November 30, 2011
Vikings: We don't really care where, just give us a damn stadium
As promised, the Minnesota state legislature held the first of two "informational hearings" on a Vikings stadium last night, this one slated to focus on where to build this stadium that nobody's figured out how to pay for yet. The highlights, according to the recap in the St. Paul Pioneer Press:
- Vikings officials would still prefer an Arden Hills site, but will consider a Minneapolis site if that's what the legislature prefers.
- State officials want Minneapolis to narrow down its three proposed sites to one, state senator Geoff Michel telling Minneapolis Mayor R.T. Rybak: "If you've got three, you've really got none."
- Senate Taxes Committee chair Julianne Ortman said that a Minneapolis plan to use existing hotel taxes to pay for a stadium puts it "back in the game."
- Ramsey County isn't going to put any money into an Arden Hills site, commissioner Tony Bennett declaring, "The cookie jar is empty."
All in all, it sounds like a mild momentum swing back toward Minneapolis, though still nobody has a clue where a stadium would go or how much it would cost, and the hotel-tax plan would require the state legislature to overturn a 1998 referendum that blocked Minneapolis from spending money on a stadium without a public vote. (Sound familiar?) As far as straws for the Vikings owners to grasp at following the collapse of their last plan, though, at least it gives the legislature something to talk about — and from the perspective of a team owner, it's always better to keep lawmakers talking about where to build a stadium than about whether to build one.
Hamilton County to sell hospital to feed stadiums
The Hamilton County Commission has finally agreed on a plan that would allow them to keep paying off the Cincinnati Reds and Bengals stadiums while still handing out the property tax break that was agreed to as part of the stadium deal (and which is so important to county taxpayers, especially if they're really rich). Under the new plan, the county will sell Drake Hospital to a private corporation for $15 million, helping to close next year's $14 million stadium budget gap.
It's still not clear whether the gambit would be legal — earlier reports suggested that any proceeds from hospital sales are legally required to go to health care — but that's the kind of thing that can be worried about later. Sort of like how the county is going to pay the following year's stadium budget gap, assuming the economy doesn't pick up by then and start generating bucketloads of sales taxes. But surely we don't have to worry about that, right?
Sacramento can raise $200m for Kings arena by ... hey, look over there!
Sacramento Bee columnist Marcos Breton, who you'll remember from such new-arena-touting columns as this one, weighs in today with a piece on the Kings arena plans that defies easy diagramming, but I'm going to give it a try:
- Selling off the rights to collect parking fees in downtown Sacramento could generate "as much as $200 million, or slightly more" to use towards building a Kings arena, "according to multiple sources familiar with the details."
- The total arena cost would be $387 million, "but it could go higher."
- A private developer (as yet unidentified, but maybe AEG), the Kings, and the NBA would contribute unknown amounts to the project.
- Parking meters make up about a quarter of the $200 million. "Is it legal to use that money for private use?" asks Breton, then doesn't provide an answer.
- The parking fees currently generate about $10 million a year in revenue for the city — conveniently enough, pretty close to $200 million in present value — "money that would have to be replaced somehow" if the parking were sold off to pay for an arena.
- No other cities in the region are going to cough up money for an arena, and sales tax hikes won't be used, because "regionalism is an empty word around here" and Sacramento is "anti-tax."
So, to sum up: Sacramento can raise $200 million towards a Kings arena by selling a revenue stream worth $200 million, but then needs to come up with some money to pay for all the things that that revenue has been paying for until now. I'm pretty sure I've heard this plan somewhere before...
Miami-Dade paying $1m to Heat for not playing during lockout
In today's Adventures in Bad Lease-Writing, we bring you Miami-Dade County, which the Huffington Post reports has been paying the Miami Heat to run the AmericanAirlines Arena even though the team hasn't played there yet this season thanks to the lockout. The county pays the Heat $6.4 million a year in operating subsidies, meaning the Heat will have received about $1 million in public funds for not playing for two months — while the county, at least according to the county, will lose "as much as" $2.4 million in hotel and ticket taxes, though we've discussed before how those numbers are likely overblown.
Quote of the day:
Some sort of escape clause for lockouts or other season disruptions "would have been a good thing to have," said Katy Sorenson, a former county commissioner who has long been critical of the arena deal. Sorenson added, "This county's not famous for great deals on sports arenas."
No kidding: Not only did the county agree to build a new arena just ten years after the Heat got their old new arena, and agree to pay the operating costs, but the only rent the Heat agreed to pay is part of a profit-sharing deal that has generated no actual rent because the Heat have managed to avoid reporting much in the way of profits.
I'd make the obvious point that local governments need to hire smarter people to negotiate their stadium and arena leases, but given the way they approach paying to build the buildings in the first place, they'd probably object that smart leases would only get in the way of "getting things done."
November 28, 2011
Vikings stadium plan: We keep taxes, eat them too
The Minnesota Vikings owners announced their latest stadium funding plan yesterday, and this time left nothing in the hands of nasty journalists, doing so via a series of newspaper ads laying out their proposal just as they wanted to. Which then had to be reported on by journalists so we could all read about it on the web, because what's a "newspaper"?
In any case, the Vikings are calling for what could be called the mother of all TIFs: funneling every last cent of tax money paid by anyone remotely associated with the team — whether it be income taxes paid by players or team employees or sales taxes on anything purchased by fans at the stadium — back to the team to pay off its stadium costs. The ad dubbed this the "purely purple financing package" and the "but-for" solution because "All the money would come from sources that would not exist 'but for' the Vikings being in Minnesota."
Except, of course, that this is tax money that the state collects currently, and much of which it would continue to collect even if the Vikings were to leave and fans had to spend their money on mine and cave tours or something. (The Minneapolis Star Tribune, to its credit biting the hand that feeds its print ad department, noted that "No mention is made in the advertisements, which ran in the Star Tribune and the Pioneer Press, of how the state would make up the revenue it would lose if it accepts the team's plan.") And that by "purely purple" the team doesn't actually mean "purely" in the sense of being pure: The state would still have to come up with another $400 million in non-Vikings-related tax money to make the stadium deal happen.
State-designated "let's go build a stadium!" guy Ted Mondale immediately endorsed the Vikings' plan, saying, "It could work," and "I think they have a legitimate argument." What matters, though, is what the state legislature thinks of the Vikings' argument, something we should find out tomorrow at the first of two scheduled "informational hearings" ... or actually, probably not until a week from tomorrow, since the first hearing is supposed to only focus on where to build a stadium, not how to pay for it. Because why worry about where to get a horse until you've picked out your cart?
Sales taxes are still regressive, 49ers and Kings still spinning wheels, and other non-news
With Thanksgiving making for an epically slow news weekend — aside from for those reporters lucky enough to cover Black Friday pepper-spray incidents — we were instead treated to a smorgasbord of stadium non-news stories this weekend:
- Rich people pay more property taxes while the poor and middle class pay more sales taxes, reports Cincinnati.com. This is considered newsworthy because the deal to cut property taxes following a sales-tax hike to pay for new Bengals and Reds stadium will mean not just a massive transfer of funds from taxpayers to the sports team, but also from the hoi polloi to the hoity toity: "The half-cent stadium sales tax paid by homeowners is estimated by the county to be a maximum $192 annually, while owners of the county's highest-value homes get rollback rebates of $1,175 or more — netting them nearly $1,000 apiece under the current structure."
- The NBA lockout looks to be over, and everybody in Sacramento is back to saying what they were saying before about a new Kings arena. "Our position from day one is that this has never been about building a facility to benefit a professional sports team," said Mayor Kevin Johnson, who two years ago kicked off his arena campaign by declaring that without one the Kings "very may well look elsewhere." The apparent end of the lockout "is good for the efforts to keep the Kings in Sacramento," said Michael Ault of the Downtown Sacramento Partnership, which is working on efforts to keep the Kings in Sacramento. And a local economic consultant and a woman who runs a restaurant said they hoped the end of the lockout would help the economy. This is considered newsworthy because it's the same thing the Sacramento Bee runs every other day, and the announced resumption of the NBA season gave them an excuse to run it on page one.
- The San Francisco 49ers are winning, but don't have a new stadium yet, writes the San Francisco Chronicle. And they're not especially talking to San Francisco about one, while continuing to pursue one in Santa Clara. This is considered newsworthy because ... okay, I'm stumped on this one. Maybe the reporter was originally assigned to cover Black Friday, but came away empty-handed when no shoppers thought to bring pepper spray?
November 23, 2011
More delays for Yankee Stadium park opening
Last Saturday, the new ballfields on the former site of Yankee Stadium opened to the public — or rather, to a handful of local kids who got to play ball there for the afternoon. It was then closed again, and cable news channel NY1 reports that following this "soft opening," the ballfields will not reopen until next spring.
That marks the second major delay for the park, which is being constructed with city money to replace the ballfields in Macombs Dam Park, which now sits underneath the Yankees' new stadium. Originally, the city announced that the park would be open in December 2010; city officials later moved that date to fall 2011, citing "unforeseen site conditions and new design aspects." With the new park now not opening until spring 2012, that will mark almost six years that Bronx residents will have gone without ballfields since the demolition of Macombs Dam Park in 2006. But hey, it's not like a generation of kids has grown up holding baseball practice in the cafeteria or anything.
Miami could be on hook for Marlins garage property taxes
I'll just let the Miami Herald's Andres Viglucci and Patricia Mazzei tell this one, because they do it so well:
When the city of Miami agreed to build parking garages for the new Miami Marlins stadium, borrowing $100 million in the bond market to do so, officials assumed the structures, like most such municipal facilities, would be exempt from property taxes.
Oopsie.
Yes, apparently Miami officials forgot to check with Miami-Dade County tax assessors before assuming that the garages would be tax-free just because the city will own them. Because the garages will be entirely leased to the Marlins — at $10 a spot per event, with the team allowed to charge whatever it wants for the spaces — it's considered a commercial operation, and subject to property taxes. And because the Marlins negotiated a lease clause that the city is responsible for all taxes on the garages, it's the city that is now on the hook.
Score one for Florida tax law for closing an often-used tax loophole (though I'm now wondering: should publicly owned stadiums in the state be taxable under the same interpretation of the law?), but points off to Miami for not asking their tax lawyers about this, you know, before going and building a $642 million stadium. As I noted to Viglucci and Mazzei, this is just another sign of how cities get rings run around them in lease negotiations because the teams hire all the best lawyers.
Miami Mayor Tomas Regalado estimates that the tax bill will come to between $1.5 million and $2 million a year, which amounts to a total of maybe $25 million in present value. It's important to note that this isn't an additional subsidy — it's just shifting $25 million in stadium burden from the county, which collects the property taxes, to the city. Still, it's another indication, like the funding squabbles in Kansas City and Cincinnati, that you really want to work out who'll be paying for what before you start pouring concrete, let alone building terrifying home run celebration sculptures.
Minnesota senate to rehash Vikings stadium funding ideas
The Minnesota state senate has scheduled "informational hearings" on a Vikings stadium for the next two Tuesdays, and yesterday released the agendas: In short, the first one will be about where to build a stadium, the second one about how to pay for one. (The hearings will include public testimony, but it's not clear where members of the public who don't want to build a stadium at all should testify.)
The closest thing to real news here is the list of funding schemes to be discussed at the December 6 hearing, which includes: arts and cultural funds, Minneapolis convention revenue, electronic pulltabs, racino gambling, a "Block E casino proposal," a sports memorabilia sales tax, an NFL income tax surcharge and ticket surcharges. Most of these have been discussed and rejected before, but we're clearly in the "throw stuff against the wall and see what sticks" phase of the stadium campaign, so it's always possible that some funding plan will emerge as politically workable. I wouldn't hold my breath or anything, but it's possible.
November 22, 2011
Hamilton County set to drain stadium fund for property-tax cut
The long-simmering Cincinnati Bengals and Reds lease controversies could be about to boil over, as the Hamilton County Commission appears set to approve a property-tax cut that was promised as part of the stadium deals, but which there's now no money for:
If Republican Chris Monzel and Democrat Todd Portune do that — and both of their plans have been deemed not practical by the county administrator — the stadium fund will be bankrupt by March.
That will leave Hamilton County Auditor Dusty Rhodes without the cash to meet all the obligations in the sales tax fund.
"It would be the height of irresponsibly to commit funds they knew were not there," Rhodes said. "I've long criticized various governments for living in dream world.
"This takes it to a whole new level," Rhodes said.
Backing up a bit: What happened here is that when Hamilton County raised sales taxes by 0.5% in 1996 to pay for new stadiums, it designated 30% of the proceeds to rolling back property taxes. Unfortunately, this happened, which meant that sales tax proceeds fell short of what was needed to pay off both the stadiums and the property tax cut.
Monzel and Portune have different ideas about what to do next: The Republican wants to sell a hospital to raise $13 million, but any proceeds there might need to be reserved for medical care. Portune, meanwhile, wants to raise money by hosting more events at the stadiums, getting the teams to pay up-front costs of repairs, and other lease concessions, something he's tried before to no avail. More likely is that the county has to dip into its general fund reserve, which could affect the city's bond rating or even, according to Hamilton County Administrator Christian Sigman, prompt a state takeover of the county's finances.
It seems clear that somebody is going to have to blink — just don't bet on it being the Reds or the Bengals, since neither of them has any incentive to, thanks to having those sweetheart lease deals in their back pockets.
Kings arena name sponsor (predictably) goes bankrupt
Hope you weren't getting to used to calling the Sacramento Kings' arena "Power Balance Pavilion": Power Balance, the maker of silicone bracelets, just filed for Chapter 11 after admitting, under an onslaught of lawsuits, that there's no scientific evidence that the bracelets do anything. Among the firm's unsecured creditors (i.e., people who can pretty much give up on ever seeing their money) are the Kings, who are currently owed $100,000 by the company, and presumably were expecting further future payments as part of the five-year naming rights deal.
This isn't necessarily a catastrophe for the Kings, as they can now grab back the name of the arena and resell it, presumably to someone who makes something that does more than a rubber band. That could be a tough sell, though, as not only are used building names worth less — Pro Player Stadium kept its name for six years after that company went bankrupt as the Dolphins sought a new sponsor — but the Kings are trying to move out of the arena, either to a new building in Sacramento or to another city. Which, no doubt, is why last year they had to resort to partnering with a company that was already being charged with fraud.
Still, there's probably somebody out there who'd be willing to drop a few hundred thousand dollars on an arena name that's guaranteed to get you TV exposure every night of the NBA season ... oh, wait.
November 21, 2011
A's-to-San Jose tea-leaf reading
It's been six years since talk began of moving the Oakland A's to San Jose, and nearly three years since MLB commissioner appointed a three-man committee to write a report and then wait for him to tell them what the conclusions should be study the issue.
Since then, the two sides have largely become entrenched — A's owner Lew Wolff wants to move to San Jose, the San Francisco Giants say they won't give up what MLB considers part of their territory without a substantial payoff — so we've been mostly left to ponder rumors and the occasional outburst from Wolff about how long it's all taking. This weekend, though, took the cake as far as rumor-mongering:
- It all started on Saturday, when Fox's Ken Rosenthal reported that Selig plans to meet with A's and Giants officials in the next two weeks to try to resolve the standoff. Of course, unless he starts actually twisting arms — something he's been loath to do in the past — it's hard to see what he'll accomplish, but it's true that it is action of a sort.
- Rosenthal further speculated that if the Giants won't okay a San Jose move, MLB could buy the A's, negotiate a stadium deal with Oakland, and then sell them to a new owner, a la the Washington Nationals. Which assumes that MLB would have any better luck extracting a generous stadium deal from Oakland than Wolff or a new owner would, but again, sure, could happen.
- Newballpark.org, in reporting on Rosenthal's article, asserted that they've "been hearing" that "some sort of resolution is due as soon as January." Which could be true, or could be wishful thinking, or could be someone trying to put the heat on Selig — hard to say, with not even a hint of who the source is for this.
- Finally, Newballpark.org followed that up with a post speculating that the reason for the long delay has been that Selig was waiting for "Moneyball" to be out of theaters.
Most likely, all this is just blowing smoke, the Giants-A's standoff over territorial rights fees will continue, and January will come and go with no resolution. There is, however, one possible way that Selig could resolve things: If he genuinely thinks that San Jose is a better market than Oakland for MLB — which is an open question, but work with me here — he could have MLB pay part of the Giants payoff itself, a la what he arranged last week to grease the wheels for the Houston Astros' move to the American League.
It wouldn't be nearly as easy a lift — MLB only paid out $35 million in the Astros deal, and the Giants would no doubt want many times that to allow a San Jose move — but now that the precedent has been set, you can't totally rule it out. Once Brad Pitt has accepted his Academy Award, that is.
November 17, 2011
Indians to seek subsidies for stadium upgrades?
It's tough to beat an article with a headline like "To protect taxpayers, it's time to pay attention to board meetings, even the boring ones." But Mark Naymik's column in today's Cleveland Plain Dealer actually raises a potentially serious issue: The Indians are getting ready to demand major upgrades to 16-year-old Progressive (formerly Jacobs) Field:
The Cleveland Indians are working on a major improvement plan for Progressive Field, which, along with the rest of complex, is nearly 20 years old. It's unclear when the team will present its wish list to Gateway and the board. Gateway has asked the Cavaliers — which is not as far along in assessing its capital needs for Quicken Loans Arena — to present a plan.
When the teams do ask for major improvements, the board will become more interesting. The requests will set off a new debate over who should pay for serious upgrades.
Board meeting minutes show the issue of expanding the current sin tax, which expires relatively soon, to pay for the improvements was discussed at the last board meeting.
As I've noted before, this is going to be an issue not just for Cleveland: The whole initial 1990s wave of new stadiums is getting to the point where team owners feel justified in demanding upgrades, so this could set a significant precedent in terms of who pays for them, and whether the teams need to kick in from the increased revenues that would (presumably) result. It's very early yet, but fans and taxpayers in Toronto, Chicago, Baltimore, Arlington, Denver, and so on should definitely be keeping an eye on this.
Indianapolis businesses say sales fine during NBA lockout
Finally, somebody who reads Slate! From last night's WRTV in Indianapolis:
Although the National Basketball Association's players and owners have failed to hammer out a contract, downtown businesses that normally depend on traffic from Indiana Pacers games said there's a silver lining to the lockout's dark economic cloud...
Chris Ratay, general manager at St. Elmo's Steak House, said the lockout hasn't really put a dent in his pockets, RTV6's Rick Hightower reported.
"All I can say is I'm so happy we're up even without the Pacers. I do look forward to them getting back to playing so we can start a promotion again with the pregame dinners, and maybe even increase our sales a little more," Ratay said.
Also reporting strong attendance during the NBA lockout: The Indianapolis Children's Museum and the Indianapolis Symphony Orchestra.
Now, this is just as limited anecdotal evidence as some of the news stories claiming that local businesses would be devastated by the lockout — though at least this is based on actual businesses reporting their actual sales, not projections based on a team consultant's report. More concerted studies would be great, but in the meantime, it's nice to see the media at least acknowledging the possibility that, as the WRTV report puts it, "the lockout won't likely affect downtown business revenues because consumers with disposable income will redirect their entertainment dollars to other venues."
Baldwin floats $105m reno of Hartford arena
Not really sure what to make of this, but: Howard Baldwin, the former owner of the Hartford Whalers and current manager of the minor-league Connecticut Whale, has issued a proposal for a $105 million renovation of whatever it is the Hartford Civic Center is called these days. (It looks to be named after either a shirt size or a controversial oil pipeline.) The cash would pay for improved concessions areas, "seating enhancements," a Hard Rock Cafe or Planet Hollywood, and all the other usual stuff that teams want.
Of course, Hartford doesn't actually have a team (other than the Whale), so left unknown is who would pay for all this, and what kind of revenue it would generate if its customers would be limited to Phineas and Ferb Live fans. Spending $105 million isn't actually all that much in modern-day arena reno terms — just look 100 miles southwest for an example — but still, somebody's got to pay for it somehow. You can't monetize fears about being the next New Haven Coliseum.
Santa Clara spending $10m on prep work for uncertain 49ers stadium
On Tuesday night, the Santa Clara city council approved spending $10 million in city money to begin preparing land to build a $987 million stadium for the San Francisco 49ers.
Except the city doesn't have $10 million, so it's borrowing $6 million from the 49ers to help pay for the infrastructure work. And the 49ers don't have $987 million, or even the roughly $500 million that would actually come out of the team owners' pockets (the rest would be fronted by city bonds and paid back by naming rights and PSL revenues — maybe). But Tuesday's action at least guarantees that they're going to build one impressive hole in the ground.
November 16, 2011
AEG proposes removable roof for L.A. stadium
The proposed AEG downtown Los Angeles football stadium may not have a team, a solid funding source, or the support of the NFL, but it does have one thing you haven't got: a removable roof. Figuring that in the dry Southern California climate the only times you'll really need a roof are for basketball games and conventions, AEG has opted for a "deployable" roof that can be stored under the stadium and then lifted into place when needed.
Renderings of this new marvel are available at ... um, actually not anywhere, so far as I can tell. Also not pictured: how much assembling and installing the roof each time would cost, and whether the L.A. convention center (or the NCAA or whoever is holding the roof-requiring events) would be required to pay to hire the roof assemblers.
November 15, 2011
Vikings launch ad blitz to reanimate stadium effort
The Minnesota Vikings stadium campaign may be headed straight for a brick wall with nobody behind the wheel, but don't tell that to the Vikings: Team execs just launched a "six-figure" ad campaign to tell Minnesotans that a new $1.1 billion stadium would be "owned by the great state of Minnesota" and bring "over 7,000 jobs and $300 million in wages." No clue where those numbers are from, but, of course, campaign ads aren't subject to truth-in-advertising laws, so who cares?
In related news, the Ramsey County Board voted unanimously today to buy land in Arden Hills for a new Vikings stadium, so long as somebody else comes up with the $28.5 million price. As MinnPost blogger Brian Lambert quips: "In other news, I agreed to purchase a new Bentley. I get the keys when my neighbors pitch in to pay for it."
November 14, 2011
Dayton calls for Vikings stadium "negotiating team" (and maybe racinos)
Minnesota Gov. Mark Dayton is at it again, with a Minneapolis Star Tribune op-ed yesterday in which he:
- Declared that a Vikings stadium is needed "at a time when more than 200,000 people are out of work in our state."
- Said that such a stadium whether in Arden Hills or Minneapolis, could be funded by "taxes on stadium items like tickets and souvenirs, and by adding electronic pulltabs to already existing charitable gambling."
- Blamed the state legislature for refusing to hold a special session until there was an actual funding plan, which Dayton says he would have had, but he canceled it because the legislature wouldn't hold a special session.
- Offered to get together with the legislature to appoint a "a site-neutral negotiating team, consisting of the Republican and DFL authors of the legislation; stadium, real estate and financing experts, and an experienced negotiator."
This last is a nice touch: You're going to leave the stadium funding negotiations in the hands of the legislators who are currently working with the Vikings to give the stadium deal they want? Isn't there a term for this?
In any event, it looks like racinos (racinos! racinos!) are going to be the likely last-ditch effort to drum up public funds for a Vikings stadium, now that sales tax hikes are off the table. A Minnesota TV station noticed that Aqueduct Racetrack is generating about $1.5 million a day for New York state since video slot machines were installed there, though it fails to notice that a good chunk of that money is thanks to the fact that the state's Off-Track Betting service recently closed, meaning gambling revenues are being moved around more than actually increased.
Whatever the source, it's going to need to come up with something like $50 million a year in revenues to pay off the public's share of a proposed new stadium — and maybe more than that, given that team owner Zygi Wilf said last week that he'd reduce his $400 million share (note: not actually all his money) if the stadium is in Minneapolis instead of Arden Hills. Somebody really needs a reminder on how this is supposed to work.
November 09, 2011
Dayton: Legislature needs to build a Vikings stadium, er, somehow
If there was any doubt that Minnesota Gov. Mark Dayton was trying to position himself so that the state legislature takes the blame if the Vikings don't get a new stadium, it should have dissipated yesterday when Dayton blamed the state legislature for the Vikings not getting a new stadium:
An apparently frustrated Gov. Mark Dayton called on Republican legislative leaders Tuesday to stop "playing games" and propose their own plan for financing a new Vikings stadium.
"It's time for leaders of the Legislature to show some leadership to get this project approved," Dayton said at a Capitol news conference...
Dayton asked of the leaders, "What are you for? What are you willing to support?"
Without naming names, Dayton said of some legislators, "All they know is no."
Dayton had previously announced that he was canceling plans to issue his own stadium proposal this past Monday, after state house speaker Kurt Zellers came out against holding a special session this month to discuss a Vikings stadium. Instead, the governor spoke vaguely about some of the ideas being kicked around for funding, including electronic gambling pull-tabs in bars (he's in favor), Legacy arts funds ("a bad idea"), and memorabilia and ticket taxes (mentioned as options, not specifically endorsed). He also said, "I'm for maximizing the private team's contribution," but didn't indicate whether that would mean increasing the Vikings' contribution or whether he thought the current three-way city/state/team split was maximized enough.
State rep Phyllis Kahn, meanwhile, issued a proposal to finance a new stadium by selling stock in the team to fans, a la the Green Bay Packers. (The NFL no longer allows so-called "community ownership"; Kahn's plan would require the Vikings and state to get the league to change its rules.) Kahn, who proposed a similar plan for the Twins back in 2005, also said she's introducing a bill to install slot machines at airports — something she didn't particular endorse as a way to fund a stadium, but which is worth mentioning for her explanation of why it'd be a good thing:
"All gambling is a regressive tax on stupidity, but if you put the gambling in the airport, it would be a progressive tax on stupidity, because you have people with higher incomes at the airport," Kahn said. "Plus, 80 percent of the traffic at the airport is from out of state."
Now there's a campaign slogan: "TAX RICH IDIOTS." The 99% would approve — not to mention, presumably, non-stupid rich people.
San Jose okays A's option on stadium land
The San Jose city council voted to approve the sale of land for a new Oakland A's stadium last night ... okay, wait, they actually voted to give the A's a three-year option on buying the land. You know, like they said they were going to do two weeks ago. (San Jose voters would still have to approve any actual land sale.)
In other non-news, still no word on when Bud Selig's nearly-three-year-old relocation committee is going to issue its report on the fate of the A's. (They're still looking for the stapler.) If they do surprise everyone and approve a move to San Jose, though, the A's are ready and waiting to start trading all their best players in preparation. Wait, what?
November 08, 2011
Red Sox earning $5m a year windfall on city handover of Fenway streets
The Boston Globe ran a long article yesterday by some Northeastern University journalism students (sadly, now behind the Globe's subscription paywall) that investigated a fascinating topic: How much has being granted control over the streets around Fenway Park on game days been worth to the Red Sox. Their answer: oodles.
Over the last nine years, the Boston Red Sox have increased their revenue by an estimated $45 million through the use of two streets that city officials handed over for a relative pittance: an average of $186,000 a year in lease fees.
Every home game, the Red Sox close off Yawkey Way, where thousands of fans congregate and, over time, spend millions at concessions before heading into the park.
Around the corner, the team has turned the air rights over Lansdowne Street into 269 expensive seats and 100 standing-room spots atop the Green Monster.
The leasing agreement, whose details have never been publicly reported, has been a bonanza for the Red Sox, because the city set the lease fees without taking into account how much money the team could make from use of the properties.
If the city had demanded a portion of the revenues, as is common in commercial ventures, the team would have paid the city millions more over the first nine years of the 11-year lease, according to industry estimates and an examination of city records.
For the math-phobic, $45 million over nine years amounts to $5 million a year in new revenues for the team from expanding out into the surrounding streets — which were declared "blighted" in 2002 by the Boston Redevelopment Authority and turned over to the Sox — for which the city is only collecting $186,000 a year in rent. The good news: According to the Globe report, the Sox' ten-year lease on the streets expires in 2013, and BRA director Peter Meade is currently seeking to renegotiate the deal to get the city a cut of the added revenues.
Still, it's yet another sign of the hidden subsidies that Judith Grant Long has noted add an average 40 percent to the public price tag of stadium projects. Something for Rahm Emanuel to keep in mind the next time Chicago Cubs owner Tom Ricketts asks if he can set up a game-day shopping mall on Sheffield Avenue.
November 07, 2011
Royals to sell Kauffman naming rights, split cash with stadium's public owners
Kansas City's NBC affiliate is reporting that the Royals are on the cusp of a deal to sell naming rights to Kauffman Stadium, their 38-year-old ballpark that currently bears the name of the team's founding owner. According to the report, the deal is with a bank that will pay between $3 million and $6 million a year for the next 21 years to have its name on the building, just in time to get its name in the papers during next year's All-Star Game, which will be held in K.C.
The report also notes:
Sources say according to the lease, half of the money will go to the Royals, half will go back to the Jackson County taxpayers to pay for stadium maintenance.
That's good news compared to most cities, where teams demand 100% of all naming-rights money as part of their stadium deals. Though given that the stadium is owned by Jackson County, and local taxpayers just spent a couple hundred million dollars to renovate the place in 2006, it's hard to see why the Royals should be getting any money at all — especially when the public's half of the naming rights boodle won't come close to paying off the $8.5 million in operations costs taxpayers are on the hook for under the 2006 lease revisions.
But, hey, at least it's something. And this way maybe the windfall will let the Royals afford to sign ... um, one-third of Paul Maholm?
November 04, 2011
Sacramento floats using parking meters to pay for Kings arena
With time running out for the mayoral public-private task force Think Big Sacramento to come up with an actual funding plan for a new Sacramento Kings arena, city officials have a new idea for raising money. Let's try to understand it, with the help of the Sacramento Bee's Tony Bizjak:
City officials said Thursday they are looking at ticket revenues as part of a still-forming plan to lease city parking services to a private company for cash.
Assistant City Manager John Dangberg said a consultant's early analysis has found that the value of city garages, parking meters and ticketing revenues is significant — perhaps hundreds of millions of dollars — and could play a key role in generating upfront cash to launch construction of an arena.
Okay, so the city would effectively sell its future parking revenues to a private company in exchange for an up-front cash payment, which would be used to help pay for an arena. So then what happens when the city notices it's no longer getting those parking revenues?
City Councilman Rob Fong said any parking funds used for an arena would have to be replaced by revenues from other sources to replenish any annual parking revenue loss to the city general fund, which pays for basic city services. That amount is undetermined, but could be at least $6 million annually.
Er, what? So in order to solve the problem of where to get money for an arena, the city would sell off its parking meters, and then would instead only be left with the problem of where to get money to replenish its parking-meter fund. That's some kind of contest, but it's not basketball.
November 03, 2011
Emanuel: Wrigley amusement tax kickback a "non-starter"
The Cubs' plan to renovate Wrigley Field by having taxpayers kick back any additional ticket taxes generated over the next 35 years died a quiet death yesterday, as Chicago Mayor Rahm Emanuel shot down the plan as a "non-starter." While Emanuel said he was excited about new Cubs GM Theo Epstein's arrival from Boston, according to the Chicago Sun-Times, "that does not mean the mayor is changing his tune about using taxpayers funds to finance Wrigley at a time when his 2012 budget is cutting human services, closing police stations and raising taxes, fines and fees by $220 million."
And what did Emanuel actually say about that? Let's have a listen:
"I'm excited that the Cubs have made this decision and wish him the best. But I am not changing my perspective from the taxpayers just because people are excited. I will still evaluate anything I do as it relates to Wrigley Field based on the interests of the taxpayers. That's who I'm negotiating for."
And when asked about rescinding or adapting Wrigley's landmark status:
"I understand that. And when I sit down, I'm gonna sit down with them and work through the issues. But you know who I'll be representing: the taxpayers of Chicago."
Okay, so that's not actually so much a pledge not to use taxpayer money as a pledge that Emanuel knows who casts votes. Still on the table, according to the Sun-Times: Having the state buy and renovate Wrigley, kicking back a smaller amount of amusement tax, creating a tax-increment financing district around Wrigley to kick back other taxes, using historic preservation tax credits, expanding the area subject to a 1 percent tax on downtown restaurant meals, or the sale of personal seat licenses, none of which Emanuel specifically ruled in or out before storming out when someone asked him whether he was liked during his time at the White House.
November 01, 2011
Vikings stadium sales tax dead without referendum (i.e., dead)
This just in: Gov. Mark Dayton and Minnesota's top legislative leaders have declared that after meeting on Friday and today, they have determined that "there is not majority support in either body for an exemption from a voter referendum" for a Vikings stadium in either Arden Hills or Minneapolis.
Since a sales tax hike requires a voter referendum in Minnesota unless the legislature grants an exemption, this means the earliest any sales tax hike could be attempted would be November 2012 — and even then, it would almost certainly be defeated, if recent polls are any guide.
Said Gov. Mark Dayton in a statement:
"Last Friday's meeting was very significant in eliminating one proposed source of financing for a People's Stadium in either Ramsey County or Minneapolis, unless the Vikings are willing to endure the time delay and continuing uncertainty in obtaining voters' approval. Given this reality, we are now actively assessing and discussing with the team other financing options."
Those other financing options include ... hang on, there has to be something. Right, sports jersey taxes. And racinos! And, um, wait, wait, somebody's got to have a plan to raise money fast.
More realistically, since the stadium plan already had a $200 million-plus funding gap, this effectively sends all the players back to square one. The prediction here on what happens next: Vikings execs issue a statement that walks the line between disappointment and blowing a gasket and start dropping hints about moving to L.A. or San Antonio or Guadalajara; their state legislative backers come up with crazier and crazier funding schemes in hopes of something that'll stick; and maybe, just maybe, people start taking seriously ideas that don't involve building a brand-new $1 billion stadium.
One thing I'd say is unlikely: The Vikings hightailing it out of town before this whole mess comes back up again in the legislature. The team's friends in the state capitol may have empty pockets, but that's better than no friends who want to give you money at all — like in some other places I could name.
Oilers arena cost to taxpayers nears $500m
As approved by the city council last month, the city of Edmonton has moved ahead with its $20 million purchase of land for a proposed new Oilers arena:
Monday afternoon, the City of Edmonton concluded a deal with the Katz Group to purchase three parcels of land for a proposed new downtown arena and entertainment district for a total cost of $74.9 million.
Wait, what the? $74.9 million? Where'd that come from?
The answer, explains the Edmonton Journal's Paula Simons, is that the original land buy for the arena will now cost $25.9 million, but the city picked up two other adjacent parcels as well for an additional $49 million. These will be used for development around the arena, and Oilers owner Daryl Katz has already promised to buy back one of the site for $33.6 million.
The catch, explains Simons:
Daryl Katz had long pledged to invest $100 million in commercial developments in the arena district.
At last Wednesday's city council meeting, Coun. Tony Caterina, a staunch opponent of the arena deal, changed his position and voted in favour of the proposal — but only after he successfully amended the city's agreement with the Katz Group to include a clause that would require the company to invest a minimum of $30 million in those ancillary commercial developments before construction of the arena is to begin. I had rather assumed — perhaps naively — that such a $30-million commitment would involve some kind of visible development, like a hotel or an office block.
Not quite. Moyles said the Katz Groups's repurchase of the 3.7-acre south parcel would be considered as representing that $30-million investment. ... Katz is a tough negotiator — and with this land swap he's just reduced his capital commitment in the ancillary developments to $70 million. In effect, Caterina's amendment didn't make this a better deal for the city — it made it a better deal for Katz.
In any event, the remaining $41.3 million land cost is on top of the $450 million price tag of the arena itself, meaning Edmonton taxpayers are looking at a close to half a billion dollar expense, with the only money supplied by Katz coming in the form of $3.5 million a year in rent (rising to $5.5 million after ten years), parking revenues, user fees and ticket taxes.
It's still not the worst arena deal in the world — that'd be this one — but it's definitely getting worse and worse.
