February 28, 2012
Kings arena plan: Better than a kick in the head, but how much?
Sacramento Mayor Kevin Johnson, the Kings owners the Maloof brothers, and the NBA announced yesterday that after a weekend of marathon talks, they'd agreed on a "tentative deal" for a new arena — what most of the rest of the world would call a "plan," since it still needs to actually be voted on by the city council and the county board, not to mention have a bunch of unanswered questions nailed down. And the plan is ... nobody's saying, not until Thursday, just five days before the council will have to vote.
What details have emerged, though, are of a fiendishly complex funding scheme with oodles of revenue streams headed this way and that, such that it's hard to figure out exactly who's paying for what. Let's give it a shot, though:
- Of the estimated $387 million arena cost, the city would put in the largest share: anywhere from $200 million to $250 million. This may be from the leasing of rights to future parking revenue at city-owned lots as previously planned — something that could raise anywhere from $100 million to $200 million — or could mean selling bonds against future parking and hotel-tax revenue, which could raise more money but would bring with it the risk of shortfalls in paying off the bonds. Other possibilities: new cell phone tower leases or revenues from electronic billboards outside the arena. The city would also own the building, which presumably means the Kings would be excused from paying property tax, which they currently pay on their existing team-owned arena.
- The Maloofs would put in $75 million in cash (at least partly raised by selling the site of their current arena), plus $75 million in "arena-related revenue," which looks to be from a ticket surcharge of anywhere from 3 to 5% (a pretty big spread) that would go directly into the city's general fund to make up for part of the $9 million a year in future parking revenues that would disappear from the city treasury. Ticket surcharges are generally considered to be a legit team expense — if the market will bear $50 for a ticket, then a 5% surcharge means the team can only get away with charging $47.62 as a face value — but this would actually be a surcharge on tickets to all events, not just Kings games, meaning much of it would actually fall on...
- AEG, which is now offering to kick in $60 million for the rights to run the arena, including collecting money from rock concerts and the like on nights the Kings are off. Exactly what share of the revenues they'd share with the city or the Kings isn't clear, but past history shows they drive a hard bargain in these matters.
That's a plan, certainly, but one with so many ifs and maybes that I'd hate to have to be a member of the Sacramento countil voting on it in just one week. Among other things, the rest of the $9 million in lost future parking revenue is supposed to be paid off by the ever-popular "other sources," including a cut of future parking revenue on arena event nights — something that you'd think the companies bidding to lease the parking lots would want for themselves if they're going to pay top dollar. And there's no agreement on who'd pay for cost overruns, though there's talk of trying to find an arena builder who would agree to pay for overruns in exchange for getting to keep any savings if it comes in under budget.
At first glance, at least, this looks like it could be a marginally better deal for the city than what was being discussed a week ago, if only because of that ticket surcharge that would help make up for the lost parking money. That's a huge "could be," though — if, for example, the ticket surcharge was achieved in exchange for the city agreeing to share parking proceeds with the Kings, and this cuts into how much money the city can get for its future parking rights, we're right back where we started. And most important, without knowing who'll be getting what share of arena revenue, it's impossible to say who'd be getting a return on their investment and who'd be getting the short end of the stick.
None of this, naturally, stopped Mayor Johnson from exclaiming, "It's game over! Sacramento deserves to win, and this is our chance to win. I'm so emotional, I can't even articulate it." After spending a weekend locked in a room with David Stern, KJ is understandably ready to celebrate, even if only being let out of the room. But while this may be game over as far as this round of negotiations go, it promises to be only the first game of a long, grueling Sacramento arena season.
February 27, 2012
Vikings stadium almost ready to be thrown to Minneapolis council wolves
Vikings vice president Lester Bagley says the team is "near the end" of negotiating a stadium deal with Gov. Mark Dayton and Minneapolis Mayor R.T. Rybak, though of course that doesn't actually mean that the Minneapolis city council or Minnesota state legislature will approve it.
And speaking of the council, seven out of its 13 members are now on record as saying they won't approve a stadium deal without a referendum, and that their constituents overwhelmingly back them up on this. Four members support the mayor's plan; two, Meg Tuthill and Kevin Reich, are undecided, though Reich said on Friday that he's leaning toward requiring a referendum.
At this point, the only real hope for the Minneapolis plan appears to be if either Rybak can twist some seemingly untwistable arms — maybe somebody would like some redevelopment money funneled to their district? — or the state legislature decides to flat-out overrule the council, which it says it doesn't want to do. Still, it doesn't cost Bagley, Rybak, and Dayton anything to announce a deal, and who knows? Maybe some "We have a deal!" headlines will prompt some Minneapolis councilmember to change their mind — or at least to name their price.
Browns seek sin-tax extension for stadium upgrades
Sure enough, Cleveland's sports teams are talking of extending the city's sin tax that built two new stadiums and a new arena in the 1990s to pay for further upgrades to those buildings. However, it's not the Indians leading the charge, according to the Cleveland Leader, anyway, but rather the Browns:
The Browns are banking on the support of the Indians and Cavs, who have yet to join their efforts, because without them it will be quite a challenge to get the sin tax renewed. One of the biggest challenges that they will face will be in changing the minds of state officials, as well as overcoming the tobacco and alcoholic beverage lobbies who were successfully able to insert language into a budget bill in 2008 that bans counties from levying local sin taxes.
It's not immediately clear whether the teams are seeking the sin tax extension to pay for new upgrades, or just for upkeep that's already required in their leases. (There's a Crain's article too, but it's behind their paywall.) Not that there's likely much of a difference in the eyes of the teams, but it'd help to put a figure on how much additional public money the three teams are hoping to avail themselves of before their leases start to expire in another 12 years.
February 24, 2012
NBA extends Kings deadline as Sacramento scrambles for funds
I'm sure there's been other stadium news while I was afk the last 48 hours — say, this and this — but since heck's a poppin' in the Sacramento Kings arena saga, let's focus on catching up with that, and deal with any other loose ends on Monday.
So, on the Kings front:
- On Wednesday, Mayor Kevin Johnson announced that rather than the city council voting next Tuesday on an arena plan, it would vote the following Tuesday, March 6. Since March 6 comes after March 1, the alleged NBA deadline for a deal to be finalized, NBA commissioner David Stern agreed to accept just the announcement of a term sheet by that date as meeting the deadline.
- Stern said that while arena operator AEG was expected to put $50 million into the arena, that would be considered part of the Kings owners' $85 million share of funding. Hello, another $50 million in funding hole!
- Sacramento County offered to let the city use three of its downtown parking lots during arena events — something it estimates could generate $2.5 million a year — if the city agrees to kick back $500,000 a year toward county parks. That'd be enough to finance either about $30 million in arena costs, or fill in $2 million a year of the $9 million a year the city would be giving up by leasing its own parking spaces to fund arena bills, depending on how they want to allocate it.
And... that's pretty much it. (Big thanks to reader MikeM for collecting Sacramento arena stories in my absence, incidentally.) The upshot appears to be that everybody involved is still pedaling madly in hopes of coming up with a deal by March 1 or thereabouts, but there are still huge questions about how they're going to get the money numbers to pencil out — in fact, if Stern is right about AEG's $50 million counting towards the Maloofs' share, things have even gone backwards.
In any case, the week's delay can be looked at in two ways: Either Stern is happy to extend things by a week because he thinks they're close to a deal, or he's throwing Sacramento some more rope in the desperate hope that somebody will strike oil under Sutter's Fort in the interim and save him from having to figure out a Plan B for the Kings. In other words, pretty much the same as he did last year.
February 20, 2012
Field of Schemes World Headquarters is going to be moving this week (just in physical space — the website will remain right where it's always been), so posting here may be light to nonexistent for the next few days. If something exciting happens in any of your favorite stadium debates — say, yet another city offering to host a Vikings stadium — and I'm not here to write it up, feel free to talk it over here in comments, and I'll chime in once I've unpacked my DSL modem.
Vikings stadium "agreement" agrees on not much
The Minneapolis Star Tribune reported on Friday that the state has "reached a tentative agreement" with the Minnesota Vikings and the city of Minneapolis on a new $975 million stadium. The details of the agreement, according to "multiple sources":
- The state of Minnesota would contribute $398 million.
- Minneapolis would kick in $150 million in construction costs, plus $180 million in operating costs over 30 years.
- The Vikings would pay $427 million.
And ... that's it. Nothing on where the public money would come from. Nothing on whether the Vikings would pay rent (or share stadium revenues) to offset some of that $180 million in operating costs. No set site, even, since the parties have only agreed to build "at or near" the Metrodome. And, oh yes, the "state" here just means the governor, and the "city" here just means the mayor — neither the state legislature nor the city council have agreed on squat, and the council in particular features a majority opposed to a stadium without a public vote, one that the team would almost certainly lose.
In other words, pretty much nothing we didn't know last May, except that the exact dollar split has been tweaked (a bit more from the state, a bit less from the city, up-front anyway), and now the Vikings and governor are on board as pushing for a Minneapolis site.
Still, it's an occasion for headlines, and for Star Trib columnists to weigh in on why this would be the bestest thing since sliced bread: For never-met-a-stadium-he-didn't-like Sid Hartman, it's that a new stadium could host the NCAA Final Four just like the Metrodome already does; for Patrick Reusse, it's, um, something about how hard schoolteachers work and how Occupy protestors like prisoners too much. (I'll leave the more detailed boggling over these to the irreplaceable Minnesota blog I Dislike Your Favorite Team.)
But at least you can say one thing: The battle over where to build a Vikings stadium is over, and ">Minneapolis has won —
Ramsey County businessman Mike O'Connor says he's got a plan to single-handedly revive the Arden Hills plan for the Vikings stadium.
And he's going to roll it out Monday.
Sigh. Same as it ever was...
February 17, 2012
Hansen's "no new taxes" Seattle arena vow: Is it for real?
Chris Hansen's press conference on his Seattle arena plan came off yesterday as promised, though perhaps predictably, it shed more heat than light on the hedge fund manager's proposal to bring the NBA and NHL to Seattle. (One Seattle Times columnist called it "more pep rally than news conference," and that's from a guy who likes the plan.) There were some funding details revealed, though, which come down to this:
- $290 million from Hansen and other "private investors," who would also supply the land (not far from Safeco Field in the SoDo district) and be responsible for buying an NBA team to move to Seattle, with the Sacramento Kings and league-owned New Orleans Hornets considered the leading candidates. Hansen's group would also seek a NHL team to relocate, but wouldn't own that.
- $200 million in bond sales by the city and county, which would be repaid by a mix of rent payments by the team, and "existing tax streams, including sales, property, admissions and business-and-occupation taxes generated by the arena." (Hansen didn't indicate how much public money would be paid back by each method.)
As arena plans go, it's a heck of a lot better than some I could mention: Unless there's some hidden costs that Hansen didn't mention (who'd be paying arena operating costs, for one thing?), it looks like well over 60% of the cost would end up being footed by the private team owners, which is better than a poke in the eye with a sharp stick. But is it truly "self-funding," as Mayor Mike McGinn insisted at yesterday's news event? And more to the point, will it meet the requirement of Initiative 91, passed in 2006, that Seattle turn a profit on any sports facility expense?
That is likely going to come down to how that "existing tax streams" clause gets interpreted. This is basically a TIF, which — as we've discussed a million times before — assumes that all tax revenue from a new arena is new money to the city and county, and then kicks it back to the developer to pay off construction costs. Only one problem: If some of this is taxes on money already being spent at entertainment events — say, at the existing arena that the city already owns across town — then the city ends up losing money on the deal. Also (okay, two problems), there's the little matter of city services to support a new arena, which, as Judith Grant Long likes to point out, normally are paid for with the tax revenue from a development project. And (three problems...) it doesn't look like either Hansen or McGinn detailed what would happen to KeyArena under this plan, which could saddle the city with additional costs for either demolition or operating a lame-duck arena, though it could also provide new opportunities if it frees up the KeyArena land for other uses.
That said, a private contribution of $290 million plus land is nothing to sneeze at, and — assuming the I-91 requirements can be finessed — it looks possible that the city and county could be voting on this plan by summer. The bigger trick for Hansen, in fact, could be landing a team at a price that makes this feasible: Since he'd be looking at something like $20 million a year in arena payments, plus whatever he'd have to be paying the city and county in rent, that doesn't leave a ton of revenues to create a return on investment on whatever he'd have to plunk down for, say, the Hornets. Plus, you know, actually fielding a team.
If Hansen can actually make the numbers pencil out, this could provide a model of how to build a sports facility without tapping the public purse — much, anyway. But there are still many chickens to hatch before they can be counted.
Vikings, Dayton set to go all in on Metrodome site for stadium
"Agreement on Vikings stadium near Metrodome imminent" is the headline in today's Minneapolis Star Tribune, but it sort of depends on what you mean by "agreement" and "imminent." After all, Minneapolis has had its stadium plan in place — all four pages of it — since last month, and Gov. Mark Dayton already tapped it as the only viable option, albeit without a ton of enthusiasm. So the real news here is that the governor and the Vikings are agreeing to go full steam ahead with the Minneapolis option, in the hopes of getting something passed this legislative session.
That could be tricky, though, given that a majority of the Minneapolis city council opposes building a new stadium without a public vote, and Minneapolis voters have made clear that they have no interest in any deal that includes public funds. "No one should think that, all of a sudden, it's a done deal, because it's not," stadium advocate Rep. Morrie Lanning told the Star Trib. "This is going to have to be supported by a majority vote of the Minneapolis City Council. If they don't, it doesn't go any further."
Still, it's a great way to get your project in the paper alongside momentum-building words like ... well, "agreement" and "imminent." And from the Vikings' perspective, it's got to be better than headlines like this one.
February 16, 2012
Seattle arena plans to be revealed today, but maybe only to mayor
Hedge-fund rich guy Chris Hansen has told the Seattle Times he's going to release details of his Seattle arena plan today, but you may need to have a flexible notion of what "release" means:
Hansen plans to privately reveal details of his offer to [Mayor Mike] McGinn, who is expected to hold a news conference without Hansen present to discuss the proposal, said one source with direct knowledge of the talks.
But final arrangements of the news conference were still being worked out Wednesday night, without firm word on whether it will happen, said a City Hall source briefed on the plans.
The news conference, if it happens, will take place at 2pm Pacific time. I'm scheduled to be en route to a prior engagement then, but I'll post any details once I'm back online. In the meantime, feel free to kibitz in the comments.
Kings arena funding would be 60% public; nada on who gets revenues
The Sacramento Bee has a rundown of the likely cost shares for the upcoming Kings arena proposal, which go a little something like this:
- $85 million from the Kings owners, Joe and Gavin Maloof.
- $50 million from arena operator AEG.
- $40 million "or so" from the sale of public lands.
- $200 million from the sale of future city parking revenues.
There are some immediate problems here, notably that that's not quite the $387 million the Kings say will be needed to build an arena, plus that a $200 million payday from the parking sale remains very speculative.
More important, though, is that the Bee makes one of the most common errors in sports facility reporting: looking only at up-front costs. The key here isn't just going to be who fronts the money, but who collects the arena revenues — right now we have AEG counting on those so they can turn a profit on running the place, the Maloofs counting on them so they can turn a profit on the team (okay, a bigger profit), and the city presumably counting on them to help fill the $9 million a year hole that the parking sale will blow in the city's budget for the next few decades. As there's only so much money to go around, this is going to be a vitally important piece of the negotiations in determining who's really footing the arena bill.
One hopes that the arena funding plan to be presented a week from Tuesday will include some lease details so that the city council can know what exactly they're voting on before they vote on it — but given past history in arena deals, I wouldn't count on it.
Yet another Vikings plan: The return of the Minneapolis casino
You know what the world really needs? Another Minnesota Vikings stadium proposal:
Officials with the White Earth Tribe will announce Thursday morning a plan to build a metro-area tribal casino with the state that would help pay for a new Minnesota Vikings stadium.
According to the tribe's "Minnesota Wins" website, backers say the casino would generate enough revenue to pay the public's share of a new stadium without new taxes.
Those paying careful attention will recognize this as a twist on the "Block E" casino proposal that was kicked around last fall before being scrapped as politically unworkable. Still, right now the state of Minnesota is full of elected officials who desperately want to be the ones to solve the Vikings' self-proclaimed stadium crisis, so you never know what funding scheme will end up rising to the front burner. And, hey, it's a great way to get your tribe's name in the paper.
How exactly the funding would work isn't clear exactly — the tribe's Minnesota Wins website (hey, didn't they steal that domain from the Twins' old stadium campaign?) only says the state would get a 50% of "net revenues", plus sales and property taxes, but not how much those would amount to or what would happen if Minnesotans didn't gamble enough — but presumably we'll get more info later today.
February 15, 2012
Could Minnesota use lease expiration to force Vikings to stay?
As expected, the Minnesota Vikings owners didn't announce they're seeking to move the team by yesterday's NFL-imposed deadline, and ESPN's Kevin Seifert thinks that's a missed opportunity:
If they wanted to enjoin a ruthless and cutthroat issue with a similarly cold strategy, the Vikings could have sought out a relocation agreement with one of the Los Angeles groups and at least used it as leverage to apply substantial pressure to state leaders who have said "no" far more often than "yes" when faced with this issue.
That approach would have hurt some feelings and caused some rage, but it's also a proven formula for bringing such debates to a productive conclusion. As we noted Tuesday, the Vikings will allow the deadline to pass without ever seriously considering relocation or even using the option as leverage. Now stripped of that tool for the next 365 days, the Vikings have exposed themselves to an equally ruthless and cutthroat move from state leaders.
Now, what's to stop state leaders from flipping the leverage of the Vikings' expired Metrodome lease? Now that we know the Vikings want to play in Minnesota this season, why not require them to sign a five-year lease extension at the Metrodome while politicians continue mulling and/or delaying the project? What choice would the Vikings have? They need to play somewhere, right?
That's a pretty calculating way to look at it, but Seifert has a point: With the Vikings stuck playing in Minnesota this season, the state has an excellent opportunity to drive a hard bargain in lease talks. It's not infinite leverage — presumably if the state actually held a (metaphorical) gun to the team's head and demanded an exorbitant rent, the NFL would let them move regardless of yesterday's deadline — but leverage it is. Three guesses whether the state actually uses it in stadium talks, though, or whether it continues its "How can we give the Vikings exactly what they want?" epic haggle fail.
SF mayor: Warriors arena should use "private investments"
San Francisco Mayor Ed Lee said yesterday that he still wants to build an arena for the Golden State Warriors, but that it should be funded with private money:
"It's their private investments that have to be laid out there," Lee said of the Warriors. "I'm hopeful sports teams will look at San Francisco, and not just for their sports. ... The venue has to be successful well beyond those games."
That's certainly promising, but also far from a commitment not to use any public money, especially given how mayors have been known to bend the definition of "private investments." (Pay off your construction bonds instead of paying taxes? Sure!) Lee added, "Details to follow," so stay tuned.
Santa Clara approves 49ers stadium contracts
The Snata Clara city council voted last night — yes, again — to approve the $1 billion stadium plan for the San Francisco 49ers. (Technically, the last vote approved the stadium financing agreement; this one approves the construction contracts.)
The new vote changes essentially nothing: The issue of whether construction can begin this summer is still in the hands of the courts, which will have to decide whether the whole thing has to wait for a new referendum, as voters approved last month, or whether the new plan is just an "administrative" change to the stadium plan that voters approved in 2010 and hence not subject to a new vote, as the city insists. If nothing has been resolved by the scheduled July groundbreaking, things are going to get very interesting...
Sacramento council opens talks on parking bids to fund Kings arena
The Sacramento city council voted unanimously last night to keep on doing what it's been doing as far as raising funds for a new Kings arena, agreeing to begin talks with 11 companies that responded to its RFP to buy the city's future parking rights for a present lump sum.
Not that that commits the city to actually sell the parking rights, nor — certain blog headlines notwithstanding — will the next council vote, on February 28, which will be to approve a "term sheet" spelling out how the $387 million arena will be financed. While the reporting on this is maddeningly unspecific, it looks as if actual bids from the parking companies won't be due until after that date, which means if they come in below what's counted on in the term sheet, you could still see new holes blown in the budget after that date.
And speaking of budget holes, the Sacramento Bee sneaks this into a late paragraph:
Downtown parking operations pump $9 million a year into the general fund. City staffers are exploring ways to replace that revenue but have not yet discussed their plan.
Supposedly a plan to fill that $9 million hole will be presented by February 28 as well. Actually, hopefully by February 27, or we're going to need some speedreaders on the city council to figure out what they're voting on before they vote on it. Not that that would be a first.
February 14, 2012
Cubs deny South Side shift to make way for Wrigley renovations
The Chicago Cubs could be moving to the White Sox' U.S. Cellular Field for 2013!
Should team brass decide that the time is ripe for -- and they secure funds for -- a renovation of Wrigley Field, they could move their games across town to U.S. Cellular Field -- home of the sometimes-rival Chicago White Sox -- sources said...
"I have never heard of a done deal of moving home games to the 'Cell," said Dennis Culloton, a spokesman for the Ricketts family.
Workers at U.S. Cellular tell a different story. They say they are being warned of a much busier 2013 season (as in, prepare for double the games). Bridgeport bar owners tell a similar story.
The Chicago Cubs won't be moving to the White Sox' U.S. Cellular Field for 2013!
A direct phone call to Cubs spokesman Dennis Culloton cleared the Wrigleyville chatter right up.
"It could not be more false," Culloton said.
When major renovations do take place, they will be carried out in the off season.
What, exactly, is going on here? Certainly, Culloton's denials aren't exactly ironclad — "I have never heard of a done deal" is about as non-denial a denial as you'll find — but then, too, given that Fenway Park was effectively renovated during several offseasons, it doesn't make a whole lot of sense for the Cubs to give up their main attendance draw for a season (that'd be Wrigley, unless Cubs fans are way more excited about watching Dale Sveum manage than I am) and play tenants to their main rivals just to get the rebuilding done a bit faster. And that's even before taking into account the fact that there's still no deal in place to pay for any reconstruction, which makes talk of any 2013 action premature at best.
This is going deep into conjecture, but my best guess would be that either this was a trial balloon floated by the Cubs to see if fans would freak out at the notion of going to the South Side for games for a season, or a leak of internal discussions to see if U.S. Cellular would be an option should renovations be too extensive to take place entirely in the offseason. In either case, though, it's an indication that Cubs owner Tom Ricketts is serious about a Wrigley redo (assuming he can line up the funds), and that it'll likely be a substantial project, landmark laws or no landmark laws. Which means it's likely the Cubs will at least be battling over something of importance this summer, even if it's not the NL Central.
February 13, 2012
Minnesotans tell Vikings to take new stadium and shove it
A new poll of Minnesota registered voters finds that nearly two-thirds think the Vikings should stay put in either the Metrodome as-is or a renovated building, with just 28% saying the team needs a new stadium.
The story on KSTP-TV, which commissioned the poll, naturally reports this as "Minnesotans remain split on the Metrodome." For good measure, the ABC affiliate ran a second story proclaiming, "Minnesotans appear ready to accept an expansion of gambling to help pay for a new Vikings stadium" — which is marginally true in that 50% said yes to "Should legalized gambling be expanded in Minnesota to raise revenue to help finance a new stadium for the Vikings?" (vs. 39% no), but not so true in that 68% said any stadium should be built entirely with private money, which would preclude the use of gambling taxes. Though given that the station's main story reports a total of 110% of respondents for the main question, we probably shouldn't expect too much from them on analyzing the rest of the numbers.
In any event, the Vikings stadium campaign looks to be running out of what little steam it still had:
- Ramsey County finally came up with its revised plan to fund a stadium to Arden Hills, and it involves using parking revenue, naming rights, and an admissions tax to fund the county's share. The Vikings ownership, predictably, hates this idea, since that's money it was planning on either using to pay its own share of the stadium costs, or to pad the profits that have heretofore gone so tragically unpadded, leading to the whole stadium-demand thing in the first place.
- Gov. Mark Dayton, meanwhile, likes the Ramsey County plan — or at least likes the fact that Ramsey County officials actually like it, unlike those layabouts on the Minneapolis city council, who insist on not wanting to spend money on the Vikings without a public vote. "They'll sit on the sidelines and carp about everything and trash the thing," said Dayton on Friday. "Mayor Rybak and Council President Johnson made a tremendous effort to pull it [together]. There's so many people here in this building and over in Minneapolis who just want to sit on the sidelines and take potshots at it. Well, OK, if they destroy the proposal and continue to do that, well, then they can explain to the people of Minnesota why they're having to root for the Los Angeles Vikings."
- Dayton's attempt at saber-rattling aside, the state legislature is showing no sign of urgency about throwing money at the Vikings. "The Vikings have tried to create the impression, through somewhat subtle threats, that they could move," Rep. Ryan Winkler told the Minneapolis Star Tribune. "But ... I think there's a growing realization that the Vikings have nowhere to go." Any lingering momentum for a stadium bill is expected to entirely deflate after Wednesday, when the Vikings are locked into Minnesota for another year unless they announce a move — pretty much a foregone conclusion, since they aren't anywhere near negotiating a place to actually move to.
So, populace on the warpath against public stadium funds, elected officials showing no eagerness to buck the public will — that's pretty much about where the Twins were eight years ago, and they had a stadium approved within two years after that, so anything can happen. Or at least, anything can happen when you can find four amenable legislators on a seven-member body.
Santa Clara: Damn the referendum, 49ers stadium to open in 2014
The city of Santa Clara has moved up the planned construction schedule for its $1 billion 49ers stadium: Groundbreaking has moved up from early 2013 to late spring 2012, and opening day is now slated for fall of 2014, a full year ahead of previous plans. "We're going to be playing football here in 2014," Santa Clara Mayor Jamie Matthews said Friday. "I have no doubt whatsoever."
There's still that little matter of the court battle over the referendum to be cleared up, of course. Surely Santa Clara wouldn't be trying to get shovels in the ground before an injuction can be put into place, right?
Seattle consultant presents "broad outlines" of arena plan
A consultant working with the city of Seattle on its new arena proposal met with members of the city council last week to provide some details of the talks — though not actually details of the financing plan, apparently:
Carl Hirsh, who was hired by Mayor Mike McGinn in July, ... offered broad outlines but few details as part of an effort to update council members on negotiations from which they have largely been excluded.
Revenue to build a Seattle arena and to cover the costs of acquiring NBA and NHL teams could come from admission taxes from events at the new facility, as well as the development of a lucrative television network, council members said.
Well, yes, they could. But that would mean revenues that the team then wouldn't be able to pocket (admissions taxes effectively cut into ticket revenues, since it means teams can't jack up prices as high as they would otherwise), which will make any arena less attractive to teams being courted. In other words, we're back to the same old dilemma: Yes, the Sacramento Kings could move to Seattle, but if they wanted an arena funded by their own ticket and TV money, they could build one where they are right now.
Councilmember Nick Licata, my old Congressional panelmate, was duly cautious about Hirsh's promises, noting afterwards, "There's no free lunch. I'm looking for the cost of the tab, but we won't see that for some time." Please temper your expectations, people, until we actually have some numbers to crunch.
February 09, 2012
My bedroom closet proposed as Vikings stadium site
It's official. The Minnesota Vikings stadium battle has crossed the line into farce:
State Sen. Roger Reinert is throwing a fourth-down Hail Mary pass with just seconds left on the clock today as he sends Gov. Mark Dayton a letter suggesting a new Minnesota Vikings football stadium be built in Duluth.
Reinert, DFL-Duluth, acknowledges his chances are about the same as the Vikings chances to win the Super Bowl anytime soon — between slim and none — but said the lack of consensus for any Twin Cities stadium site spurred his action.
There's no indication that Reinert is serious — he actually told the Duluth News Tribune, "If all this does is enhance Duluth as a prime [tourist] destination, then I’m fine with that," which seems about as likely as it getting a Vikings stadium — but still, this means that people are now approaching the Vikings stadium situation solely as a way to get their names in the paper. As if this weren't already enough evidence of that.
So, what the hell: I have a pretty big walk-in bedroom closet. I hereby offer to build a $1 billion NFL-ready stadium in it for the Vikings, funded via a public-private partnership. (Public and private partners yet to be determined.) It already comes with a roof, so that's taken care of, and thanks to expected advances in wormhole technology, it will be at least as accessible to Vikings fans from throughout Minnesota as Duluth is. This promises to be just the economic shot in the arm that Minnesota (and my closet) needed — especially if the state is willing to offer tax subsidies to become the site of the wormhole manufacturing facility.
Sacramento rejects arena funding referendum, and other Kings news
Much minor news in the ongoing Sacramento Kings arena drama:
- The Sacramento city council voted Tuesday on a bill to put to a public vote its plan to sell future parking revenues to pay for an arena ... and rejected it, 5-4. Still, the fact that it even came close to passage is being touted as an indication that the council could drive a hard bargain on the parking deal, or something.
- AEG is reportedly looking for a similar deal to what it got in Kansas City in exchange for kicking in money toward a Kings arena. Local news station KXTV says that this would mean AEG would put in about $50 million, leaving the Kings owners to contribute $80 million. The city, meanwhile, would still be on the hook for at least $270 million, which — if AEG gets the same kind of guaranteed profits and high rate of return that it did in K.C. — sounds like a great deal for the arena manager, and no real help in filling the public funding gap.
- Anaheim Ducks owner Henry Samueli broke ground on $20 million in improvements to the Honda Center, promised last year in an attempt to lure the Kings south. Actually, last year he promised $70 million, but what's $50 million among friends?
- Those imminent plans for an arena in Seattle may not actually be that imminent after all. I know, shocker, right?
As the March 1 NBA deadline for the Kings to announce their intent to relocate approaches, it's important to keep in mind that nothing really matters here other than what owners Joe and Gavin Maloof think has the best chance of making them the most money: If they think there's hope of getting a windfall in Sacramento, they'll likely wait and see what shakes out. Given that the alternatives right now are an Anaheim offer that the rest of the league hates and which includes giving Samueli much of their TV money, and a Seattle plan that's even less far along than the current Sacramento one, and I'd be stunned if the Maloofs don't stick around to see what they can get out of Sacramento ... or at least ask for another one of those extensions that the NBA hands out like candy.
Browns: We built selves restaurant, we deserve public money
Mark Naymik has a column in today's Cleveland Plain Dealer detailing the claims the Cleveland Browns owners used about how much money they've put into renovating their stadium in order to talk the city council into giving them $5.8 million in public cash. And the list is pretty impressive, though probably not in the way the Browns owners hoped:
The team said it spent $50 million on stadium repairs and improvements it wasn't required to spend.
That's a good chunk of money, for sure. The figure, however, is a bit misleading. It includes escalators that were installed when the stadium was built. This amenity was an upgrade the team's late owner believed was necessary to attract fans. The figure also includes a restaurant at the stadium, which generates profits for the Browns.
The Browns also counted sales and tickets taxes paid by fans ($35 million since 1999), team income taxes ($6.2 million) and its elecric bill ($24 million), leading city councilmember Mike Polensek to snort, "I'm glad you pay utilities and taxes like most other businesses." (It's also worth noting that these are agressively feeble numbers for a team paying only $250,000 a year in rent on a stadium it got for free, and casts even more doubt on some of the wilder claims of the tax benefits of having a team in your city.)
The real news here, as Naymik notes, is that the Browns are looking to get the city's sin tax extended beyond 2015, and "there's growing chatter that the Browns will join forces with the Indians and Cavaliers -- whose facilities are 20 years old and in need of upgrades -- to mount a campaign" to extend it. Which should answer anyone wondering what the shelf life is of modern stadiums: until the teams can gather the chutzpah to ask for new (or improved) ones.
February 07, 2012
Cleveland gives Browns another $5.8m for stadium
Somebody on Twitter already beat me to the good headline, so I'll have to settle for a straight lede: The Cleveland city council has just approved spending $5.8 million on repairs to the Browns' 12-year-old stadium, over and above the $850,000 a year it's required to spend on major improvements.
Why? The article in the Cleveland Plain Dealer doesn't exactly say, except that the stadium needed waterproofing after some rough winter. "When you own a building and a few years go by, it starts to develop needs," Mayor Frank Jackson's chief of staff, Ken Silliman, told the council. It's not clear, though, who's required in the team's lease to actually pay for this stuff.
The stadium maintenance issue is likely to come to a head in the near future, as the "sin tax" on alcohol and cigaretttes that is used to pay for upkeep (and was used to pay for construction costs on both the Browns stadium and the Indians' and Cavaliers' facilities) is set to expire in 2015, and the Indians, at least, are already jonesing for upgrades. One Cleveland councilmember has already predicted that voters will be asked to extend the sin tax beyond that year. Truly, stadiums are the gift that keeps on giving.
Just how godawful would Edmonton's Oilers arena subsidy be?
Former Edmonton mayor Cec Purves lashed out at the city's proposes arena deal for the Oilers yesterday, calling it a "sweetheart deal" that would provide a $1.5 billion gift to team owner Daryl Katz and "make Edmonton the laughingstock of the country."
That price tag is probably high — it looks like Purves added up the value of using the arena for 35 year, plus interest and the increased value of the team, without taking into account that future money ins't worth as much as money right now. (And no, not because of inflation. Because money earns interest. In normal times, anyway.) Still, even converting to present value would indicate a subsidy windfall in the hundreds of millions of dollars, which is roughly what I was figuring already.
In any event, the Oilers arena plan remains on hold while the city waits patiently for the province to fill in the last $100 million in missing funding, something Alberta's premier swears she's not going to do. Which is, really, the main reason to be interested in Purves' statement: While in the end it may not matter what a former mayor thinks, having "$1.5 billion" and "laughingstock" in the newspaper alongside your arena plan is never a good way of winning over elected officials.
February 06, 2012
Seattle rich guy wants to build arena, presumably not with own money
Talk about a new arena in Seattle has been fairly quiet since the Sonics left, at least in public. But behind the scenes, according to an investigation by the Seattle Times, the mayor's office has been talking to a local hedge fund manager about building a new arena to lure teams, possibly targeting the Sacramento Kings or Phoenix Coyotes:
In an initial email laying out his vision, [Christopher] Hansen told city officials an arena could be built with minimal impact on taxpayers...
"I really appreciate it and look forward to making this happen in Seattle," wrote Hansen, a multimillionaire who built a fortune in the private investment world. "I genuinely mean that and am confident that with a little effort and creativity we can find a solution that meets our needs and the City's /State's desire to get a team back to Seattle without a large public outlay."
Hansen offered to provide information on "recent municipal arena deals that have been put together and some of the direct and indirect contributions that the city can make that don't require incremental taxes or direct public funding."
There's the catch: How on earth to raise the cash (the Times article doesn't say, but $400 million is a decent starting point) to build a new arena without charging teams such a high rent that they have no interest in relocating there. Seattle voters approved a referendum in 2006 that requires that the city get a positive return on any investment in a sports facility. The Times speculates that possibilities could include kicking back ticket taxes to pay off arena costs (which could still violate the 2006 law, since the money would be cannibilized from existing local spending) or "increased tax collections tied to a boost in Sodo property values," which is pretty much the definition of "incremental taxes," unless Hansen means something else by that term.
Reading between the lines here, it looks as if Hansen is going to try to find a loophole in the "return on investment" clause in the 2006 law, by claiming that the tax revenues being kicked back to the arena wouldn't exist without it. That's generally a pretty lousy economic argument, but given that this would likely be decided in a court of law, not a court of economics, Hansen might have a chance at pulling it off. And at the very least, it let him get his name in the paper.
Meanwhile, talk of the Kings having another relocation option is likely to heat up talks by Sacramento to sell off their future parking revenues to pay for a new arena there. Not that that has a great shot of success either — while plenty of bidders are interested, it would blow a $9 million a year hole in the city budget that would presumably have to be filled before the plan could go forward — but in the arena game, much of the time it's about throwing as much stuff against the wall as possible, figuring that eventually something will stick.
Yet another Vikings stadium plan imminent?
It looks like the Minnesota state stadium negotiator Ted Mondale is going to introduce yet another Vikings stadium plan, this one at the near-the-Metrodome-site-but-not-on-it location that was first floated last week. Mondale says he could issue a new plan this week, and Minneapolis Mayor R.T. Rybak says to expect a "major announcement" today.
Not building on the Metrodome site would allow the Vikings to keep playing there until the new stadium was ready, which would certainly please the team. Before anyone gets too excited, though, this new site has the same funding problems as the other Minneapolis proposals, and stadium proponent But Rep. Morrie Lanning told Minnesota Public Radio that issues like needed road rerouting could make it infeasible anyway: "Initial readings are that the obstacles there are so great that there's no chance of that getting put together before very long." Still, if you can't have quality ideas, quantity is the next best thing, right?
Super Bowl spawns stadium stories
The weekend of the Super Bowl — I understand that some team won by a guy accidentally falling on his butt for a touchdown, which is truly the greatest sports moment ever — brought with it a plethora of stadium stories at least tenuously connected to the big game. My personal favorite is the one about how nice the weather would be at the Super Bowl in New Jersey if only it were now instead of two years from now, but other highlights include:
- A Bloomberg News editorial noting that data show that public stadium financing almost never generates worthwhile economic benefits (complete with lots of links to actual studies), and arguing that "teams should shoulder the heaviest financial burden in any deal" and the public should be fully informed of the costs and benefits before voting on stadium subsidies.
- This followed on a Bloomberg article looking at how the Super Bowl probably won't do much for Indianapolis, despite the city trying to use the occasion to declare itself the "Epicenter of Awesome."
- An International Business Times article running down a bunch of random facts about random sports stadiums (most of them not even football stadiums), and illustrated with a photo of the old Yankee Stadium that it calls the new Yankee Stadium.
- Many, many articles about how Indianpolis is now the epicenter of awesome.
On balance, it was a pretty good run of pieces — at least it's better than regurgitating unsubstantiated claims about how much big sporting events bring to the local economy — even if we likely only got it because of Super Bowl-related search-engine-grubbing. Not that I'd know anything about that.
February 03, 2012
49ers get $200m in NFL stadium funds they've been expecting since December
The NFL upped the ante on its aid to the San Francisco 49ers stadium in Santa Clara yesterday, increasing its offer of G-4 loans (which are really grants, since the recipients can "repay" them with other teams' money) from $150 million to $200 million. This was immediately reported as a huge boost to the Santa Clara project, with the San Francisco Chronicle blogging: "The move from Candlestick to Santa Clara became less of a mirage. Long Sundays on 101 became more of a reality."
Except that we already knew that G-4 loans were being increased to $200 million, and that the 49ers were likely first in line to get one. And the stumbling block for the Santa Clara plan at this point isn't so much the 49ers' share of the funds — they were only slated to pay for $150 million of the $1 billion stadium cost up front — but rather the $850 million in loans that the city stadium authority would be taking out for the rest of the construction tab, though I suppose the 49ers owners can use part of this NFL windfall to pay those back, as they've promised they'll do (though there's still much dispute about whether they're contractually bound to do so or not).
So, nothing to see here, move along. The only real news here is going to come not from NFL offices, but from the courts.
Goodell promises 34 NFL teams if L.A. gets one? Not so much
This was a weird news item to wake up to this morning:
Commissioner Roger Goodell says if the NFL puts a team in Los Angeles, it is probable the league would expand to 34 franchises.
Appearing Thursday night on "Costas Live" on NBC Sports Network, Goodell said the league "doesn't want to move any of our teams."
Why, exactly, would Goodell risk blowing the one thing the NFL is getting out of the two as-yet-unworkable L.A. stadium plans — leverage for team owners to threaten their home cities with a move to L.A. — by promising that any teams that move would be replaced with expansion franchises? True, it's not like Vikings fans will be entirely placated by "Don't worry, there'll be two expansion teams, and we'll have first dibs on one," but still it's an odd thing to volunteer on national TV.
Except that's not quite what Goodell said. To the videotape:
Key section:
Costas: Thirty-two seems like the right number for any number of reasons, the right number of teams. So if L.A. is going to get a team, it's going to be a team that will move. ... How likely is it that L.A. has a franchise sometime soon?
Goodell: It's hard, Bob. There's several issues. First you have to have the stadium. We're developing the stadium--
Costas: The city council there has approved the funds recently, right?
Goodell: There's two plans that are developing in Los Angeles, both of which we think have a great deal of potential. But really, we want to keep our teams where they are. That's the dilemma. Because not only do we have to get the stadium in L.A., then we have to find out how to get the team.
Costas: And 33 is unwieldy?
Goodell: You probably wouldn't go to 33. You'd probably go to 34. I would think you would have to do it by two.
In other words, the interpretation here could just as easily have been "Goodell says probably no expansion team for L.A., because you can't add just one." But that doesn't fit as well in the headlines.
February 02, 2012
St. Louis unveils plan for Rams to keep up with Joneses
Yesterday was the deadline in St. Louis' lease with the Rams for the city to come up with a plan for keeping the Edward Jones Dome "top tier," and the St. Louis Convention & Visitors Commission complied, issuing a $124 million proposal that would include: a giant field-spanning scoreboard like Jerry Jones' Dallas Cowboys have; 1,500 new club seats; and a new courtyard next to the dome that would be "almost like tailgating but without the cars," in the words of commission director Kathleen Ratcliffe.
The city would pay for $60 million of the upgrades, with the Rams footing the other $64 million. That's not likely what Rams owner Stan Kroenke was hoping for — in the famous words of Jerry Reinsdorf, "three-thirds/no-thirds is more of what we had in mind" — but if it boosts the Rams' revenue by even a few million dollars a year, it'd be a reasonable investment for the team. Of course, that only matters if Kroenke is thinking in terms of investments, and not "What can I extract from the city via this ridiculous lease that they signed?"
The Associated Press reports that Kroenke now has until March 1 to either accept or reject the offer or make a counterproposal; if no agreement is reached by June 15, the matter goes to arbitration (the AP doesn't say whether it's binding arbitration or not). St. Louis Mayor Francis Slay also promised in a blog post that "new local public dollars spent to make the facility 'top tier' will be subject to the prior vote of the people. If the CVC gets an agreement with the Rams, YOU will get the final say." Which is good, since it's the law and all.
February 01, 2012
Lexington task force proposes $300m rebuild of Rupp, convention center
If you're wondering what's been up with the plans to replace the University of Kentucky's Rupp Arena for these past four years, it's not transmogrified into a plan to renovate Rupp Arena, plus a bunch of other stuff:
The Arena, Arts and Entertainment District Task Force's final report envisions a $250 million to $300 million "transformation" of Lexington Center, including Rupp Arena, the Lexington Convention Center, the Civic Center Shoppes and immediate environs...
If financing is found, phased demolition and construction of the civic center and Rupp Arena could start as early as 2014.
"This important project will require a mix of local, state and private funding for construction," the report said.
The other change since 2007, apparently, is that Lexington is no longer focusing on using a tax increment financing to fund the construction; it can't help that its neighbor Louisville is having such trouble with its own TIF district. TIFs are still on the table, according to the Lexington Herald-Leader, but along with "naming rights of the arena, premium seating, advertising, sponsorships, concert and event promotions, concessions, stock offerings, state road funds, state tourism tax incentives, tax increment financing and new market tax credits."
Needless to say, that's a big mishmosh of arena revenues and public subsidies. Whether this deal makes fiscal sense is going to depend on which items the city and state choose from that menu, assuming they don't decide the whole thing is too rich for their blood.
