Warriors buy land in Mission Bay, now plan all-privately-funded arena

It’s been rumored for a while now that the Golden State Warriors owners Joe Lacob and Peter Guber were looking for a Plan B now that his proposed Piers 30-32 arena site was running into stiff opposition, but that still didn’t make yesterday’s news any less of a bombshell: The team owners have bought 12 acres of land in Mission Bay, south of the Giants‘ AT&T Park, and plans to build a new arena there by the 2018-19 season. And Lacob and Guber say the project will be entirely privately financed, including the price paid for the land.

This makes a lot of sense on many levels: The main opposition to the old waterfront site was from locals concerned about the arena and its accompanying condo towers blocking views of the bay, less of an issue in Mission Bay, which (for the moment, anyway) is mostly occupied by a hospital, office space, and old industrial sites. There’s a new Muni Metro underground streetcar line set to lead to Mission Bay by 2019. And by ditching the old site, the Warriors owners will avoid paying an estimated $200 million on shoring up the piers there.

Still, with the condo development now off the table — the 12-acre site will be barely enough for an arena — Lacob and Guber are now looking at building a roughly $1 billion arena entirely on their own dime, something remarkable enough that the San Francisco Chronicle felt it necessary to note it as “a rare instance of a modern sports venue that would use no taxpayer funds or public land.” The Warriors organization didn’t reveal how much it paid for the new site, but given it’s part of a 14-acre site that the land’s previous owners paid $250 million for four years ago, you have to figure the NBA team paid something close to that. So we’re talking $1.2 billion that needs to be repaid entirely from profits on running an arena — meaning the building will need to run something like $100 million a year in the black just for Lacob and Guber to break even.

That seems crazy, given that most arenas have trouble turning an operating profit at all. San Francisco, though, is a special market: Not only is it chock-full of wealthy people who can buy top-priced tickets (and whose eyeballs advertisers will pay a pretty penny for), but it’s the only major city in the nation that I can think of that lacks anything like a modern sports and concert arena: The Cow Palace is undersized and across the city line in Daly City, leaving Oakland’s Oracle Arena as the only real option for touring acts requiring a 20,000-seat indoor space. This means a Mission Bay arena stands a good chance of being full for the 200+ days a year needed to run a successful business — and also may avoid the fate of Brooklyn’s Barclays Center, which thanks to the presence of Madison Square Garden across town has had to offer cut-rate deals to artists to woo them away from Manhattan. And, of course, the Warriors stand to appreciate in value significantly from a move across the bay to a more fashionable address.

It still sounds like an awfully risky gamble to me, but fortunately it’s not my money at stake. And — at least if the Warriors owners live up to their promises, which isn’t always the case — it won’t be San Francisco residents’ money either, since a privately owned arena on privately owned land should even pay its fair share of property taxes. There are a lot of details still to be divulged — actually, pretty much all the details are still to be divulged — but so far, knock wood, this may actually be the rare case of a new sports facility that’s a win-win for both the team owners and the city. Maybe San Francisco’s penchant for voting down development projects that it doesn’t like isn’t such a bad thing after all.

Milwaukee pols have opinions on Bucks arena, even if they don’t all know what they are

Milwaukee politicians are starting to take sides in the Bucks arena debate, at least if standing with one foot firmly on each side counts as taking sides. See, for example Mary Burke, the bicycle corporation heir and former Wisconsin secretary of commerce who is currently seeking the Democratic nomination for governor, and who told the Milwaukee Journal Sentinel on Friday that she’s firmly in favor of knowing what her options are:

“First and foremost, I think we’d get people at the table to figure out what all the options are,” Burke said during an hourlong interview with editors and reporters of the Milwaukee Journal Sentinel…

“Certainly having $200 million [from the Bucks' current and former owners] is a really good start,” Burke said. “But are there other ways of bringing private investment into this, private financing that could over time be paid off? I think all of those should be investigated and supported and pushed. And that public funding of it should be one of the last options that’s looked at.”

That’s all eminently reasonable, if completely noncommittal: Treating public funding as a “last option” could mean that she’s going to hold a hard line on demanding private funding, or it could mean “Nobody else willing to pay for this? Okay, guess it’s on us, then.” It also treats the need for a new arena as a fait accompli, with the only question being how to pay for it — somehow it’s only the private side in these matters that is allowed to walk away from deals if they’re too rich for their blood.

If we want someone who’s really taking sides, fortunately, we have Milwaukee alderman Nic Kovac, who didn’t mince words in a Thursday interview with BizTimes:

“The NBA has been printing free money for 20 years. I’m not asking them not to make money. I’m just asking them to cover the capital investment that allows them to make money. I’m an old-fashioned guy; I still like capitalism,” said Kovac, who represents Milwaukee Third District. “I don’t believe in Vladimir Putin-style corporate socialism, which is what the NBA believes in. And you can quote me on that.”

Kovac added, “The talk of contribution to me should be off the table – any public contribution that does not involve a direct return on investment. I will loan them money, I will bond them money, but in my opinion, we shouldn’t be giving them a dime. It’s a private business.”

And then we have the Journal Sentinel editorial board, which continues its series of “Just build something already!” editorials on the Bucks situation. In the latest, the board argues that “the community shouldn’t lose sight of the need to find a sustainable funding source for all of its cultural amenities,” not just an arena, then goes on to argue that playgrounds and roads are “a different conversation” that could “mean the effort collapses under its own weight.” Call this the Editorial Corollary to the Hunt Doctrine: Additional projects that add support to an arena campaign are good, but those that could lose support for it are bad. American journalism, people.

Elephants fight over proposed Miami MLS stadium, grass not heard from

Awright! We have a full-fledged stadium controversy underway in Miami, which in daily news media terms is defined as one where there’s a corporate titan on each side:

John Alschuler, the New York-based real-estate adviser for David Beckham, the retired English player who wants to build a home for his new franchise at the seaport, squabbled on local television with John Fox, a former Royal Caribbean Cruises vice president who is leading the opposition against the waterfront site.

Royal Caribbean is currently the main landholder at the seaport, and Alschuler charged that the cruise ship company pays below-market rent for its port properties — though Beckham officials have also “pushed back against” estimates by a port consultant that fair-market rent on the property they want would be $3 million a year, according to the Miami Herald. The dispute between the two sides mostly comes down to whether both could happily coexist without getting in each other’s way, which led to the unusual sight of a would-be stadium developer promising that its building would be great because it would be empty 340 days a year.
As for actually paying for it, Beckham insists that, despite a price tag that is now up to $250 million thanks to the need to raise it above flood levels, he’ll pay the costs himself. Except for the $2 million a year in state sales tax kickbacks he wants, of course. And rent breaks, if that $3 million figure turns out to be accurate and Beckham wants to pay less. And a full exemption from paying property taxes. Most of the total cost would probably still land on Beckham, but there’s enough fine print here that it’d be nice to see a full financing plan before passing judgment on what kind of deal this would be for Miami taxpayers, let alone cruise ship operators.

Bengals miraculously agree to pay for a small cut of Bengals things

The Cincinnati Bengals lease is a bit legendary in some quarters, being that it contains one of those “state of the art” clauses that requires Hamilton County to provide any upgrades that other NFL teams have already gotten, specifically mentioning such imaginary enhancements as “stadium self-cleaning machines” and a “holographic replay system.” So it’s big news, kind of, that the Bengals owners and the county have cut a deal on a revision of the lease.

The prompt for the new lease had nothing to do with the team’s ridiculous guarantees — they’re not negotiating those away so fast — but rather that Hamilton County is looking to build a new mixed-use development that would include a General Electric building and apartment towers near Paul Brown Stadium, and this would exceed the height limits in the Bengals’ deal. So the county offered a swap: increased height limits for a list of items that the Bengals execs neglected to get the first time:

  • $7.5 million toward a new scoreboard that’s already required by the state-of-the-art clause.
  • $3 million in public funding for part of the $3.5 million cost of installing Wi-Fi at the stadium.
  • Permission to add an expanded weight room for an MLS franchise, if Cincinnati ever gets one (for football, not soccer — see comments below).
  • The right to hold one game a year in London if the Bengals so choose.

Given the Bengals’ old lease, none of this is actually so bad — really, getting the team to pay anything toward stadium improvements at this point is a plus for the public. County commissioner Todd Portune, who’s been one of the Bengals’ biggest critics, called it “a new era in our relationship,” so maybe it really is possible to get team owners to kick in money for things that will benefit them just by sitting across the table and shaming them. So long as, you know, it’s only a little part of the money.

Privately funded MGM-AEG arena in Vegas actually breaking ground in May

It looks like one of Las Vegas’s umpteen proposed sports venues is actually going to get built, as AEG and MGM have announced a May 1 groundbreaking for their $350 million 20,000-seat arena on the Strip. The Las Vegas Review-Journal reports that the building wil be built to “NBA and NHL specifications” but will at least at the beginning rely on “programming such as concerts, MMA fight shows, sports events, award shows and boxing matches.”

The AEG-MGM arena is also being built entirely with private money — so far as I can tell, the developers never even tried to get public subsidies — which just goes to show that 1) in certain circumstances, privately funded arenas can work, and 2) those certain circumstances are largely “be in Las Vegas.” Trying to pay off arena construction entirely with revenues from concerts and the like is usually impossible unless you can guarantee 200 or so nights a year of activity — but apparently AEG and MGM think that’s doable in the bizarro world that is the Vegas tourist economy. Either that, or MGM so desperately wants to beat all its competitors to the punch to get a new arena built, it’s willing to treat it as a loss leader for the rest of its casino/hotel/murder mystery business.

Either way, Vegas will now have a new arena to dangle in front of the NBA and NHL for a new team, though we’ve seen how well that’s worked for Kansas City. In the short to medium term, expect this to mostly be a snazzier place to watch Cher, Billy Joel, and Justin Timberlake. Man, tell me why people like to go to Vegas again?

Everything that’s wrong with sports stadium coverage, in one sentence

I’ve made no secret of how unimpressed I’ve been with the Milwaukee Journal Sentinel’s coverage of the Bucks arena debate, but this, from today’s column by Michael Hunt, really takes the cake:

So now it becomes a matter of trust that the extraordinary financial commitments by Kohl and the new owners toward the building won’t languish on the table in another unseemly political fight.

So, to recap: The owners of a professional sports team offering to pay for less than half of the cost of their new arena is “extraordinary.” Public officials not wanting to pay for the other half, meanwhile, is “unseemly.” Got that?

(For those who would like an alternate perspective, I have a longer piece on the Bucks situation up at Sports on Earth, hot off the presses.)

Atlanta officially granted MLS team for 2017, because $70m, that’s why

Atlanta was officially awarded MLS’s 22nd franchise* yesterday, with the as-yet-unnamed team set to begin play in 2017 at the new $1.2 billion stadium being built by the Atlanta Falcons (with the help of about $560 million in taxpayer subsidies), whose owner Arthur Blank will own the soccer club as well. And given that Atlanta is currently home only to a minor-league team named for a now-deceased zoo gorilla that has only recently been able to draw more than 3,000 fans per game and once sold the rights to host a home game in exchange for cash, this has led to one of the most damning-with-faint-praise headlines of all time:

Despite what everyone tells you, an MLS expansion team in Atlanta will work

And sure, it might. In addition to its moving iris roof, the new Falcons stadium is supposed to have movable seats that will allow for a realignment to more soccer-friendly dimensions, and Atlanta is as sizable a market as plenty of other MLS home cities. And there is something nice about two consecutive new MLS teams being summoned into existence without requiring new stadiums to accompany them — I’m as much of a fan of soccer-only stadiums for viewing purposes as the next person, but there’s something to be said for making use of already existing facilities, especially for a team that isn’t that sure a bet to exist for very long.

Still, it’s another indication of MLS’s ongoing strategic shift from “Build us a soccer-specific stadium and show us you have some fan support” to “Give us enough money and a team is yours.” (Blank is coughing up $70 million for his expansion franchise.) It’s a defensible strategy, but it’s also one that could yet blow up in the league’s face if it works out as well as the NHL’s Sun Belt strategy. MLS will still always have that $70 million, though.

* Before anyone says anything about the reports calling it the league’s 23rd franchise: David Beckham hasn’t officially gotten his Miami franchise yet, just the option to buy one if and when he gets a stadium deal. So back off.

B.C. city bails on minor-league hockey deal after 5 years, $77m in losses

It’s not often that you see a city decide to cut its losses and jettison a deal to bring a pro sports team to town, but that’s just what has happened in the small British Columbia city of Abbotsford, which has terminated its deal with the minor-league Abbotsford Heat hockey franchise after five years and $7.2 million in losses:

The [Calgary] Flames were persuaded to leave town for $5.5-million, as Abbotsford was staring at annual losses of about $2-million, estimated at a total of $11-million, before the deal expired. The hockey team likely will move to New York State. While Abbotsford has cut off potential losses, it is left with a gleaming arena – including 15 luxury boxes – with no primary tenant.

The deal for the Flames’ top minor-league club was supposed to last ten years, but was apparently a disaster for several completely foreseeable reasons: Abbotsford is Vancouver Canucks fan territory, it’s a huge travel distance from the rest of the AHL, etc. Thanks to this terrible planning, plus one of those horrible “Sure, we’ll cover all your team’s losses, why not?” deals that someone should really be staging interventions when elected officials even consider them, the city will now be on the hook for a total of $12.7 million in subsidies and buyout, plus the initial $64 million it paid to build the Abbotsford Centre, but at least maybe now it can book some more concerts that Canucks fans won’t mind going to see.

But I know what you’re thinking: Enough about Abbotsford, what does this say about Chilliwack? Never let it be said I don’t have you covered.


Bucks sold, pledge to stay in Milwaukee, also threaten to leave Milwaukee

Former U.S. Senator Herb Kohl announced yesterday that he was selling the Milwaukee Bucks to a pair of New York hedge fund billionaires for $550 million, that he and the new owners would each be pledging $100 million towards a new arena, and that a condition of the sale is that the team will remain in Milwaukee.

All of the above is true. All of the above is also not exactly true. Here’s why:

Marc Lasry and Wesley Edens, the very very rich guys who will be the new Bucks owners, are indeed buying 100% of the team from Kohl, for a price that’s well above Forbes’ $405 million estimate for the team’s value. And while Forbes has a history of undervaluing teams compared to their eventual sale prices, there’s a bit of sleight-of-hand here: Because Kohl is kicking in $100 million toward an arena for a team he’ll have nothing to do with, this can equally be looked at (aside from some tax implications) as Lasry and Edens buying the team for $450 million, and pledging $200 million toward an arena.

Now, about that arena. News reports all say that Kohl made it a “condition of the sale” that the team remain in Milwaukee, but also all indicate that a new arena is a condition of that condition — meaning what he’s actually demanded is that Lasry and Edens continue his policy of promising to stay in town so long as a new arena is built, largely with public money. In fact, Kohl made that explicit in an interview yesterday with Milwaukee Journal Sentinel reporter Don Walker:

 ”Ultimately, if we don’t get to a new arena, yes, we will lose our team,” Kohl said. “The money will go away.”

That $200 million combined “pledge,” then, can equally be looked at as a demand for the $200-300 million in money that would be required to pay for the rest of the arena — or else.

Milwaukee chamber of commerce president Timothy Sheehy made an unspecified promise yesterday that “there is more private-sector money coming,” but far from being a “game-changer” as Walker insisted in his lede, this is pretty much the same game as always: The Bucks have owners who say if they don’t get public subsidies for around half the cost of a new arena, they’ll threaten to leave town. The only thing that’s changed is the names of the owners, and their ages (Lasry and Edens are in their early 50s; Kohl is 79). “Milwaukee Arena Shakedown: The Next Generation” isn’t quite as boosterishly sexy a headline as this, but it’d be a more honest one.

Wolff makes pitch for 10-year A’s lease extension in Oakland

We’ve heard Oakland A’s owner Lew Wolff say before (via his intermediaries in the newspaper columnist world) that what he really wants is to stay put for another decade at the Oakland Coliseum — Tim Kawakami of the San Jose Mercury News reported as much last month, and Kawakami’s colleague Mark Purdy echoed that sentiment, saying all Wolff really wants is a long-term lease so that he can sink some money into a new scoreboard. The San Francisco Chronicle’s Matier and Ross joined the fray today, saying Wolff is ready to sign a ten-year lease extension at the Oakland Coliseum:

“We hope to have (a deal) as soon as possible,” A’s co-owner and managing partner Lew Wolff told us Tuesday. “It’s really up to Oakland now.”

The new lease could keep the A’s at the Coliseum until at least 2024. It calls for the team to make nominal rent payments in return for the A’s paying for $10 million to $12 million in stadium improvements.

On the one hand, this shouldn’t be all that shocking: Wolff’s attempt to move to San Jose is still spinning its wheels (that antitrust suit wending its way toward the Supreme Court notwithstanding), and there’s little chance of a new stadium in the East Bay happening in the next few years, and the A’s have got to play somewhere in the meantime. And if they’re going to be playing at the Coliseum anyway, Wolff may as well have a ten-year lease so he can plan ahead accordingly, and replace the bulbs on the Kittyvision.

Still, these reports raise a bunch of questions:

  • Is Wolff serious, or is this just a negotiating ploy? Oakland has been dragging its feet on extending the A’s lease — city officials say they want to resolve the Raiders stadium situation first, which could involve building a new football stadium on the Coliseum lot — and this could just be the A’s owner calling Oakland’s bluff: If you want me to stay, then put the lease years where your mouth is.
  • What happens to the A’s if the Raiders get their new stadium? Having been to the Coliseum, it seems to me there should be enough room to squeeze a new stadium in the parking lot without disturbing the baseball team. That said, Wolff told Matier and Ross that in the lease he’s working on, “There’s a clause that if the Raiders build a new facility, with some notice we will evacuate.” Which doesn’t seem like the security he says he’s looking for, but we’ll have to wait to see what the actual language says.
  • What would this mean for the A’s cut of revenue sharing? Right now the A’s are exempted from the ban on big-market teams getting a cut of MLB revenue sharing, thanks to a special clause that allows Wolff to keep receiving checks so long as he doesn’t have a new stadium. That clause expires with MLB’s collective bargaining agreement following the 2016 season, however, and there’s likely to be a pitched battle among the owners about whether to renew it.

None of which is to say any of this is a bad thing: If Wolff and Oakland are close (or at least closer) to resolving their lease squabbles, this could be a way for the team to finally settle in and worry about building a fan base (and making some improvements to the home it’s stuck with, a la the Tampa Bay Rays) instead of going through this “Are the A’s moving to San Jose/Sacramento/Portland/Boise?” business every year. And who knows? Maybe if the Raiders leave the Coliseum, it might even be possible to knock down Mount Davis, the tower of football luxury seating that is worse than useless for baseball, and rehab the Coliseum into the not-half-bad baseball facility it once was.

Or it could just mean kicking the can down the road a few years, while Wolff bides his time, or more likely sells the team to someone younger who’s up for fighting the next battle. Either way, it’s not a resolution I think anyone would have expected even a couple of years ago, but baseball moves in mysterious ways.