Trump scares NFL with tax break threat, but will he do anything real about sports subsidies?

So Donald Trump’s tweet yesterday threatening to eliminate the NFL’s “massive tax breaks” got an immediate response from league commissioner Roger Goodell, who issued a press statement that of course the league believes that “everyone should stand for the national anthem,” and will get right on figuring out how to make players do that without violating collective bargaining laws. The lesson: Sanctions work!

Trump hasn’t yet responded to Goodell’s letter, but one has to figure he’ll probably call off the tax break attack dogs now that they’ve achieved what he unleashed them for. Which would be a shame, as I note in an op-ed today for the Washington Post website, because if the president really wanted to rein in public subsidies for pro sports, there’s plenty he could do:

The use of tax-exempt bonds for sports stadiums is a problem that goes back to a time when Trump was still a USFL owner suing the NFL. The practice, which effectively provides sports franchises with low-interest loans at the expense of the federal treasury, has cost taxpayers an estimated $3.2 billion across all pro sports since the turn of the millennium…

And that stadium tax break — if it was what Trump was getting at (even his own press secretary seemed unclear which public money he was talking about) — is only the tip of the sports-subsidy iceberg. Even at $200 million a year, the public cost of tax-exempt bonds is dwarfed by the flood of cash flowing from state, county and city governments to sports teams.

Please go read it now. There’s a good bit at the end with David Minge in it.

Islanders owner: We’re totally going to move to Belmont, someday, somehow

We still have zero details on how the New York Islanders owners’ plan for an arena at Belmont Park would work, but co-owner Jon Ledecky nonetheless gave team beat writers the hard sell on it yesterday:

“We are locked and loaded on Belmont,” Ledecky said Tuesday at a luncheon with Islanders beat writers. “We have the blinders on for Belmont. We’re not looking at other places, other things, other opportunities. We want to make Belmont a reality.”

Great! Visualization is the first step, right?

More interesting is the tidbit buried deep in the article that the Islanders need to decide whether to opt out of their Barclays Center lease in January, but the state Empire State Development agency hasn’t announced when it will make its decision on the Belmont land. This means Ledecky and friends could be in the position of having to decide to terminate the lease without knowing when and if they’ll get a site for a new arena — which would at the very least leave the franchise having to negotiate a new lease extension in Brooklyn from a position of crappy leverage. Though since it’s a mutual lease out clause, I suppose if the Barclays Center owners want the leverage, they can just cancel the lease themselves and be done with it.

Meanwhile, Ledecky and Barclays Center CEO Brett Yormark are keeping up their war of words over which is more economically useless, the arena or the Islanders:

While I’m dying to find out the financial details of the Isles’ Belmont plan, I’ve gotta admit that this is a lot more fun.

Hansen to Seattle: Okay, how about if we build two arenas?

Would-be Seattle arena builder Chris Hansen seems to have resigned himself to the city approving Oak View Group’s plan to renovate KeyArena, which appears to be a fait accompli despite its main backer resigning in disgrace last month. That doesn’t mean Hansen is giving up on his own arena dreams, though, not when Seattle could just have two pro sports arenas, amirite?

Hansen says he also now believes the city could move forward on KeyArena and his proposal.

“I think it would work better when you consider the purchase price for NBA teams. Look at Houston as an NBA comp,” said Hansen.

The NBA’s Rockets just sold for $2.2 billion.

“A venue with an NHL partners and music partner and NBA partner is inherently going to lead to issues,” he said, “with how to divvy up the pie.”

There are several things wrong with this argument. First off, one doesn’t “divvy up an arena pie,” because there is no pie: Arenas don’t bring in money, NBA and NHL games and concerts bring in money. I suppose one could argue that there are a few things about an arena you can only sell once regardless of how many events you hold there (naming rights and some ad signage, maybe), but those are unlikely to make up for the fact that you only have to pay to build one arena.

Secondly, the history of urban areas building multiple arenas for multiple pro teams is not great: They end up competing for concerts to fill the dates around the sports schedule, and something often ends up being demolished or abandoned. Sure, there are exceptions, especially in cities larger than Seattle where there are tons of concerts to go around. But again, putting in twice (or close to twice) the construction costs to get back the same amount of total sports and concert revenues is a pretty dumb business plan all around.

Plus, does it really make sense for Seattle to devote two parcels of land to sports arenas when one will do? You get the idea.

But hey, if Hansen wants to go up against Tim Leiweke in an arena marketing war, more power to him, I guess. This guy clearly really wants to own an NBA team in Seattle, and really thinks the best way to do that is to build an arena in SoDo. And I’m on record as saying I think Seattle should do everything in its power to keep both Hansen’s and Oak View’s bids alive to see if they’ll keep upping the ante, so really, all good here.

Trump says kill NFL’s “massive tax breaks” so long as players are protesting

Somewhere, somebody is waking up from a coma and is so desperately confused by this:

WASHINGTON (Reuters) – President Donald Trump on Tuesday called for changes to U.S. tax law affecting the National Football League, fueling a feud with the league and its players over protests that he says disrespect the nation.

Here’s the tweet in question, for the record:

So that probably means the tax breaks that come along with tax-exempt stadium bonds, which several other Republicans have proposed rescinding for the NFL if their players keep taking a knee during the national anthem. (A state representative in Missouri has also called for “not investing any more money for stadium funding if the players and billionaire owners are going to disrespect our country and disrespect our state,” which I guess means not paying to renovate the Kansas City Chiefs‘ stadium again?) As is typical with Trump, there are no specifics about what he means, though I suppose I could try tweeting at him to ask if he knows a way to change tax law so that the NFL can’t get tax-exempt bonds but more patriotic sports like, er, hockey can.

Anyway, let’s all enjoy the spectacle of Trump and the GOP rushing to embrace a policy that President Obama proposed two years ago, only to be blocked by a Republican-controlled Congress, because they’re mad at players for not standing on the field during the anthem, defying a tradition that dates all the way back to 2009. I remain extremely skeptical that this will lead to any actual legislation, but the universe is so insane right now, anything is possible.

Flames greet hockey fans with pro-arena ads one week before mayoral election

When it comes to stadium-subsidy campaigns, sports team owners have a massive soapbox and generally aren’t afraid to use it — who can forget the “Yes on Prop C” sign on the San Diego outfield wall throughout the 1998 World Series? The Calgary Flames owners, though, look to be taking things to a new level:

Displaying their bogus and poorly copy edited Powerpoint slides on arena video screens is one thing. Running “Bill Smith For Mayor” ads, whether they were paid for or not, is another, especially when team CEO Ken King previously said:

“We’re not running for office. It’s certainly not an election issue for us,” King said. “We’re certainly not trying to throw fuel on the fire.”

Meanwhile, the Globe and Mail reports that the Flames owners, in addition to seeking public money for a new arena, initially requested “an option to buy and develop land near the events complex, a slice of the Stampede Casino’s revenue, all parking revenue from major events it would manage at the events complex and other goodies.” And also: “the city of Calgary covering the cost of flood insurance, reimbursing the club for all provincial property taxes that may be imposed on the facilities, and requiring local ratepayers to pick up the bill for a public gathering place suitable for festivals next to the arena.” And also:

“Our proposals in the enclosed term sheet outline the minimum requirements for a robust competitive sports environment and the infrastructure needed to compete on the world stage from an entertainment perspective,” Ken King, president of CSEC, said in the letter.

In the latest polls, Smith has reportedly taken a sizable lead over Mayor Naheed Nenshi, based on a massive surge in his support from 18-to-34-year-olds, which is either a sign that Smith’s message is resonating with young people or just a sign that polls suck. We’ll see a week from today.

MLS still set to announce two new teams in December, unless it needs the stadium leverage

MLS has been dead set on announcing two expansion franchises this December, with two more getting the nod next year. But on Thursday, commissioner Don Garber hedged on that timetable just a bit:

A league spokesperson later texted, according to ESPN, that “MLS remains on track to name two teams in December, with an announcement ‘likely around Dec. 19-20.'” But that’s still hedging, in a way that could probably best be taken as We’re planning an announcement the week before Christmas, but we reserve the right to change our minds.

What could be going on here? Soccer Stadium Digest thinks that MLS wants to be sure that David Beckham’s Miami franchise will actually get stadium approval in time to begin play next year — the stadium won’t be done by then, mind you, but MLS will award a team so long as it has a stadium deal in place — or else award a franchise to a fallback city in order to keep an even number of teams. That’s certainly possible, though MLS has operated with an odd number of franchises before, so it could always just push back Miami’s entry another year or three if necessary.

Equally possible is that MLS may want to wait out the legislative process in some potential expansion cities to see what they can shake loose in terms of public stadium funding. Of the four frontrunners declared by Soccer Stadium Digest, Detroit Pistons owner Tom Gores and Cleveland Cavaliers owner Dan Gilbert’s $300 million plus free land and I’ll build Detroit a new jail to replace its already half built one plan still needs both city and county approval, Nashville S.C.‘s $75 million subsidy demand requires approval of the regional Nashville Metro council, F.C. Cincinnati‘s gambit for that city to pay for half of a new $200 million stadium hasn’t seen much action in recent months (other than a new Cincinnati citizens’ group petitioning Garber to let the team move up to MLS while still playing at Nippert Stadium, where it’s setting attendance records), and Sacramento F.C. has already started clearing land for a new stadium, though with actual construction not scheduled to begin until 2018 the team owners can always slam on the brakes if they don’t get awarded an MLS franchise by then.

That’s a whole lot of uncertainty, and could easily be a reason why the league doesn’t want to set an expansion announcement date in stone. When running a bidding war, it’s a fine line between wanting to scare the participants with a countdown clock, and wanting to make sure they always have enough rope to up their bids.

Friday roundup: Too much nonsense to fit in one headline

On a super-tight schedule this morning, so super-quick lightning round:

  • A judge in El Paso has confirmed that its new arena can only be used for concerts, not sports, because that’s the way their wrote the bond proposal for voters. Copy editors are important!
  • North Carolina withdrew a plan to explore whether to sell a bunch of government building in Raleigh and give the land to a new MLS soccer franchise because it would be “premature,” whatever that means, but it sure doesn’t sound like a ringing endorsement.
  • At a panel on whether Calgary should give a ton of money to the Flames, National Post columnist Jen Gerson asserted that while Edmonton may have been suckered into funding an arena for the Oilers, “we’re just not that pathetic, as a city.” I really really hope that “How pathetic can we be?” becomes somebody’s campaign slogan in the upcoming mayoral election.
  • Nashville councilmember Jeremy Elrod is questioning the city’s plan to include a private development on public land as part of a soccer stadium project, noting, “I thought we were building an MLS stadium out of wanting to get a team here and not necessarily to help the team owners make more money.” Ah, but wanting to help the team owners make more money is always the reason why they demand stadium subsidies. I’ve got a whole book you can read about that if you want, Councilmember Elrod.
  • Inglewood Mayor James Butts is surprised and steamed that Madison Square Garden, which owns the Forum and rehabbed it as a concert venue, is fighting against Los Angeles Clippers owner Steve Ballmer’s proposed arena because it would compete with theirs. Somebody doesn’t know his history.
  • Russia is ensuring that a new stadium in Ekaterinburg is big enough for World Cup games by building extra seats outside the stadium.
  • Phoenix is selling off its Sheraton hotel for $255 million (great!), $50 million less than the city owes on it (not great, but better than continuing to only get a thin trickle of revenue from it), and will also give the buyer $97 million in tax breaks and $13 million in cash to use for renovations (hey now…) If the city now turns around and spends the money on a Suns arena, this will be the trifecta of badness.
  • The Washington Nationals are again fighting with D.C. officials over who’ll pay for added late-night train service to postseason games, as this is what happens every time the Nats make the playoffs, at least for the couple of days before they’re elminated again.
  • The San Francisco 49ers keep hosting concerts at their Santa Clara stadium that blow past the 10 pm curfew, and it turns out the $1,000 fine per infraction isn’t much of a deterrent. Never could have seen that one coming.

KC studying $450m stadium for Royals, because old one was renovated eight whole years ago

I’m sorry, what?

The city of Kansas City is funding a study of at least four potential sites for a downtown baseball stadium for the Kansas City Royals, according to documents obtained by The Star…

[Kansas City Manager Troy] Schulte said the studies started after the Downtown Council approached City Hall about the feasibility of downtown baseball. Schulte added that he agreed to help fund a study to consider whether the four sites would work so that the city could plan ahead if the idea gained momentum…

Potential obstacles for downtown baseball include parking and how to pay for it. Schulte said initial estimates for a stadium were north of $450 million. Those details, he added, have not been studied in depth.

Any stadium, if it were built, wouldn’t be built until 2030, when the Royals‘ lease runs out at Kauffman Stadium. And sure, by then the stadium will be 57 years old. But it also just got $250 million in taxpayer-funded renovations that were completed in 2009, with new seating, scoreboards, and concessions areas, and generally scores near the top of best-stadium lists. So spending “north of $450 million” to replace it, especially when the team isn’t even demanding to, seems a bit, well, demented.

This whole thing appears to be driven by the Downtown Council, a council (duh) of downtown (duh) business and real estate interests, with a few nonprofits thrown in, who undoubtedly have figured out that the city building a baseball stadium on their doorstep could be good for business, or at least speculative property values. (They’ve already floated this idea before, in fact, though this is the first time it’s gotten an actual study.) Why the city is taking this seriously is beyond me — or rather, I’m sure it’s the idea that a stadium will “revitalize the downtown core” or something, a notion that’s so laughable among economists that the most recent studies are a decade old, because nobody can get funding to do new ones when the numbers just keep showing the same thing over and over and over.

As for Royals execs, they responded exactly how you’d think someone would if you offered to tear down their newly renovated home and build a completely new one:

“We’re perfectly content where we are, we think it works well,” [Royals VP Kevin] Uhlich said. “Thirteen years from now, who knows what the situation is going to be? I can’t hold anybody back from doing what they’re doing on their side. We would listen.”

There’s also a rendering of a potential new stadium, which looks like HOK architects drew it up in Minecraft:

On top of the obvious issue of Kansas City citizens maybe being on the hook for up to $450 million in stadium money in the not-too-distant future, I’m starting to get really concerned that there’s a notion going around that once a sports team’s lease expires, of course the public has to offer a new or renovated building in order to get them to extend it. As someone who was an apartment renter for 25 years, I can tell you that this is not how things normally work in the real world; but if team owners can succeed in getting city officials and the media to consider this “standard business practice,” then this website may have to be around forever. I better start taking my vitamins.

Calgary residents want Nenshi to stick to guns with Flames, but may not re-elect him

There’s a new poll out in Calgary that should let us see how the Flames owners’ war of words with Mayor Naheed Nenshi over whether paying taxes that everybody else pays should count as “private money” toward an arena is going over with the general public. So, how’s it going over?

Forty-seven per cent of respondents who participated in a Mainstream Research/Postmedia poll for the Calgary Herald/Calgary Sun say the city “should stand firm on its commitment to get the best arena deal for taxpayers,” even if that means the NHL team moves away from Calgary.

Thirty-nine per cent of people who answered the interactive voice response survey on their cellphone or landline said they don’t think the city should stand firm, while 14 per cent of the 1,000 respondents weren’t sure.

That’s a strange way of wording a poll question, especially since Flames execs have only made the most tentative of move threats (and don’t have a lot of good options for places to move to). Still, a plurality of respondents saying, “Stick to your guns, let ’em leave if that’s the way they’re going to be,” is pretty notable.

In a poll with more immediate import, meanwhile, Nenshi is reportedly trailing challenger Bill Smith in the runup to the mayoral election a week from Monday. If you scroll down and look at the breakdown of the numbers, though, you’ll see that the gap is mostly among women over the age of 50 — which, even if it doesn’t imply polling funny business as Nenshi’s team insists, probably is an indication that this isn’t angry hockey fans who are threatening his re-election.

 

Nashville mayor vows MLS stadium with almost no public costs, it’d actually cost $75m-plus

Nashville Mayor Megan Barry released her proposal for a soccer stadium for a new MLS franchise yesterday, and this is how the Nashville Scene headlined it:

Mayor Proposes $275 Million Soccer Stadium Deal

Potential MLS team would be responsible for all but $25 million of fairgrounds stadium cost

Sounds pretty good, right? What’s that? What do you mean, “You’re just setting us up with a rosy headline so you can undermine it with the actual horrible facts, aren’t you?” Do you think you know me that well?

The actual horrible facts:

  • Of the $275 million in construction, land, and infrastructure costs, the Nashville Metro Council, a joint city-county governing body, would put up $250 million by selling bonds. The other $25 million would come from John Ingram, owner of Nashville S.C., a USL expansion club slated to begin play in 2018.
  • Ingram and his fellow owners would pay off the bonds via “a mixture of rent, captured taxes from revenue generated at the stadium and private investment,” according to the Scene. The Tennessean breaks that down: It’s actually $9 million a year in rent payments, plus $4 million a year from kicked-back state sales taxes from anything bought at the stadium and from a $1.75 surcharge per ticket.
  • If sales taxes and the ticket surcharge fall short of $4 million, Metro would be on the hook for the shortfall.

Let’s be clear about this: Counting money siphoned off from sales taxes collected at a sports venue as a “private” contribution is completely insane. Even aside from the substitution effect — where increased money spent at, say, soccer matches invariably turns out to mostly be counterbalanced by decreased money spent at, say, local movie theaters and restaurants — this is money that for a normal business would flow directly into the state treasury. For Ingram to insist that this is really “his” money because he touched it with his hands (or his concessions workers did, anyway) is just the Casino Night Principle.

Exactly how much in public money this would actually cost Tennessee taxpayers is a little tricky to determine, since those sales taxes are lumped together with a ticket surcharge, something that economists universally agree ends up mostly coming out of the team owner’s pocket. But let’s try to back into it: If a typical MLS team sells 20,000 tickets per game (I’m assuming here that tickets given away for free still have to pay the surcharge), and there are 19 home games in a year, that’s 380,000 tickets per year. Multiply by $1.75, and the ticket surcharge should generate about $665,000 a year.

That leaves $3.335 million a year to be covered by sales taxes, which comes to about $50 million in present value. Add in the $25 million that won’t get repaid, and we’re at $75 million in public cost — at minimum, because if tickets don’t sell well, then Nashville would have to make up the shortfall out of its own pocket.

This is not the worst stadium proposal in history, but it’s also not the “private-public” (emphasis on the first word) deal that Mayor Barry promised. And if things break the wrong way, it’s not that far off from the $100 million subsidy demand that is raising eyebrows in Cincinnati. MLS stadiums are still generally lighter on the public purse than those in other U.S. pro sports, but that’s only because MLS team owners and wannabes know they can’t get away with demanding as much — and that doesn’t make the cash that taxpayers would be out any better of a deal.

(Rest in peace, Tom.)