October 31, 2011
Trib columnist: Wrigley needs "lessened burden," not subsidies
Chicago Tribune columnist David Haugh weighed in on the Wrigley Field renovation controversy yesterday, with a slightly strange column calling for the city to find ways to let Cubs owner Tom Ricketts get more money out of his 97-year-old landmarked ballpark.
Why strange? For starters, there was the headline, which insisted that it is "Time for government to get out of Cubs' way" on renovations and also that the club "needs [a] helping hand" from government. Hough then issued a list of complaints about Wrigley Field and the way the city stymies the Cubs from earning money on it:
- Because Wrigley is landmarked, the Cubs are limited in what changes they can make to the structure, or what ads they can hang on its sides.
- City officials wouldn't let the team take over adjacent Sheffield Avenue to turn into an outdoor mall on busy game days, as the Boston Red Sox do with Yawkey Way.
- The White Sox got a free restaurant. And, um, the Cubs didn't.
- City ordinances limit the number of night games the Cubs can play.
- Chicago collects a 12% amusement tax on each Cubs ticket sold, even though the stadium is privately owned.
Concludes Haugh: "If the Cubs were permitted to lift landmark status to allow signage, increase the number of night games and redirect some of the revenue the amusement tax generates, it would considerably lessen the burden on the Cubs for the proposed $400 million Wrigley renovation."
Makes sense, right? All the city needs to do is to lift some of those nasty regulations that other teams don't have to follow, and Ricketts could have enough money to pay for a renovation of Wrigley in order to bring in more money to make up for the fact that nasty city regulations prohibit him from... waitaminnit...
The fact is, though things like rent breaks and additional ad signage sound less like subsidies than the straight-out cash transfers that Ricketts has been gunning for, they're just the same thing under a different name. In particular, exempting the Cubs from the city's amusement tax — something that, regardless of whether the Boston Red Sox don't pay one as Haugh complains, is applied to everything from cable TV to pleasure boat rides — would be a massive kickback of city funds, not to mention exactly what Ricketts has demanded (though Haugh never mentioned this).
Even more to the point, all those terrible city ordinances were in place when Ricketts bought the team in 2009, something that was no doubt taken into account in the $900 million sale price. Yes, the Cubs aren't the money-making machine that the Red Sox are — but then, you almost certainly couldn't buy the Red Sox today for $900 million. If Ricketts didn't notice the fine print about the city amusement tax or the ban on billboards on his landmarked stadium — one that, incidentally, allows him to charge sky-high ticket prices even when the team playing in it is dismal, as is often the case — then it's a bit disingenuous for him, or his supporters in the media, to be griping about how gummint regulation is strangling his ability to find a half-decent center fielder.
Vikings talks result in lotsa smoke, little fire
Sometimes it's hard for me to know when to post an item here about some bit of stadium news, and when it seems like it'd just be playing into the spin going on in the rest of the media. For example, how to deal with this weekend's spate of articles about how Minnesota Vikings stadium talks are ongoing but not accomplishing much yet?
How about we try wading through the sea of verbiage to pick out only anything that's actual news? Like:
- Using so called "Legacy Amendment" funds, from a statewide sales tax for arts and other projects passed in 2008, is still under consideration by Gov. Mark Dayton, according to the Minneapolis Star Tribune. Also, according to the St. Paul Pioneer Press, Dayton says he's "not for the Legacy funds." But also not against using them.
- Dayton still plans to call a special session of the state legislature for the week of November 21, according to Minneapolis Public Radio. According to the Associated Press, he hasn't decided on calling a special session yet, because "You can't ask people to make a decision when they don't have the facts."
- Dayton is okay with a stadium either in Arden Hills or Minneapolis, saying, "Any site, as long it's in Minnesota, remains my determination."
- The governor thinks that the only choices are large public subsidies for a stadium or the team moving elsewhere. "You can't say you're for the stadium but you're not for any reasonable means of financing it," he said. Those who are opposed to public funding, he charged, "want the Vikings to leave Minnesota and go somewhere else."
Add it all up, and you get ... okay, not a whole heck of a lot. Except that Gov. Dayton really really wants to be seen as supporting the Vikings stadium effort, but is going to leave it to the legislature to decide which unpopular tax scheme to hang their hat on. If I had to bet, I'd still put my money on "reply hazy, ask again later" as the likely outcome of this month's talks — though "later" could be as soon as the next regular legislative session in the spring.
October 27, 2011
White Sox getting free restaurant paid for by Illinois taxpayers
U.S. Cellular Field (then New Comiskey Park) opened 20 years ago last April, but it's been the gift that keeps on giving for Chicago White Sox owner Jerry Reinsdorf. First was getting the stadium itself for $167 million in Illinois tax dollars, following Reinsdorf's "a savvy negotiator creates leverage" jaunt to Tampa Bay. Then there was the $41 million renovation in 2004 that was paid for by the state handing over naming rights to the stadium to the team, which sold them for $68 million.
And now there's this:
The Illinois Sports Facilities Authority, the government agency that built and owns The Cell, paid $3.2 million for construction of the [new Bacardi at the Park] restaurant [across the street] plus just about everything inside the place, from walk-in refrigerators to bar stools, the Tribune and WGN-TV found in a joint investigation.
Another $3.7 million from the agency went for infrastructure upgrades for water and sewers at the Gate 5 plaza that made the restaurant possible.
A 2010 agreement between the Sox, who selected Gibsons Restaurant Group to run the business, and the agency shows that at the project's completion, the team was exempt from owing the agency any money. That arrangement contrasts with the management agreement for operating the stadium, which stipulates the team pay rent and make payments based on attendance.
That Chicago Tribune story, incidentally, notes that the White Sox' rent on the stadium has averaged $2.7 million in recent years. Crain's Chicago, however, points out that it's currently less than that: Because the White Sox failed to sell 1.9 million tickets last year, they're exempt from sharing any ticket revenues from the state. (This is actually a pretty terrible lease for the state to have agreed to if they want a winning team, since it creates a strong disincentive for the White Sox to spend money on players in order to sell lots of tickets.)
As for the free $6.9 million restaurant that the state apparently gifted Reinsdorf with, the quote of the day goes to former Gov. Jim Thompson, who initially approved the stadium deal as governor and later ran the stadium authority:
"We said to Jerry, 'Jerry can we have part of the profits?' and he said no," former Gov. Jim Thompson, who was the agency's board chairman when the deal was made, said in an interview. "We said, OK.'
"I've known Jerry for 52 years. He's tough. He's tough."
Helpful hint: Don't send Jim Thompson to go buy a used car for you. Especially not from someone he's been friends with for 52 years.
A's to get San Jose stadium land at cut-rate price
We've been waiting almost as long for Oakland A's owner Lew Wolff to cough up financial details of his proposed San Jose stadium as Wolff has been waiting for Bud Selig to rule on whether he can move his team, but one piece of information was finally let slip today: The city of San Jose plans to sell a five-acre plot of downtown land to Wolff for one-quarter what they paid for it, and less than half of its current market value.
For the moment, Wolff is actually buying a two-year option on the land for $50,000. If he gets permission to move to San Jose, he can have the land for $6.9 million. The city redevelopment agency spent $25.1 million to assemble the parcel, and it's currently appraised at $13.9 million.
Needless to say, a $7 million land subsidy — or an $18.2 million one, depending on how you want to count — isn't a huge deal when you're talking about a $450 million-or-so stadium. The next question is how the rest of the deal would work: Newballpark.org speculates that the A's, after acquiring the rest of the parcel from private owners, would end up deeding the land back to the city and leasing it, presumably to get out of paying property taxes. How much those lease payments would amount to, though, we still don't know — meaning it's going to be a while yet before we can make an A's spreadsheet like this one.
No support on Minneapolis city council for Vikings sales tax
Remember Tuesday, when I said that having the Minnesota legislature overrule the Minneapolis city charter and approve a sales-tax hike to pay for Vikings stadium would be "controversial"? Apparently the term I was actually looking for was "outright hated by everyone on the city council that would have to approve it":
Despite an optimistic pitch by city leaders at the State Capitol this week, plans to fund a Vikings stadium in Minneapolis with a citywide sales tax have almost no vocal support from council members who would have to approve it.
Mayor R.T. Rybak said Monday he believes "there is enough support" on the council to pass a Minneapolis sales tax to pay for the stadium, but no council members except President Barb Johnson were willing to support the idea in interviews -- six were outright opposed. Several said they had not been consulted by the mayor or council president on the matter.
There are 13 members of the Minneapolis city council, which means that unless Rybak can pick up every single vote from the uncommitted members, his sales tax plan is in trouble. And, of course, a slim margin like that raises the likelihood of council members making all kinds of demands in return, as we've seen happen before.
With all this confusion in the air, my bet is still on nothing happening at a special session this month, the Vikings owners fuming a bit about the slow pace of stadium talks, then ultimately agreeing to extend their lease for another year while everybody tries to sort out all the competing plans and see if anything is workable. The alternative, after all, is taking one of the two not very appetizing Los Angeles stadium deals, which come with far more costs for the team owner — if that's Plan B, I'll be shocked if Zygi Wilf and company don't muster up the patience to wait for another grab at the brass ring in Minnesota.
October 25, 2011
Minneapolis mayor offers Vikings three stadium sites, sales tax hike to pay for it
Was it only last weekend that Minneapolis newspaper columnists were griping about how their city wasn't leaping into the Minnesota Vikings stadium race? Well, gripe no longer: Minneapolis Mayor R.T. Rybak yesterday offered three, count 'em three, possible sites for a Vikings stadium in his city, and said he'd help pay for it with a citywide sales tax and possibly proceeds from a downtown casino.
In May, Minneapolis officials rolled out an $895 million plan to transform the Metrodome into a bigger facility. Rybak and Johnson said that's still their preferred option, but they also support the Farmers Market site favored by several business groups and the Xcel Energy site near the Basilica of St. Mary.
Vikings stadium chief Lester Bagley issued a stadium saying thanks but no thanks, the team is focused on the Arden Hills site in Ramsey County. What looks like is going on here is that Rybak is positioning himself to be ready to jump in should the Arden Hills plan fall apart, as it looks to have a fair chance of doing, given the questions about its price tag and possibility of a voter referendum to block it and just the general uncertainty of ever getting a stadium bill through the Minnesota legislature.
The problem, of course, is that Minneapolis is still barred from spending more than $10 million on a stadium by that long-ago referendum vote (so long ago that it predates this website) that installed a stadium spending cap in the city charter. Rybak could ask the state legislature to override his city charter and approve a sales tax hike anyway, but that would be a tougher sell than a straight stadium subsidy deal. There's also the possibility of going through Hennepin County, as the Twins did for their stadium, though at last report the county was still saying it couldn't afford to go in on a new Vikings home.
In any case, though, Vikings execs have to be absolutely thrilled to have a bidding war going on, even if the various bids aren't all that strong. Minneapolis may only be a fallback option for now, but that's one more option than they had yesterday.
Dodgers slash ticket prices to make fans stop hating Dodgers
The Los Angeles Dodgers are responding to their dismal attendance last year (dismal by Dodgers standards, anyway — for more other teams their numbers would look pretty good) by slashing ticket prices, with some field-level seats near the foul poles dropping from $40 apiece to $16.
It just goes to show you that if your team is bad enough, and everyone hates your owner enough, fans will stop showing up and force the ticket market to respond. The problem for the Dodgers being that, since the team still sucks and Frank McCourt does too, some fans still may not be willing to show up at any price.
At least no one's blaming Dodger Stadium yet, though that's probably only a matter of time, especially if the AEG downtown baseball stadium rumors rear their ugly head again.
October 24, 2011
Subsidy foes: Let's give Metrodome to Vikings for free!
Veteran stadium-subsidy foe Minnesota state senator John Marty jumped into the Vikings debate on Friday, joining with Republican Linda Runbeck (Marty is a Democrat) to propose handing over the Metrodome to the team instead of building a new one for $1 billion or so. Marty explains:
I joined with Rep. Linda Runbeck to offer a bipartisan alternative: give the Metrodome to the Vikings in exchange for a 25 year contract to play in Minnesota. This proposal does not require any public funding. No Ramsey County sales tax, no Ramsey County automobile tax, and no state taxes or "fees" or "other revenues." Taxpayers would be fully compensated for the value of the Metrodome through property taxes, from which the Vikings are currently exempted.
State stadium negotiator Ted Mondale fired back that the proposal is "ridiculous" and "not a solution." And on one level, he's right: For the Vikings owners to get control of their stadium but have to pay property taxes on it wouldn't really gain them anything, so they're not going to consider it a solution to their problem. (And, in fact, a Vikings spokesperson immediately denied any interest in the Marty-Runbeck deal.)
What it does do, though, is point up that Vikings execs' complaints about their lease at the Metrodome are beside the point: The reason they want a new stadium is to get the public subsidy that comes with it, not because a stadium itself is worth anything. Of course, we knew that already, but maybe there are some members of the state legislature for whom this will help deliver the message.
October 21, 2011
Rays stadium saga: Isn't this where we came in?
This week's developments in the ongoing Tampa Bay Rays stadium standoff:
- The St. Petersburg city council held a stadium workshop, and Mayor Bill Foster's staff hogged the entire schedule by talking at them. The reason? Foster doesn't want any talk about a new stadium until the Rays drop their demand that they be allowed to discuss options outside St. Petersburg, something they desperately want but that is prohibited by their lease. Councilmember Leslie Curran, who had requested the workshop in the first place, told the Tampa Tribune: "I appreciate staff putting this all together. I thought this was going to be a little different."
- MLB commissioner Bud Selig said the Rays finishing last in the league in attendance despite a playoff team is "bad," and added of the stadium situation, "I'm usually an optimist, and I don't have any reason to be too optimistic."
- The mayor of Orlando said the Rays would be better off in his city.
In other words, pretty much par for the course. Tune in next week for more of the same fun!
Titans, Bills seek stadium renovations
Another day, another NFL team asking for stadium upgrades. Today it's the Tennessee Titans, who are seeking renovations to 12-year-old LP Field:
Upgrades to everything between and underneath must be examined before the Bills and Erie County can move forward on a lease extension.
The Bills hired Populous, an architectural firm based in Kansas City, Mo., to conduct an exhaustive study of Ralph Wilson Stadium's infrastructure. The study will determine how much necessary improvements will cost.
Wait, hold on, wrong article! That one is about how the Buffalo Bills, who are seeking renovations to their field, 38-year-old Ralph Wilson Stadium, which was just renovated in 1997. The Titans are seeking $25 million in upgrades to the sound system, scoreboards, and concessions areas; the Bills want an estimated $100 million or more in improvements to concourses, restrooms, and concessions areas, among other things.
Also likely different is how the two teams plan to pay for upgrades. The Titans are looking to use an already existing ticket tax, which they would raise from $2 to $3 — something that largely comes out of their own pockets, say economists, since it limits the price that they can get away with charging fans in face value. Bills execs, meanwhile, haven't said who'll pay for improvements, but it's clear it wouldn't be them:
"Cost is an unknown and could be in a wide range," Erie County Executive Chris Collins said. "I'm expecting New York State to pay for these improvements. But you can't sit down and have meaningful negotiations until this study is complete."
The difference: The Titans are in the middle of their lease, while the Bills' current lease with Erie County expires next year, giving them leverage to demand subsidies or else move to Toronto or Los Angeles or someplace like that. (Not that anyone from the Bills would threaten that aloud, but there are plenty of other people to do it for them.) So we have the prospect of Jets and Giants fans (and, um, me) helping to pay for improvements to their rivals' stadium.
The hope would be that the Bills would at least agree to share some of their increased profits with taxpayers in the new lease in exchange for renovations, but I really wouldn't be holding my breath there, unless some savvy negotiators in the state legislature can ... er, never mind.
October 20, 2011
NBA lockout: When it hurts, when it doesn't
Hey, look! It's yet another news story about how the NBA lockout is hurting local economies!
The NBA lockout means lost income for workers at Oracle Arena, reduced takings for some Oakland bars, restaurants and hotels, and a drop in revenue for the city of Oakland, which operates the arena and also gets sales-tax revenues from many affected businesses.
Those who read my recent Slate article, or my FoS posts since then, know that this is what economists refer to as "a load of crap." To their credit, the above-cited article in the San Francisco Chronicle quotes economist Roger Noll as saying that there's no indication that lost sporting events have any significant effect on the local economy — less to their credit, they then counter Noll with figures lifted from the Boston Globe and "an NBC affiliate report in Indianapolis" that claim otherwise.
The Chronicle didn't bother to include links, but I dug up the Globe article, which, it turns out, cited the Boston Redevelopment Authority, which just added up all spending in and around Celtics games and came up with a figure of $1.8 million — with no adjustment for money that's being spent elsewhere now that the NBA is on the shelf. The Indianapolis report's source was a consultant behnd the Pacers' latest subsidy deal; the station didn't give details about how the numbers were derived. In either case, though, it's not exactly a peer-reviewed study, like some I could mention. It's just another example of how bad journalism can take on a life of its own, long after it's been debunked.
I would make the same complaint about this report out of Memphis, except that there's a twist here:
The city of Memphis is considering getting involved in the NBA owners' lockout of the players. Memphis taxpayers stand to lose a lot of money if game revenue doesn't come in to pay off the bonds used to build the FedExForum.
Research is still being done, but early estimates indicate taxpayers could have to pay $18 million in bond payments if the entire season is cancelled...
At the suggestion of Chairman Myron Lowery, the council approved a resolution that would ask City Council Attorney Allan Wade to explore all options, including a lawsuit against the NBA.
So if the claims of economic losses from an NBA lockout are nonsense, then a lawsuit to regain those losses would be even bigger nonsense, right? Not quite: In Memphis' case, the Grizzlies actually cough up a share of arena revenues to help pay off the city's construction costs on FedExForum, as part of the team's complicated lease deal. In that case, the city actually is losing real money — rent money, effectively — to the lockout, and has a right to try to sue to get it back, though it seems a longshot whether they'll be successful.
In Indianapolis, by contrast, not only aren't the Pacers paying rent, they're actually now being paid by the city just to play there — or not to play there, as the case is so far this year. So the only money being "lost" is sales taxes and other taxes in the arena district, which according to economic studies should be recouped from increased sales in other parts of the city — something that every sports economist is aware of, but not so much, for example, the Indianapolis Business Journal.
It's taking longer than we thought, indeed...
Minnesota mulls casino money, every other idea under sun for Vikings stadium
With Minnesota state legislators on the clock to come up with a Vikings stadium funding plan by mid-November, it was only a matter of time before somebody brought up casinos:
Gambling is an obvious source, said bill sponsor Rep. Morrie Lanning, R-Moorhead, and odds greaten that gambling might be part of the final proposal as stadium backers try to come up with the state's $300 million share of the $1.1 billion dollar stadium.
"Gaming certainly has to be one of the options that's considered, in fact, the original bill that we presented did have some gaming in it," Lanning said. "Those proceeds were earmarked to the facility, and gaming clearly is an option."
Everybody loves gambling money because it's not technically "taxes" (though it is state revenue that could be used for other purposes), which is why it's been proposed as a stadium funding source over and over again in Minnesota history — and rejected just as many times: Most recently last year, and dating back as far as 2004. (The most recent proposal was for slot machines at race tracks, or "racinos," which I mention because I like typing "racino" almost as much as Gail Collins likes writing about the time Mitt Romney drove to Canada with his dog strapped to the roof of the car.) No immediate word on how it will fly in the legislature this time, but it's one more idea to throw into the hopper.
Meanwhile, Gov. Mark Dayton says he'll issue his own stadium plan by November 7, which would give legislators two whole weeks to digest it before debating it at a special session Thanksgiving week. And NFL VP Eric Grubman threatened that if no stadium is built soon, it could mean "opening the door" to moving the team:
"We're worried about a stalemate, and a stalemate means there's no lease, or the lease is about to expire. There's no plan for a stadium, and there's an alternative plan in another city. That's a stalemate, and the alternative wouldn't include Minnesota. That's the way we look at it, [it's] a crisis."
There's an NFL exec in charge of pressuring cities for stadium money named "Eric Grubman"? Man, I think I'm going to like typing that even more than "racino."
Tampa: We could maybe spare $100 million for a Rays stadium
The city of Tampa has told the city's Chamber of Commerce that it could possibly pay for $100 million worth of a new Tampa Bay Rays stadium, if one were built in Tampa. Once the city's debt on the Tampa Convention Center is paid off in 2015, officials said, it could redirect the $12.5 million a year in bond payments to other downtown improvements, which could include a baseball stadium.
If that's a lot of "coulds," Tampa CFO Sonya Little drove home the point to the St. Petersburg Times: "We were very, very clear that it was no promises, no commitment." And as Noah Pransky adds, even if Tampa did come through with the money, it'd be a drop in the bucket compared to a possible $550 million stadium cost, especially if the Rays' lease with St. Petersburg has to be bought out first.
Still, bidding has got to start somewhere, and it looks like the Rays have an opening offer. Now if only they can find a sofa with half a billion dollars under the cushions...
October 18, 2011
Dayton to set Vikings stadium session, now needs only stadium plan
And it's on: Minnesota Gov. Mark Dayton says he'll call a special session of the state legislature in November to discuss a Minnesota Vikings stadium, even if there's no stadium bill agreed on by then to vote on:
Dayton said he's counting on the deadline to "produce an outcome by at least Nov. 23 that will be either a vote up or a vote down...I see this as the best opportunity, perhaps the only opportunity, to get it resolved until at least 2013."
The debate over the stadium has "become a circular process where, without a deadline, without legislators knowing that they're going to have to vote by a certain date on a stadium plan, that we won't have a plan. Conversely, it's not appropriate or fair to ask them to vote on a plan without knowing what it is," the Democratic governor said at a news conference after briefing legislative leaders on the idea.
What the plan is, of course, still remains a moving target, with a report commissioned by Dayton warning that the Arden Hills site in Ramsey County would be more expensive than sponsors have claimed, and a couple of potential Minneapolis sites still in the mix, plus the longshot of a renovated Metrodome. The likeliest scenario looks to be, as ESPN's Kevin Seifert writes, "five intense weeks of negotiations followed by a pre-Thanksgiving 2011 vote" — or a failure to come up with a bill to vote on, in which case Dayton can at least say he tried.
Meanwhile, opponents of the Ramsey County stadium are busily launching their petition drive to force a public vote on the plan, which would presumably kill it, since voters in Ramsey County all hate the idea of a sales tax to help pay for it. Which could increase the chances of a Minneapolis stadium, except that there's no actual funding plan for one, the city is prohibited by an earlier referendum from spending more than $10 million on it, and the Hennepin County commission has said it doesn't have the money for one. This could be quite the interesting special session.
Calgary Stampeders: Oh, yeah, we need stadium renovations too
You know what I was just thinking Canada really needs? Another stadium demand:
The president and chief operating officer of the Calgary Stampeders held a news conference on Monday afternoon to stress that McMahon Stadium is in need of a serious facelift and that it's also time for interested stakeholders to step up.
"I'm sure the people are aware," he said. "Especially our fans, our sponsors, and everyone else that it's critical for the Stampeders and this franchise and, I believe, this city for us to address a 50-year-old facility."
For now, Stampeders president Lyle Bauer is just calling for renovated "concessions, washrooms, and general concourse amenities" at 51-year-old McMahon Stadium, and hasn't put a price tag on it, let alone specified who'd pay. Still, consider it a warning shot across the bow: If everybody else is getting new or rehabbed stadiums, the Stamps want their piece of the action.
Edmonton council okays Oilers arena land buy
The Edmonton city council blinked on Friday, voting to approve the purchase of land for Oilers owner Daryl Katz's proposed $450 million arena, as the owner had insisted must happen by October 31. In exchange, Katz agreed to drop a controversial non-compete clause with the city's old arena, which was proving to be a deal-breaker.
The full arena plan now goes before the council on October 26 — for certain values of "full." Under the plan, the city will pay $350 million toward the arena cost, then be repaid over time by parking revenues, ticket taxes, a TIF, and $5.5 million a year in rent payments by the team. That still leaves a $100 million gap, though, for which the bill is expected to be delivered to the province of Alberta — whose newly elected premier, Alison Redford, has already declared her opposition to arena funding.
Clearly, both Katz and the council are determined to throw the arena problem in Redford's lap, and make her be the bad guy if she doesn't want to cough up $100 million. What happens if she calls their bluff isn't clear — is the city still stuck with the arena land, for one thing? This is a long, long way from over.
October 14, 2011
How to write a stadium article: ESPNLA debunks Roski's NFL plans
I take back everything bad I ever said about ESPN LA's Arash Markazi ... well, okay, no, I still really hated that damn gravy analogy. But let's just say that Markazi has more than made up for with yesterday's in-depth investigation of Ed Roski's proposed NFL stadium in City of Industry. His conclusion: Roski's whole financing plan is a house of cards — or, as one obscure stadium blogger tells him, "somewhere between 'optimistic' and 'pie in the sky.'"
I'm not just praising this article because it cites me, though, or even because it's critical of the Roski plan. Rather, Markazi's piece gets stadium journalism right in just about every way:
- He doesn't fall for pretty pictures. The artists' renderings, Markazi acknowledges, are "perhaps the most beautiful stadium proposal NFL owners have ever seen," with "wave pools, gondolas in which fans fly over the site, concert stages, an 'NFL Experience' area with punt, pass and kick competitions, a BMX course, and a Harley Davidson Cafe with an area for fans to show off their classic bikes and cars." However, he then cuts to the chase: How will all this be paid for? Noting that Roski's initial confusing financing plan has now been replaced by a new, even more confusing one, Markazi then spends the bulk of the article crunching numbers to see if any of it makes financial sense.
- He doesn't take team owners' or stadium builders' word for things. Asked how the $800 million stadium would be paid for, Roski lieutenant John Semcken replies, "The team pays nothing for the stadium. The stadium pays for the stadium." Many reporters would stop there, but Markazi presses on: How would that work, exactly? To which Semcken replies: $300 million would come from personal seat license sales, $150 million from the NFL, and the rest would be paid off by an estimated $28 million a year in naming-rights fees.
- He talks to economists. Not just one economist, which is the most you'll see in a typical newspaper article, but multiple economists, so we can see whether they all agree on the numbers. And this case, they do: Retired stadium financier John Gillespie and Holy Cross economics professor Victor Matheson both say that $800 million sounds far too low for a state-of-the-art stadium in a major metropolitan area. (Particularly one with flying gondolas.) Matheson boggles at Semcken's claims of $300 million in PSL sale proceeds, speculating that he may have neglected to notice that PSLs are taxable, which in California would cut the resulting revenues just about in half. And Smith College professor Andrew Zimbalist rolls his eyes at the notion of $28 million a year in naming-rights fees, noting that both AEG's downtown L.A. stadium and the new New York Giants and Jets stadiums top the current market, and they only yielded $20 million a year.
There's more, including info on how bank loan requirements have tightened up since the Staples Center was paid for with arena revenues a decade ago, and a long discussion of why no team is going to move to L.A. without a firm financing plan in place, yet Semcken says there can't be a financing plan until there's a commitment from a team. The one thing I wish Markazi had included was a breakdown of what siphoning off PSL money and other stadium revenues would do to a NFL team's cash flow at an Industry stadium, but with this article already running almost 4,000 words, I'm happy to wait for the next one for that.
October 12, 2011
Ramsey County panel on Vikings vote: We are not the 99%
Last night, the Ramsey County Charter Commission held its long-awaited vote on a Minnesota Vikings stadium referendum, and voted 10-6 not to put a referendum on the November 2012 ballot. Their reason? Allowing a public vote would be undemocratic:
Chair Richard Sonterre said that for him, it wasn't a decision about taxes or a public-private partnership. It was a decision on the role of representative democracy. An appointed body like the charter commission, he said, shouldn't be challenging the authority of elected county leaders.
This, needless to say, clears a huge distraction for the Vikings stadium campaigners: Even if a referendum next fall might have been too late to block funding if it were approved in next spring's legislative session, the very term "public referendum" gives stadium planners hives, especially in a perennially taxpayer-funded-stadium-skeptical state like Minnesota. There's still the possibility of a petition drive to force a referendum, but for the charter commission to act would have been a much clearer path to a public vote.
Meanwhile, another potentially big distraction entered the picture last night, as the state-run Metropolitan Council regional planning agency issued a report on the Vikings' Arden Hills stadium proposal that warned toxic cleanup costs to the site could be more than expected, and using county sales taxes would "compromise the county's and the region's ability to finance other projects." The Minneapolis Star Tribune speculates that the negative report could "complicate" the possibility of a special legislative session this fall to vote on a Vikings stadium bill.
Still, a bad economic report is a speed bump, where a public vote could have been a roadblock. Ramsey County Commissioner and stadium backer Tony Bennett said after the commission vote and report release that overall "I think it's been a good night. I think it keeps us going." And while the Arden Hills stadium plan may not have had much momentum left to begin with, on balance, Bennett is probably right.
Raiders, 49ers on Davis' death and stadium deal: No comment
In case you're wondering what the death of Oakland Raiders owner Al Davis means for the team's possible relocation plans, the San Jose Mercury News has a rundown for you:
- "[Davis' son and new owner] Mark Davis did not comment on his intentions."
- "[Raiders CEO Amy] Trask said, 'I am working with our team, our organization and the Raider family to navigate a very difficult time.'"
- "[San Francisco] 49ers spokesman Steve Weakland said in an email: 'Out of respect to the Davis family and the Raider organization, we have no public comments at this time.'"
In other words, no news is no news. It's possible that Mark Davis has a bit less distaste for the 49ers than his dad, but in the end, what's expected to make a shared 49ers-Raiders stadium happen or not — whether in Santa Clara, Oakland, Los Angeles, or Kuala Lumpur — is likely going to be money, not enmity. Trask has already been working on it, after all, so if the numbers pencil out, having a different Davis to answer to isn't likely to change things — and likewise if they don't.
Lockout hurts Kings arena push (or not), hurts Sacramento economy (or not)
Meanwhile, in the never-ending Sacramento Kings arena saga:
- The Sacramento Bee reports that the NBA lockout could cut into public support for a new arena for the Kings, though most of their evidence is a single arena task force member who admitted, "It's not an issue that helps anything" and said the lockout "have some psychological impact." However, the official, Downtown Sacramento Partnership president Michael Ault, also said the arena is "about more than sports" and would likely move forward even if the Kings moved — which is the first time I'm hearing this, and pretty alarming given that the only ones demanding a new arena are the Kings. (Dave Grohl seems happy enough with the old arena.)
- Sacramento Mayor Kevin Johnson declared that the loss of four Kings home games already to the lockout represents a "big hit" to the local economy. Jeez, doesn't anybody around here read Slate?
MLS promises NYC team if someone builds a stadium
MLS commissioner Don Garber made his clearest statement yet yesterday that he'd like to see a team in New York City — once there's a stadium for it to play in:
"If we can build a stadium we're going to have a team in New York City. But we have a lot of work to do before we get that stadium built," Garber said, referencing Flushing Meadows, Willets Point and Randall's Island as potential sites. "I feel better about it now than I have at any other point."
A lot of work to do is, if anything, an understatement: Flushing Meadows Park has already lost public parkland to a contentious expansion of the U.S. Tennis Center, developer proposals have already been filed with the city for Willets Point (though it's possible a soccer stadium could be wedged into an existing plan), and Randall's Island is inaccessible by subway in a city where 54% of households don't own cars.
The biggest hurdle, though, is how to pay for it: Construction costs are high in the New York area, and the New York Red Bulls' arena cost $200 million and required major subsidies from the city of Harrison, New Jersey. Garber acknowledged the issue, "joking," according to the New York Daily News:
"We always love to use other people's money. [But] it's too early say how we would finance it."
Ha. Ha. Ha.
October 11, 2011
NFL hates on AEG Los Angeles stadium, Roski retools Industry offer
The Los Angeles NFL stadium competition, thought by many (though not by me) to have been settled in favor of AEG's downtown stadium plan when that was approved by the L.A. city council back in August, just got turned topsy-turvy again:
- On Friday, Yahoo News reported that the NFL isn't interested in the AEG plan as currently constituted: "During a Sept. 6 meeting at the NFL offices in New York, commissioner Roger Goodell told Los Angeles Councilwoman Jan Perry and political aide Bernard Parks, Jr. that neither the league nor any team interested in moving there would agree to the business proposal set forth by Anschutz Entertainment Group, according to three sources with knowledge of the conversation." Added one unnamed NFL exec: "The problem is that when you start to look at the expenses and how much has to be divided among all the competing interests, you have to wonder how much is going to be there for a team." Or, as the invaluable (and I say that not just because they linked to us) I Dislike Your Favorite Team puts it: "Wait, you want to charge HOW MUCH to have a NFL team in your stadium?"
- With the AEG plan apparently dead in the water for now — at least until they can figure out how to pay for it without demanding that any team playing there give up a ton of stadium revenues and a chunk of equity in the team — developer Ed Roski has retooled his City of Industry stadium plan: Now, instead of seeking to trade development rights to land around the stadium for an ownership share in an NFL team, Roski would buy a chunk of the team at market rate, and offer to hand over the development rights to the land to any team that would move in and finance the stadium themselves.
On the face of it, Roski's new proposal doesn't sound all that much more tempting to an NFL owner: Either way, they're looking at giving up a chunk of their team and having to build a stadium on their own dime, with the uncertain prospect of getting to develop the surrounding land the only upside. That's not what team owners are looking for — as I've written before, if teams wanted to use their own revenues to pay for new stadiums, they could do that right now in their current cities.
L.A. is no doubt a tempting market — albeit less so in the NFL, where local TV revenue is inconsequential — but it remains exceedingly unlikely that either the league or any individual team owner is going to jump at a stadium offer that mostly requires them to pay their own way. (Yes, the New York Giants and Jets did it, but New York is an even bigger market than L.A., and there the teams didn't have to start fresh with a new fan base.) Unless somebody figures out how to either cut the cost of the stadiums or generate cash out of thin air — or from those increasingly standoffish California taxpayers — we could be a long way from seeing the NFL return to Los Angeles.
Could BC Place-style renovation work for Metrodome?
Apparently FoS commenters aren't the only ones looking at Vancouver's newly renovated BC Place and wondering why Minneapolis can't do something similar with the Metrodome for the Vikings:
In late September, the Vancouver, B.C.-based BC Pavilion Corp. unveiled its BC Place stadium, home of the British Columbia Lions football team. Before the taxpayer-funded renovation, the stadium was about the same age, size and style as the 29-year-old Metrodome.
The Canadian project was completed for $563 million — considered a relative bargain by today's standards and about half as much as it would cost to build a proposed Vikings stadium in Arden Hills.
Now, there are still a ton of unanswered questions about any Metrodome renovation, foremost among them: Would a half-billion-or-so price tag be reasonable (a Vikings spokesperson claimed renovation would cost $967.4 million, but then they're the ones trying to argue for a new stadium), and would the Vikings still chip in the same $350 million that it's committed to a new building? Still, that anyone is even talking about this gives the idea a teeny bit of traction, especially when you already have a leading state official making noise about rehabbing the Metrodome. Of course, depending on the financing and the lease, a renovation can still end up being a money pit for taxpayers — in any case, this is clearly something that bears watching.
AP: La la la, we can't hear you, economists!
Last Wednesday, I published an article in Slate on why the NBA lockout isn't likely to harm local economies, providing evidence from multiple economic studies of previous work stoppages. The explanation is the same as for why new sports stadiums don't help local economies much: Most sports spending is just reshuffled from elsewhere in your local region, so what's good (or bad) for sports is bad (or good) for movie theaters, restaurants, bowling alleys, etc.
Twenty-four hours later, the Associated Press ran this:
Harry Buffalo is one of the downtown restaurants in Cleveland that counts heavily on the beer-drinking, burger-devouring NBA crowd to keep its doors open. Operations manager John Adams has taped an internet report outside the kitchen for his waitresses, bartenders and cooks to read.
With yellow highlighter, he's shaded the grim news of the NBA labor impasse for his employees, some of whom may soon lose their jobs if there's no deal.
This is where the lockout hits home, and hits hardest.
"It's rough," Adams said, glancing toward The Q. "I've got three single moms on my wait staff and two single dads in the kitchen. I've got their 11 children to think about. It's painful when it's out of my control, when I have to put the business first and say I can't have 15 servers on staff because we don't have the business."
Now, all of this is true — but in both economic and journalistic terms, utterly beside the point. If a restaurant across from the Cavs arena is facing layoffs if the NBA season is cancelled, there's almost certain to be a restaurant across town that will end up hiring as a result — people in Cleveland have still gotta eat. (Some people, anyway.) But that doesn't fit the desired narrative as well, so instead we get stories of how "ushers, security personnel, parking lot attendants, concession workers, restaurant employees and others all stand to have their hours cut or join the country's 14 million unemployed." Number of actual economists consulted by the six AP writers who contributed to this 1200-word article: zero.
On Friday, incidentally, I wrote another article for the Village Voice on how claims (this time by the New York Daily News) of a lost economic windfall from the Yankees not making the next playoff round were hogwash, for the same reasons as the mythical lockout disaster. So far as I can tell, the AP hasn't written an article yet directly contradicting this one with no evidence, but maybe they were all off for the holiday weekend.
October 07, 2011
Sternberg: Rays suck because fans suck, MLB could "vaporize" them (Rays, not fans)
With the Tampa Bay Rays' elimination from the postseason on Tuesday, team owner Stu Sternberg took it as an opportunity to gripe about how tough it is to put together a winning ballclub when the turnstiles aren't clicking like in New York and Boston:
"We replicated last year and our numbers were down," Tampa Bay owner Stuart Sternberg said in the clubhouse. "The (television) ratings were down. The rubber has got to hit the road at some point. We're four years into winning. We're getting to the point where we don't control our own destiny. This is untenable as a model."
In fact, he added, the Rays' poor attendance — next to last in the league, if you're scoring at home — might have even cost the team a championship:
"When you're sitting here at this point and you lost by a run, you know another X dollars might have changed things...Three or five million wouldn't have changed things necessarily but 15 to 30 might have. That's where we were. And for the foreseeable future that's what we've got."
Leaving aside whether poor attendance is really to blame for Sternberg not spending an extra $30 million — at an average ticket price of $19.42, taking into account that increased revenues would mean decreased revenue sharing checks, the Rays would have needed to at least double their attendance to put that much new money in Sternberg's pockets — the threat is clear here: Spend money, or we'll shoot this team. Or, Sternberg continued even more ominously, somebody else could shoot it for us:
"It won't be my decision, or solely my decision. But eventually, major-league baseball is going to vaporize this team. It could go on nine, 10, 12 more years. But between now and then, it's going to vaporize this team. Maybe a check gets written locally, maybe someone writes me a check (to buy the team). But it's going to get vaporized."
All this, not least of it the timing of Sternberg making his comments when the Rays' playoff corpse wasn't even cool, caused the sports media to go completely apeshit. My ex-Baseball Prospectus colleague Maury Brown further fanned the flames with a blog post saying that while he didn't expect the Rays to be moved or contracted, Tampa Bay fans don't "deserve" their team, which spawned its own uproar, including speculation that Maury's article was just sour grapes about not being able to get a team for his own hometown of Portland.
This debate will likely rage for a while, further fanning the flames of the Rays' barely simmering stadium controversy. But even as fans debate whether the attendance problem stems from the stadium being in the wrong place (Sternberg's favorite argument) or to the team being in the wrong place (as this guy argues), there's an elephant in the room that hasn't been much discussed. As my other ex-BP colleague (and current Rotohardball.com poobah) Marc Normandin remarked to me this morning:
"They'll just say, 'It's the park.' 'It's the economy.' Not, 'The fans saw we cut payroll by 40% and responded by not buying tickets regardless of the team's performance.' The only way they were getting away with that is if they won the World Series."
And there's the rub: Sternberg may have saved himself $30 million by cutting payroll this year, but you could make a case that he cost himself just as much in revenues: not only all the fans who were driven away by the fact that their Carl Crawford and Carlos Pena jerseys were now out-of-date, and who weren't brought back by a pennant race that didn't start in earnest until the Red Sox decided to collapse in September, but also the estimated $1 million and change per home playoff game that the Rays could have gotten from advancing to the World Series, plus the almost-certain bump in 2012 attendance (and TV viewership) that could have come along with "your World Champion Tampa Bay Rays." That's why they pay athletes the big bucks, after all: the hope that that one guy's swing of the bat will launch your team into the promised land, where jersey sales rain like manna and the afterglow of victory sells tickets for years down the road.
Sternberg really seems to be saying, then, is: "I finally got sick of investing money in my business in hopes of a World Series title that wasn't coming, so I jettisoned my entire bullpen and half my starting lineup to save money. And we still made the playoffs! And this is how you repay me? By not buying tickets to the games back in the regular season, before we made the playoffs!"
Still, it at least looks like a sign that Sternberg has thrown in the towel on the "Let's win games and see if people get excited enough to build us a new stadium" plan, and is instead headed down the "Let's lose games and tell fans they'll never have a winner until they build us a new stadium" road. Because next year, surely, there will be no hope of catching lightning in a bottle again—
"We're going to be a really talented team next year," [Rays GM Andrew] Friedman said, sitting alongside [manager Joe] Maddon. "We've proven time and time again that it's not necessarily about the payroll number; it's about the talent we have. So, it's easy to use (revenue) as an excuse, but the two of us refuse to do so."
Maddon called the team's success — built around youth, pitching, and defense, not big spending — a "validation of the system."
On second thought, maybe it's best to withhold judgment on any of this until everybody gets the same memo.
October 06, 2011
Sacramento, AEG hold talks about plan for talking about plans
Sacramento city officials and would-be Kings arena builders ICON/Taylor held their first meeting with representatives from the arena-management company AEG yesterday, and emerged with an agreement that this meeting thing is a keen idea:
In a joint statement, Mayor Kevin Johnson and City Manager John Shirey said the conversation focused on making progress before the end of the year.
"All sides expressed a desire to continue to work collaboratively," it read. "Our focus is on putting in place a public-private partnership that will put the taxpayers first and generate more than 4,000 jobs and $150 million in annual economic activity in the city."
Before the meeting, Shirey had issued a memo that the meeting with AEG was only a "preliminary technical discussion," and adding: "Following this discussion, we will lay out the process and timeline that formal discussions and negotiations will take place. Our collective goal is to reach a definitive financing plan by the end of the year."
As for the elephant in the room — the fact that the city still doesn't have a set funding plan — that wasn't mentioned in either of Shirey's statements. Not in the room, meanwhile, were representatives of the Kings:
Kings co-owner George Maloof, asked about the Dallas meeting, said, "We weren't invited."
"They're going to meet and they're going to get back to us," he said. "That's been the process. It's a little strange, but we're anxiously awaiting what they have."
He said the city and the developers have been extremely busy and "we've left them alone," adding that the Kings' owners have not been approached with a proposed annual rental fee.
"Nobody's put a number down," he said.
Arena talks are lots of fun, until it's time for somebody to pick up the check.
October 05, 2011
NYTimes: Vikings stadium woes are Tea Party's fault
Long article in the New York Times today about the Minnesota Vikings stadium push by the man they insist on assigning stadium stories to, the inimitable Ken Belson. And as is par for the Belson, there's plenty of good information in there, but the main premise misses it by that much:
The country's most popular sport is colliding with the country's emergent political philosophy: smaller government and lower taxes.
"We have to ask whether this is really a good use of the money," said King Banaian, one of more than 30 Republicans to join Minnesota's House of Representatives this year and a professor who teaches sports economics at St. Cloud State University. "Should we be supporting a new stadium over higher education? It's simply not a priority. These deals are, by and large, giveaways to millionaires and billionaires."
That would be an interesting and dramatic point — if not for the fact that Minnesotans have always been opposed to public funding of new sports stadiums. Belson cites a May Minneapolis Star-Tribune poll that found that 62% of Minnesotans want the Vikings to keep playing in the Metrodome, and 74% are opposed to using public money for a new football stadium. Compare that with, to pick just one example, this poll from 2004 that found more than 60% of Minnesotans opposed to using tax money for a Twins stadium, and more than two-thirds against the Vikings getting a new stadium at all.
The Twins, of course, got their new stadium, but only after the state legislature allowed Hennepin County to raise sales taxes without a voter referendum, which would certainly would have been defeated.
So opposition to spending money on stadium over schools is less a sign of an "emergent political philosophy" (since when do small-govenment types like school funding, anyway?) than a longstanding distaste for stadium subsidies among Minnesotans. It's always possible that this represents an emergent political philosophy among Minnesota legislators, of course. But then, given that it took ten years for the Twins to get their stadium through the legislature, and even then did so only by ensuring no state money was used and by a two-vote margin, it's probably fair to say there's nothing really new there, either.
October 04, 2011
Blue Jackets bailout clears Columbus council
The Columbus city council approved the public-private bailout of the Columbus Blue Jackets yesterday, putting that deal one step closer to fruition. The mayor and the county commission still need to sign off on it, but that seems pretty likely, as the plan has widespread support:
"So many neighborhoods are literally dying," Smith said. "To do this right now is morally indefensible. We need to focus on our critical needs — infrastructure and the well-being of our citizens."
Whoops, wrong quote: That's actually Columbus mayoral candidate Earl Smith, who says it's a lousy deal, since Columbus would be giving up casino revenue that could otherwise go to serve other needs, in exchange for uncertain economic benefits. It doesn't look like there'll be much that Smith can do about it even if he takes office in January, though — and in any case, as we've seen, it's all too common for stadium-skeptic mayoral candidates to have changes of heart once they're the ones in the lobbyists' crosshairs.
Mercedes Superdome deal to end yearly Saints subsidies?
As a change of pace, here's some good news: The New Orleans Saints and the state of Louisiana have announced a ten-year naming rights deal with Mercedes-Benz for the Superdome. No word on how much the carmaker will be paying, but apparently the fact that the dome is set to host the 2013 Super Bowl made them willing to pay more than chump change for a building that 99% of people will still just call "the Superdome."
And why should anyone other than Saints fans and luxury European car fans care about this? Because as part of the new lease signed along with the dome's recent $336 million renovation, the Saints and the state split naming-rights proceeds (after the first $1 million a year goes to the team). And while Louisiana taxpayers won't likely see any cash from the deal, they do get to use the naming-rights money to reduce the annual operating subsidies that the state has been paying the Saints to play in the dome for the last ten years.
So, rejoice! The Saints will soon only be playing rent-free, instead of paying negative rent! And all it cost was $336 million in state-sponsored renovations! C'mon, why aren't you rejoicing?
October 03, 2011
B.C. Place is "cheerier" after $563m reno, but does it pay?
Vancouver's newly renovated, soon-to-be-corporate-renamed B.C. Place reopened this weekend for games by the B.C. Lions and Vancouver Whitecaps, and initial reports were positive: With a new retractable roof, scoreboard, lounges and suites, and redone concessions concourses, the stadium is "a lot cheerier looking," according to one longtime fan, and — inevitably — "world-class," according to The Province newspaper.
Which it had better be, considering that the province (the province this time, not the newspaper) spent $563 million upgrading the place. That's up from an initial estimate of $60 million, according to British Columbia assembly member Rob Fleming. Yes, retractable roofs are expensive, and there's also some retractable seating to convert the place from football to soccer use, but it still seems a hefty price tag for a building where most of the original steel and concrete remains in place.
As for what B.C. will get for its investment, the province projects an extra $40 million a year in economic activity, which would be enough to pay off the $563 renovation cost ... except that that's only economic activity (i.e., money changing hands in the local economy), not actual tax receipts, so any benefit to taxpayers is likely to be exponentially lower. Also, economist Dennis Coates thinks even these figures are hogwash. So enjoy your fresh air, Vancouver sports fans; you're paying for it.
