the additional revenue which will be generated by taxes on liquor, memorabilia and parking at the stadium itself over future years.
"These taxes are generated at a base level in 2011, and in 2015 in the new stadium, the revenues have raised," said Bagley. "The idea is to capture the incremental increase in these revenues and use them to pay off these transportation bonds."
That's sales tax increment financing, or a STIF. I know I've written before about why STIFs are even worse ideas than TIFs — oh, yes, here it is, about an old stadium proposal in ... why, it's Minnesota!
STIFs have never been used in Minnesota, and in those states where they have been used, they have a checkered past: as finance expert John Mikesell has written in the one substantial study of STIFs, sales taxes "are less suited for use in tax increment finance programs" than property taxes for several reasons, including the volatile nature of sales-tax receipts during lean economic times, and the difficulty in determining how much sales tax activity is "new" and how much is merely cannibalized from spending in nearby areas. (California repealed its STIF law in 1993 for precisely this reason.)
There's been no immediate reaction from state officials, but apparently they're meeting with Vikings execs right now behind closed doors to try to hash out an agreement. More news once there's a post-meeting announcement, or sooner than that if we can get any British tabloid journalists on the case.
AEG short list for L.A. NFL relocation actually a long list
No sooner was it reported that AEG president Tim Leiweke had narrowed the list of teams targeted for a move to a new Los Angeles stadium to five than unnamed AEG officials declared that they're actually in touch with more than five teams:
AEG president Tim Leiweke told The Orange County Register on Thursday that his group has been in contact with the Rams, Raiders, Jaguars, Vikings and Chargers, to gage interest in attracting a team to Los Angeles.
An AEG source indicated on Friday that the group is actually in contact with more than the five teams cited by Leiweke. Those clubs are getting monthly briefings from AEG on the progress of the downtown project.
At a certain point, AEG's target list is just the entire NFL — especially when "getting monthly briefings from AEG" could just mean that the company is spamming owners' in-boxes with news about their stadium plans. (It doesn't help the story's credibility that it was reported by a site that can't spell the word "gauge.") Still, it'll no doubt get people freaking out in more cities than the original five now, which is no doubt why AEG rushed to leak the news after Leiweke left out teams like the Buffalo Bills in his original statement.
June 13, 2011
AEG outs five NFL teams as L.A. relocation targets
AEG president Tim Leiweke, not content to be dropping arbitrary deadlines for his company's downtown Los Angeles stadium plan, let loose another media salvo on Thursday by declaring that his boss, Philip Anschutz (the "A" in "AEG"), was prepared to buy an NFL team to move it to L.A. — and then naming names about which teams he was considering:
"St. Louis, Jacksonville, not extensively, certainly Oakland, San Diego, Minnesota are still in the mix," Leiweke said listing the teams AEG has met with before adding: "We're not packing any [moving] vans right now."
Now, "met with" doesn't necessarily mean the current team owners are actually considering AEG's offer (or that there's a solid offer to consider). Still, it was enough to set off media mayhem in the listed cities. A San Diego Chargers blog declared that "The Hit List Is Out"; Oakland Raiders CEO Amy Trask issued a statement denying that her team was for sale; and Minnesota Vikings execs insisted that their only meetings with AEG were over possibly operating the new stadium they want built in Minnesota.
Meanwhile, though the St. Louis Rams probably aren't for sale, ESPN noted this would give their owner welcome leverage in his own stadium campaign. And that's the main upshot here: For Leiweke to come out with a statement like this is a win-win for all the bigwigs involved — AEG gets a carrot to dangle alongside its July 31 deadline stick, and the owners of all the rumored move targets get a threat to use against their own localities, plus plausible deniability against being blamed for threatening a move.
And as for us? We get to play the home version. (Currently leading: The Jacksonville Jaguars, by a sizeable margin over "nobody" and then the Raiders.)
Life after death for Yankees garages?
Those privately run, publicly subsidized New York Yankees parking garages may be headed for bankruptcy by next April, but apparently they're not totally worthless: Hedge funds are reportedly buying up the garage debt in hopes of seizing the garages once they go into default and turning them around.
"This facility seems meaningfully impaired, but there are some potential fixes," said Laurence Gottlieb, chief executive officer of Fundamental Advisors LP, a private-equity firm in New York that buys municipal debt. "Costs can be reduced and it could be repositioned for commuter parking."
That seems pretty optimistic, given that Yankees fans have much cheaper parking options nearby, and that any commuters parking there would face a long subway ride to Midtown once they parked. (The Metro-North commuter rail line would be faster, but if you're going to ride Metro-North, there are already other park-and-ride options.) Of course, the Bloomberg News article doesn't say how much the hedge funds are paying for the garage debt — if it's pennies on the dollar, then suddenly even half-empty garages look a lot more profitable.
Either way, if the current garage owner goes under, city taxpayers presumably lose the $43 million in future rent payments they were supposed to be getting from them. But after $700 million in city subsidies, what's another $43 million among friends?
June 10, 2011
Rays stadium: Tampa dips one toe into the TIF pool
What is this, TIF week? At a budget workshop on Wednesday, Hillsborough County commissioner Ken Hagan suggested using property tax kickbacks to pay for roads and infrastructure for a new Tampa Bay Rays stadium in Tampa, if Tampa officials were thinking of building a stadium for the Rays, which they're totally not, doncha know. Since I'm tired of explaining how TIFs work, let's turn that over to the St. Petersburg Times, which actually did a stellar job of it today:
Here's how it works: In Tampa, officials have created eight community redevelopment districts, one each for downtown, the Channel District, Tampa Heights, Central Park, Drew Park, east Tampa and two for Ybor City.
When those districts were created, officials added up the value of all the assessed property inside their boundaries. As new development has taken place, the additional tax revenue that the growth in property value creates goes to improvements in the district.
Tampa Mayor Bob Buckhorn said his thinking is: Don't interfere with St. Petersburg's relationship with the Rays, but try to keep the team in the region in the event of a "divorce."
Part of that effort, he said, could use tax-increment financing revenues to help pay for infrastructure improvements — roads, water and sewers — that a new stadium would need.
The problem with TIFs are legion: Mostly, that if the increase in tax revenues ends up being cannibalized from somewhere else nearby, or if tax revenues don't increase (it's happened), then taxpayers end up screwed. Or as subsidy expert Greg LeRoy memorably put it, the TIF district "eats the lunch of the general fund."
The Times, meanwhile, goes on to note that TIFs helped to build the San Francisco Giants' new stadium (yes, but only to the tune of about $10 million total), while the Tampa Tribune reports that "County Administrator Mike Merrill agreed that tax increment financing had been part of the package that built the new Yankee Stadium" — which isn't true at all. (The Yankees got property tax and construction sales tax exemptions, but that's a different thing.) But I guess when something's the hottest thing since sliced bread, reportorial common sense goes out the window.
Kansas City opens new soccer stadium with $5,000 chairs, a cow, and no actual scoring
Sporting Kansas City (formerly the Kansas City Wizards, but that didn't sound soccer enough) opened their new $200 million Livestrong Sporting Park yesterday, after spending nearly the first three months of the season on the road. And if you're wondering what you can get in a soccer stadium for $200 million — nearly double what was spent on the Philadelphia Union's stadium — apparently it's this:
More than 330 high definition televisions will be placed around the stadium, the first MLS park fully equipped for HDTV.
In the plush home locker room, players will sit on $5,000 seats imported from Spain. The seats are equipped with power docks so they can access information during halftime. The spacious media room where postgame interviews will be conducted is right next to a large bar and food area. Fans will be able to look through the glass partition to see the interviews while the audio is piped to them.
And what do those fans think of it? The game was a sellout, but according to the Kansas City Star, not everybody is planning a return trip:
During halftime, the soccer match still scoreless, fans began trickling out of the new stadium. Dominic Jones was one of those who headed for the exit. He carried a poster tube; its contents would be delivered to Jones' daughter.
"I just wanted to come here and get the feel of it," said Jones, 36. "It's something for fans to be proud of. But when it's all said and done, it's not football."
In other news, someone dressed as a cow ran onto the pitch during the match's waning minutes and kicked a ball into the goal. Other than that, it was a 0-0 tie. It sure isn't football — except for, you know, it being football.
June 08, 2011
Stadium talks at "stalemate," Vikings offer other people's money to fill gap
Things just look worser and worser for the all-but-dead Minnesota Vikings stadium campaign. In the latest news, state stadium czar Ted Mondale declared that "we're kind of in a stalemate" over stadium talks, with neither the state, Ramsey County, nor the Vikings willing to pay for $131 million in road work that would be needed on top of the $1.05 billion in construction costs.
Vikings execs did proffer a plan this week to pay for the new roads, but not with their money:
"We have laid out a transportation finance plan to pay for the roads for the Arden Hills site," said Lester Bagley, the team's vice president of public relations and stadium development. "It's a user-based finance proposal. The intent is to capture transportation revenues at the stadium or near the stadium."
Bagley declined to go into details but said part of the plan would raise money from taxes or fees on spending around the stadium that wouldn't have happened were it not for a stadium being there.
Dear lord, it's yet another TIF! Which went nowhere when then-governor Tim Pawlenty proposed it last year, so it's not something that should make anyone think a stadium deal is imminent. No one, that is, except for Mike Nelson. (And no, still not that Mike Nelson.)
Sternberg: Rays can't "sustain" themselves without more fans
If it's Wednesday, Tampa Bay Rays owner Stuart Sternberg must be whining about his team's attendance again:
"It is what it is,'' Sternberg said of the disappointing turnouts at Tropicana Field. "It could be better and should be better. I know we can't sustain ourselves like this. It hasn't gotten better. If anything, it's worse. We had another successful year last season and the economy, while it's not good, has not gotten worse, but our numbers I think will be down, coming off a postseason appearance. It's unheard of."
Sternberg knows there are plenty of fans out there.
"People are watching us on TV and listening on the radio. I walk around and I see all the hats. I want to have a team that's going to be able to compete, but we can't lose money year in and year out, hand over fist.
"To run a payroll like we do now, basically the second-lowest in baseball, and barely keep our nose above water, we can't sustain that.''
While it's got to be frustrating to have a team in the thick of the pennant race that's not selling tickets, the Rays are hardly alone in that regard. (Hello, Cleveland!) More to the point, though, early-season attendance usually reflects how many tickets were sold the previous winter, and last winter was a time when Sternberg's execs were dumping high-salaried players left and right, which isn't exactly a great way to kick off a season-ticket drive. Add in that Sternberg has spent the last four years complaining that his home stadium is outmoded and decrepit, and really it's a wonder that anyone comes to the games at all.
It's certainly possible that St. Petersburg just isn't a good location for a stadium — whether because the Florida economy can't support a team there or because, as Sternberg suggested last week, Rays fans hate bridges. But until we see management actually promoting the team and its home park instead of giving fans excuses not to show up, we can't know for sure.
(Finally, props to Sternberg to adding "can't sustain ourselves" as a euphemism in the move-and/or-contraction-threat game. I doubt it will surpass "certitude" for word of the year, but it's still a nice touch.)
June 07, 2011
Vikings stadium deal: When is a subsidy not a subsidy?
The Daily Norseman, the SBNation blog on the Minnesota Vikings, has a long post up today about the projected public cost of a Vikings stadium, and in particular whether it should be criticized as a "subsidy." After all, writes the author, if you've gone to a public school, or visited a public library, or ridden public transit, you've taken advantage of subsidies, so what's the harm in that?
Of course, there's an obvious difference between subsidizing something that's a pure public benefit like a library and a profit-making enterprise like a pro sports team — hence the book subtitle. So in an attempt to argue that the Vikings provide a public benefit beyond allowing fans to plunk down $100 to watch an NFL game, the Norseman goes on to discuss the taxes paid by the Vikings:
According to the Vikings organization, every year the Vikings contribute $18 million in state and local taxes. Not only does the team contribute to the tax base, but so does the stadium they use-the Metrodome has generated $304 million in tax revenue for the state of Minnesota since it opened. If Minnesota lost the Vikings, we would see a direct loss of millions in tax revenue that the team, and its stadium, brings the state.
Losing the Vikings means the tax base would also suffer indirectly from the loss of Minnesota jobs. Including all the staff, coaches, active players, and practice squad players, the Vikings organization employs approximately 200 people. Vikings' game days at the Metrodome, including staff, players, and coaches, support 2,800 full- and part-time jobs.
Spot the economic fallacy yet? Let's think this through: Say the Vikings skip town tomorrow for ... okay, Los Angeles doesn't actually have a stadium yet, and may not ever, so let's just put them on a barge floating down the Mississippi or something. The team and its employees stop paying taxes, sure enough. But they also stop selling tickets, and jerseys, and overpriced beers. What happens to that money?
Well, it goes back into the pockets of Vikings fans. If those are Vikings fans who live in North Dakota, then yes, they'll probably spend it on hunting for big game at the local comedy club or something. But for our suddenly NFL-bereft Minnesotans, they're likely as not going to spend it on something else: Going to the movies to fill their suddenly empty fall afternoons, buying big screen TVs to watch the Barge Vikings, drowning their sorrows in slightly less overpriced beer. And wherever they spend their money (unless they order their beer over the internet), the businesses they spend it at will be hiring people to make their sales, and will pay taxes on it.
There's even a potential benefit to having money spent this way: Unlike Vikings players, who may or may not live full-time in Minnesota (and even if they do is likely to spend a chunk of their money on things like vacation homes), the average convenience store beer salesperson is likely to spend almost all of their salary within the state. (Movies, because so much of the ticket price goes straight to Hollywood, is less of an obvious gain.) So a dollar spent on the Vikings doesn't necessarily equal a dollar spent on some other entertainment, in terms of impact on the local economy.
Those, in a nutshell, are the "substitution effect" and "leakage," the two biggest economic factors that stadium subsidy backers invariably overlook. It's absolutely fine to argue that subsidies to private enterprises are worthwhile if the payoff for local taxpayers is greater than what they'd be spending. The problem is, in virtually every stadium deal — including the proposed Vikings stadium — that's not the way the numbers work out.
Vegas sports subsidy bill killed dead
The funding bill for a Las Vegas arena, or a Las Vegas stadium, or a Las Vegas arena/stadium/floor wax was declared officially dead last night by the bill's sponsors:
Asked if any elements of the various public financing measures presented to lawmakers would survive, former state Sen. Terry Care answered: "It'll be the surprise of my lifetime if it does."
Care was the chief lobbyist for Texas developer Christopher Milam, who had proposed building a $1.9 billion project including a ballpark, arena and stadium near Interstate 15 and Russell Road.
"It was a difficult bill to begin with," Care said.
Dead, of course, is a relative term when it comes to sports subsidy bills, so it's always possible that some of these proposals will be revived in the next legislative session. That's not until 2013, though — Nevada legislators take alternate years off, presumably so they can spend them at the craps tables — unless the governor calls them into special session before then. Quebec, you can breathe one-third easier now.
June 06, 2011
Edmontonians protest Oilers arena deal
About 75 Edmonton residents gathered at their City Hall yesterday to protest the proposed Oilers arena deal, in particular both the $225 million in public funds that would be involved and the secretive process by which it was approved by the city council: "It was basically forced on council, passed abruptly with only one-hour of closed door debates," said organizer Danny Barrett, a recent University of Alberta graduate. "I mean how could they have asked the right questions?"
Meanwhile, Edmonton CTV bent over backwards to provide "balance" in its story on the protests, by including this:
Two sides on the issue were represented at Sunday's rally, with one Oiler fan showing up in support of the plan.
"It's for our city," Amanda Callum said. "It's going towards our city. It's going towards our team."
I'd say giving column inches to a lone counterprotestor (is it even a protest if you're by yourself?) against several dozen protesters was a new low in journalism, but plenty have already sunk lower.
Legislative clock running down on Vegas stadium and arena deals
It's getting late early out there in Nevada, as the state assembly adjourns tomorrow, leaving little time to hash out the details of the complicated arena tax-increment financing bill that three developers are seeking to take advantage of (and a fourth is seeking to have amended so it can get in the running).
So far, legislators seem wary — "it is kind of hard to get all these bills like this at the last minute and often extremely difficult to get them through," said state senator Sheila Leslie — but that's not necessarily a major obstacle: "Typically, agreements are not made until the end," local AFL-CIO official and former state legislator Danny Thompson told the Las Vegas Review-Journal. "That is the way this place works."
Of course, the Nevada legislature has been called into special session five times in the last six years, so as we're seeing in Minnesota, it ain't over even when it's over.
Quebec considers bill to block arena lawsuits
Add Quebec to the list of cities that could face legal challenges to their arena deals on the grounds that they did an end run around proper public process. Former city official Denis de Bellevale and another city residents filed suit last week charging that the city's $400 million arena plan is illegal because media giant Quebecor was given the rights to manage the building without an open bidding process.
[De Bellevale] said the deal amounted to cash pay-out to Quebecor of $40-million a year for the next 20 years.
"The futility and the absurdity of this financial package is enough to scandalize even the most hardened capitalist," Mr. de Bellevale told the committee.
That committee, by the way, was one holding a National Assembly hearing (the National Assembly being, logically enough, the government of the province of Quebec — o, you wacky Canada!) on Thursday on a bill that would explicitly block the lawsuit by declaring the Quebecor contract as "deemed not to contravene" provincial law. Mario Bedard, who's leading a drive to raise $40 million for the arena via seat pre-sales, testified that getting the provincial government to change its laws for the project was necessary because, as the Montreal Gazette described it:
Bedard said Seattle, Houston and Las Vegas also want NHL teams and that the failure to adopt Bill 204 would cast doubt over Peladeau's bid, hurting Quebec City's chances.
That's right: Seattle doesn't even have an NHL-ready arena or any serious thoughts of building one, but it's already being waved as a threat to steal Quebec's as-yet-nonexistent team. I mean, if you're going to go that route, why not say that Quebec has to change its laws to avoid losing an NHL team to Chattanooga or Walla Walla? At least they're more fun to spell.
June 03, 2011
AEG issues two-minute warning on L.A. stadium
When last we left AEG's plan for a new NFL stadium in downtown Los Angeles, it was under fire for not including guarantees on repaying public stadium debt, facing a possible need for county approvals, and under attack by lobbyists for Majestic's competing stadium plan in Industry. It was already enough to make AEG president Tim Leiweke get publicly cranky, and now he's crankier still, issuing an ultimatum to get the deal approved by July 31 or he'll take his ball and go home:
While saying he's "optimistic" that the city has approached negotiations in a purposeful way, Leiweke said billionaire Philip Anschutz is prepared to pull the plug if the uncertainty drifts into August, thereby opting not to spend an estimated $45 million over the next year on an environmental impact report, designs for the stadium and replacement hall, and pursuing an NFL team.
"Will we get to the right place? I think so," Leiweke said. "But I'm OK if we get to July 31 and we don't get a deal done, and we move on, and I didn't spend $45 million of Phil's money."
There's a long tradition of setting arbitrary deadlines in the stadium biz, though there's just as long a tradition of re-setting them when it looks like you're going to lose. (Or if you prefer a more recent citation, try this one.) From the sound of things, Leiweke is mostly just trying to light a fire under the city council to step things up with deciding on the stadium bill — though given recent events in L.A., perhaps that isn't the best choice of metaphor.
Nevada stadium hearing: Three projects enter, only one will leave
The Nevada legislature heard from three developers who want to build stadiums in Las Vegas — Majestic, Cordish, and Chris Milam — as part of a hearing yesterday on the bill to provide TIF kickbacks to whichever sports construction project can actually win approval. Though not exactly "whichever": The bill would only provide state funding for projects with 35,000 seats or more, which rules out Caesars Entertainment's plan for a 27,000-seat NBA arena.
From the sound of things, the hearing was mostly an occasion for the three developers to make their pitches, and we've heard about those already. Quote of the day, meanwhile, comes from bill sponsor (and Senate majority leader) Steven Horsford, via the Las Vegas Sun:
Horsford acknowledged that he wrote the original bill after asking each project team what they would need to make their financing pencil out. But he said lawmakers would ensure the legislation is written fairly.
"Sometimes things get rushed through at the last minute and consequences get determined later and people need to fix it," he said. "I completely agree we need to be deliberative about this process."
Which is why he let the developers write the bill and then immediately introduced it without any fiscal notes on what it would cost, doncha know.
Could debt worries sink San Jose A's stadium?
Nine MLB teams are carrying more debt than is allowed under baseball rules, according to an article by Bill Shaikin in today's L.A. Times. Not that that's an insurmountable problem — the MLB debt rules basically come down to "Don't do anything to make Bud Selig mad," and league profits are generally high enough to cover any debt payments — it is a sign that some teams could be more vulnerable to a prolonged economic downturn that pushes down ticket demand. Not that either of those is likely or anything.
Meanwhile, newballpark.org jumps off from the debt numbers to see what they'd mean for the proposed San Jose stadium for the Oakland A's, currently still on permahold. With lots of charts, they project how the A's could cobble together revenues to pay off $30 million a year in stadium debt — and how, if attendance dipped by 25%, they'd suddenly be facing a $5 million a year shortfall.
That's not an insurmountable problem either — $5 million barely even buys you a middle-aged middle reliever these days — but it does show how close to the bone teams have to go in order to pay off new buildings on their own dime. It also shows why the issue of territorial rights payments for the Giants have been such a huge stumbling block, as it's not like there'd be a ton of extra money from the new stadium to pay off the Giants.
Newballpark.org cites "the potential for an extra $30-50 million or more per year after debt service" from a San Jose stadium, but it's not clear where those numbers are from — the actual charts imply a smaller $20 million bump after debt payments at best. (It's also not clear whether the figures provided take into account that the A's would be see their revenue sharing checks reduced if they had more revenue of their own.) Still, it's an interesting exercise in running the numbers, and understanding why, if new stadiums are such gold mines, teams don't just go build them with their own money: They can be, but it's a huge risk, and everyone knows it's better to take risks with other people's money.
June 02, 2011
Sacramento arena commission to include every power broker in a 50-mile radius
Sacramento may still not have any idea how to pay for a new Kings arena, but they'll sure have enough people working on the problem: Mayor Kevin Johnson earlier this week announced he's convening a 60-member commission, led by two state senators and a political strategist who worked on past arena campaigns, to come up with a funding plan.
Called "Here We Build," the task force's final roster is expected to be finalized in the next few days, with its first meeting in a couple of weeks. It will then have 100 days to come up with a report — timing that ensures that at least it won't get upstaged in the news by anything.
So far the list of task force members seems to be limited to the usual suspects: local elected officials and area business and union leaders. (It'd be nice to hear that some actual economic development experts or citizen community groups were involved, but so far no such luck.) Sacramento political consultant Doug Elmets told the Sacramento Bee that "the mayor is smart to cast a wide net so as to not alienate any of the decision-makers within the region, especially if you're going to be asking them for some type of political or financial investment." In other words, this is more about getting all your ducks in a row than about actually coming up with something that makes economic sense. Which is actually reasonable, given that even arena supporters admit that building one makes no economic sense.
Vikings stadium bill still undead
This really says all that needs to be said about the Minnesota Vikings stadium campaign:
Even as the state prepares for a possible government shutdown, lawmakers are still working on a potential Vikings stadium bill.
That said, there's been a mild flurry of Vikings news this week, so:
- An economic consultant told Ramsey County that it can afford its $350 million share of a Vikings stadium. That's how the Minneapolis Star Tribune headline put it, anyway; in actuality, all the consultant said was that raising sales taxes by 0.5% should be enough to pay off that much in stadium bonds. Whether the county can afford to raise sales taxes by that much — in other words, what the negative economic effects would be from such a hike — was outside the scope of the report.
- Readying the Ramsey County stadium site in Arden Hills would involve cleaning up acres of contaminated soil, and the cost is "unknown," according to the St. Paul Pioneer Press. However, if the cleanup cost goes up, the Army has agreed to sell the land for less.
- Arden Hills held a public meeting last night to hear citizen comments on the stadium plan, and "many who attended had concerns," according to KSTP-TV. (Video snippets from the meeting here.)
Plus, there's still that $200 million funding gap, plus the possibility of a petition campaign forcing a public vote. And the continuing NFL lockout, which can't be helping build enthusiasm for the project. Still, it's at least treading water, and as the Twins proved over a decade of their own stadium campaigning, that can be enough to get a bill passed eventually, if you're not picky about when "eventually" is.
