February 04, 2010
Portland Timbers get their stadium reno deal; Beavers future uncertain
It took a while, but yesterday the Portland city council approved a $31 million plan to renovate PGE Park to be soccer-only, clearing the way for the Portland Timbers to start play there as an MLS club in 2011. Most of the money will be provided by taxpayers, though partly via a convoluted "prepaid rent" scheme that makes it hard to understand exactly who's paying for what.
Meanwhile, the Portland Beavers minor-league baseball team — owned, like the Timbers, by Merritt Paulson, son of former Bush treasury secretary Henry — will be without a home after the 2010 season. Paulson had previously threatened that this would be a deal-breaker for any renovation plan, but who really takes sports team owner threats seriously, anyway?
January 26, 2010
Portland to delay stadium financing until after stadium is complete?
The Portland city council is set to vote tomorrow on an agreement with Timbers owner Merritt Paulson to convert PGE Park to soccer-only, and inveterate blogger Bojack notes something odd about the deal: The city would apparently hold off on issuing bonds to pay for the renovation until the construction is already complete, instead using a short-term line of credit to pay initial costs, then later deciding whether to pay them off with bonds or cash. Bojack says that as a result, "Portland taxpayers won't get to see (or pass on) the terms of the mortgage until after the stadium project is finished" — and, more important, wouldn't have the opportunity to file a petition challenge to the bonds, because the project would already be complete by then. Tomorrow should be an interesting city council meeting.
December 23, 2009
Timbers release stadium design, construction schedule
Merritt "My Dad Gave Away Your Dad's Tax Money" Paulson still doesn't have a new home for his Portland Beavers minor-league baseball team, but that isn't stopping him from moving ahead with plans to renovate PGE Park as soccer-only. Paulson's Timbers soccer franchise released new renderings this week of how the renovated stadium will look, after a $31 million makeover being paid for by, well, The Oregonian didn't mention it this time, but psst, mostly the taxpayers.
The most interesting bit here may be that they plan to begin construction in January, pause for the baseball season, then finish up next winter. Which certainly leads one to believe that at least some of the renovations could take place while still accommodating baseball. Also, apparently Paulson was definitely lying when he told the Beaverton city council that "if I don't get a baseball deal done, I'm not going to finalize the deal with Portland" — unless he really thinks he's going to finalize a deal with the other Vancouver before the construction crews are set to arrive next month.
October 30, 2009
Paulson puts kibosh on Beaverton Beavers
This just in: Portland Beavers owner Merritt "Son of TARPman" Paulson has pulled out of his proposed deal with Beaverton for a minor-league baseball stadium. His explanation: There isn't enough time to get a stadium built there by 2011.
As explanations go, this is pretty unexplanatory: That would have been a tight timetable to get a Beaverton stadium done in any case, and it's not like any other cities are further ahead with their stadium plans. More likely: All the Beaverton city council members hating on the plan, combined with behind-the-scenes talks with other cities, caused Paulson to figure he'd be better off putting his money on another horse, whatever that may be.
Portland City Commissioner Randy Leonard told the Portland Business Journal that the news doesn't threaten Portland's agreement to renovate PGE Park to be soccer-only for Paulson's Timbers. Which is exactly the opposite of what Paulson said two weeks ago, but then this is a guy whose lines in the sand change every other week.
October 15, 2009
Paulson threatens Timbers deal if Beavers don't get new home
The Portland Beavers and the city of Beaverton announced a tentative stadium agreement this week, and Beavers owner decided to mark the occasion the old-fashioned way — with a threat. "If I don't get a baseball deal done, I'm not going to finalize the deal with Portland," Paulson told the Beaverton city council Tuesday night. "So MLS will not come to Portland unless I do a deal for a new baseball park." Which is a change from what he said four months ago, but new times demand new threats.
As for the mystery of how a Beaverton ballpark, that seems to have been resolved. According to The Oregonian:
In Beaverton, Paulson would pay $9 million upfront and make annual rent and ticket-tax payments for 25 years, beginning at more than $870,000. The city would sell revenue bonds to cover $50 million, to be repaid through higher property and utility taxes.
Taxpayers would be on the hook for about 60 percent of total project costs.
That's a bit oblique, but what it seems to be saying is that: For a $59 million stadium, Paulson would kick in $9 million in cash and pay off about $15 million in bonds; the other $35 million would come out of taxpayers' pockets.
A citizens' group calling itself Let Our Voters Vote has launched a petition drive to force a public referendum on the stadium project. Mayor Denny Doyle has already countered by arguing that the monthly cost of a stadium would be less than half the price of a movie ticket; it's got to be only a matter of time before somebody translates that into pennies.
August 05, 2009
Keeping naming rights could pay Portland's share of Timbers stadium cost
Writing in The Nation, Dave Zirin and Jules Boykoff call attention to yet another problem with the problematic Portland Timbers soccer-only renovation plan for PGE Park:
PGE secured a decade's worth of naming rights at a bargain-basement price of $8.5 million, but the deal expires after 2010.
If the naming-rights agreements signed recently by other MLS teams are any indication, Portland could get a lot more bang for its corporate buck.
In Toronto, the Bank of Montreal paid $24 million for a ten-year naming-rights deal. The Los Angeles Galaxy scored $70 million over ten years from Home Depot for soccer-stadium naming rights. Real Salt Lake signed a ten-year deal with Rio Tinto for approximately $20 million, while Dick's Sporting Goods agreed to pay the Colorado Rapids $30 million over fifteen years for stadium naming rights.
If PGE were asked to fork over $19.7 million for the next decade of sponsorship--a figure in line with other MLS agreements--there would be no need to finagle the city for money.
Of course, that would mean Timbers owner Merritt Paulson giving up the naming-rights money — which the current stadium agreement would hand over to him, even though the city currently gets the money, and the stadium would continued to be owned by the city. See what I was saying about hidden costs?
July 27, 2009
Portland soccer deal: Team gets profits, public gets the risk
The Portland Timbers stadium plan took another step forward last week, as the Portland city council voted 4-1 to approve the preliminary finance plan for a $31 million rebuild of PGE Park as a soccer-only facility. (This would force the minor-league Portland Beavers baseball team — also owned by Timbers owner Merritt Paulson, son of Henry — to relocate elsewhere.)
The Oregonian notes, as I alluded to earlier, that much of the $31 million consists of hidden subsidies that could come back to bite Portland in the general fund. For example, the $11.1 million in "prepaid rent," notes the paper, is actually public money, and expensive money at that:
The prepaid rent, which the city refers to as capitalized rent, is akin to Paulson providing the city with a construction loan.
In exchange for $11.1 million today, Paulson will avoid rent and ticket tax payments totaling at least $38.4 million over 18 years. That translates to some $27 million in interest payments by the city over the life of the loan -- the equivalent of paying an interest rate of 8 percent.
And while another $11.2 million would come from future ticket taxes, it's actually mostly taxes on basketball, not soccer: "The Blazers are effectively locked into their Rose Garden lease until 2025. If they left at that point, the Spectator Fund would become insolvent, unable to repay the final 10 years of soccer debt." And, of course, even without that dire scenario, it would be $11.2 million that the Spectator Fund wouldn't be able to use for other public projects.
For further analysis of the Timbers plan, see Bojack's report, which calls it "the most preposterous deal you've ever seen" and concludes: "Bottom line on the remodel: The Paulsons and their friends get all the upside, and Blazer fans and the taxpayers take a major share of the downside risk, which is substantial."
July 16, 2009
Running down your own stadium in the cause of getting a new one has a long, inglorious history, but Portland Beavers and Timbers owner Merritt Paulson still deserves some sort of award for telling Willamette Week that PGE Park is a "crap stadium," just in time for his team to host the AAA All-Star Game there last night. That's the All-Star Game, WWeek notes, that Paulson announced he'd landed two years ago with the statement that "we are thrilled at the opportunity to showcase Portland and our wonderful ballpark." But that's when he was more interested in selling tickets than stadium financing packages.
July 11, 2009
Paulson, Portland push new Timbers plan
The $15 million hole in Merritt Paulson's $31 million soccer stadium plan has been filled, the Portland Timbers owner and city officials announced yesterday. Under the new plan, Paulson would pay $8 million in cash, and prepay $11.1 million in rent and ticket taxes; the city, meanwhile, would kick in $11.2 million in future tax revenue, plus a $700,000 development tax break.
So who would actually end up paying the $31 mil to convert PGE Park to soccer-only? It's hard to say — if the previous plan was confusing, the new one is if anything more so: The $11.1 million in prepayments by Paulson, in particular, looks more like a loan than a private expense. The key point here, though, seems to be that this plan avoids using urban renewal money, which was a no-go with some city commissioners; since Paulson has already ditched the more-controversial minor-league baseball stadium plan for the time being, he seems to have given himself a leg up on getting the soccer deal done. We'll know more in two weeks, when the council has to vote on the new financing package.
June 19, 2009
Paulson: Forget baseball, let's talk soccer
Those protestors in Lents have to be thinking, "That was easy": Portland Beavers owner Merritt Paulson withdrew his plan for a minor-league baseball stadium today, saying he wanted to instead focus on finalizing plans for a soccer stadium for his expansion Timbers team. As for the Beavers, he said he's committed to keeping them "in Portland or the Portland area."
It may or may not have been intentional, but Paulson has now pulled off a series of switches even slicker than his dad managed last fall. Let's recap:
- Two years after buying the Beavers and minor-league Timbers franchises, Paulson wangles an invitation to move up to Major League Soccer in 2011, provided he has a soccer-only stadium.
- Paulson presents Portland with a no-lose proposition: He'll build a new stadium for the Beavers, and renovate their current home park to be soccer-only. And all he'll need is $30 million or so in tax money.
- Everyone freaks out about where to put the baseball stadium. Paulson freaks out about the freaking out.
- Mayor Sam Adams says, "We don't need to worry about baseball to get soccer done."
- Paulson: "What is this 'baseball' of which you speak?"
While nobody knows what the soccer stadium deal will look like now — it was only presented previously as a package deal — Paulson is potentially sitting pretty, as the city has already identified a whole pile of different public revenue streams, any of which could cover the soccer costs if the baseball stadium is scrapped. Meanwhile, Paulson now gets to play "Who Wants To Build Me a Baseball Stadium?" with the Portland suburbs — both Hillsboro and Vancouver, Washington have been mentioned as possibilities — and at worst, he's traded in two minor-league teams for one big-league one and a AAA baseball franchise that he can move or sell or whatever, which is a good swap however you want to count it. "Hey, how about you build me a new soccer stadium and make my baseball team a free agent?" isn't a deal he likely could have gotten if he'd proposed it back in March, but what's important is how you get there, or something.
Portland: We'll do MLS stadium with or without baseball
Hours before more than 100 people rallied in protest of a Portland Beavers minor-league baseball stadium in their neighborhood of Lents, Mayor Sam Adams and city commissioner Randy Leonard threw the project under the bus, declaring that they'll back converting PGE Park for soccer for the expansion Timbers regardless of whether the Beavers get a new home. This likely means the Timbers deal will get done — commissioner Dan Saltzman, the swing vote on the city council, has opposed the soccer stadium because of concerns about the baseball plans — but also could mean the Beavers would have to move if the Lents stadium plan falls through: "I don't see another option," said Mayor Adams.
Of course, there's always the much-discussed option of having the Timbers and Beavers share digs at PGE, saving millions of dollars on building duplicate facilities. MLS Commissioner Don Garber has said he doesn't want to do that, but he's going to say that, obviously — he has no incentive to shack up with a baseball team if he doesn't want to. The only way to test whether he'd actually rescind the Timbers franchise rather than share space is to make the demand and see what happens. Not that Mayor Adams is likely to do that, but you don't get if you don't ask...
June 12, 2009
Portland study: New ballpark site blows
Another city-backed study of the proposed Portland Beavers minor-league baseball stadium is out, and it looks just as promising as the last one: A stadium in Lents Park, according to consultants HVS International, would have lower attendance and revenue and provide less visitor spending in the immediate neighborhood than the previously considered downtown site, thanks to being way out in the boonies and surrounded by a residential neighborhood. City Commissioner Dan Saltzman, who has opposed the downtown site and holds the swing vote on approving the baseball stadium — which is being sought by Beavers owner Merritt Paulson so their current stadium can be converted for his expansion Timbers soccer franchise — told The Oregonian that he planned to make the report "my weekend reading."
May 27, 2009
Portland study: Stadium would destroy jobs
Another day, another economic consulting report making glowing claims about the jobs created by new stadiums ... er, what's that you say, Portland Mercury?
Mayor [Sam] Adams' office asked consulting firm ECONorthwest on Monday, May 11, to figure out the number of jobs the Beavers stadium construction would create in Portland. The mayor gave ECONorthwest only one working day to turn around the study, but its results were not good news for the mayor's office or the stadium plan: While the ballpark construction would create 453 jobs during construction, the $49 million total investment would actually create a net loss of 182 jobs citywide.
"If those individuals who put their money into baseball via taxes are allowed to put that money into the private market, that same amount of money would actually yield more jobs," explains ECONorthwest number-cruncher Abe Farkas. The study also showed that 67 percent of the construction jobs would go to people who do not live in the City of Portland.
You will not be surprised to learn that this report never saw the light of day — the Mercury only finally obtained it from the city yesterday. For their part, Mayor Adams' office charged their consultants with making "seriously faulty underlying assumptions," including that residents would get to keep their urban-renewal tax dollars if they didn't go to the stadium. While this is a fair criticism, it's worth noting that urban renewal money would presumably be spent elsewhere if not on a stadium, an opportunity cost that the ECONorthwest study (downloadable here) doesn't attempt to quantify; and if other taxes ultimately have to be raised to support whatever other project doesn't get the stadium money, then the study's numbers pan out. (For his part, Farkas said he made reasonable assumptions, given the one-day turnaround required.)
While one city commissioner called for a new report, the mayor's office nixed that idea, saying it would take up to a month and cause them to miss Major League Soccer's deadline for a Timbers stadium, which is coming up in ... September. But still, it's got to be better to act first, and ask questions later, right?
April 26, 2009
Paulson: All bets are off if stadium site is changed
The Portland Timbers deal keeps moving backwards: The latest came on Friday, when team owner Merritt Paulson declared that if the city moves the associated minor-league baseball stadium for his Beavers franchise to Lents Park as is being considered, then the whole deal would need to be renegotiated from scratch:
"The only way Lents is on the table as an official option is if we can reach a financial deal with the city first," Paulson said. "And it's going to be a very different financial deal than we have at Memorial Coliseum. We're starting from scratch." ... "I can't see doing anything like that anywhere else other than the coliseum site. That's such an unusually good site that we really extended ourselves in terms of personal protections."
That's not quite "Rose Quarter or the highway," but it certainly looks like Paulson is trying to dissuade city officials from seriously considering Lents. If so, the fate of the deal could all depend on what city commissioner Dan Saltzman considers due diligence in finding alternatives to knocking down Memorial Coliseum to make way for a baseball stadium: If he's just trying to cover his butt to please preservationists, he can now use Paulson's statement to say there are no alternatives; if he's really out to avoid demolition, though, Paulson could be painting himself into a corner.
And, let's not forget, there's still the matter of the missing $15 million, which has mostly dropped from discussion during the siting debate. There's a lot to be resolved between now and Paulson's September deadline.
April 24, 2009
Timbers stadium gets vote delay, September deadline
Those concerns over saving Memorial Coliseum have led to another delay in the Portland Timbers stadium vote: Portland mayor Sam Adams and team owner Merritt Paulson agreed yesterday to indefinitely delay the city council vote until a site has been worked out for a new minor-league baseball stadium that won't require razing the coliseum. The city tried to see if it could squeeze in a stadium just north of the coliseum ("It won't fit," said the mayor); it's now revisiting the idea of building it in Lents Park in residential Southeast Portland, something that was floated earlier and rejected in favor of a downtown location.
The delay is apparently an attempt to placate city commissioner Dan Saltzman — if you're wondering why members of the Portland city council are called "commissioners," yeah, me too — who is the swing vote required to approve the $88.8 million deal. Unlike some other swing votes, though, Saltzman isn't asking for cash, and isn't even dead opposed to knocking down the coliseum if it comes to that: "If I'm going to make a decision to demolish the coliseum, I'd like to do that knowing there's been some process to look at the options," he told The Oregonian.
Meanwhile, Paulson levied the most direct threat yet if the stadium deal doesn't get done, saying, "If we come to September and we don't have a deal in place, then we're not going to have Major League Soccer in Portland." We'll see if he's any more serious about that than some other sports team owners.
April 21, 2009
Timbers deal features fuzzy finances, dubious demolition
The Portland Timbers soccer stadium mess is turning into, well, a bigger mess, with questions about both the financing plan and the site for the new minor-league baseball stadium that would be built as part of the deal.
Starting with the financing: The Oregonian yesterday ran a wordy analysis of the economics of the twin-stadium deal, noting that while Timbers owner Merritt Paulson has promised to guarantee $31 million in rent payments and ticket taxes that are supposed to help fund the $88.8 million project even if the team (or MLS) doesn't last another 30 years, much of those will go to pay existing debt on renovation of the team's current stadium. That means, writes the paper, that "the city will have to rely on revenue from Portland Trail Blazers ticket taxes and parking proceeds — or, if those fail, the general fund — to cover about $20 million in baseball and soccer bonds."
It's of particular concern, say reporters Helen Jung and Ted Sickinger, because the city's economic impact study of projected tax revenues from the project is "peppered with basic math errors" and "assumptions that change from page to page," though they didn't supply details. (Consultant Brian Harris explained — I swear, you cannot make this stuff up &mdash that this was because he was keyboarding figures into a spreadsheet during an airplane flight, and while he was sick.) Paulson's projections — which the economic impact study was supposed to verify — include a 50% jump in attendance for his minor-league Portland Beavers franchise in their new home, as well as the Timbers clearing an operating profit in their first year, "despite the fact that 10 out of 13 Major League Soccer teams recorded operating losses in 2007," notes The Oregonian.
On the city's end, meanwhile, that suddenly unguaranteed stadium borrowing turns out not to be your garden-variety municipal bonds:
For a majority of the new borrowings, the city plans to issue the municipal equivalent of a subprime interest-only loan. For years, it would make no payments on the debt while interest accumulates at an estimated 9 percent. Then it would retire the loan with a series of increasing balloon payments in later years through 2035.
The structure is so unusual that the city's debt manager isn't sure anyone would be willing to buy the bonds. That's where the Paulsons have stepped in again.
Paulson and his father, Henry Paulson, a former investment banking chieftain and U.S. treasury secretary, have pledged to help find a buyer.
With all this going on, the Portland city council has delayed by a week a vote originally scheduled for tomorrow to finalize Paulson's development agreement — but not because of concerns about the financing. Rather, the council wants to consider concerns of preservationists who want to save the Memorial Coliseum. The Coliseum, former home of the Trail Blazers, is currently home to the minor-league hockey Portland Winter Hawks and lacrosse Portland LumberJax, who may have trouble booking dates at the Blazers' new Rose Garden — and who have lease clauses guaranteeing them a year's notice before they're evicted, clauses that the city may have to buy out if it intends to demolish the 49-year-old arena.
And meanwhile, the $15 million funding hole remains. See why I'm always warning that stadium deals are never over until they're over?
April 01, 2009
Portland Timbers won't join MLS unless more money is found
That stadium funding gap is turning out to be a bigger deal for the would-be Portland Timbers expansion MLS franchise than anyone wanted to admit: Not only is there $26.8 million in funding unaccounted for, but the city would need to sell $36 million in risky taxable zero-coupon bonds, a prospect that city officials are "pessimistic" about, according to the Portland Business Journal (article not online). If the funding isn't in place by August 1, the team's stadium deal falls apart, as does the franchise's entry into MLS.
Portland Mayor Sam Adams says he's considering either raising more city urban renewal money to fill the gap, or levying new taxes on alcohol and food in and around the stadium; Timbers owner Merritt Paulson, meanwhile, is exploring everything from asking for state aid to making the bonds tax-free to asking for federal stimulus funding — maybe he can see if his dad has any leftover TARP money in his coat pockets.
March 21, 2009
Portland gets MLS team, shy $15m
The Portland Timbers will indeed become the 18th MLS franchise in 2011, the league announced yesterday, two days after announcing the Vancouver Whitecaps as the league's 17th team. "A city with such a storied soccer tradition deserves an MLS team, and we are proud to have Portland join the top level of professional soccer," declared MLS commissioner Don Garber, adding: "The renovations of PGE Park was a key factor in Portland becoming our 18th team."
Now all they need is a way to pay for those renovations, which — along with money to build a new baseball stadium for the minor-league Beavers once PGE is converted to soccer-only — are expected to cost $88.8 million. About $75 million in funding is in place, a bit under half of it public funds, but a $15 million gap remains. Possible sources, according to The Oregonian, include "revisiting the idea of an urban renewal area, finding savings in construction, creating new fees on development around the stadiums and taxing nearby bars and restaurants that might profit on game days." No one is saying who pays if the added $15 million isn't found, let alone what happens to the franchise if the PGE renovations aren't complete by 2011.
UPDATE: Garber now has said what happens to the franchise if the stadium deal doesn't get done: "Then we won't be able to have an MLS team in Portland." So apparently the expansion team really is conditional on stadium funding.
March 18, 2009
Major League Soccer announced its expansion plans today, but only halfway: The Vancouver Whitecaps, currently in soccer's top minor league, will become the league's 16th team in 2011 as expected. Announcement of a 17th franchise, though, is on hold, with Portland, St. Louis, and Ottawa all still in the running. Maybe somebody's still worried about that $15 million funding hole.
March 12, 2009
Portland okays MLS deal, cuts renewal funds
The Portland city council voted 3-2 yesterday to approve Portland Timbers owner Merritt Paulson's plan for an $88.8 million MLS soccer and minor-league baseball complex, but with one condition: Commissioner Dan Saltzman insisted on eliminating $15 million in urban-renewal money that was to be used for the sports project, leaving it with a major funding hole. The Portland Business Journal notes, "It's unclear how the city will fund the $15 million shortfall, should Major League Soccer award Portland one of two expansion it will award next week."
Or maybe not next week, as MLS commissioner Don Gerber said yesterday that a decision on expansion could be delayed until later in the month. As for what role, if any, the $15 million funding hole will play in that decision, that's unclear, too.
March 10, 2009
Portland soccer deal reached, headed to council
The soccer stadium standoff in Portland is over, with would-be MLS expansion team owner Merritt Paulson and city officials agreeing on an $88.8 million plan to renovate the city's existing minor-league baseball stadium for soccer, while building a new baseball-only park as well. The deal, which now goes to the Portland city council for approval, uses a hodge-podge of funding sources to get to $88.8 million:
- $24.3 million from Paulson himself, though he may seek to recoup some of that from public sources, such as $5 million in player income-tax kickbacks from the state.
- $31 million in rent payments, ticket taxes, and hotel and rental-car taxes in the city's arena district.
- $15 million in kickbacks of increased property taxes from a downtown tax-increment financing district.
- $18.5 million in public urban renewal funds.
Depending on how some of these are broken down, then, it looks like anywhere from 38%-50% public money, which is better than some deals, certainly, though not necessarily better than a carrot. To help form your own opinion, you can read the arguments by political consultant Jeremy Wright, who thinks it's a worthwhile investment in public infrastructure, and Oregon state representative Nick Kahl, who thinks it's a misuse of urban renewal money.
March 08, 2009
Portland soccer stadium talks break down
I've been meaning for a while to catch up with goings-on in Portland, Oregon, where Merritt Paulson, owner of the local minor-league baseball and soccer teams — and son of former U.S. Treasury Secretary Henry Paulson — to use $85 million in public money to build a new minor-league baseball stadium and renovate the old stadium for a Major League Soccer expansion team.
Now events seem to have caught up with me: Talks between Paulson and the city broke down on Friday, with Paulson reportedly storming out of the last meeting after being told he'd have to agree to pay any cost overruns. (Paulson denies it.) There's also the problem that the plan is already $20 million short, even after kicking in everything from ticket taxes to urban renewal money to kickbacks of state income taxes by soccer players. Which, come to think of it, is much the same problem that Portland's MLB stadium proposal had. Must be some sort of local tradition.