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November 30, 2011
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."
Neil, you pointed out that 'local governments need to hire smarter people to negotiate their stadium and arena leases'.
Here in Santa Clara, the city has paid millions to consultants, who told all of us that the 49ers stadium (because of the extension in time of the redevelopment area to skim off property tax dollars for stadium debt)will cause an estimated $67 million loss to our General Fund, and our city will sustain a 2 to 1 loss on it's direct public subsidy. That's not including the costs/debt/risks for the Stadium Authority and the potential for insolvency of Santa Clara's Stadium Authority because of stadium bond debt (hundreds of millions plus a couple hundred million more in interest) and operating expenses.
But the pro-stadium city council majority chose to not only ignore its consultants, but to campaign for the Yes on Measure Jed stadium campaign by denying what the city's consultants and staff had shown the public ('No Costs to City Residents! No New Taxes Needed for the Stadium - Ever! No Loss to our General Fund!)
We need to elect more city council members who will actually represent the people who live here (not special interests from outside the city; we currently have only 2 council members who represent us) and elect council members who will actually listen when consultants warn about costs/debt/losses/negative return on investment etc.
Note that in the last election for Santa Clara city council (and prior elections), FPPC campaign finance forms show that campaign dollars flowed from the Yorks/their stadium consultants/other entities that stand to financially benefit from the stadium into the campaign coffers of pro-stadium council members/mayor and a former council member who ran again for election (he was at the helm of the Yes on Measure Jed stadium campaign). Special interests put money into keeping people on the council who will vote 'yes' on everything the special interests ask for.
Oh, and the contract (as described in the Term Sheet) states that the 49ers are not responsible for the Stadium Authority bond debt, and that the contract won't actually be with the 49ers owners - it will be with a shell company set up as a Limited Liability Corporation.
All of the risks and liability will lie with Santa Clara and its Stadium Authority. I don't think smarter consultants would have helped when the city council majority have blinders on.
Yeah, that was the point I was trying to make in my last paragraph. There's definitely a fair bit of incompetence to blame in negotiating stadium leases, but there's plenty of willful ignorance as well — "The team owner says if we question the clause where he gets to own the immortal soul of everyone in town, he'll move to Ouagadougou, so guess we have to leave it in. It'll probably never come up, anyway."
Posted by Neil deMause on November 30, 2011 10:35 AM
The DDA study sessions are within the next 2 weeks. Starting this Friday, there should finally be information up on the City of Santa Clara's website (hopefully DDA paperwork) to show just how bad a deal the 49ers stadium will be for Santa Claras, and how good a deal it will be for the Yorks.
The Term Sheet wasn't binding, so they've been free to negotiate an even worse deal for Santa Clara over the past 1 1/2 years.
Posted by SantaClaraTaxpayer on November 30, 2011 03:30 PM
What's the old line about "The Smartest Guys In The Room"?
Anyway, combine that with Dirty Harry's, "A Man's Got To Know His Limitations." If you can see during the course of negotiations that "They're smarter than we are", that's a sign to stop. Of course, you might be SO dumb that you don't recognize when you're dumb -- that's a problem.
That looks like Miami's problem now. Oh well.
Posted by MikeM on December 1, 2011 03:33 PM
MikeM - Santa Clara's problem too, only the pro-stadium council majority has blinders on and they can't see (or refuse to acknowledge) the financial problems they're leading us into.
Posted by SantaClaraTaxpayer on December 1, 2011 03:52 PM