The mayor of Birmingham is out of his goddamn mind

The Birmingham City Council voted unanimously (with one abstention and one absence) yesterday on a “resolution of intent” to spend $90 million over 30 years toward a new football stadium. That’s along with $11.7 million a year from the state and county, all for a stadium that will be used mostly by the University of Alabama-Birmingham football team, plus a USL franchise.

That’s kind of a lot of money for a less-than-hugely-popular college team and minor-league soccer, but to hear Mayor Randall Woodfin tell it, this isn’t about supporting local sports. No, this is about an investment:

Addressing the council and members of the public, Mayor Randall Woodfin said the city needs to help fund the construction of the stadium to generate new revenue to pay for street paving, demolition of dilapidated houses and rebuilding sidewalks.

He said the city doesn’t currently have the money to pay for those priorities.

Here’s how Woodfin justifies this logic: The city will take $3 million a year that is currently going to pay debt service, and instead give it to the stadium. The stadium, in turn, will — according to a projection by the state-run Birmingham-Jefferson Convention Complex, which hasn’t revealed anything about how it came up with this number, to my knowledge — generate $9.9 million a year in new tax revenue for the city.

If that sounds like magic beans, it should, because as we calculated here last week, the stadium would need to consistently draw sold-out crowds of fans, each of whom would have to spend hundreds of dollars per game, and none of whom would have been spending their money in Birmingham otherwise, for those numbers to pencil out. The best you can say about this plan is it comes down to “hey, if the city spends some money on a stadium, the state will spend even more — maybe, if it decides to pass a new car rental tax surcharge — and maybe we’ll end up getting a new stadium on the cheap for city taxpayers.” But that’s not nearly the same as “building a stadium will be a cash cow for the city,” which as Roger Noll noted yesterday, is exactly the reasoning that cities should never be using for building new sports venues.

Fortunately, at least the members of the Birmingham city council seem to have their heads screwed on marginally better:

“None of us think this is a slam-dunk win,” Council President Valerie Abbott said. “The devil is in the details. The details haven’t been worked out,” she said, which is why only a resolution of intent was considered Tuesday.

So… maybe once the council realizes that there’ll be no money raining from heaven if they spend on a stadium, they’ll reverse course and vote against it? Or does this just mean “we’re not approving anything until the state passes that car-rental tax”? Ideally the council would have found a way to express its skepticism some other way than a unanimous “yes” vote, but when Mayor Woodfin is the alternative, I guess you have to take what you can get.

Become a FoS Supporter, because my website subsidy demand is stuck in city council committee

Now that I’ve kicked off the Field of Schemes 20th anniversary celebration with my Roger Noll interview, it’s time to remind FoS readers that this site — or, at least, my ability to devote the time to updating this site each morning — exists thanks to your support, or more specifically the support of those of you who chip in as FoS Supporters. I’m really proud to have kept this site going for two decades without resorting to paywalls or what have you, and I’m equally proud of you all for allowing me to do so via your generosity, in exchange for a few trinkets and that warm fuzzy feeling of helping call attention to the ongoing stadium subsidy madness. Seriously: Thanks, everyone who has ever donated, or retweeted, or commented, because I literally could not do this without you — and not just in the millennial sense.

As a reminder, here’s the stuff you get when you become an FoS Supporter:

  • For $100, full-year supporters get a stylish Field of Schemes mug, a Field of Schemes Supporter pin, a set of Field of Schemes stadium trading cards, an e-book copy of my 2016 book The Brooklyn Wars, and one year of ad space (running in rotation with other site supporters) in the top right corner of this page — you can either provide your own 90×250-pixel ad, or I can design one for you. (If you don’t have anything you personally want to advertise, feel free to promote a favorite charity.)
  • For $50, half-year supporters get everything except the mug, and the ad space only lasts for (wait for it) half a year.
  • For $25, minisupporters get the pin, cards, and ebook, but not the mug or ad space.

If you want the goodies to wing their way to your door, please remember to include your mailing address in the notes field; if you don’t want any goodies, just say “no goodies” and you’ll receive only a thank-you email.

As always, I am hugely appreciative of anything you can give. After all, this site is 20 years old now, so clearly it’s time for me to start thinking about building a new one with air-conditioning.

Thanks,

Neil


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FoS 20 interview: Roger Noll thinks the stadium subsidy tide just might be turning

With 2018 being the 20th anniversary of the publication of the first edition of Field of Schemes — and also, not coincidentally, the 20th anniversary of the launch of this website — I wanted to do something special to mark the occasion. And so I am very pleased to announce the first installment of the FoS 20 interview series, where I chat with stadium and arena experts I’ve gotten to know over the last two decades to discuss where the subsidy racket has come and where it might be going.

The choice for guest #1 was an easy one: Stanford University economist Roger Noll was one of our first big interviews for the articles that ended up blossoming into our book. Noll continues to be one of the nation’s most knowledgeable followers of sports business, and if he still has lots to say that’s pessimistic about that world — those wagering on future success for the Las Vegas Raiders and Major League Soccer might want to avert their eyes here — he actually thinks there may be some signs of a light at the end of the subsidy tunnel.

Click the audio player below to listen to the audio interview in your browser, or skip down to the transcript if you prefer to read a lightly edited version of our talk. Either way, enjoy, and I’ll be back next month with another installment.

ND: Hi, everybody, and welcome to the Field of Schemes 20th anniversary interview series. Our guest for this inaugural episode is Roger Noll, who is an economics professor at Stanford and one of the definitive experts on sports economics, including coauthoring the book “Sports, Jobs, and Taxes,” which was one of the first in-depth investigations of the sports industry, including stadium deals and their financial implications. Hi, Roger, thanks for taking the time.

RN: Hi! My pleasure.

ND: So I remember back when Joanna Cagan and I were first working on the book, and we were first starting to do the research, we contacted you with questions like “Are cities being blackmailed into having to put up more money than it’s worth for the economic benefits they get back?” And your response was something like: “Yeah, it’s even worse than that, because there really aren’t any economic benefits to speak of!”

RN: That’s right.

ND: We’re still in the same situation, right? That’s remarkably unchanged. Is there anything we’ve learned in the last two decades to tell us otherwise or if there’s any exceptions or anything?

RN: Oh, I see a new dawn arising. Admittedly, this is inconsistent with the Raiders deal in Las Vegas, but in general in the last few years the resistance against huge public subsidies for stadiums has increased, and it’s much more difficult now for a team to get a large public subsidy than it was in the early 2000s. I think it definitely got worse after you talked to me last time. That sort of peaked in the early 2000s, and then since the Great Recession it’s been hard for a team to get a large public subsidy.

What you observe now is that the subsidy is more likely to become indirect, and more like conventional ways of attracting companies to locate in your area, like giving them the right to develop a whole bunch of land with tax increment financing of infrastructure, and things like that. So you give them tax breaks, but you don’t do it directly. It’s like the Los Angeles Rams facility and the L.A. area.

So I actually think that it’s hit its peak. And of course Las Vegas, which is an interesting one to talk about because it now looks so out there — it’s so different than any deal that’s been done in the last few years. The Las Vegas Raiders deal is now the exception, whereas in 2000 to 2005, it would have been the rule.

ND: Let’s step back for a second and first talk about the about how things have changed in the last few years. What do you attribute that to? That people finally read our books?

RN: Well, I don’t know how to apportion blame between you and me! But I think that notwithstanding the power of the press, the other thing that happened of course is that a bunch of cities got in deep financial trouble for the deals they made in the late ’90s and early 2000s. You know, Cincinnati, and the Phoenix area. So I think that that the reality came home that as the price of stadiums went up and up and up and up, and they became a significant component of a budget of a city or a county, that the failure to generate the incremental revenue that was promised in the initial plan caused serious financial harm that could easily be attributed to the stadium deal. And that has added a lot of a lot of heft to the arguments of the opponents.

So I do think that sports just overreached. They kept getting more and more and more money, a large part of which went to investing in much more elaborate facilities — things that had a lot more bells and whistles that went well beyond what you would actually need to have an economically viable business investment. And this caused financial hardship that then meant that the next round of requests for new stadiums, people did not respond as favorably as they had in the past.

ND: There’s a couple of other outliers, right? You’ve got the Texas Rangers, you’ve got the two stadiums in Atlanta, maybe you could throw the MLS stadium in D.C. in there. But you’re saying that those are becoming more the exceptions to the rule than the other way around?

RN: Yeah, what I’m saying is that the hit rate has gone down. It used to be the case that 75 percent of the time, teams would get a good deal. And now it’s down to like 25 percent of the time. You’re right, there’s still some bad deals out there. But there’s also a lot more deals where all the local government is providing is the land and the infrastructure, and the team is basically paying for the facility. And the way that it makes it work out financially is they get ancillary development rights in the area surrounding the stadium.

And this is actually a good thing for cities because it forces teams to do more like the Washington Bullets [ed. note: Wizards, obviously; Noll is old-school] facility in downtown D.C., where you actually try to develop a sports facility to be more integrated in the local economy as opposed to be walled off from it. In the late ’90s and early 2000s, the design of a sports facility was you’d have a facility and then you’d surround that with a parking lot, and you’d surround that with a freeway. So the probability that someone could actually escape and spend a dollar outside the facility was zero.

Now, if you’re going to be building an ancillary development that’s integrated with the sports facility, that enhances the value of the facility and the value of the surrounding businesses. Even though a smaller fraction of the net business may be going on inside the facility, the fact that it’s integrated with the greater community is actually beneficial. So that’s why the Los Angeles experiment with their new facility for the Rams and Chargers is especially interesting, because no one has ever successfully integrated a football facility into a local community before. And this will be a first if it works.

ND: I assume it’s a challenge because the football stadium is in use such a small amount of time. All sports venues, you have the problem that it’s just people flooding in and flooding back out a limited number of times a year. But football’s the worst for that, right?

RN: Football is exactly the worst. That’s why it is the singularly worst investment that a local community can make is to build a pro football stadium. But we’ll see what happens with the Rams. I don’t think there is any real solution to it, but you can make it better by having the facility be built in such a way that it has more uses, it is more modular. I don’t know whether they’re going to succeed in doing this in Los Angeles, because I don’t know enough about the plans — of what the inside of the facility is actually going to look like. But it’d be interesting to see if they experimented so that instead of, except for a few tractor pulls, being used ten times a year, it will be in fact use maybe 50 times a year. If they can do that, that’s a big benefit for the community.

ND: We’ve talked plenty of times over the past 20 years about the expectation that if the direct subsidies dried up, you would just see a lot fewer new stadiums being built. And that may be the case, but I certainly am surprised that you’ve got Los Angeles, you’ve got the new Warriors arena in San Francisco, you’ve got the Islanders talking about one in New York. MetLife. The new arena renovation that’s going on Seattle. It’s not unheard of for team owners or arena developers or people like AEG to say we actually will invest private money in sports venue. Is this a surprise to you? Or do you think this has to do somewhat with finding other ancillary ways of bringing in money that aren’t directly through trying to pay off the construction costs just by selling tickets.

RN: It’s a surprise that it’s gone as far as it has. It’s not a surprise that qualitatively this is the direction it’s taken. My expectation was that what they would do is simply make the stadiums less expensive — have fewer bells and whistles. But also, if you can recall, I remember talking to you about how Fenway Park was the past and it might be the future. The Boston Red Sox were forced into this by the lack of footprint. They had they didn’t have a lot of land. So they were forced to have the neighborhood be a beneficiary of Red Sox games as opposed to being a competitor.

So it doesn’t surprise me that there has been this attempt to have greater integration of the facility and the local community. And the dual use aspect of it that the Rams and chargers are playing in the same facility — again, 20 years ago, NFL teams thought it was anathema to share stadiums.We were in an area where sharing od stadiums was almost done — all of the shared stadiums had been essentially dispensed with, in all of sports, and we were moving to every team controlling its own facility. Again in football, especially, it makes no sense not to share stadiums multiteam team cities. And now we have two!

I think those things were foreseeable. But I think that the integration of the facility into multiuse, and with the rest of the community, the degree to which it is going to happen we underestimated it. And it’s probably going to happen more than we thought was possible 20 years ago.

ND: Which is much better from an urban planning standpoint, clearly. The one thing I wonder is whether it opens the door to — you know, we already have seen the shift away from direct subsidies, just going to the state legislature and asking for 300 million dollars in cash, to, well, give it to us in terms of tax breaks, give it to us in terms of free land, give it terms of other operating subsidies things down the road, because that’s easier to get to get passed. And we’re going to make this back by building other development around the stadium.

But then I wonder whether you’re at risk of seeing more things like the proposal in Anaheim that didn’t happen with the Angels — where it was, “Oh, we’ll pay for a whole new stadium! We just want development rights to the entire parking lot.” And the mayor there demanded a assessment and discovered that the value of the parking lot was worth more than the renovations they were doing. So I wonder whether there’s an opportunity for a different form of extracting public wealth or public opportunity cost or public value — just not through cash.

RN: Well, there’s always that danger. Tthat is to say that what form the subsidy takes, it’s still a subsidy. I was deriving joy from the fact that the actual magnitude of the subsidy has roughly been cut in half by now. I view that as a gain.

But you’re right, it’s still there. And it’s still an uneconomic investment. It still doesn’t have a good return on investment. So yeah, it would be better to have it be zero, but it’s certainly better to have it be two or three hundred million than to be 700 million. That’s sort of my take on it.

ND: I don’t mean to be the voice of doom. But as someone who has predicted that the tide was turning before and been completely wrong…

RN: Oh, I agree with you! And your skepticism is deserved. I agree that if these things turned out to be hugely successful, then I can imagine the magnitude of the subsidy coming back, so that any community benefits that arise from these multipurpose developments get completely captured by the owner of the sports team. That would be too bad. I can see that possibility happening. At least for now, that’s not where we are. And then if it turns out to be that this is the problem in the future, we can write another book!

ND: Let’s talk for a second about the Raiders, because I think you called that the worst deal you’ve ever seen. I think I’ve called it the worst deal I’ve ever seen.

RN: I think it was the worst deal we’ve ever seen!

ND: Talk a little bit about why it’s the worst, and then how on earth this happened. Because I think a lot of us thought, “Man, Mark Davis has painted himself into a corner. He has failed to get a chunk of the L.A. market. He is screwed.” And he walked away with 750 million dollars. How did this happen?

RN: I think he’s still screwed. In the sense that, yes, he got 750 million dollars of a two-billion-dollar facility. But if you read the financial plan, it is completely insane. They are expecting that something on the order of 40 percent of the people in attendance at those games are going to be people who drive up from L.A. They have 25,000 people per game getting to the game by walking from their hotels on the strip to the facility. And notwithstanding that in September in Las Vegas it’s 100 degrees, and the closest hotel on the strip is three quarters of a mile away.

So they’re expecting NFL fans — who are not exactly working class — to walk in 100-degree heat for somewhere between three quarters of a mile to three miles to get to a football game, and the reason that this is in the plan is they have no parking.

And they’re anticipating that the number of Las Vegas area people who will attend a game is 15,000 fewer than the number of season tickets they sold this year in Oakland.

ND: So, are we looking at a scenario where this could be a disaster for both the state of Nevada and the team? I would say that this was the first time but I guess we’ve had, I mean, arguably the Marlins stadium…

RN: This is the first.

ND: Well, the Marlins stadium was not a success for both sides, and the Glendale arena — there’s a few where everybody winds up unhappy. But this seems like it could potentially be not just everyone ending up unhappy, but it being a complete disaster for everyone.

RN: Exactly. When I said first, I meant the NFL. But you’re right, it looks like the Phoenix Coyotes. That’s exactly what it looks like. They’ve gotten themselves into a fix where their own forecasts of the local market demand for their product is substantially less than the local market demand for the product where they currently are — and they’re moving anyway.

ND: Is this just because Mark Davis check for 750 million dollars on it, and thought, “I can’t pass this up”?

RN: I don’t know anything. I’m trying to put a rational actor spin on it. My expectation is that the only way this makes logical sense is Mark Davis thinks he’s going to sell the team within the next couple of years.That maybe Sheldon Adelson or Steve Wynn or somebody like that will buy it and make it part of the Strip, basically.

I can’t see that this makes financial sense. Because when Adelson pulled his $650 million out of the deal, and that was replaced by a bank loan of 650 million, that sort of sealed the doom as far as I’m concerned for the Raiders as a business entity. Because they will collect a significant amount of money for naming rights and PSLs and all that. But he’s going to be hundreds of millions of dollars in debt to build this himself, with projected revenue substantially less than he has now.

So I think the only conceivable way out for him is that he will sell it to one of the hotel moguls in Las Vegas, and that that mogul would buy it because they think they can somehow integrate the marketing of their hotel chain. As you know the strip in Las Vegas, almost everything on their is owned by one of three companies. So if one of those companies buys the Raiders, they may think they’re getting a marketing advantage over their competitors for their casinos. So maybe that’s what he has in mind. But I can’t see the football team in and of itself being a viable enterprise in a stadium, even with its $750 million subsidy.

ND: This does seem to be one of the directions that things are heading, where you are seeing more stadiums being built as kind of loss leaders in these battles among big hotel owners or casino owners or arena operators, AEG and people like that. I can only understand this plan to spend a billion dollars on a new arena in Belmont Park in Queens as a turf war between Madison Square Garden and the owners of Barclay Center and things like that. Because as much as New York is a huge market, there’s a lot of arenas here right now. I can’t imagine it makes sense any other way.

RN: I think you’re absolutely right. And that is bearing in mind that an arena makes more sense than a stadium. Even so, New York now is well beyond full capacity for arenas, and building still another one makes no sense at all.

ND: Let’s talk for a second about shelf life. One thing that we have seen, even if the subsidy numbers are going down, is that 20 years ago we used to say when stadium is 30, 40 years old, the owner is going to want to start demanding a new one. Now it’s 20 years and you start looking ahead ot 20 years, so 10, 15 years down the road, it’s not unusual for an owner to say, “Well, you know, we’ve got to start talking about what comes next.” How long can this continue, this trend? I guess there’s two questions: One is what’s driving that? Is it just that they think they can get away with it? And the other is: Is there a limit? Can literally you start asking for a new stadium before the old one before the previous one is finished being built?

RN: This is one of the most interesting things going on in sports. And I think it has a two-part answer. The first part of it, of course, is you keep asking for more and more frequently because as sports become more and more popular in society, more closely integrated into the social fabric of a city, the greater the leverage the owner has to get more. So that’s the first part. The second part is the huge technological change has taken in the actual design and operation of sports facilities. As you know, the footprint of a contemporary stadium or arena is several times as big as the footprint of an arena or a stadium would have been built at the same seating capacity 25 years ago. And that’s because so much more stuff is being put inside the stadium there. It’s basically the shopping mall. So what’s gone on is the opportunity for ancillary revenues other than just selling tickets, and how that requires more space, and how that then leads to the demand for at least a serious renovation, if not a complete replacement of an older facility.

Now, both of these arguments hinge on the growth of the sports continuing. And I think for Major League Baseball and the NBA I don’t have any problem with that. I don’t see the end coming soon. For football, it’s not so clear. I mean, the NFL may well have peaked two years ago. The all-time historical peak of interest and willingness to pay for the NFL may well have peaked in 2015 or 2016.

And if that’s the case, then it’s going to come to an end. Because that takes away both the demand side for generating still more revenues, and it takes away the leverage of the owner to get more out of a local government. Meanwhile, back in the NBA, they are continuing to get bigger and better facilities with more and more opportunities for revenue generation inside. And they have actually a better prospect for integrating the facility into the local neighborhood for spillover benefits that they can capture.

So the NBA is different and it may well continue on the path it’s been on for the last few years. And likewise Major League Baseball. For the NFL and then to a lesser extent hockey I don’t see it continuing. And so I think that we may see a divergence here that the NBA and MLB sort of continue on the path, and the NHL and the NFL find it getting increasingly difficult to get new stadium deals, and the expected useful life will start to creep up again to the 30-year or 40-year range it was before.

ND: Do you have guess at what’s going to happen with MLS? Because it seems like they’re kind of in this weird cusp where they’re both building interest from a fairly low level — they’re going from being the fifth most popular sport to 4A — but legitimately growing in popularity. But at the same time, they are starting from a far distant beginning point, and so much of their business model seems to be based on, “Well, we’re just going to keep selling more expansion franchises and hope that that keeps” — right?

RN: I’ve had to spend a lot of my time in the last couple of months explaining precisely why the MLS is not a Ponzi scheme, but you might think so.

No, you’re absolutely right that the profitability of the original set of franchises in MLS is completely dependent upon expansion. It is true they have secured some television. They have increased their popularity. But it’s nowhere near enough to justify the prices of the franchises and the costs of the stadiums. And obviously expansion can’t go on forever. Plus, this additional problem is they are a sport that depends upon a vibrant minor league system.Every nation on earth that has good soccer, or football, has multiple divisions. MLS has taken this policy attitude that it’s going to try to mimic baseball where the MLS teams control the minor leagues. And that just raises their costs again. It doesn’t create a viable community-based independent demand like we see for second and third division clubs in Europe. And without promotion and relegation, you don’t have this positive prospect of teams going up and down so occasionally they get to be major league teams.

So I don’t see the business model of MLS justifying the amount of expansion that’s currently going on and the expenditures on new facilities. So I think if we move out 10 years, what do you think is going to happen, I think MLS has a good chance of having happen to it what happened to the North American Soccer League in the 1980s when they did the same thing: They got overexuberant and overexpanded.

ND: Now you’re the one who’s even more pessimistic than me. I’m not saying you’re wrong! But that’s the nightmare scenario that everybody is afraid of.

So I’m sure you get this question all the time, because I certainly do, which is people saying so what’s a good deal? What is a reasonable involvement that governments should have? Whether it’s what’s an example of a specific stadium that’s good, or how do you determine what a price point is. Because don’t think you or I ever say—

RN: Never should do it.

ND: Never should do anything — nobody should ever build stadiums, we should just shut down all sports and make them go play in some other country. And there obviously is some benefit to having a team, to having a new stadiums, to all these things, even if it’s nowhere near what the owners and their boosters claim. So what answer do you give to that, in terms of what makes sense for governments to do — or what’s a way for governments to figure out what they should do.

RN: I actually think there is a positive case to be made for government involvement in the provision of localized sports facilities in the same way that they provide libraries and parks and symphony orchestras and ballets — that this is part of the culture of a city. And if government is honest up front and says, “We’re not doing this because we’re all going to get rich. We’re doing it because we want this to be a part of our community, want it to be part of the cultural environment of the community in which we live,” that’s fine. Then where does that lead you? It leads you in actually the direction things have been going in the last few years, with a few exceptions, which is the integration of the facilities into the local community, giving responsibility for the design of the investment and the cost of the investment in the facility itself to the sports owner. If you’re going to subsidize it, you can give them the land and give them the infrastructure, but you don’t want to be paying directly for the bells and whistles. You want the decision about bells and whistles to be done by the team itself so that they only spend money on things for which there is some purpose other than being a monument to the owner. If, like in the case of Jerry Jones in Texas, for example, he’s willing to pay for monuments to himself — and that’s okay, I don’t have any objection to that — but the citizens of the community don’t have to build monuments. They don’t have to build his pyramids — he can build them himself.

And so I think that approach where you use things like giving away the land and the infrastructure and giving them some property tax breaks, but not paying for the stadium itself and not committing yourself to underwrite the operating revenues of that facility, subsidize the team and its operations, that’s the way to go. And if you present it that way — yes, we’re giving them something, but you decide as a citizen whether to vote for it on the basis of whether you’re willing to pay to have a local team be part of our community — that’s the right way to run the politics. My objection I think, and pretty much yours too, has always been don’t try to sell us snake oil. Don’t try to tell us we’re all going to get rich when we’re not.

ND: I guess the question then is how do you determine what the value is right of the team and of a stadium and things like that to fans and to taxpayers. Because clearly there is a value. But if you’re going up there and you’re saying. “Oh, this is not could be an economic benefit, we’re just doing this as a community asset,” unless you’re having some sort of referendum about it, you can still just go through and ask whatever you want, and just say, “Well, we’re being upfront about it now: We’re just we’re just doing this because we think it’s cool.”

RN: Most cities do not have a referendum every time they build a park. As long as the politics of it is discussed openly and the facts are presented in an objective fashion then I’m not so much worried. I mean, you can get corrupt situations where essentially a team might bribe a city council to give it a subsidy. But I don’t think that’s been the fundamental problem historically. I think the fundamental problem historically has been that the politics of large stadium subsidies dictated making the economic argument that somehow this was going to make all the property in the city more valuable.

Now we know from experiences in the ’90s and 2000s that it’s not true. We have lots of data now to say it’s not true. So I think it’s fairly easy to beat off that argument now, compared to what it was 20 to 30 years ago. And if people stop making that argument and local governments continue to decide they want to help teams and keep them, and it’s part of the normal political discourse of the community, I wouldn’t be terribly upset if indeed what is the common way to deal with it now becomes the norm. I would be upset obviously if the profitability argument came back and cities started just giving straight cash subsidies for stadium construction like the Las Vegas deal. I think that that would be a bad deal.

ND: But you’re you’re actually somewhat hopeful that things are heading in a direction that we may not be having the same conversation in another 20 years.

RN: I think that’s right. I mean I would say cautious optimism is the exact right way to put it.

ND: I guess I can’t hold you to that if you have a qualifier there. But I hope you’re right.

RN: I do too!

 

Columbus Crew owner pushes back Austin stadium site decision three more months

The city of Austin and Columbus Crew owner Anthony Precourt have agreed to a three-month delay from a planned Feb. 15 council vote on selecting a site for a new soccer stadium, which, guys, this really isn’t going to be ready for a relocation for 2019, and maybe not even for 2020. So either the Crew are looking at multiple lame-duck seasons in Columbus, or playing at the University of Texas’s soccer field, or … wait, why can’t they play at UT’s field anyway?

Or the Crew could just stay put in Columbus, where it has a sweetheart lease deal on a reasonably new stadium and a fan base that isn’t speculative, at least. I still don’t understand Precourt’s obsession with Austin — maybe he didn’t hear that Dean Schlabowske moved back to Milwaukee?

Jeff Loria adds to supervillain status by stiffing Miami on share of Marlins sale

Remember how, when Miami agreed to give a squillion dollars to Marlins owner Jeffrey Loria for a new stadium and in exchange was promised a share of the profits if Loria ever sold the team? Yeah, that’s not gonna happen:

The 2008 county agreement that had Miami-Dade fund the bulk of the $515 million government-owned stadium in Little Havana gave Miami-Dade and Miami the right to 5 percent of any profits Loria and partners might reap if they sold the team within 10 years. But Loria could deduct team debt, certain expenses and taxes tied to a sale, and county officials and team executives privately predicted Loria wouldn’t agree to give up any of his revenue from the October sale to Derek Jeter and partners…
In a brief report sent by Loria’s lawyers, his organization said the terms of the deal resulted in a profit-sharing calculation of zero. The reason? About $280 million in debt that lowered the profits from the $1.2 billion sale, plus an agreed-to underlying value of the franchise of about $625 million, based on it getting more valuable each year. Add in nearly $300 million in taxes tied to the sale by Loria and partners, and Loria’s accountants claim the sale amounted to a loss of $141 million. Loria also deducted the $30 million fee paid to the financial advisors hired to negotiate the deal.

So on the one hand, Loria does have a case here that his windfall profits from selling the team weren’t mostly because of the new stadium, as we’ve covered before. On the other, “Sure I sold my team for a 650% profit, but inflation, and also taxes, so sorry you can’t have any even though I promised” is a spectacular display of chutzpah. Loria may have just cinched his membership in the Evil League of Evil.

Friday roundup: Beckham stadium opposition, Arizona bill to block “disparaging” team names, and oh, so many soccer stadiums

So. Much. News:

  • F.C. Cincinnati CEO Jeff Berding says the team still hasn’t decided among stadium sites in the Oakley and West End neighborhoods and one in Newport, Kentucky, while it awaits traffic studies and whatnot, though the team owners did purchase an option to buy land in the West End to build housing for some reason? Still nobody’s talking about the $25 million funding gap that Berding insists the public will have to fill, but I’m sure they’ll get back to that as soon as they decide which neighborhood hates the idea of being their new home the least.
  • Here’s really sped-up footage of the final beam being put in place for D.C. United‘s new stadium.
  • Indy Eleven is officially moving this season from Carroll Stadium to the Colts‘ NFL stadium, but hasn’t figured out yet whether or how to lay down grass over the artificial turf. Might want to get on that, guys.
  • San Diego is looking at doing a massive redevelopment of the land around its arena, and as part of this isn’t extending AEG’s lease on running the place beyond 2020. This is either the first step toward a reasonable assessment of whether the city could be getting more value (both monetary and in terms of use) for a large plot of city-owned land, or the first step toward building a new arena in some boondoggle that would enable a developer to reap the profits from public subsidies — Voice of San Diego doesn’t speculate, and neither will I.
  • Some Overtown residents are still really, really, really unhappy with David Beckham’s Miami MLS stadium plans for their neighborhood, and have been getting in the papers letting that be known.
  • “Can stadiums save downtowns—and be good deals for cities?” asks Curbed, the official media site of tearing things down and building other things to turn a profit. You can guess what I say, but you’ll have to wade through a whole lot of self-congratulation and correlation-as-causation from the people who built the Sacramento Kings arena to get there.
  • Tampa Bay Rays owner Stu Sternberg is still seeking as much as $650 million in stadium subsidies, with local elected officials holding secret meetings with lobbyists to make a project happen. WTSP’s Noah Pransky reports that “commissioners told 10Investigates there remains little appetite to make up the nine-figure funding gap the Rays have suggested may be needed to get a stadium built,” though, so we’ll see where all this ends up.
  • Arizona state rep Eric Descheenie, who is Navajo, has introduced a bill that would prohibit publicly funded stadiums in the state from displaying any team names or logos that local Native American tribes consider “disparaging,” which could make it interesting when the Cleveland Indians, Chicago Black Hawks, or Washington RedHawks come to town.
  • The U.S. Justice Department is investigating possible racketeering and other charges around bidding on major sports events, including American consulting firms that may have helped Russia get the Sochi Olympics and this year’s soccer World Cup. If they can’t find enough evidence to prosecute, they’re not watching enough TV.
  • I didn’t even know there was a surviving Negro League baseball stadium in Hamtramck, Michigan, let alone that there was a cricket pitch on it. Who’s up for a road trip?
  • The town of Madison — no, not the one you’re thinking of, the one in Alabama — is looking to build a $46 million baseball stadium with public money because “economic development.” They’re hoping to get the Mobile BayBears to move there, at which point the Huntsville region will undoubtedly become the same kind of global economic engine that is now Mobile.
  • An East Bay developer wants land in Concord (way across the other side of the Oakland Hills, though developing like crazy because everything is in the Bay Area right now) that’s owned by the BART transit system, and says they’ll build a USL soccer stadium if they can get it. Have you noticed that like half of these items are about soccer these days? Of course, half of all sports teams in the U.S. will be pro soccer teams soon the way league expansion is going, so that’s about right.
  • Here’s a map of failed New York City Olympic projects and how they helped Mayor Michael Bloomberg ruin neighborhoods. Sorry, did I say “ruin”? I meant “improve,” of course. This is from Curbed, after all.

Birmingham considering spending $15.7m a year on a college football/USL stadium because numbers!

One of the first stadium controversies I covered on this site — so long ago that I can only find dead links to it — was the plan to spend several hundred million dollars on a domed football stadium in Birmingham, Alabama, something that voters rejected in a referendum way back in 1998. The dream never died, though, and now local officials are moving full speed ahead on a plan for a $174 million, 55,000-seat stadium that would host the University of Alabama-Birmingham and a USL expansion team and other stuff too, presumably, and really I just need to quote liberally from AL.com here:

During a Wednesday afternoon meeting, [Birmingham Mayor Randall Woodfin] proposed the city contributing $3 million a year for 30 years to the expansion and renovation of the BJCC which includes a stadium and renovations to the Legacy Arena.

AL.com describes this as “allocating $90 million,” but in present value it’s really more like $45 million. Or to put it another way, it’s the same as taking out a mortgage for $45 million and then paying it off over 30 years.

The city’s contribution would come each year from excess lodging tax and funds that have previously been going to city debt service, the mayor said.

“Excess” would imply here that the city doesn’t need it any more for debt service? So it would be going into the general fund? Doesn’t the city need money in its general fund?

Woodfin said the city doesn’t have the money to fund its priorities such as crime and neighborhood revitalization, but the city can’t afford not to invest in its infrastructure.

The city definitely needs money in its general fund.

The BJCC Authority is committing $10.7 million to the annual debt service on the project. Jefferson County has committed $1 million a year for 30 years.

So that’s $10.7 million a year from the BJCC Authority, $1 million a year from the county, and $3 million a year from the city? UAB is kicking in $4 million a year in lease payments (over the first ten years, anyway), so all that would be just about enough to pay off bonds on a $300 million project, which is what the whole thing is projected to amount to. But where will the rest of that public money come from?

State legislation that would levy an additional 3 percent automobile rental tax in Jefferson County for the support of the BJCC has been advertised for the 2018 legislative session.

This rental sales tax is expected to generate $3.5 million a year for 30 years.

A new car rental tax, if it passes the state legislature. Check.

And why should Birmingham taxpayers want to do all this?

The expansion of the BJCC is projected to generate $9.9 million in additional tax revenue for the city, according to the BJCC.

That’s $9.9 million annually, apparently, which would clearly make this a great investment for the city (if less so for county car renters, who’d bear the bulk of the costs), but which also seems completely implausible. I can’t find whatever study the BJCC is using to support its claims, but we can do the math ourselves:

Let’s say UAB sells out six home games a year — kind of ambitious since this is a football program that actually considered shutting down a few years back out of lack of interest, but let’s go with it. That’d be 330,000 fans a year. Add in 100,000 soccer fans a year, which would be pretty good for a USL team. Birmingham has a 6% local sales tax, so to generate $9.9 million in tax revenue, those 430,000 fans would have to spend $165 million — or $384 apiece, per game. (If we assume, I dunno, ten sold-out concerts and international soccer games a year, which is getting into the realm of wish fulfillment, then you might get it down to $150 in spending per fan, which isn’t much more realistic.) And this would all have to be money that wouldn’t be otherwise spent within Birmingham, so it would entirely depend on local college football and minor-league soccer mostly appealing to fans from outside the city limits.

On the one hand, this is clearly a far better idea than spending half a billion dollars on a domed stadium to lure an NFL team like city leaders were considering two decades ago. On the other, it still doesn’t appear to make a damn bit of sense. AL.com quotes Mayor Woodfin as saying, “We can net new revenue (from renovating BJCC and building new stadium) to create fund that will go 100 percent to neighborhood revitalization,” which doesn’t make sense either grammatically or mathematically, but the mayor said it, so it has to go into the newspaper, right? I should stop pretending that journalism is actually a thing anymore, shouldn’t I?

Study shows Super Bowl only sells 22% as many hotel rooms as NFL claims

If you want a good concrete example of how Super Bowl economic-benefit claims are bunk, just keep in mind this paragraph from a Sunday New York Times article on the subject:

In a forthcoming paper, [Berry College economist Frank] Stephenson examines the 2012 Indianapolis Super Bowl, which generated 224,000 hotel stays, according to its economic impact report. Indianapolis serves as an apt comparison to Minneapolis since it is a cold-weather city in the Midwest. Actually, in the week leading up to the Super Bowl and the three days afterward, Indianapolis hotels rented an additional 49,000 rooms compared with what would be expected, less than a quarter of the estimate.

That is a large discrepancy! We’ll have to wait for Berry’s full paper to get into the nitty-gritty of where all those Super Bowl visitors are staying, but it certainly helps explain why other economists like Holy Cross’s Victor Matheson have found the economic impact of the game to be less than a quarter what the NFL and host cities claim.

Stephenson goes on to note that there’s likely a ton of leakage of that money from the local economy, since fans “don’t give it to the housekeeper or bellboy or front-desk person; a lot of it just flows to whoever owns the hotel” — or as Matheson once put it, “Imagine an airplane landing at an airport and everyone gets out and gives each other a million bucks, then gets back on the plane. That’s $200 million in economic activity, but it’s not any benefit to the local economy.”

Meanwhile, the city of Minneapolis is spending $50 million on hosting the game (on top of the billion dollars or so it put into the Vikings‘ new stadium that’s hosting it), though it says it’s raised it from corporate donors. I think I’ll wait to see what the actual numbers look like after the fact, though — it’s becoming increasingly clear that when it comes to the Super Bowl, you want to check the final bill, not the initial estimates.

The Texas Rangers may have traded a real grass field for air-conditioning

The art of writing an intro to a piece of journalism — called a “lede” because journalists are weird — is an interesting one, and I’m always impressed when someone can come up with something like this:

Science has bred a chicken to look like a dinosaur and is actively working on humanless home pizza delivery – and a flying taxi

…even, or maybe especially, when the article itself is about something as prosaic as the Texas Rangers‘ new taxpayer-funded stadium maybe using artificial turf.

Yes, that’s right: A major-league baseball team is actually tearing down its reasonably well-regarded 20-something-year-old stadium so it can build a new one with air-conditioning, but this may require installing fake grass, even though all but two MLB teams have done away with the stuff in recent years because everybody hates it, from fans to players who have to deal with its broiling heat and abuse on their bodies. The problem, according to the Fort Worth Star-Telegram, has something to do with the field being too deep, or too far from the retractable roof, or something:

The Rangers said that right now they don’t know when they will know/announce the surface for the new stadium, which is scheduled to open in 2020…

“Fifty feet below grade is not a concern itself. It’s about how the stadium is designed to let light in,” said Texas A&M associate professor Ben Wherley, whose expertise is in turfgrass in the school’s department of soil and crop sciences. “My assumption is they will try to get grass in there if at all possible.”

This is really something they should have thought of while designing the stadium, you know? Though given the Escheresque renderings the Rangers have released so far, maybe they were planning on having sunlight hit the field from below, who can say?

Former Denver mayor proposes pot ads to fund Broncos’ stealth $650m stadium reno demand

Former Denver mayor Wellington Webb has issued a letter suggesting ways to pay for $650 million in upgrades to the Denver Broncos‘ stadium over the next 20 years — phone photo of crumply paper version here — that includes selling ads to marijuana companies on folding seat bottoms (so they’ll be visible to fans but not on TV) and getting fans to chip in by buying shares in exchange for “good will” and … hold up, did he just say $650 million?

I understand there’s an estimated $650 million in stadium improvements wanted over 20 years

Apologies for previously missing this news, which appears to have been revealed in a statement by Broncos execs buried deep in a boring naming-rights article from last September. Sure, sports venues need maintenance, but $650 million in work over 20 years for a 17-year-old stadium is insane, and is better described as “Broncos owners want to tear down their nearly new stadium and build a new one in place over the next two decades, but want somebody else to pay for it.”

Under the Broncos’ lease, naming-rights money goes toward maintenance and upgrade costs, but the last naming-rights sponsor went bankrupt two years ago, and realistically there’s no way on earth they’re going to get anything close to $32.5 million a year for the name of a stadium that’s already had two corporate names, and which everyone will just call “Mile High” anyway. So while Webb’s idea may or may not be the best — though obviously ads reading “[Marijuana Company Here] Brings You Mile High” would be a no-brainer — the bigger concern is that the Broncos appear to have levied a demand for $650 million and gotten everyone to swallow it as perfectly cromulent, which stops here, as far as I’m concerned. Whoever actually owns the Broncos now, you crazy!