September 29, 2011
Vikings hammered at stadium forum
Ramsey County held the first of its two promised public hearings on the Minnesota Vikings stadium plan on Wednesday night, and according to Minneapolis Minnesota Public Radio it wasn't exactly a lovefest:
The Vikings say they don't want their stadium plan on a ballot, and the meeting offered a clue as to why: It was a two-and-a-half-hour marathon of almost unbroken objection to the team's plans to pay for the facility on the former Twin Cities Army Ammunition Plant site along Interstate 35W...
"I'm a stay-at-home mom. I am married to a third grade teacher. He is in a public school system and is again having another state pay freeze," [said Cindi Aarsvold Nickel of Shoreview]. "I get tired of having the gun held to all of our heads saying that we need to do this for them or else they're going to leave. In school this would be called bullying, and it's not to be tolerated."...
Opponents of the plan including Steve Donatelle, who has run Donatelli's restaurant in White Bear Lake restaurant for 35 years, said they feared that stadium tax would drive business out of the county. Donatelle told commissioners he's having "a real hard time" telling his customers the prices on his menu are going to go up because of the proposed stadium tax.
And so on, though one person did testify that it'd be worth building a stadium to get the polluted site, which he lives across the street from, cleaned up.
As for what Ramsey County can actually do about a state-imposed stadium tax, that's less clear. The state legislature has to power to waive the requirement that county residents vote on a tax increase, as they did for the Twins; the county charter commission can force a vote to overturn any state action, but that likely wouldn't take place until after the stadium was approved and underway, which could get messy.
The hope of stadium opponents in the county, clearly, is that the legislature will decide to steer clear of the Ramsey County proposal and go for something that will generate less opposition: either something on the Metrodome site (or a renovation of the dome), or maybe a site near Target Field. Of course, nobody's really seen cost or funding estimates for those sites, so there's no telling what opposition would arise to them. We could still have a ways to go on this one.
September 27, 2011
Cincinnati stadium debt options: Rock, or hard place
The Cincinnati Enquirer ran a long article on Sunday looking at Hamilton County's lease woes with the Cincinnati Reds and Bengals, and looking at how other cities solved similar revenue shortfalls. The findings:
- Indianapolis raised sales and hotel taxes, plus redirected tax revenue from the stadium area to pay off construction bonds on the Colts' stadium.
- Cleveland sold off naming rights to Jacobs Field (now Progressive Field) and Gund Arena (now Quicken Arena), which had formerly been named for the Indians' and Cavaliers' owners.
- Orlando has scrapped a planned performing arts center* and cut back on police, fire, and road services to fill funding shortfalls on the Magic's new arena.
In other words, options for Hamilton County include raising taxes, cutting spending, or selling off anything that isn't nailed down — sound familiar? Other already rejected options include declaring bankruptcy (would destroy the county's reputation), selling the stadiums (no one will buy them), raising ticket taxes (the leases prohibit it, though it's possible a voter referendum could get around this), default on the agreement to pay into Cincinnati's public schools fund to make up for lost property taxes on the stadiums (school bondholders could sue), refinance the bonds (won't save much money), buy the Bengals (too expensive), or end a riverfront development project (very little of that funding comes from the stadium tax fund).
The problem is that the damage was done when Hamilton County agreed to build the stadiums and agreed to those godawful leases; now, as I told the Enquirer, "The teams say, 'You made a deal and if you got the short end of the stick, that's not our problem." At this point, barring a ticket-tax end run, the county seems like it's going to have to pay off its stadium debt out of taxpayer pockets one way or another — unless they can find a way to retroactively revise the leases using time-traveling neutrinos.
*UPDATE: The Orlando performing arts center informs me that construction is underway for phase one of the project, with a groundbreaking having taken place in June. It's phase two that's currently not scheduled, according to the center, "due to construction timing."
Earthquakes stadium funding gap resolved?
San Jose Earthquakes managing partner Keith Wolff (son of owner Lew) gave a presentation to San Jose residents last night on the progress of their long-stalled soccer-only stadium, and if he's to be believed, it could be stalled not much longer. Skip past all the stuff about noise complaints (which is important if you live near the stadium, but not likely to be a major holdup) and stadium design (which is largely unchanged from two years ago), and you hit this tidbit:
The overall budget for the 15000-18000 seat stadium would require "up to a $60 million investment" by team ownership and was not dependent on securing outside corporate funding.
If true, that's a big change from last year, when Lew Wolff said he'd need to pre-sell "sponsorships" to raise money for a new stadium. It's not clear why that would have changed — improving revenue projections for MLS? increased desperation on Wolff's part to get shovels in the ground leading him to front the money himself? — but if it has, then a new Earthquakes stadium could be open by ... probably not 2013, but certainly 2014, if they get rolling soon.
September 26, 2011
Yankees community benefits list includes dodgy groups
The community benefits fund that the New York Yankees and then-Bronx Borough President Adolfo Carrion set up in 2006 to help grease the wheels of their new stadium deal is back in the news again, and just like last time, when it was suing its own chair for mismanagement of funds, this time the news isn't good. The New York Post found that among the beneficiaries of the Yankees' charity have been:
- A for-profit gym that has since obtained non-profit status, but still requires hefty fees for membership;
- A tap-dance troupe that hasn't filed with the IRS since 2007, and was just stripped of its non-profit status as a result;
- Something called "Praise, Peace and Pride," which after years of reporting no activities at all now says it intends to "provide medical-health and dental-care assistance for all hip-hop pioneers and their families."
The Yankees issued a statement that they would be "extremely disappointed" if the fund was found to be misallocating funds, which is either a sign that community benefits agreements make for great plausible deniability, or that the Yankees don't know their movie quotes that well.
A's: No contracts until stadium situation resolved
And speaking of threats, Oakland A's execs are apparently telling their players that they won't talk about new contracts for 2012 until they know whether the team is getting a new stadium in San Jose. Or at least that's what GM/part-owner Billy Beane told the agent for outfielder Josh Willingham:
"We gave the A's an idea of where we were, and we were told they have interest in bringing Josh back, but before they did anything, they want to see what happens with the stadium," [agent Matt] Sosnick said. "Josh and I both made it clear he'd like to stay, but at this point, I'm pretty sure he'll test the free-agent market.
"We talked about a time frame, given that Billy would like Josh back, but it seems like Billy is sort of hamstrung right now."
If this sounds familiar, it may be because you remember when the Florida Marlins signed then-third baseman Mike Lowell to a contract extension that would be nullified if the team didn't get a new stadium approved promptly. They didn't, but then they renegotiated Lowell's deal to keep him anyway, and the whole issue went away. (The issue of Lowell leaving, that is — the Marlins kept pressing for public stadium money, and ultimately got it.)
In the A's case, either owner Lew Wolff genuinely thinks that the San Francisco Giants ownership shakeup could open the door to approval of an A's move to San Jose, or he's trying to put pressure on MLB to get the Giants to quickly resolve a deal, or both. Though to be honest, it's hard to see how the rest of baseball is going to quake in its boots at the prospect of the A's not having Josh Willingham, notwithstanding his agent's insistence that he's "the one guy on the team who would be the most difficult to replace" — especially when you consider that MLB's next collective bargaining agreement is likely to penalize teams that take revenue-sharing money without spending it on payroll.
Another interesting note from Susan Slusser's San Francisco Chronicle article: She writes that "according to one person familiar with the team's thinking," the A's would likely cut spending if they moved to San Jose, since they'd move into rebuilding mode to try to have a winning team by the time a new stadium is ready; if they stay put, they'd be more likely to spend on players to get any fans they can coming through the gates in Oakland in the short-term. That actually makes a fair bit of sense, but it would mean that the threat here is really that if the A's can't get a new ballpark, they will re-sign Josh Willingham. Maybe they should threaten to sign Mike Lowell, too, just for good measure.
Oilers owner: Arena deal by Oct. 31, or I'll hold my breath and turn blue!
What to do when you're unhappy with the lack of progress for your team's arena or stadium deal? Set an arbitrary deadline! That's what Edmonton Oilers owner Daryl Katz did last week, declaring that the city council needs to vote on his $450 million arena deal by October 31, or else ... okay, he left out the "or else" part. But really, they need to vote. Soon. Just because.
The rationale for the October 31 deadline is apparently that Katz' option to buy the land where he wants to build a new arena expires on that day, though 1) there's nothing saying Katz can't negotiate an extension and 2) that isn't really the council's problem anyway. What is the council's problem is that the terms of the deal are still awfully sketchy:
Coun. Linda Sloan scrutinized the deadline saying, "that kind of ultimatum is not a demonstration of good faith."
She asked administration if Katz had yet provided financials or collaterals, proving he can uphold his $100 million contribution to the arena. The response from administration was "no."...
As for the planned $100 million from other levels of government, [city manager Simon] Farbrother told council that the city has received "no formal promise," from the province that was toying with the idea of funding an arena through a Municipal Sustainability Initiative (MSI).
The council is apparently now considering voting on the rest of the arena plan by October 31, contingent on getting $100 million from the province and Katz' financial guarantees. It's hard to see how that would help, though: If the deal is off if Alberta doesn't come through with the cash, then Katz can't reasonably exercise his option on the land; and if the deal isn't off then, Edmonton would be putting itself in the position of having to find $100 million to fulfill a deal it had already committed its own money to. So it doesn't really make sense, unless it's just a push by Katz to jump-start a process that's been dragging on for years ... nah, he wouldn't do that, would he?
Should Cubs sell Wrigley to fans in order to save it?
With not much left to focus on in the Chicago Cubs this year other than whether they'll be stuck with Carlos Zambrano for another season, Chicago Tribune columnist Phil Rosenthal tries to solve the lingering Wrigley Field crisis* by making a modest proposal: Sell shares in the beloved ballpark to baseball fans, thus raising money without tapping the public purse:
Separate the ballpark from the team, on paper at least. Set up a foundation. Something. Let the Ricketts family retain control of the subsidiary and sell shares in it to finance the rehab.
Okay, that's a bit hand-wavy. But could something like this actually work?
First, keep in mind that Wrigley Field is current privately owned, so pays property taxes. That would have to be dealt with in any sale — it's one thing to buy a certificate that says you own a brick of Wrigley Field, another to commit to sending checks to the city of Chicago every April 15. (I don't actually know how the tax law would work if the Ricketts family tried to transfer ownership to a foundation, let alone a "something.")
Second, what would the market be for these shares? Yes, the Green Bay Packers are owned by shareholders, but there you're actually getting a park of the team. The most recent example of a team trying to raise funds by selling bits of a stadium was Labatt Park in Montreal, and that wasn't exactly a rousing success.
Rosenthal proposes that buyers could "get to attend annual meetings at the ballpark, private tours, special events and other perks," calling this "free money" for the Cubs. But, of course, if those things have value, then the Cubs could sell them right now — call it a "Cubs Platinum Members Package" — and keep the cash for themselves. That's not something Ricketts is going to jump at, certainly not as long as the possibility of using other people's greenbacks is still on the table.
AEG sniffing around Sacramento Kings arena deal
Take this with a grain of salt, but: AEG, the entertainment giant that is trying to build an NFL stadium in downtown Los Angeles, is reportedly "interested" in being part of a Sacramento Kings arena project.
"We have made the mayor aware that ... any assistance he would like to ask us for, we would be interested," AEG spokesperson Michael Roth said on Friday. (Oddly, none of the news outlets reporting this indicate what Roth said in the ellipsis. I'm willing to make my own guess, though.)
This is likely just tire-kicking: "Sure, if you figure out a way to build an arena, we'd love to manage it. We still get to pay ourselves guaranteed profits before the city sees a dime for repaying its debt, right?" Still, the announcement provides a smidgen of momentum for the arena plans, which is a smidgen more than they had yesterday.
In related news, meanwhile, the Sacramento city council is set to vote tomorrow on a city plan to spend $555,000 to hire a consultant to analyze its arena proposals and negotiate with the Kings. That price tag is about par for the course, and isn't a terrible idea — as noted here previously, one reason cities often get stuck with terrible leases is because they don't have experts on their side — but it all depends on what they're buying. The biggest contract would go to Barrett Sports Group, which has a long record of working for both government and team clients, which is promising; their website also prominently features a quote from NFL commissioner Roger Goodell on their expertise in "finding solutions to the always-complex challenge of developing stadium facilities," which is less so, given that you want an arena evaluator to tell you whether to build a new building, not just how to do so.
Minneapolis Mayor: We paid for the Metrodome, we should get the sale money
Minneapolis Mayor R.T. Rybak threw another wrench into the already wrench-laden Minnesota Vikings stadium plan by insisting that if the Metrodome is sold, the proceeds go to his city, not to fund a new stadium in suburban Ramsey County. "We hit the roof when we heard there was a plan to take proceeds from the Metrodome and use it to build a stadium in Arden Hills," Rybak declared last Wednesday. (Yes, sorry, just catching up a bit here.) That money, he said, "does not belong to someone trying to move a business out of our city. And we will fight it every step of the way."
Rybak apparently has a case: State law says that if the Metrodome is sold, Minneapolis and Hennepin County each get $5 million from the proceeds. The mayor, however, wants an additional $25 million on top of that, on the grounds that the rest of the sale money is supposed to repay stadium debt — which was paid out by the city. Vikings stadium exec Lester Bagley retorts that since the Metrodome is already paid off, the money could be used to pay debt on a new stadium elsewhere.
I'd say that the whole thing is likely to end up in court, except that most of it is probably political posturing: Rybak is no doubt hoping to use his leverage with the state stadium-sale law to push the already-teetering Ramsey County plan into the scrap heap, and get attention refocused on the possibility of a new or renovated stadium in Minneapolis. And while $35 million is kind of a drop in the bucket in the context of a $1.03 billion stadium project, drops can add up.
September 22, 2011
Kings arena costs uncertain, could steal funds from other projects
The Sacramento News and Review has a good rundown today of where things stand in the Sacramento Kings arena campaign, and it goes a little something like this:
- The $387 million price tag is just a guess, and doesn't include land costs (the site was initially bought with money earmarked for transportation projects, so the transportation fund would "have to be reimbursed $10 million to $20 million, maybe more") or infrastructure costs (including building new streets and sewers). Also, whether a new freeway interchange will be needed, which won't be known until a traffic study is done — which can't be completed before the Kings' March 1 deadline to decide on building an arena.
- The site of the Kings' current arena could require an "incentive package" to get new development there once the arena is gone. But "we don't have any money with which to incentivize anyone," according to Sacramento city council member Rob Fong, an arena proponent. One possibility: Giving extra city-owned land near the arena to a developer as an incentive for building there ... except that sale proceeds from that land are already being included as one way of paying for the arena. "Clearly, that land can't be sold to raise money, and also be given away to entice a developer," notes the News and Review. Oh, can't it?
- If you're going to be selling off city land and investing in city infrastructure, it's worth considering whether doing other things with the money would be more effective than building an arena. "The city can always sell land, but it makes the most sense for a one-time expenditure that brings a stream of benefits into the future," Sacramento State University economist Rob Wassmer told the paper. An arena could fit that bill, he said, "but so would the building of a new public park or a bike trail." Adds California Budget Project director Jean Ross: "There are a number of options which could potentially touch the lives of a broader range of residents, and have a greater impact on Sacramento as a place to live, work and play You could build world-class science labs in all city schools. You could invest in endowments for pre-school programs and after-school programs. You could Wi-Fi all of downtown. You could improve parks and other facilities that far more people would actually use over time."
Or you could renovate a local community theater, which is what Sacramento has been planning to do with $50 million of the money that could now be redirected to a Kings arena. "The Community Center Theater needs a renovation to add more seating and make it A.D.A. complaint, without it, there will be no Broadway season," Broadway Sacramento director Richard Lewis told the local ABC affiliate. Question: Is that factored into the arena proponents' economic impact projections?
Chargers: It's not just a stadium, it's a convention center!
With their stadium plans still in a holding pattern, San Diego Chargers execs are trying a new tack, suggesting that they could incorporate convention facilities into their new football stadium, which would presumably allow the team to grab a chunk of the $550 million slated to go toward expansion of the San Diego Convention Center:
"We're looking at several options right now, and this is one of them," [Chargers stadium exec Mark] Fabiani said, noting that convention center elements were also part of pro football stadium projects completed in Atlanta, Indianapolis and St. Louis, among other cities.
Yes, though those facilities haven't exactly led to booming convention business. Also, those stadiums are adjacent to existing convention facilities; the Chargers stadium wouldn't be.
In any case, the San Diego city council is now looking into this proposal, with councilmember Carl DeMaio yesterday asking for a list of conventions that have skipped San Diego, and which ones did so because they wanted bigger space, versus those who went elsewhere because the convention center was already booked. "I think that will get to the heart of the argument about contiguous space versus two separate facilities," said DeMaio.
One additional problem with using an NFL stadium as a convention center (aside from that it's a football stadium, not a convention center), notes convention center board member Steve Cushman: Conventions need to be booked years in advance, and the NFL schedule is only set a few months before the season starts. Details, details...
September 20, 2011
49ers buy amusement park that had sued to block Santa Clara stadium
The San Francisco 49ers don't have to worry about the on-again off-again lawsuit threats by the owners of the Great America amusement park near the team's would-be Santa Clara stadium site. That's because the 49ers are about to become part-owners of the amusement park, as part of a consortium spending $70 million to take it off the hands of its current owner, Cedar Fair.
This would be huger news a couple of years ago, when Cedar Fair was the primary obstacle to the Niners' stadium dreams. Now, with the bottom having fallen out of the team's private financing, they have bigger fish to fry. Maybe next they can try buying a bank.
Yankee Stadium hotel to tack on more public subsidies?
Remember those all-but-bankrupt parking garages that were built for the new Yankees stadium, only to find that Yankee fans aren't so keen on paying $35 to park when they do so for $10 a couple of blocks away? Bronx Borough President Ruben Diaz Jr has a plan to rescue them: Rezone one of the 1970s-era garages near the site of the old Yankee Stadium and let the parking company try to develop it as a "hotel/conference center."
As for whether such a hotel in the South Bronx could make money, let alone enough money to bail out money-losing parking garages, nobody knows — Diaz' plan is technically just a "Request for Expressions of Interest," which translates as "Hey, anybody out there want to build a hotel?" For Diaz, this is a slam dunk: If the project happens, he gets to say he got his long-desired hotel built in his borough, and helped rescue the Yankee garage project as well. (The RFEI asks for a developer to build a "Latino Hall of Fame" as well, but that's clearly just padding the wish list.) From a city perspective, the worry is that because the garage is on city-owned land — the city apparently handed it over to the garage operator a couple of years ago, gratis — any hotel project could end up involving even more city subsidies to the already heavily-subsidized project, if only via property-tax breaks or the like.
That's especially true because the list of successful hotels anchored only by a sports stadium is vanishingly small. "A conference center depends upon group business, and there is not much in terms of demand generators (or Manhattan amenities) around the stadium," University of Texas economist Heywood Sanders (whose book on convention center economics should be out soon) told me for my Village Voice article on the hotel plan. "Cleveland did subsidize some new hotels into being around Gateway, but the downtown hotel market there never took off and now is suffering."
If a garage is torn down to make way for a hotel, it'll be a bitter irony for residents of the surrounding neighborhood, who watched as their public parks were taken away to make room for what's now unused parking. Joyce Hogi, a community activist who was active in both fighting the stadium project and pushing the city to expedite replacement parks, tells FoS she's skeptical of the whole deal: "If you had money to invest, would you build a hotel and conference center on this site? ... What is there to come to? When the City starts taking care of the area then maybe, just maybe..."
September 16, 2011
Architects say renovation of Chargers' stadium would be cheaper, better
Renovation of old stadiums must just be in the air today: A bunch of San Diego architects is pushing a plan to renovate the Chargers' Qualcomm Stadium, which they say would cost only one-quarter as much as building a new stadium.
Historic preservationist John Eisenhart said the matter is simple.
"Twenty years from now, you can have a new stadium that will look old or an old stadium that will look new," he said.
Both city and team officials said they've ruled out renovation, with Chargers stadium czar Mark Fabiani citing a 2003 study by stadium architects HOK that concluded that renovating Qualcomm would cost $353 million, while building a new stadium would cost only $10 million more. Of course, even discounting the possible conflict of interest here — HOK is in the business of designing new stadiums, so stands to earn a lot more from one of those than from a renovation — the estimated cost of a new Chargers stadium is now up to $800 million, which is a good bit more than even $353 million.
(I emailed Fabiani, and he replied that renovation would cost more now, too — notwithstanding that the architects claim it could be done for $250 million. He also noted that the Citizen's Task Force on Chargers Issues report — also from 2003 — was skeptical of a Qualcomm renovation, in part because the building's foundation has settled differently in different places, something it claimed would be tough to easily repair.)
Fabiani also notes that if Qualcomm is renovated, you can't help pay for it by building housing in the parking lot as you could with a new stadium, but then, you also wouldn't need new land to put the new stadium on, on top of saving $450 million or so.
Just like in Minnesota, this is an idea whose time hasn't come yet, but it'll be interesting to see what happens if it's another couple of years down the road and the Chargers are still beating their heads against the financing for a brand-new building — and, of course, haven't moved to L.A.
Meet the new Giants boss, same as the old boss
For anyone hoping that the news of Bill Neukom stepping down as lead owner of the San Francisco Giants would lead to a break in the impasse with the Oakland A's over territorial rights to San Jose, you can stop hoping:
Larry Baer, who is becoming CEO when Bill Neukom retires at the end of the year, said Thursday that the Giants' stance on territorial rights in the Bay Area is fixed.
"There is no change on that position," Baer told reporters Thursday. "It's a position Bill's had, a position our board has had, a position I have."
A's owner Lew Wolff told the San Francisco Chronicle he'd have no comment on his nemesis Neukom's departure, then opined: ""If I were the Giants, I'd feel more confident the longer it takes. I don't think they'd be right." Asked what he thinks about prospects for a resolution overall, he replied: "I have no idea." Does this count as depression or acceptance?
MN house leader: No state money for Vikings, how about Metrodome reno?
Minnesota state house speaker Kurt Zellers, who earlier this week dared say that he didn't think the Minnesota Vikings would leave the state without a new stadium, upped the ante yesterday, saying he would oppose all efforts to spend state tax money on a Vikings stadium:
"There is absolutely no way we're going to be able to go to the finance commissioner and say, 'would you write out a $300 million check to [Vikings owner] Zygi Wilf, and put in the little memo section 'roof for the new stadium,'" Zellers told the [Grand Forks] Herald. "It's not going to happen."
He said the team needs to tie financing for the proposed stadium to "the game, something that as a fan, you as a participant at the game, are willing to do. I'm not really sure what this is just yet."
That sounds like he's looking for ticket taxes or user fees, which has been suggested before and not gone very far, in part because there's no way it'll pay for a nearly $1 billion stadium without eating into the Vikings' profits. Unless Zellers would accept a TIF, which would be another story.
Zellers also broached the possibility of renovating the Metrodome, which he called a "pretty good facility." So far nobody else has shown much interest in that, but if all the financing plans for a new stadium keep being stuck with multi-hundred-million-dollar holes, you never know.
September 15, 2011
Columbus panel proposes public-private bailout of Blue Jackets
One of the few good models of a privately funded sports facility may be about to get a whole lot less, uh, modely. A government task force put together to resolve the Columbus Blue Jackets' demands to be bailed out of their lease at their 11-year-old, privately built arena has come up with a plan that would go like this:
- Columbus' Convention Facilities Authority, a combined city-county entity, would buy the Nationwide Arena from its private owners, Nationwide Insurance and the Columbus Dispatch, for $42.5 million, and take over management and operations. The city and county would pay off the purchase price with part of its share of revenue from the state's four new casinos, just as the Blue Jackets owner requested last summer.
- The Blue Jackets would stop paying rent, currently running about $9.5 million a year. It would also extend its arena lease through 2039, which doesn't sound like much of a concession when it's a lease where you pay no rent.
- Nationwide would buy a 30% minority share in the Blue Jackets for $52 million, as well as signing a 10-year, $28.5 million naming rights deal to keep its name on the building it would no longer own. That money would go, naturally enough, to the Blue Jackets, even though they 1) didn't build the arena, 2) wouldn't own the arena, and 3) wouldn't even be paying tenants, thanks to that whole free rent thing. Effectively, then, the team would be getting paid $2.85 million a year to play in Columbus.
So what's in this for whom, exactly? Well, the Blue Jackets, who say they're currently losing $12 million a year, would get that $9.5 million a year rent break plus $2.85 million a year in naming-rights money, effectively putting them in the black in one fell swoop. Nationwide would take a bath on its $175 million construction cost, getting only $42.5 million in return, and having to cough up naming-rights money as well. As for city and county taxpayers, they'd be giving up several millions of dollars a year in casino revenues in exchange for an arena whose primary tenant would be paying no rent — so how that works out for them will likely depend on whether it's possible to pay operations costs on an arena off of just Lady Gaga concerts and monster-truck shows.
Or, as Columbus City Auditor Hugh Dorrian put it to Columbus Business First (in the newspaper's words): "The deal will not raise taxes and won't take money away from capital projects and city operations." Oy!
The plan still has to be approved by the Columbus City Council, the Franklin County Commission, and the Franklin County Convention Facilities Authority.
Vikings stadium to face cost overruns, after-the-fact public vote?
Apparently the state of Minnesota saved up all its Vikings stadium news for today, because there's a crazy flurry of activity in the mostly stalled campaign:
- Gov. Mark Dayton declared that cost overruns on the project could increase the Vikings' share of the costs from $400 million to $500 million, since overruns are currently slated to be paid by the team. Vikings stadium VP Lester Bagley responded that the Vikings' share is still "in negotiations," which sounds worryingly like "We're still hoping to figure out how to have somebody else pay for that." (Bagley did sound more amenable in talking to Minneapolis Public Radio, running down the state and county's proposed contributions, then adding, "What's left? Everything else. Who covers everything else? We do.")
- Ramsey County has scheduled two public hearings for Sept. 28 and Oct. 11 to discuss a proposed voter referendum on whether to use sales tax money for a Vikings stadium. The vote would be held next November, which could be after the state approves a stadium plan; opponents of the stadium deal say that even having a scheduled vote could affect the debate over the project, but we've seen how that's worked out before.
- Minnesota state house speaker Kurt Zellers, who opposes public stadium funding without a referendum, declared that he didn't think the Vikings would move immediately if a new stadium isn't approved: "After this much heritage and tradition, I don't think they would."
Detroit rejects Chevy offer to maintain Tiger Stadium ballfield for free
The Detroit residents who have been maintaining the baseball diamond at the empty former site of Tiger Stadium — and playing occasional pickup baseball games there — got a big boost last month when Chevrolet offered to underwrite their cleanup efforts ... and a big blow yesterday when it was revealed that the Detroit Economic Growth Corporation was rejecting Chevy's offer because it wants to keep the site vacant for development.
"We're starting to get major retailers" interested in building downtown, said DEGC president George Jackson, not noting that the Tiger Stadium is the only large vacant downtown parcel available because, well, see for yourself.
In any case, turning down an offer of a free community baseball field — even if temporary — is likely to be yet another huge community relations faux pas for the agency, which has previously refused to meet with U.S. senators to discuss plans for the ballpark site.
"This is a fastball right down the plate, and Detroit looks like it's swinging at it with a blindfold," University of Detroit Mercy marketing professor Michael Bernacchi told the Detroit News. "There is no way the city of Detroit wins this battle — in terms of public perception. Their long-term vision of the site has always sounded very reasonable and solid — that they need to find a feasible development. But this sounds like such a reasonable short-term solution by a venerable brand, and they missed it. It's going to dig, gnaw at that perception out there that the city didn't do all it could."
September 14, 2011
Sacramento council okays negotiations with developer to build something for Kings, someday, somehow
The funding plan may remain a work in progress, but the Sacramento city council voted last night to okay the city to work on an exclusive development deal with the ICON-Taylor group to build a Sacramento Kings arena. You'll remember ICON-Taylor from the last time they were picked by the city for an exclusive arena deal, though you may also remember co-developer David Taylor from the time last week that he promised that "big-time developers" would surely starting building all kinds of stuff if only exclusive arena rights and lots of public subsidies were first granted to, um, him.
The council's gung-ho-ness notwithstanding, there are still a number of issues to be worked out before any arena deal to go forward. Among those identified by city staffers: the proposed arena site needs toxic cleanup and water and sewer changes, the city would need to buy an additional two-acre parcel of land, and the site needs an extra 1,500 to 1,800 "premium" parking spaces. And, of course, the city still needs to figure out exactly how to pay for the whole mess.
A reader who was at last night's council meeting further reports that it's against state law to selling parking meters to a private entity, which would rule out that form of arena funding; that an environmental review will take 16-20 months, which would make it tough to approve an arena deal by the Kings owners' declared March 1 deadline; and that Sacramento doesn't have the bonding capacity to finance an entire $400 million arena, so would need other local governments chip in as well. Little stuff like that.
The city is to report back in three weeks, at which point the council will presumably give it a whole new list of things to figure out how to accomplish. Eventually.
September 13, 2011
Majestic on $2B Vegas stadium: Read their lips, no new taxes
Majestic's proposed 40,000-seat domed stadium and basketball arena may have died in the Nevada legislature, but as we all know, stadium plans never stay dead for long. And so we have this from today's Las Vegas Sun:
The public-private partners behind a proposed on-campus stadium at UNLV say they are developing a plan to build it without raising taxes.
Since the Legislature this year rejected a special tax district to fund the $2 billion stadium/dormitory/retail project, university administrators and Majestic Realty Co. have been working on a financial formula and other changes to allow the project to move forward.
Craig Cavileer, president of Silverton resort and Majestic's representative on the project, said one idea is for UNLV to issue but not underwrite bonds to pay for construction, allowing the university to avoid liability should the project fail and investors sue. Another idea is for Majestic to fund the project.
Now, that's hand-wavy in the extreme — Majestic says it can find a way to pay for a $2 billion stadium by, um, finding a way to pay for it — but what I'm more interested in here is the headline: "Developers: A UNLV stadium could be built without raising taxes." There are basically two promises a wannabe stadium builder can make to the public: one, "no new taxes will be used"; the other, "it won't raid the general fund." These are, of course, mutually contradictory: If it's using public funds, it has to use either new tax money (which means raising taxes) or old tax money (which means taking money that was previously going to be spent on other things). But somehow you never see reporters discuss the flip side of these promises, as in "Developer promises stadium will only use existing public funds" or "Developer promises entire cost will be paid by raising taxes."
Of course, if Majestic really can fund the entire project itself, as it alludes to, then that's all well and good. (Though it'd still be using public land, and not paying any property taxes while using police and fire and other services that would need to be paid for somehow, which is less well and good.) But if they could build it themselves, then presumably they wouldn't have needed to ask the legislature for the talcum powder.
September 12, 2011
Cal legislature okays fast-track for all stadiums and arenas
The bill to fast-track Los Angeles' $1.2 billion downtown football stadium indeed passed the California State Senate on Friday, by a 32-7 margin. And later the same day, the senate also passed president pro-tem Darrell Steinberg's bill allowing all development projects to be exempted from lengthy lawsuits — which, depending on how you look at it, either puts all of the state's big projects on equal footing, or uses a loophole granted to one developer as an excuse to grant loopholes to all developers (so long as their projects are worth at least $100 million).
Assuming Gov. Jerry Brown signs the bills — no word from the governor's office at last check — this will obviously smooth the path for AEG's L.A. stadium, as well as proposed buildings for the San Francisco 49ers, Sacramento Kings, and San Diego Chargers, among others. Still, the main holdup in all of those cases is money: The 49ers still haven't firmed up their share of construction costs, the Kings arena finance plan right now mostly amounts to wishful thinking (the latest involving selling off future parking revenues for up-front cash), and AEG needs to find an NFL owner who wants to give up either a hefty annual rent, a hefty share of stadium revenues, or a hefty share of the team itself in exchange for moving to L.A. Not having to worry about pesky lawyers is a nice plus, but pesky bankers are still the main reason why stadium deals do or don't get done.
September 09, 2011
Latest Kings arena plan includes every funding scheme but the kitchen sink
At last, it has arrived: Sacramento Mayor Kevin Johnson's Think Big arena task force yesterday issued its Nexus Report — nobody can say they're not thinking big in terms of ostentatious titles, anyway — on how to fund a $387 million Sacramento Kings arena. The result, though, is more sketchy framework than detailed plan, and mostly amounts to a laundry list of funding streams that it thinks would be politically feasible:
- There's no sales tax hike or other broad-based tax, presumably because those would require a public vote, and the last time the Kings tried that they failed miserably.
- The crux of the Nexus would be what proponents are calling a split of the arena funding into thirds: one-third from the public, one-third from private sources, and one-third from users of the arena.
- The public share would amount to $94-123 million, and could include the sale of public land, diversion of existing hotel taxes, and/or billboard revenues.
- The private portion would be $91-156 million, a good chunk of which would presumably come in the form of rent payments from the Kings: The Sacramento Bee reports that "task force officials have indicated they want the Kings to enter into a lease comparable to the deal the team struck in their aborted attempt to relocate to Anaheim," which included a rent equal to 7.5% of ticket revenue, which would come to somewhere around $2-3 million a year. Though the Kings owners would there have gotten a cut of arena ad revenue plus naming rights money, which would be problematic in Sacramento's case because...
- Naming rights would be part of the "user" slice of the pie ($90-112 million), which could also include parking fees, a ticket surcharge, business improvement district fees, or even the EB-5 green-cards-for-cash plan used by the New Jersey Nets for their new Brooklyn arena.
In short, this is a run-stuff-up-the-flagpole package, with lots of hand-waving and gaps to be filled in. (Best line from the Sacramento Bee's solid analysis of the plan: "The Think Big report also glides over the existing $67 million debt the team owes to the city, calling it a 'significant issue that must be addressed.'") And while it manages to cobble together enough money to pay for an arena, it leaves unclear whether either taxpayers or the Kings would get back enough revenue to make the whole thing worthwhile.
The Kings owners the Maloof brothers issued a statement calling the Nexus plan "a very positive step," but otherwise didn't comment on the specifics. The Sacramento city council is expected to begin debating on Tuesday whether to give the city the go-ahead to start negotiating with developers to turn this pencil sketch into an actual arena plan; even if that happens, though, the real battle could be over what to pick and choose from this menu of funding options, and whether a mix can be found that will please the Maloofs and an arena builder without soaking the public.
UPDATE: Commenters below note something that blew right past me: While it's implied that the dollar figures above are in present-day dollars — i.e., $100 million means enough future cash to pay off $100 million in construction bonds today — it never actually says whether it means present value or nominal future value over time or what. If it's the former, it's the right way to do it — except for the bit about not explaining what units you're using in a high-priced document that took months to produce.
California senate to okay fast-track for all stadiums, arenas?
It's D-Day for AEG's Los Angeles stadium fast-track bill, which passed the state senate on Wednesday and now goes to the state assembly. With the legislative session ending today, either the bill will get swiftly approved — just nine days after it was written, though that still wouldn't be a record — or AEG will need to decide whether to move ahead with its project without the promise that any lawsuits will be swiftly resolved.
The state senate, however, appears to be focused on a new bill, introduced just yesterday, that would allow the governor to fast-track any development project over $100 million, for the next three years. Reports the L.A. Times:
Senators acknowledged that the broader measure would probably have to pass if they are to approve the AEG stadium bill. Its principal co-author, Senate President Pro Tem Darrell Steinberg (D-Sacramento), said it was justified by the state's 12% unemployment rate.
"This is a recession," Steinberg said. "People are hurting, and we have to use every tool in our disposal to help people get back to work, and do so in a way that does not undermine our very important environmental laws."
The bill, AB 900, would allow a wide variety of projects — residential, commercial, sports, cultural, entertainment, renewable energy and recreational — to apply to the governor for expedited treatment. They would have to be located on an under-utilized property in a developed area.
This would make Steinberg, for one, happy because it could potentially be applied to the Sacramento Kings arena; the senate leader is co-chair of Sacramento's Think Big committee trying to get that built. Less happy, though, are the environmentalists who'd endorsed the AEG-specific bill: National Resources Defense Council attorney David Pettit had barely finished blogging about how the AEG bill was worthwhile because they'd added legally binding commitments to increase public transit use by fans when he was telling the Times that the broader bill was problematic because it could apply to so many projects:"There are a lot of projects that could get under the wire by 2015."
According to the Times, though, senate leaders say it's the broader bill or no bill at all. Looks like you can listen live here (and possibly watch live here) if you want to follow the play-by-play of today's final senate session.
September 07, 2011
L.A. Times: Chargers! Chargers! Chargers! Wooooot!
It looks like the Los Angeles Times has declared this to be "When are the San Diego Chargers moving to L.A. already?" week:
- On Monday, it was an article speculating (with no specific evidence) that the Chargers are soon to move north to a new L.A. stadium, complete with an over-the-top metaphor about how going to L.A. is like being deployed to Afghanistan. (And this from the hometown paper.)
- Yesterday, the intent to move was apparently a fait accompli, with the headline reading, "San Diego divided on whether to fight Chargers run to Los Angeles." Included were quotes from the same two stadium proponents as in Monday's article, City Club of San Diego president George Mitrovich and San Diego Mesa College professor Carl Luna, the latter of whom intoned doomfully, "The Chargers' leaving town will be another sign that America's Finest City just might not be so fine anymore."
- Today, it's just a throwaway line from columnist T.J. Simers: "You're going to love General Manager A.J. Smith when he brings his Chargers to Los Angeles next year."
Not that it's exactly unprecedented for a newspaper's sports section to become a booster of bringing a team to town — it guarantees them more readers, after all, not to mention more jobs for gameday reporters — but this is still pretty remarkable, especially when the Chargers' official stance is still that they're planning to get a new stadium built in or around San Diego. It'll be interesting to see what shows up in tomorrow's paper — you have to figure their reporter has a couple more Mitrovich or Luna quotes in his notebook that he still has to burn off...
September 06, 2011
California legislature mulls bill to fast-track AEG stadium
As expected, two California legislators on Friday introduced a bill to fast-track AEG's planned downtown Los Angeles NFL stadium, forcing any environmental challenges to be resolved within six months. The twist: With just four days left in the legislative session, some legislators said they'd barely have time to read the bill before having to vote on it.
Defense against what it considered frivolous lawsuits was one of AEG's main demands, especially after its stadium competitors in City of Industry got an even more sweeping get-out-of-lawsuit-free card two years ago. It looks like this one could see some opposition, though, particularly from legislators who don't see why their cities' stadium and arena plans shouldn't be similarly fast-tracked: San Diego assemblymember Nathan Fletcher declared, "I oppose this effort unless it's amended to apply to the entire state. Los Angeles isn't the only city to undertake this kind of effort, and if the process is broken, the fix should apply to the entire state." And Senate President Pro Tem Darrell Steinberg of Sacramento suggested that he'd prefer to see a statewide change to environmental laws as well, presumably so that the Kings could take advantage of it as well, if their arena plan ever gets off the ground.
All of which seems like a lot to untangle in the next four days, but if nothing else it could certainly lay the groundwork for a broader exemption next session.
In other Kings news, meanwhile, Mayor Kevin Johnson's arena task force is set to turn in its final financing plan this Thursday, which means it's time for the spin attempts to begin. First up: Developer David Taylor, who promised on Thursday that "if the arena is a go, there will be private investors, big-time investors" will build other projects — why, he might even build a hotel himself. Taylor, of course, is one of the developers hoping to build the arena itself — but a developer would never lie about the likely benefits of development just to win public subsidies, would he?
Hamilton's Ivor Wynne to be replaced, not rebuilt
While we're in Canada, it was announced last week that Ivor Wynne Stadium, home of the Hamilton Tiger-Cats, won't be getting a renovation as approved last February, but instead will be completely demolished and replaced. The rebuild, city officials promised, could be done under the same $152 million budget, so why not buy a new stadium instead of keeping half an old one?
It sounds reasonable enough, except for the bit where this was apparently decided back in April but not made public until now. As the Hamilton Spectator editorialized last week:
By the way, how does it happen that a complete rebuild will cost the same as rebuilding the south and renovating the north? Again, we're told, don't worry your little heads about it. According to senior city staff, more study on the project resulted in a more "refined" cost estimate. So the original estimate was too high? But why? And since city council made the Ivor Wynne decision based on the original cost and project description, doesn't this mean the decision was made on inaccurate information?
So the north stands will go from benches to seats. But how much money could have been saved by sticking with the original plan — $5 million, $10 million? Shouldn't council have had the option of making that decision instead of being presented with a fait accompli? Shouldn't council have had the chance to decide between applying the savings to other projects — say the increasingly expensive velodrome — or putting the money back into the Future Fund where it came from originally?
Apparently not. The decision was made and communicated to a bewildered city council. Poof. New stadium. Don't worry, be happy.
Quebec mayor, Quebecor reach NHL arena agreement
Seven months after announcing plans for a $400 million hockey arena to be paid for entirely with public money — but with plans for the public to get some of its money back via arena revenues — Quebec City Mayor Regis Labeaume and Pierre Karl Peladeau, president of the communications giant Quebecor, announced yesterday that they'd reached a deal for Quebecor to operate the facility. According to reports over the weekend, the contract would look something like this:
- Quebecor would get full control of the arena through 2040, with an option to extend its rights until 2045.
- Quebecor would get to sell naming rights to the building, and presumably keep other arena revenues as well.
- The company would pay the province $63.5 million up front, plus $4.5 million a year in rent, if it lands an NHL team to play in the arena. Without a team, it would pay $33 million up front, and $2.5 million a year in rent.
Without seeing more details — the agreement is apparently close to 200 pages long, and I haven't been able to find it online — on the face of it this sounds a lot like AEG's lease to manage Kansas City's Sprint Center: The city hands over all arena revenues to a professional manager in exchange for fixed rent payments. And while it looks like Quebecor will be paying a fair bit more than AEG for that privilege, the amount of money headed Quebec City's way is still a pittance compared to its costs: Even if you ignore the $200 million that the province is putting in for construction costs, $63.5 million in a lump sum plus $4.5 million in rent is still going to leave the city losing several million dollars a year on its own $200 million construction debt.
And that's if Quebecor even bothers to bring in an NHL team — making their rent higher if one is present certainly isn't a good way of incentivizing their new arena managers to bid high to lure, say, the New York Islanders.
The Quebec city council is scheduled to vote today on the arena deal, and is expected to approve it. Hopefully at least the council meeting will shed a little more light on what exactly they're agreeing to.
September 02, 2011
The Chargers and the gravy theory of stadium finance
For your consideration, we present today an article at the awkwardly named ESPNLosAngeles.com that begins like this:
In our romanticized view of football, all a team really needs to play a game is a field, a ball and an opponent. Everything else is gravy.
In the big-money world of the NFL, however, it's the gravy that pays the bills.
If all an NFL team needed to be lucrative was a solid field, nice uniforms and good weather, the San Diego Chargers would be the most profitable team in the league.
Sadly, perfectly trimmed Bermuda sod, crisp powder-blue-and-gold uniforms and sunny 75-degree afternoons don't pay the bills in the NFL. State-of-the-art stadiums complete with luxury suites, club seats and plush corporate lounges do.
The article — by columnist Arash Markazi — goes on to talk about how the Chargers' Qualcomm Stadium is a dump, how the Chargers need a new stadium in San Diego or they'll leave for Los Angeles, and so on.
Only one problem: The "gravy pays the bills" argument is 100% wrong. First off, this is the NFL we're talking about here: What pays the bills, first and foremost, are the league's mammoth TV contracts, which are shared by every team equally regardless of whether they play in a state-of-the-art palace or a shopping mall parking lot.
Still, corporate suites and the like do account for the main differences between the revenues of NFL teams, which is why team owners are so aggressive in pursuing new stadiums. So exactly how much more would a new stadium be worth to the Chargers?
Markazi's article cites a study by Conventions Sports & Leisure International that asserted that annual operating income for a team playing at Los Angeles' as-yet-unbuilt downtown stadium could be $53 million, more than double the Chargers' current estimated $24.7 million in annual profit. That sounds impressive. But even an extra $28 million a year wouldn't come close to paying off construction costs on the $800 million stadium that the Chargers want to build — which is why the team is asking for public money to do so.
Going back to that lede, then, it really should have read: "In the NFL, it's the gravy that pays the bills. So long as it's someone else paying for the gravy, that is. Because otherwise you'd have to be crazy to pay that much for friggin' gravy."
Foster's secret Rays stadium plan isn't
Hey, remember St. Petersburg Mayor Bill Foster's secret plan to resolve the Tampa Bay Rays stadium standoff? Turns out it's not so much a plan as, well, not a plan at all:
My plan consists of three strategic elements: 1) ensuring that the legal integrity of the city's agreement with the Rays is not compromised; 2) supporting private sector efforts to retain the Rays as a regional asset without compromising the city's agreement with the Rays; and 3) continuing to support and promote the Rays as a professional sports franchise in west-central Florida.
Or as St. Pete Times columnist Sue Carlton translates:
1. Hold the Rays' feet to the fire, since they are under contract to play here 16 more years and St. Petersburg and Pinellas have invested in them big-time.
2. Support ongoing private efforts to keep them here.
3. Support your local team. Go Rays!
Foster described the whole "secret plan" thing as "the erroneous speculation brought about by my own words." Which, if you'll allow me to translate, means roughly: "I thought alluding to a secret stadium plan would get people off my back about the Rays, not turn up the heat. Jeez!"
Emanuel to back $200m in Wrigley Field subsidies?
Catching up on this late, but apparently Rahm Emanuel, the Obama hatchet man turned mayor of Chicago, is willing to put up as much as $200 million in city money towards a renovation of the Cubs' privately owned Wrigley Field. Or so say the "sources" cited by Crain's Chicago Business:
According to insiders, the team has pitched a range of public-funding options, from allowing the team to use amusement-tax revenues to pay for renovations to a sales or property-tax subsidy, a state credit for rebuilding an historic structure and bonds that would be issued by the Illinois Sports Facilities Authority, which owns the field where the White Sox play.
Some of those ideas already have been shot down. For instance, a source close to Mr. Emanuel said there is no chance the mayor would back an expanded tax on restaurant meals in the Lakeview area to pay for stadium work.
But a state historic tax credit in the range of $40 million is said to be potentially doable, and the team argues that it ought to be a subsidy from new taxes that its renovation would create, in the same manner that scores of local projects have received tax-increment financing subsidies.
TIFs, of course, have a somewhat problematic history in Chicago, having been handed out so vigorously to developers by Emanuel's predecessor, Richard Daley, that the city's property tax base has been left with more holes than the Cubs' starting rotation. And as the Chicago Reader notes:
There are no real community economic development benefits to be gained by pumping $200 million into Wrigley Field. The surrounding Wrigleyville area is already booming—as wild on weekends as the French Quarter in New Orleans.
There are certainly other areas in town—like most of the west and south sides—far more deserving of public subsidies. And, as we all know, the schools and city are deep in the red.
All in all, it's really not a good time to essentially take money that could go to public school students—among other worthy recipients—and turn it over to a baseball team.
Especially one that's as wretched as the Cubs. Sorry, easy target.
The Reader goes on to note that Cubs owner Tom Ricketts is rich enough to afford to pay for renovations himself — which, while true enough, is sort of beside the point, since it's unlikely that $400 million worth of renovations is going to produce $400 million worth of new revenues. Which does raise the question of why a major renovation is desirable in the first place, but then, we know what the response to that is.
In all, given the lack of details (the Crain's article just alludes to possible kickbacks of property taxes or amusement taxes, the latter being a rehash of the Cubs' previous plan), the unnamed sources, and the fact that it dropped in mid-August, this feels more like a trial balloon than anything. Still, it's probably a sign that the Wrigley subsidy debates are likely to heat up again, once everyone has had time to forget about the Cubs' season.
September 01, 2011
Vikes mull upping stadium offer in exchange for other concessions
More new developments on the Minnesota Vikings stadium front:
- Vikings stadium point man Lester Bagley said that team owners could be willing to put in more upfront money, but in exchange for other considerations such as control of stadium revenue: "It's possible that the ownership contribution could go up, but all things are connected. There's a couple of other open issues that are all part of the package and all part of the negotiation, like the operational control of the facility and things like that. Those are big issues to everybody."
- Gov. Mark Dayton may not be committed to a public referendum anymore, but state senate majority leader Amy Koch says she thinks a public vote should be required.
- The Ramsey County Charter Commission met last night and voted to put off any action until October, holding two public forums in the interim. Not that the charter commission necessarily has say over a stadium deal, depending on what the state legislature does, but it's hoping if nothing else to exert public pressure on the shape of any deal.
Add it all up and ... enh, everything will probably change again by tomorrow, anyway, so no use reading tea leaves until they've hatched.
