Olympics go 90% over budget on average, prospective hosts say, “La la la, we can’t hear you”

Since the start of the Rio Olympics, media coverage of the controversies surrounding the games has mostly been limited to things like the algae-polluted diving pool, turning attention away from the widespread protests in recent months against the Games themselves and their costs. (This is a bit of a tradition: The 2014 Winter Olympics in Sochi were widely considered an unfathomable scandal, until the events began and suddenly everyone forgot about the caviar highway and the anti-gay laws.) So it’s nice to see Fivethirtyeight turn its attention to what a massive money suck the Olympics have become, not just for Rio but for any city that hosts them:

By the time Vanderlei de Lima lit the Olympic torch at last week’s opening ceremonies, the country had already spent some $4.6 billion on venues, administration, transportation and the like, putting the games roughly 50 percent over budget. By the time the games close on Aug. 21, the tally for the games will likely be higher still.

But it could be much worse. The 2014 Winter Games in Sochi blew their budget by 289 percent. The 1980 Winter Games in Lake Placid overtopped projections by 324 percent. And the 1976 Games in Montreal ran a staggering 720 percent over projections; the city spent three decades paying down the bill. While outliers such as these distort the average cost overruns somewhat (176 percent for Summer Games, 142 percent for Winter Games), the median cost overrun for all games for which we have data is 90 percent, making Rio’s cost overrun somewhat lower than the historical norm, at least so far.

Those numbers are all from a new study by Bent Flyvbjerg of the University of Oxford, and are right in line with past estimates of the Olympics’ inherently massive cost overruns. The reasons why are simple: Construction projects of all kinds often go over budget, and when you add in the fixed deadlines for Olympic venues — you can’t just delay the swimming events if the stadium isn’t ready — it’s a recipe for inflated costs.

That said, what we should care about here isn’t really how badly Olympic organizers underestimate the costs of hosting the games, but whether cities lose money in the end on hosting them. And though Fivethirtyeight buries the lede a bit here, it eventually notes that the numbers on that count are if anything even more dismal:

Host cities almost invariably fail to cover Olympics costs with associated revenues (for instance, in 2012 London took in $3.5 billion in revenues and shelled out something like $18 billion to host the games), leaving them with piles of debt and various useless venues. Research has repeatedly shown that in most cases the Olympics are a money loser for cities, particularly those in developing nations where the cost-benefit proposition tends to skew even worse.

The Rio Games will likely be cheaper than other recent Summer Olympics, but still cost Brazil several billion dollars, in exchange for a hoped-for boost in tourism that other cities have found never arrives. You’d hope that all this would make cities think twice before looking to host the 2024 Summer Games, the next ones up for bid, but you would be wrong. At least we’ll always have Oslo.

Bills owners sell naming rights to publicly owned stadium, pocket cash

The Buffalo Bills owners have sold the naming rights to Ralph Wilson Stadium for an undisclosed sum to New Era Cap Company, and immediately took down the lettering with the old name:

This made many Bills fans unhappy that the stadium will no longer be named for the team’s founding owner:

We’ve seen this before in other cities, of course. What’s odd here is that Ralph Wilson Stadium isn’t the building’s original name: From 1973 to 1997 it was Rich Stadium, named for a local food company in one of the first naming-rights deals in pro sports. When that deal expired and Rich Products wouldn’t agree to an increased rights fee, Erie County instead named it after the Bills’ owner.

Wilson died in 2014, and somewhere along the way, so did the county’s ownership of the naming rights, as it appears new owners Terry and Kim Pegula will be pocketing whatever cash comes from this deal, even though Erie County still owns the building. It seems like that’d be more worth getting upset over, but there’s no accounting for football fans.

 

Hillsborough candidates agree: Tax somebody to pay for Rays stadium, just not sure who

The invaluable Noah Pransky of WTSP-TV (and the Shadow of the Stadium blog) has polled candidates for the Hillsborough County commission (that’s the county with Tampa in it) on where they stand on public funding for a new Rays stadium, and the survey says:

Sandy Murman (District 1 incumbent): Opposed to “a sales tax increase or use of general revenue” for a stadium, but not necessarily opposed to other forms of public funding.

Jeff Zampitella (District 1 challenger): Opposed to using general revenues, fine with hotel taxes, sales taxes, property tax breaks, or pretty much anything else.

Les Miller (District 3 incumbent, not being challenged): “We have to figure out a way to pay for it and not ask taxpayers to pay for a new stadium.”

Jim Norman (District 6 incumbent): Wouldn’t answer, but “has a long record of supporting stadium subsidies for the Tampa Bay Buccaneers.”

Tim Schock (District 6 challenger): Would likely support hotel taxes only for a stadium, wants the state to be on the hook for anything else.

John Dicks (District 6 challenger): Supports using both hotel taxes and a Community Redevelopment Area, which is essentially a TIF-style property tax kickback. Plus state money.

Pat Kemp (District 6 challenger): Would “likely oppose” general fund spending, but “might support” TIF money or parking revenues.

Tom Scott (District 6 challenger): Yes to using hotel taxes, no to anything else.

Brian Willis (District 6 challenger): Yes to hotel taxes, rental car fees, and state money, so long as it’s no more than half the total stadium cost.

Add it all up and hotel tax money sounds like a consensus pick — which would better news for Rays owner Stuart Sternberg if not for the fact that best estimates are that these would only be enough to pay off maybe $75 million in construction costs, which isn’t going to get very far toward building a whole new stadium. This sounds like it’s going to be one of those “collect pails of money from wherever you can find them” negotiations, which usually end up resorting to something totally crazy because it’s the only option that nobody outright hates.

It’s still very early, but all the “we have to get something done, we just need to figure out how to pay for it” talk is not a good starting point at all if you’re concerned about public subsidies. Add in that this is inevitably shaping up to be a Tampa-vs.-St. Petersburg bidding war — or at least a Hillsborough-vs.-Pinellas County bidding war — and it’s probably time to be very worried indeed. Winning the right to pit different localities against each other for the right to throw money at his team may have been the best deal that Sternberg ever made; St. Peterburg really should have asked for a bigger buyout, but they didn’t ask me, now did they?

Angels really truly not moving to Tustin, slink back to Anaheim to reopen lease talks

Hey, remember almost two years ago when the Los Angeles Angels were threatening to build a new stadium in the Orange County city of Tustin? Vaguely? I’d largely forgotten about the whole thing once Tustin officials said they wanted to receive fair market value for any stadium land, but apparently Angels owner Arte Moreno hadn’t given up on the plan. Until now:

The developer of the proposed Tustin site said his firm worked extensively in recent months on a ballpark project, but could not structure a deal that made economic sense for the development company, for Tustin and for the Angels…

The two sides are believed to have focused on a stadium that would have seated about 37,000 and cost about $700 million. Tustin officials had said they would not provide taxpayer funding for stadium construction.

“At this point, there’s not a path forward that’s economically viable for anyone,” Oliver said.

Instead, Moreno has now reopened talks with the city of Anaheim about a deal to renovate the team’s current stadium, which could get very interesting indeed. Anaheim Mayor Tom Tait is one of the more skeptical local officials on the subject of stadium subsidies, and has been insistent that he won’t give away valuable development rights to Moreno for nothing; a majority of the city council, though, still consists (until the November elections, at least) of members who approved the free-land deal that Tait later scuttled. Tait says he hopes to come to an agreement that’s a “win-win” for both the team and the people of Anaheim; if most mayors said that I’d expect it was just empty rhetoric, but Tait seems to actually mean it, so … yeah, very interesting times indeed.

Report: Chargers stadium would create 3 cents of new revenue for every public dollar spent

Who hates the San Diego Chargers$1.15 billion stadium-convention center public subsidy demand? Not only most San Diegans, it turns out, but the hotel industry that would have to shoulder increased room taxes in exchange for all the new tourists who would be expected to come to town as a result, but it turns out, wouldn’t really:

The Chargers’ plan for a downtown stadium-convention center will not generate enough meeting business to justify an increase in the hotel tax, concludes a new study funded by the tourism industry…

The proposed center, the study says, holds only limited appeal to meeting planners and would generate just $2.3 million more a year in additional hotel tax revenue, compared to what it estimates are the $67 million in annual public costs for both construction and operation of the project.

Okay, sure, economic impact studies, which can be made to say pretty much whatever you want them to. Still, $2.3 million a year in return on $67 million a year in new costs is pretty horrible even as a worst-case scenario. And the report correctly points out that other NFL-convention center joint projects have worked out pretty terribly as lures for new convention business, though as I’m sure Heywood Sanders would point out if he were awake at this hour, that’s true of lots of standalone convention center expansions as well.

Anyway, the upshot is that Chargers owner Dean Spanos’s uphill battle to convince two-thirds of San Diego voters to approve this thing in November just got even steeper. I’d never say never, especially before all the campaign spending is spent, but if you’re looking to place bets on how the stadium vote will go, take the under.

Phoenix mayor: Don’t listen to county supervisor, we’ll “facilitate” stadium upgrade

To anyone still all excited about yesterday’s revelation that the lead elected official of Maricopa County told the Arizona Diamondbacks owners to take their subsidy demands and shove them, Phoenix Mayor Greg Stanton is here to let the world know that some Arizona politicians are still going to stand up for truth, justice, and the American way of offering whatever it takes to the local sports team owner if they please, please won’t even consider moving out of town:

Stanton said a letter to county officials from team president Derrick Hall, revealed Monday by The Arizona Republic, was a surprise and should not lead fans to believe Phoenix has lost interest in a compromise that does not cost taxpayer money…

“Any impression that was left that the City of Phoenix wasn’t interested in keeping the Diamondbacks in downtown Phoenix for the long haul is inaccurate,” Stanton said. “I’m willing to roll up my sleeves and get to work to keep the Diamondbacks.”…

Stanton said he reached out to the team Monday to offer assistance: “We stand ready now and into the future to facilitate a long-term solution to this situation if we can be helpful.”

That bit about “does not cost taxpayer money” sounds somewhat promising, though somewhat less promising when you consider that Stanton has previously said that building a new arena with tax money doesn’t count as tax money if it’s tax money that the city is already collecting. Mostly, it looks like Stanton was just reacting to D-Backs president Derrick Hall’s letter saying that the team would proceed on the assumption that neither the county nor city wanted to renegotiate the team’s stadium lease, with the mayor saying, “No, no, we’ll talk! Don’t listen to that crazy guy in county government!” Which totally undermines any attempts by the county to hold a hard line, yes, but in America that’s what we call statesmanship.

L.A. seeks to use $22.5m in anti-poverty funds to help build MLS stadium (UPDATED)

When the Los Angeles city council approved a $250 million stadium plan for the Los Angeles F.C. MLS expansion team in May, I wrote that it looked like it would be entirely paid for with private money, “unless there’s some other shoe yet to drop.” And you know, sometimes I really hate being right:

Los Angeles City Hall is seeking to give a loan of up to $22.5 million to the developers of a new soccer stadium near downtown Los Angeles.

A motion submitted this week by City Councilman Curren Price asks for city approval for a U.S. Department of Housing and Urban Development (HUD) loan for the backers of the Los Angeles Football Stadium.

Now, the HUD loan isn’t for the stadium per se — it’s for the “ancillary” construction, meaning a sports museum, conference rooms, and retail, i.e., all the parts of a stadium complex that don’t specifically involve watching the game. The excuse for using a federal housing loan program to build this is that it’s “economic revitalization,” which is the usual argument for this sort of thing.

If the government were just lending the money and the team repaying it, that wouldn’t be such a big deal. But HUD Section 108 loans are repaid by a local government’s federal Community Redevelopment Block Grant funding — meaning Los Angeles is considering taking $22.5 million in anti-poverty funds and giving it to the developer of a soccer stadium, because economic development.

MynewsLA reports that the city council voted on Friday to ask HUD for the loan, so presumably this is now up to the Obama administration (or its successor) to approve or deny it. I’m not sure what discretion HUD has to reject uses of its loans for really off-label purposes, but hopefully we’re going to find out.

UPDATE: A commenter who works in finance points out some fine print in the Section 108 program: The city’s CRBG funds are only used as security on the loan, but it’s still supposed to be paid off by the private developer. This is much better for the public than a straight subsidy, obviously — LAFC’s owners would be getting the benefit of a cheap loan rate, and there’s some risk to taxpayers if they default on the loan, but it’s not just handing over $22.5 million. You can still make a good case that HUD should be looking at this project with lots of skepticism — if building a soccer stadium is an anti-poverty program, then building pretty much anything is — but at least it’s less of a cash grab it appeared at first.

Rangers stadium heads for ballot, Arlington mayor grabs at phone of opponent videoing him

After voting unanimously to put a new Texas Rangers stadium funding measure on the November ballot in May and again last week, the Arlington city council did so a third time yesterday, which means the referendum will really truly happen now.

The stadium campaign promises to be more of a battle than it sounded at first — I haven’t seen any polls yet, but there’s an opposition group organized called Save Our Stadium (no website, only a Facebook page, because Zuckerberg owns our public commons) that recently confronted Arlington Mayor Jeff Williams over his support for the $500-million-plus public subsidy plan and his role in banning opposition comments from a Facebook page about the stadium. They then posted a video about it (shot in portrait mode, because the future will also be shot in portrait mode) that ends with the mayor getting steamed at a question about a stadium opponent being threatened with arrest, at which point he tries to grab the phone of one of his questioners, which isn’t something you see every day from a mayor:

I’ve also been sent video (no permission yet to post it, sorry) alleging to show a stadium supporter trying to smash the car window of some people handing out anti-subsidy flyers. With emotions running this high with three months to go, I’m honestly a little anxious about where this will go by November, this being Texas and all.

Rays start crowdsourcing stadium ideas, so long as they’re ideas they already want

Tampa Bay Rays owner Stuart Sternberg is clearly in the “building momentum” part of his new-stadium campaign: After making a nearly endless list of possible stadium sites (without discussing yet how any of them would be paid for, because that gets people thinking about price, and you always want to avoid that as long as possible), Rays execs have now launched a website called ballparkreimagined.com where fans can chime in on what they want to see in a new stadium.

The site offers two places to enter your comments, the first being the prompt “I imagine…” and room to write anything you want. Among the featured comments are “I Imagine An Intimate, Waterfront Ballpark That Will Be Here For Years To Come” and “I Imagine A Retractable Dome Because Of The Unpredictable Summer Weather,” which leads me to believe that the comments are being edited heavily, both to ensure that everyone uses proper initial-caps style and to edit out “I Imagine DEEZ NUTS.”

The second poll is a multiple-choice one: “What words describe the ballpark you imagine?” The options are:

  • Year-round
  • Intimate
  • Organic
  • Breathtaking
  • Welcoming
  • Cutting-edge
  • Icon
  • Seamless

Leaving aside that this sounds like a list of rejected Divergent factions, you’ll note that they’re all characteristics that a team owner would stress in their marketing materials — there’s no “Privately funded” or “Easy to get to” or “Affordable tickets” on the list. (Yeah, I know “Affordable tickets” isn’t an adjective, but neither is “Icon.”) And sorry, no write-in adjectives allowed.

Ultimately, this is a website-as-push-poll, where in the guise of soliciting fan opinion, the Rays ownership is selling how totally awesome it would be to have a new breathtaking, cutting-edge stadium. They might even eventually incorporate a couple of fan-submitted ideas — judging from the video on the site, something including a place to play catch on the beach, and a barbershop where you can get a Rays-colored mohawk — but the real point of this is what they’re selling you, not what you’re telling them.

Arizona official calls baseball “parasitic,” tells D-Backs owner “go to West Virginia”

To recap briefly the Arizona Diamondbacks‘ stadium squabble: In March, team execs sent a letter to Maricopa County, saying if they didn’t get $187 million (or maybe more) to upgrade (or maybe replace) their 18-year-old stadium, they’d sue to break their lease and move. In April, county officials wrote back that most of the $187 million in proposed upgrades in a 2013 county study was for things that the lease explicitly says the team should be paying for, so seriously, guys?

That should be enough epistolary bad blood for anyone, but the Arizona Republic just turned up another letter, this one from County Supervisor Andy Kunasek to Diamondbacks president Derrick Hall in April that included some remarkably pungent language for an official missive from a public landlord to its whiny tenant:

Your slanderous public comments and attempts to rewrite history demand a response. The false narrative you are trying to sell impugns the character and competence of many dedicated people who have worked diligently to protect the interested taxpayers who paid for and own the stadium…

My instinctive concern for the taxpayer is amplified by my belief that this facility should never have been built using taxpayer funds, and to turn the music up louder, THEY WERE NEVER GIVEN THE OPPORTUNITY TO MAKE THAT DECISION AT THE BALLOT BOX. I have no intention of compounding that wrong by supporting your obscene demand that we provide another massive infusion of taxpayer money to the private business that currently employs you…

As for your business, profession baseball is evolving into a parasitic enterprise which is well on its way to destroying its host. … I suggest that you focus on your job, which should be the development of a success product (a winning team), which will improve the fan experience and in turn, will increase ticket sales and reignite a desire for people to attend and watch professional baseball in Arizona. Or, if you want, run for a seat on the Maricopa County Board of Supervisors. Maybe you can become the personal valet your owners want on the Board. Please quit trying to do both jobs.

Boom! And if that weren’t enough, the Republic reports that Kunasek hand-delivered the letter, and added a few more choice words at the time:

As Kunasek delivered the letter to the team, he directed a profanity-laced storm at Hall, calling on owner Ken Kendrick to “take your stupid baseball team and get out” and go back to “f–king West Virginia,” according to team notes that Kunasek does not dispute.

Kunasek, a fiscal-responsibility Republican who’s been in office since 1997, has already said he’s not running for re-election this year, so this was an opportune time for some venting. As for what it’ll mean for the Diamondbacks’ future, Hall wrote back with a long letter about what the Diamondbacks allegedly do for the local economy, and concluding:

Your candor with respect to this issue will cause us to move forward in a different direction from what we had anticipated and hoped, and where we had tried to find resolution in the past to no avail.

So that’s a threat, albeit probably an idle one unless Hall and Kendrick really think they can win a court case to break their lease, which seems questionable at best. More likely they’ll wait to see who’s on the county board after November, and see if they’re more willing to play ball. Kunasek certainly set the battle lines for any future stadium talks, though, which isn’t bad for a parting shot after 19 years on the job.