December 30, 2011
California's RDA ruling could affect A's, 49ers, Chargers stadium plans
As if the umpteen stadium and arena battles ongoing in California needed more drama, the state's supreme court handed down this yesterday:
The court ruled unanimously in favor of a state law passed last summer that abolished redevelopment agencies and voted 6 to 1 to strike down a companion measure that would have allowed the agencies to continue if they shared their revenues.
More than 400 redevelopment agencies will cease to exist after Feb. 1. Authorized by law since 1945, the agencies have been responsible for such success stories as Old Pasadena and San Diego's Gaslamp Quarter but also plagued by projects that some argued had little public benefit.
First, some brief backstory: After Gov. Jerry Brown declared his intentions earlier this year to stop allowing city redevelopment agencies to siphon off property tax proceeds for local development projects, the state legislature offered a compromise of sorts: If RDAs would cut the state in on a share of the boodle, they'd be allowed to continue. Yesterday's court ruling struck down that deal, saying that while the state could shut down RDAs it couldn't attach strings to them; and so, as of a month and two days from now, all RDAs will cease to exist. (Ironically, the court was ruling on a lawsuit filed by a bunch of cities and their RDAs, which were trying to knock down only the piece of legislation that would eliminate RDAs, not the one that would allow them to continue. Whoopsie.)
This is big news for the sports world because, as you might imagine, cities have been thrilled to hand out development dollars when it's not really their money they're spending. (While technically RDA spending is just a straight-up TIF — any new tax revenue gets diverted to pay for the project — in practice, at least according to Brown, the state has ended up filling the gaps in school spending and other local services that have resulted.) So pretty much every sports construction project now underway or in the planning stages in California has involved RDAs, which means many of them may now be in jeopardy.
A quick scorecard, from north to south:
- Oakland's Victory Court plan for an A's stadium appears to now be out the window, since that relied on an RDA-based TIF. However, its second "Coliseum City" plan for the A's and Raiders could still move ahead, according to Newballpark.org, as Oakland's existing stadium site is "part of a separate joint-powers agreement which allows the Coliseum Authority to raise money for its own projects."
- Any thoughts of moving the Golden State Warriors to a new arena in San Francisco will likely be hampered by the ruling.
- Santa Clara's stadium funding was thought to be already in place — barring a last-minute petition drive — but $40 million of that was supposed to come from the city's RDA, which now must turn it over to the state instead. (I'm not clear on what happens to the $4 million the city RDA already pre-paid to the 49ers last March.) That's not a huge sum to be made up on a $1 billion project, but given how the whole financing plan is already held together by spit and baling wire, you never know what could turn out to be its striped bass.
- San Jose's RDA already completed its part in the city's proposed A's stadium plan, giving team owner Lew Wolff an option to buy RDA-owned land for the project last month. Yet a lawsuit filed earlier this month by the Giants-funded Stand For San Jose charges, among other things, that San Jose illegally jumped the gun by agreeing to sell the land before going before a public vote; if a court agrees, then San Jose could be forced to go back and hold a referendum before selling the land — except at that point the RDA would no longer exist to do the sale.
- AEG's downtown Los Angeles football stadium project would use a TIF, but it seems that it's one that doesn't require an RDA. (I think this is because rather than actually redirecting the money, the city would just be totaling up the new tax benefits and hoping they're enough to pay off the stadium bonds, but don't quote me on that.) Still, this could give a minor boost to Ed Roski's City of Industry stadium plan in the race for first place among L.A. stadium plans that don't have a snowball's chance in hell of getting approved by the NFL or attracting an existing team owner.
- The San Diego Chargers, whose stadium chief previously said that without RDA money, their stadium plans are "done, finished," are indeed completely hosed. But they kind of knew that already.
In any case, before anyone gets too excited about it being a new day in Baltimore, the state legislature — which, you'll recall, started off this whole mess by trying to save RDAs while reclaiming a share of their money — can always pass new legislation reestablishing some form of local redevelopment agencies. This being the California state legislature, of course, that will inevitably be a long and painful process — which is why I told the San Diego Union Tribune that my prediction is for "gridlock," as team owners wait to see how the new world order shakes out.
The interesting bits here in the short run will be how the 49ers (and, if necessary, the A's) handle the potential new speed bumps in their stadium campaigns. More news to come in the new year, I'm sure.
December 28, 2011
Magowan: A's not moving to San Jose
More speculation today on a possible Oakland A's move to San Jose, only this time with something that last weekend's Twitter-driven story didn't have: an actual named source. Peter Magowan, the former managing partner of the San Francisco Giants (and still minority owner), tells the San Francisco Chronicle's Susan Slusser that his team isn't going to give up territorial rights to the South Bay without a fight, and he doesn't expect MLB commissioner Bud Selig to try to force one:
"I'd be amazed that, with all the public reassurances we've received from Bud Selig over the years, he would change his mind on this matter," Magowan said. "He's a man of his word, a man of integrity, and he has been clear and direct in the past about reaffirming our territorial rights. It's hard to see how he would not be bound by what he's said, as many times as he has been on the record in support of those rights."
Of course, Magowan is an interested party, so he's likely putting spin on this just as whoever has been talking up the A's side has been. Still, it doesn't seem like a sign that the Giants and A's owners are set to shake hands and cut a deal — and as even Wolff admits, Selig's M.O. is to wait until he can find an agreement that all owners are happy with. And speaking of Wolff, he also tells Slusser that he doesn't know why someone said he's "confident" of getting approval of a San Jose move:
"I haven't heard anything. It's all up to the commissioner. We'll follow whatever he says."
The best hope for Wolff at this point is that Selig is working behind the scenes with the other 28 MLB owners to raise a collection to buy out the Giants' territorial rights to San Jose, leaving everybody happy (except for any owners who don't want to pay to help the A's compete against them). Otherwise, it's likely that all these rumors are just that: rumors being planted by both sides to try to create or stall momentum via the media. Which, given how slow a news week this is, this would be a perfect time for ... but Wolff and Magowan couldn't possibly know that, right?
December 27, 2011
More unsourced rumors of imminent A's-to-San Jose move
And speaking of slow news weeks and rumors, USA Today's Bob Nightengale chimed in over the weekend with this:
All signs and top #MLB sources say that the #Athletics will be granted permission by Feb to move to San Jose.
...and that's it, no further indication of who the unnamed sources are, why we should believe them, whether the permission will include a territorial rights fee to the San Francisco Giants and if so whether it's one A's owner Lew Wolff can afford, etc. Still, it was enough for some people to write entire stories based around an imminent A's move to the South Bay.
The only indication here that there's some fire behind the smoke is that the mayor of San Jose says that Wolff is "optimistic," while yet another unnamed source (this one "close to" Wolff) says he's "very confident" that a move will be approved. Plus, of course, that whole Jerry Reinsdorf thing. It certainly seems like something is coming to a head, but whether it's actually the A's and Giants shaking hands on a territorial handoff, or just Wolff and his friends trying to create momentum for such a deal, there's no way to tell from anonymous talking heads. Tune in again in February. Maybe.
Vikings close to stadium deal, also not close to stadium deal
The holiday actual-news doldrums continue, and sportswriters continue to fill it with delicious, speculative nougat:
It's Christmas, and it looks like Vikings fans are about to get a pretty big gift.
Peter King of Football Night In America reported earlier in the hour (I know this because I was standing right next to him) that the Vikings and Minnesota officials are close to a deal that would keep the team in the state it has called home since entering the league in 1961.
According to King, it's no longer a question of "if" but "when."
While I can't comment on where NBC Sports' Mike Florio was standing at the time, the rest of it appears to be premature at best, at least according to the Vikings themselves, whose press spokesperson Jeff Anderson tweeted yesterday: "While we continue to work hard on a stadium solution in Minnesota, there is no agreement imminent."
Reading between the lines, it's entirely possible that both reports are true: The Vikings are making progress in their talks with the state, but have a long way to go. And then, of course, there's the little matter of who you mean by "the state" and what you mean by an "agreement": The Vikings could easily be close to a deal with Gov. Mark Dayton, for example (or his negotiator Ted Mondale), but that doesn't guarantee that the legisature will back it — or if they do, that whatever local government will be handed the bill for the remainder of the stadium cost will agree, or be able, to supply that share.
So a more accurate headline would probably be "Vikings continuing stadium talks with state officials." But since that's pretty much the same headline that people in Minnesota have been reading for the past five years, you can see why King (and Florio) went with the snappier lede.
December 23, 2011
What if they built an arena and everybody came?
And finally, this week in Newark arena news:
- Venues Today has ranked the Prudential Center 10th in the world among top-grossing arenas for concert ticket sales — meaning not counting New Jersey Devils and Nets games.
- The arena operators (i.e., the Devils owners) still aren't paying any rent to the city of Newark, which put up nearly $400 million for construction, because they say according to their lease, the city should be paying them.
Clearly, only Mary Worth can solve this problem. Happy holidays!
December 22, 2011
Santa Clara group starts petition drive, is upstaged by blown power line
As promised, Santa Clara Plays Fair has launched a referendum campaign to block $850 million in city loans to fund a new San Francisco 49ers stadium. If they can collect 6,000 signatures within 30 days, a public vote could be held ... okay, I'm not exactly sure, so I'm going to go with "in the future."
The community group, though, couldn't even get top billing in the lede of the San Francisco Chronicle article about its own petition drive, which instead began:
The power outages at Candlestick Park this week were a visible reminder of why the 49ers want to move to a new stadium in Santa Clara.
Yes, that's right: The 49ers want a new stadium because the old one has crappy splices on the power lines outside, which led to two power outages during Monday night's game against the Pittsburgh Steelers. Me, I'd just ask for new power lines, but I guess that's because I lack the vision to be an NFL owner.
Maybe it's just end-of-year contract cancellation time, but this week has seen a relative whirlwind of naming-rights reversals: A national pizza chain announced it was taking its name off of FC Dallas' soccer stadium, while the Indiana Pacers' arena got a new name thanks to a corporate renaming, the Miami Dolphins' stadium is getting one thanks to its namesake company closing up shop in the U.S., and the Sacramento Kings' arena could get one depending on how its sponsor's bankruptcy proceedings go.
All of which is pretty much old hat in the sports world by now — this will be the eighth name for the Miami stadium in 25 years — but it does make you wonder how much brand value a stadium name when nobody can remember what it's called. (Quick, anyone: Where do the Oakland Raiders play?) So far, companies still seem willing to throw their name onto any building that might get it on the lips of national sportscasters — just look at the San Diego Chargers' stadium, which got a new name that will last only from last Sunday through next Wednesday in order to promote its usual sponsor's new cellphone chip at three major football games. But how long will it last, especially if announcers stop making as many references to stadium names-of-the-week.
It's possible to imagine, even, a world where entire articles could be written about stadiums without ever bothering to mention who has paid to advertise on their sides. But no, that could never happen.
December 20, 2011
NFL establishes "G-4" stadium fund, there is much rejoicing
Just realized I never recapped last week's NFL owners meeting to formally re-establish the exhausted G-3 stadium fund, as previously pre-announced last summer. And so, without further ado:
- The new loan program — which actually will be called "G-4" — ups the maximum loan level from $150 million per team under the old plan to a maximum of $200 million under the new one. Only projects costing at least $400 million, and with a "private contribution" from the team of at least $200 million, will be eligible for the top loan level
- As under G-3, teams can repay the loan with club seat money they normally would have had to share with the league. They can now also use incremental regular ticket revenue, defined as the difference between ticket sales in the new stadium and average sales in the last three years of the old one.
- "The project must not involve any relocation of or change in an affected club's 'home territory.'" That's in keeping with the old G-3 plan's goal of aiding teams in building new stadiums in their existing hometowns (to avoid the kind of city-hopping that gave us the St. Louis Rams and Tennessee Titans). Still, it's worth noting that this means the Minnesota Vikings, for example, can access $200 million in G-4 loans for a new stadium in Minnesota, but not for one in, say, Los Angeles.
Teams looking to build new stadiums without paying for them themselves are, naturally, thrilled — since this is money that they wouldn't normally get to keep anyway, it's effectively a grant, not a loan. (Unless club seat and ticket sales come in below projections, in which case they're on the hook for the difference.) San Francisco 49ers owner Jed York tweeted that he was confident his team would be first to get a cut of the G-4 boodle, San Diego Chargers stadium czar Mark Fabiani called it "great news for the team and our fans," and Vikings stadium chieftain Lester Bagley called it "good news," though he quickly added the caveat that the Vikings still don't have a deal for the other $800 million it takes to build a stadium these days.
And that's the catch: Most of these teams were counting on NFL funds as part of their stadium deals already, so while the establishment of G-4 comes as a relief to them, it doesn't really do much to fill the funding holes that most of these teams (except for the 49ers) still have in their plans. And while it'd be nice if the teams used this free league cash to reduce their demands on taxpayers, it looks like most of them instead intend to use it to replace their own share of stadium costs.
For more on all this, the San Diego Union Tribune has helpfully posted a document containing a brief summary of NFL commissioner Roger Goodell's press conference and the actual G-4 document language. Highly recommended for anyone who finds discussion of "tranches" to be compelling reading.
December 16, 2011
A tale of two landmarks, one of which isn't a landmark
The Boston Red Sox this week formally requested that Fenway Park be listed on the National Register of Historic Places, in order to get $40 million in federal tax credits on the just-completed renovations to the soon-to-be-100-year-old stadium. (This is different from the $40 million in state tax credits the Sox are getting for the same work.)
Skipping right over the whole tax credit issue, the New York Times cheap irony desk immediately noted that Boston is not Chicago:
Over in Wrigleyville, the Cubs say they are hamstrung by a City Council decision to give landmark designation to parts of 97-year-old Wrigley — including the marquee, ivy, scoreboard, and bleachers. Not only does the local distinction not come with federal tax dollars, but the Cubs say the landmark status is a factor in their failure to follow the Fenway rebuilding model.
"If you're going to restore and maintain the facility, you're going to have to take parts of it down and rebuild it," the Cubs' president of business operations, Crane Kenney, said in 2008. "Landmarking authorization doesn't let you do that."
Of course, the national register isn't actually landmark status (which Fenway doesn't have), and Chicago landmarks law doesn't actually prevent renovations so long as "historic" architectural features are retained, but why ruin a good story? Though it does take away a bit from the contrast between the two teams when the Times reveals that "the Cubs have discussed a listing in the National Register, but will not pursue it until after Wrigley has been renovated" ... in other words, just like the Red Sox did.
As for the $80 million the Red Sox will reap in tax credits — actually more like $50 million, given that more revenues for the team also means bigger revenue-sharing checks to the rest of MLB — that's undeniably public money, but not actually a special subsidy, since it's a tax credit that anyone can avail themselves of if they're rehabbing a landmarked building. Whether you think historic preservation credits are a good idea in the first place likely depends on your feelings about whether you think maintaining historic buildings is a public good — I'd say yes, though a cumulative 40% tax credit seems a bit richer than necessary — but that's a larger issue to take up with the U.S. Congress and Massachusetts legislature.
Meanwhile, back in Chicago, Cubs owner Tom Ricketts spent $20 million this week to buy a McDonald's across the street from Wrigley. That would fit well with a Fenway-style redo of Wrigley — the Sox bought several buildings adjacent to Fenway for office and kitchen operations, though those weren't across the street from the stadium as the McDonald's building is from Wrigley. Still, it looks like Ricketts intends on spending some more time trying to squeeze some stadium cash out of the city of Chicago before he commits to anything like that.
Kings owners: By 'deadline' we didn't actually mean 'deadline'
This time, the Sacramento Kings owners didn't even wait until the deadline was up before retracting their March 1 deadline for a new arena plan:
"I'm sure we'll always have flexibility," Joe Maloof told The Bee Thursday afternoon. "The league has always been flexible ... so I don't know about that [a firm deadline]. There are a lot of people working in a positive vein this time, where before, there was a lot of negativity. But everybody is on board. So we're optimistic guys. We want to get it done here in Sacramento."
This gambit will be familiar to anyone who's read Chapter 4 of "Field of Schemes" (and if you haven't, what's keeping you? you can even buy it as a holiday present for that new Kindle owner in your family!) as Step 5: The Two-Minute Warning. But if you need a refresher, Maloof's statement translates into: "Setting a deadline was great for lighting a fire under the mayor and the city council, but now that we have them on the hook, we'd be crazy to be impatient about reeling them in given the hundreds of millions of dollars they're offering us. Especially when the alternative is a kinda crappy deal as a second-fiddle tenant in Anaheim that the league was never going to approve anyway — wait, did I just say that out loud? This is only a hypothetical internal monologue? Phew — otherwise that would have ruined the whole point of planting the deadline threat in the first place."
December 14, 2011
Sacramento approves parking fee sale for Kings, sorta kinda maybe
The Sacramento city council voted 7-2 last night to approve soliciting bids from private companies to buy the city's future parking revenues for an up-front lump sum that could raise $200 million for a new Kings arena, but more likely not.
The Sacramento Bee calls this a "critical step" for the arena plan, but then adds:
Several council members who voted to move forward added they would not support a final financing plan that negatively affects the city's general fund budget, which pays for police, fire and most other basic services.
If they're serious, then this would pretty much rule out accepting any bids at all, since the parking revenues currently provide $9 million a year for the general fund, which at the moment is supposed to be replaced by elfin magic. If they're serious, that is, and not just making soothing noises about how they'd never spend public dollars on a basketball arena, just dollars that, you know, happen to be collected by the public.
We should know more in the next couple of months, once the responses come in and the council has to decide whether to issue a formal Request For Proposals — not to mention as the council figures out how to fill that $9 million gap, not to mention where to find another $300 million or so to meet the Kings' March 1 deadline — yes, another deadline, quit laughing — for a workable arena funding plan.
Marlins stadium inspector: "I won't take my kids to that place"
As if a parking garage tax controversy, an SEC probe, and crimes against typography weren't enough, a former welding inspector at their new stadium says he won't go to there because he's afraid it'll fall down:
What [Roy] Fastabend said he found shocked him.
Engineering specifications ignored. Contractors cutting corners to save time and money. He even caught a fellow inspector falsifying records and signing off on welds he never examined.
"If people knew what was going on there or how they did things, I mean, I won't go to that stadium, I won't take my kids to that place," Fastabend told CBS4's Jim DeFede in an exclusive interview. "Sadly, it looks beautiful but there are questions."
Marlins execs say that the inspector caught faking records was fired, and the team has now belatedly begun reinspecting all the welds to be sure they're legit. So with any luck, this will pass like the New York Yankees' crumbling concrete controversy, and the only catastrophic failure in Miami in coming years will be Jose Reyes' hamstrings.
Santa Clara council okays $1B 49ers stadium plan
As expected, the Santa Clara city council voted unanimously last night to approve the plan for a $1 billion San Francisco 49ers stadium, $850 million of which will be borrowed by the city and then repaid (hopefully) by the team.
According to the San Jose Mercury News, this leaves "one final obstacle" to the stadium project, which is for the NFL to agree to put up $150 million towards the plan as part of its Son of G-3 fund. There's also the little matter of actually negotiating a lease, which is supposed to take place "in coming months," but given the unanimous backing of the council, that's unlikely to present much of an obstacle, though how precisely it goes down could have momentous impacts in terms of who's on the hook if stadium revenues fall short of projections.
The Merc News also reports that the 49ers are now expected to try to break their Candlestick Park lease after the 2013 season, and open their Santa Clara stadium in 2014. That's an ambitious timetable, but certainly doable given California's year-round construction climate. Assuming the NFL acts quickly on its $150 million, we could actually see the 49ers playing in a new stadium before the water riots start.
December 12, 2011
Oakland plans second vaportecture stadium for A's
Oakland Mayor Jean Quan, not content to have one A's stadium plan with no real idea how to pay for it, announced on Friday that "we are sending today a letter to Commissioner Selig to make it pretty clear that Oakland wants the A's, that we have two sites for the A's that are viable that could be delivered by 2014."
Site #2 is, in fact, the current site of the Oakland Coliseum (I can't be bothered to remember its latest corporate name — nice investment, whoever owns naming rights this week!), which would be replaced by a new A's baseball stadium, a new Raiders football stadium, and a new hotel under the latest plan. (Not-very-detailed renderings available at Newballpark.org.) This "Coliseum City" would be paid for by ... okay, Quan didn't actually mention that part, but the city has a Request For Proposals out for the project, which ... actually asks the developers to submit "a description of its approach to developing financing measures." Three guesses how many of the six developers who've reportedly responded to the RFP will be proposing to fund the whole project themselves?
Coliseum City, incidentally, would also include a renovated arena for the Golden State Warriors, which is significant because the Warriors owners last week met with San Francisco Mayor Ed Lee and Giants CEO Larry Baer to discuss a new arena near AT&T Park to open in 2017, the year the Warriors' lease at Oracle Arena — which was completely rebuilt in 1996 for $121 million — runs out.
One more item from the Quan news conference: She said that the Giants claim they can use legal measures to delay any A's move to San Jose for as much as ten years. Which is exactly what they would say, and exactly what she would say, but just passing it along.
L.A. Coliseum exec used scoreboard upgrades to collect Visa points
This is only tangentially related to the topic at hand here, but it's just too good to pass up:
Last spring, the Los Angeles Memorial Coliseum set out to upgrade the sound system for its new video board. The equipment and shipping costs were steep — about $270,000.
Finance Director Ronald Lederkramer could have bought the gear the way other government agencies do, by issuing a check from the taxpayer-owned stadium.
Instead, he put the package of high-powered loudspeakers on his personal Chase Visa card, charging it in installments and paying those off with government checks that he and a lower-ranking employee signed, according to records and interviews.
In the process, depending on which Visa he used, Lederkramer earned roughly enough redeemable reward points for a week at the downtown Ritz-Carlton, two Bulova watches or even a pair of first-class round-trip United Airlines tickets to London or Tokyo worth as much as $24,000, award schedules show.
Asked about the Visa money laundering, Lederkramer acknowledged that he'd charged Coliseum bills to his personal card, saying he'd used his card points to travel to conferences on stadium business — but said he didn't have documentation of those trips. "Why would I have kept that?" he told the Los Angeles Times.
Lederkramer's actions were apparently against Coliseum purchasing rules, but it's worth wondering: In situations where private sports teams control spending on stadium upgrades — whether or not they're reimbursed by taxpayers — can team execs use this trick to gain similar benefits? Membership does have its privileges.
December 09, 2011
San Diego Union-Trib owner: Newspapers are for backing stadiums
Hotel magnate and gay-marriage-hater Doug Manchester announced last month that he was buying the San Diego Union-Tribune for $110 million. Today, the Voice of San Diego reports that Manchester has told a local TV news program what role he wants the newspaper to play:
"Local newspapers need to be a cheerleader for what's right and good for the country, such as promoting the new stadium or whatever," Manchester told KUSI anchors. "I felt that there's been a lack of that here in San Diego. And so that's one of the motivations."
Local news outlets cheerleading for sports projects has a long tradition, of course. They're just usually not quite so bald-faced about it.
New York gerrymandered arena district for Nets' green-card deal
Atlantic Yards Report today has the latest on the soon-to-be-Brooklyn Nets' green-cards-for-development-cash gambit. The state of New York, AYR's Norman Oder reveals, aided the Nets owners' scheme not only by sending an emissary to China with them to help solicit green-card-hungry funders, but by developing this map to demonstrate to federal officials that the project is in a high-poverty area, thus reducing the required foreign investment from $1 million apiece in interest-free loans to $500,000.
For those unfamiliar with the nuances of Brooklyn geography, the left end of what Oder calls "the Bed-Stuy Boomerang" is mostly old warehouses along the Long Island Rail Road tracks. The right end, meanwhile, loops up into Bedford-Stuyvesant — and not its rapidly gentrifying western edge, but the still-impoverished middle. Neatly omitted, meanwhile, are the largely affluent brownstone blocks of Fort Greene to the project's north, Park Slope to the southwest, and Prospect Heights to the south.
Oder concludes that New York state didn't actually break any laws by doing this, but it did grease the wheels for a funding plan that could ultimately save the Nets owners $140 million over the next five years (assuming a pretty high interest rate spread, admittedly — a more likely figure would be in the eight figures). The only cost is to other projects that could have used the green-card funding program to better ends — and, of course, to the integrity of U.S. immigration policy, that is, if you think such a thing still exists in the first place.
Minneapolis council opposed to Rybak's Vikings plan
Minneapolis Mayor R.T. Rybak's plan for financing a Minnesota Vikings stadium with tax money that currently goes to pay off the city's convention center may have gotten a good reception in the state capital, but unfortunately it turns out his own city council pretty much hates it. "I just think that's crazy," said councilmember Lisa Goodman, while her colleague Gary Schiff declared, "We can't take away the money needed to maintain the convention center in 20 years and start applying that to a new facility. Otherwise we just start cannibalizing our own city infrastructure."
Rybak also provided more details of his plan yesterday, which now goes like this:
- Take $20 million in receipts from sales, restaurant, and hotel taxes that is currently collected in excess of what's needed to pay off the convention center debt, and funnel between $4 million and $11 million a year towards a Vikings stadium (enough to pay off roughly $60-150 million in up-front construction cost).
- Take another $5 million a year and use it to pay off debt on the purchase of the Timberwolves' Target Center, which was originally privately built but taken off the Wolves' owners' hands in a much-criticized public bailout in 1995. Also, take a few million more and pay for $100 million in upgrades to the Target Center.
According to Minneapolis Public Radio, councilmembers "told Rybak that if Minneapolis has money to spend, it ought to go to schools, or police or some other basic service — not the Vikings." The Downtown Journal counted heads and found a majority of the council already opposed to Rybak's plan, with several additional members still undecided or unaccounted for — though it added that "perhaps some sweeteners could be thrown into the deal that might switch a council member or two." Not that we've seen anything like that before.
Sacramento releases no details of arena funding
Big news! According to a headline in the Sacramento Business Journal, "Sacramento releases details of arena funding," citing "a report that will be unveiled at Tuesday's City Council meeting." And what are those details?
- The city of Sacramento will contribute "between $170 million to $245 million" that it will collect in exchange for future parking revenue, less $52 million in remaining debt that it has yet to pay off on its parking garages.
- Developers ICON-Taylor, the NBA and the owners of the Kings will pay the rest via "a financing strategy that includes both private and public contributions."
So that's ... uh, exactly the same details we had last week. Only with $52 million less from the parking money. And still no indication how Sacramento will replace the $9 million a year it currently collects from parking fees. They sure don't make details the way they used to.
December 07, 2011
Minneapolis mayor backs Metrodome site for Vikings stadium
Minneapolis Mayor R.T. Rybak, who last month proposed three different sites in his city for a Minnesota Vikings and suggested either a sales tax hike or a downtown casino to pay for them, has now revised his plan, telling a state senate committee hearing yesterday, "Our preferred site is the Metrodome," and saying that he would now use existing liquor, sales, and hotel taxes that are currently going to pay off the Minneapolis Convention Center.
Julie Rosen, the Vikings' leading stadium backer in the senate, afterwards declared that the Metrodome site is "getting to be a very viable option," saying it would cost about $200 million less than a stadium in suburban Arden Hills. And never mind the fact that the convention center taxes will still be needed to pay off the convention center through 2020, and that the notion that the convention center won't need upgrades after that point is "a wildly simplistic, absurd assumption," according to ... last February's version of R.T. Rybak.
State stadium negotiator Ted Mondale, meanwhile, took another step toward cementing his place in the We Make Move Threats So Team Owners Don't Have To Hall of Fame yesterday, declaring, "When you have a business that's either losing money or not making money, as sure as winter comes or the leaves fall, they will leave." The Vikings' estimated cash flow over the last decade, according to Forbes: $121 million in profit.
Reinsdorf backs A's move to San Jose
Well, this is interesting: In the middle of an article on the Oakland A's winter trade talks, the San Francisco Chronicle's Susan Slusser and John Shea dropped this about the A's ongoing negotiations to move to San Jose:
Major-league owners can vote to overturn territorial rights, and recent signs point to a potential vote on the issue at the owners' January meetings. The A's will have at least one prominent backer in White Sox owner Jerry Reinsdorf, a longtime friend of A's owner Lew Wolff.
"I'm totally supportive of Lew getting a new ballpark and going to San Jose," Reinsdorf said. "He needs to be there. It has to come to a head soon."
Now, Reinsdorf backing Wolff isn't big news: As Bay Bridge Banter notes, the two are longtime pals. But for Reinsdorf, the longtime chair of MLB's relocation committee, to do so on the record to a major newspaper seems to be some kind of indication that the winds are shifting a bit — maybe this is why Bud Selig is starting to push a bit for some kind of resolution?
Of course, there's no reason for the San Francisco Giants to negotiate a resolution unless it looks like Selig, Reinsdorf, et al., would actually try to force the issue by voting to rescind the Giants' territorial rights to San Jose if they won't sell them, and there's no particular indication things have gotten to that point yet. And also of course, Reinsdorf is the author of the Savvy Negotiator Doctrine, so it's always possible he's just trying to shake things up in the hopes that it gets Oakland to up the ante to Wolff in its own on-again off-again stadium efforts. Still, it's a sign of some kind of movement, which is more than we've seen in years with the A's, so maybe it's not crazy to think we'll see resolution of this issue before both cities are underwater.
If the A's ever do get permission to move to San Jose, meanwhile, maybe we'll finally get details of Wolff's stadium financing plans there. Newballpark.org notes that the San Jose city council has pledged not to use public money for any stadium, including:
3. No public funds shall be spent to finance or reimburse any costs associated with construction of the ballpark or construction of any on-site infrastructure or improvements needed for the ballpark.
4. No public funds of any kind are spent to finance or reimburse any ballpark operational or maintenance costs related to activities conducted by or under the authority of the baseball team that uses the ballpark either at the ballpark or in the streets surrounding the ballpark.
That all sounds great, though it's worth noting that 1) this was just a council resolution, so it's not binding on Wolff or the A's, and 2) there are plenty of subsidies that can be said not to involve "public funds," such as free land, tax breaks, or (if you sort of squint) TIFs. Wolff and San Jose swear that they're going to build the first entirely privately funded ballpark since Dodger Stadium, and if that's true, more power to them; before we throw a parade, though, I'd still like to get a look at the fine print.
December 06, 2011
SEC's Marlins probe: What they're fishing for
I've now had a chance to look over the Securities and Exchange Commission's subpoenas to the city of Miami and Miami-Dade County (downloadable here and here, respectively) over the Marlins stadium project, and while it's still largely a matter of reading between the lines, there are clear signs that what the SEC is after here is a big deal indeed. In amidst all the usual requests for emails with the team, MLB, etc., is this stretch of items that appears, in slightly differently order, in both of the SEC's letters:
C. All documents from after January 2007, concerning deadspin.com and the Marlins.
D. All documents from after January 1, 2007, concerning (a) the Marlins's ability to finance or contribute to the financing of a stadium, parking structure, or sports complex, (b) the Marlins's profitability or revenues, or (c) the Marlins's debt or ability to borrow money.
E. All documents from after January 1, 2007, concerning (a) any tax issues concerning the parking garage built or to be built by the City of Miami for the Marlins stadium (including, but not limited to, whether the City of Miami had to pay property taxes on the parking garage, and whether the parking-related bonds were tax-exempt), or (b) whether the parking facility was to be used solely for public purposes.
F. All documents from after January 1, 2007, concerning any payments, loans, campaign contributions, or any offers of anything of value from the Marlins to any member of the city, county, and/or state governments.
Item E is the one you'd expect from the SEC — not only is it about bonds, which are the agency's bailiwick, but the recent revelations about Miami having screwed up the tax status of the parking garages has to be raising some regulatory eyebrows, especially after bondholders were left holding the bag in the New York Yankees' parking garage mess.
The two preceding items are a different story. The explicit mention of Deadspin in item C (something that Deadspin itself, surprisingly, failed to note in its own coverage of the SEC probe) is an indication that the agency is planning to investigate not just possible malfeasance against bondholders, but the broader question of whether the revelations that the Marlins were socking away money while crying poor for a stadium mean that taxpayers got the shaft as well.
Item F, meanwhile, is an obvious (ahem) fishing expedition for any money ("bribes" is such an ugly word) that may have changed hands to encourage the city or county to approve the Marlins deal. Given the stadium's long and messy history — remember the city commissioner who got $100-million-plus in money for her district in exchange for her stadium vote? or the county commission chairman who got $40,000 in campaign donations from firms interested in bidding on the stadium project? — there's bound to be plenty of smoke to investigate here.
All of this is heavy tea-leaf reading, needless to say, and it's entirely possible that nothing much in the way of fines or prosecutions will come of all these subpoenas. If nothing else, though, this looks likely to produce the most in-depth government investigation of a stadium scheme since Dennis Kucinich had his own subcommittee. That would be both a boon to those interested in the inner workings of stadium shenanigans, and likely a huge embarrassment to the Marlins — maybe that's why the team is rushing to sign up every free agent under the sun before any chickens come home to roost.
December 05, 2011
Santa Clara stadium deal for 49ers piles risk on top of risk
After a perusal of the "Disposition and Development Agreement" for Santa Clara's proposed San Francisco 49ers stadium, the deal looks even riskier for the city than what was reported on Saturday. In brief:
- As reported previously, the stadium will now cost $1.02 billion. Of that, $170 million will come from a mix of NFL funds, cash from the public redevelopment authority, and "other revenues ... from sources described herein," none of which are actually described therein, from what I can tell. It's implied elsewhere in the document that the 49ers will spend $150 million (which is expected to come directly from the NFL as a "loan" to be repaid by luxury suite revenue that the 49ers would normally have to share with the league) and that $10 million will come from the RDA; the other $10 million appears to be a mystery.
- Another $450 million will come via a short-term loan to the city-run Stadium Authority, to be secured by the sale of naming rights, personal seat licenses (here called Stadium Builder Licenses), and that ever-popular "other revenue." This loan needs to be paid off by 2015; for any amount that isn't, the Stadium Authority will need to sell new long-term bonds, backed by ... the document doesn't actually say, so presumably that'd be the authority's problem.
- The remaining $400 million will come via a "subordinated" loan, where the 49ers will borrow money from the banks and then re-lend it to the Stadium Authority. As if that's not confusing enough, the loan from the 49ers will be paid off via rent from the 49ers — which is "expected" to be "in the range of" $30 million a year, and "anticipated" to be enough to pay off all of the authority's outstanding debt.
- The Stadium Authority will now be responsible for operating costs of the stadium during the non-NFL season, with the 49ers covering operating costs during the season. This, frankly, sounds like a nightmare: If 49ers fans break something during the season and it needs to be repaired during the offseason, who pays the bill? Once again, the DDA doesn't say.
- The Stadium Authority can rent out the stadium during the offseason, as well as during the season "subject to approval" of the 49ers and "the payment of certain costs." The authority and the city will then split any proceeds.
The upshot remains what I said on Saturday: If naming rights and PSL sales go well, the city could end up being able to pay off the stadium without dipping into public funds, but that's a pretty big "if." The DDA specifies that "no city general funds" will be committed to the stadium debt — as required by the public referendum that approved the deal — but as we've seen elsewhere, when stadium authorities fail, it's up to their host cities to bail them out.
On top of that, it's clear that the DDA leaves a ton of details to be worked out in the actual stadium lease, which it says will be worked out by the Stadium Authority board (aka the Santa Clara city council) "in coming months." What the specifics actually look like — in particular, how those 49ers rent payments are set — could determine whether Santa Clara ends up covering its costs or becomes another Indianapolis.
December 03, 2011
Marlins stadium deal targeted by SEC investigation
Doesn't anybody want to let me sleep in this morning? The Miami Herald reported late last night that the federal Securities and Exchange Commission is investigating the Miami Marlins over their new stadium deal:
Federal authorities have opened a wide-ranging investigation into the Miami Marlins' controversial ballpark deal with Miami-Dade County and the city of Miami, demanding financial information underpinning nearly $500 million in bond sales as well as records of campaign contributions from the Marlins to local and state elected leaders.
In a pair of lengthy letters delivered to government attorneys Thursday, the U.S. Securities & Exchange Commission gave the city and county until Jan. 6 to deliver everything from minutes of meetings between government leaders and Marlins owner Jeffrey Loria and Major League Baseball Commissioner Bud Selig, to records of Marlins finances dating back to 2007.
Or as Jeff Passan of Yahoo! sums it up:
While the subpoenas issued by the SEC do not explicitly detail the purpose of the investigation, the feds' motives are evident: They want to understand how, exactly, a group of county commissioners agreed to fund 80 percent of the Marlins new stadium, which cost more than $600 million, without ever seeing the team's financial records — and whether bribes had anything to do with it.
While it's way too soon to guess at how this will turn out — and whether it'll be the Marlins or the elected officials who land in hot water, if either — it certainly casts a damper on the big relaunch of the team that was planned for the stadium opening next spring. (As Passan notes, free agents like Albert Pujols now "must ask themselves whether they really want to consider going to a team with ownership the feds are targeting.") An SEC investigation is never good news for a team owner, but if it ends up taking a bite out of the Marlins' chances of finally drawing more than flies, that could be even more worrisome for Jeffrey Loria and David Samson.
49ers strike deal for Santa Clara stadium financing
The San Francisco 49ers and city of Santa Clara announced yesterday that they've agreed on a financing deal to build a $1 billion stadium. The highlights:
- Goldman Sachs, U.S. Bank, and Bank of America will loan the city $850 million towards construction costs. Another $150 million will come from the 49ers, via the sale of luxury suites.
- The city's share — double the amount initially approved a year and a half ago — will now be repaid by ticket sales, stadium naming rights, $30 million a year in rent (up from $5 million) from the team, $150 million from the NFL, $40 million from the city redevelopment agency, and $35 million from hotel taxes.
I'll have more on this after I've had a chance to read the actual development agreement, but for now the upshot appears to be that by upping the team's rent by $25 million a year and having the city use the proceeds to pay off an extra $400 million in debt, the 49ers convinced banks to finally provide a loan for the stadium. (Having a city treasury to fall back on as collateral always helps.) The downside for the city, obviously, is that a risky deal just got even riskier.
Regardless, barring an unexpected lawsuit or a sudden change of heart by the Santa Clara city council, it seems likely that we're looking at construction starting sometime next year, with the 49ers landing in the South Bay by 2015.
More on Monday.
December 02, 2011
Chicago taxpayers may need to chip in for White Sox, Bears stadiums
Yesterday, the Chicago News Cooperative reported that the Illinois state fund that's paying off the construction of the White Sox' U.S. Cellular Field and the reconstruction of the Bears' Soldier Field is running short of funds, and will need to be bailed out by city taxpayers. With the hotel tax revenues designated for stadium expenses coming in below projections, the state has withheld $1.1 million in income tax money that would normally go to the city of Chicago.
Today, the News Coop (or as I prefer to think of it after misreading its URL for the umpteenth time, the New Scoop) says that thanks to an "accounting error," the hit to city taxpayers this year was actually only $185,000. That's the good news. The bad is that even if hotel tax revenues rebound, the state sports authority's annual debt payments are scheduled to rise from $30 million to $88.5 million over the next two decades, leading authority board member Jim Reynolds to warn that "the city has to begin to plan for some significant outlays."
On one level, this isn't actually a huge deal — as with recent tax squabbles in Miami and Cincinnati, taxpayers were going to be on the hook for these costs regardless, so it's just a matter of which taxpayers, city or state. And Chicago has been kicking in $5 million a year toward the stadium costs in any case, so this just adds marginally to the bill.
Still, it's a reminder that assigning a certain tax revenue stream to pay off stadiums — or really, to pay off anything — is in the end a bookkeeping abstraction: If the tax money doesn't come in, you still have to make the payments, the same as if you buy a new car and plan to pay for it with the raise you're expecting, and then the raise never materializes. (Note to younger readers: "Raises" and "new cars" were well-known before 2008; ask your parents.) In the end, public costs are public costs, and pretending they're not because somebody else (hotel guests, car renters, cigarette smokers, racino patrons) has had their taxes earmarked for them is just sophistry.
Sacramento can't actually raise $200m for Kings arena by selling parking revenues
Remember way back on Wednesday, when the city of Sacramento said it could raise $200 million towards a Kings arena by selling off future parking revenues? Turns out that Bank of America number-crunchers have determined that the actual number is lower than initial "hopes or expectations," according to Sacramento city manager John Shirey.
And it gets worse, explains the Sacramento Bee:
City officials are trying to determine how revenue from on-street meters could be used for an arena project. State law requires that meter money be used for traffic safety enhancements or to pay for parking facilities.
In addition, the City Council will certainly insist that any privatization plan replenish funds that now flow into the city's general fund from parking. The general fund pays for most basic city services, including police and fire protection, parks maintenance and code enforcement.
Neither of these issues is actually new — see here and here — but it still adds up to: Nobody knows how much money selling future parking revenues could, and in any case that money needs to be replaced somehow. But if you're looking for a way to shift the debate from "How can we pay for an arena?" to "How can we pay for all the stuff we used to be able to afford before we paid for an arena?" then go for it.
