For those who thought the city’s ambitions of becoming a Major League Soccer town died at the ballot box last year, there is hope — and its name is Taylor.
Taylor is the family behind Enterprise rental cars, which is based in the St. Louis suburb of Clayton. The Post-Dispatch goes on to pick up such press release soundbites as that this would be the first MLS team majority-owned by women, and that Enterprise has lots of ties with local nonprofits, and okay okay, we get it, what about the damn stadium that was the stumbling block the last time somebody tried to get a soccer expansion team for St. Louis?
A roughly $250 million stadium dedicated to the soccer franchise would be “overwhelmingly” privately financed, the Taylors say. Public help would likely come from dedicated sales taxes on concessions and other merchandise sold to patrons, a property tax break from a city agency owning the stadium site and leasing it to the group, state tax credits and a break on the city’s 5 percent ticket tax.
That “overwhelmingly” sounds good; that longish list of tax breaks sounds less good. Let’s take them one at a time:
Those “dedicated sales taxes on concessions and merchandise” would apparently mean an extra 3% sales tax surcharge within the stadium. That would mostly come out of the team’s pockets — the economics gets a bit complicated, but suffice to say that as with ticket taxes, sports teams tend to lower concessions prices to eat the surcharge themselves, since they are already trying to charge fans as much as the market will bear for hot dogs — so probably wouldn’t be a significant public subsidy.
The size of the proposed property tax break is unknown — here’s the site under consideration if somebody wants to dig through St. Louis tax records to estimate how much it would normally be expected to pay.
Actual MLS ticket sales and prices are famously hard to calculate thanks to teams’ policies of goosing the gate by giving away tickets for free or cheap, but if we guesstimate 300,000 tickets a year at an average of $30 a pop, then eliminating the 5% ticket tax would cost the city about $450,000 a year.
So all told, yeah, that all sounds preferable to the $60 million from sales tax hikes and kicked-back property taxes on adjacent land that would have gone into the previous soccer stadium plan. Though of course right now we’re just taking the word of the prospective team owners for it, so let’s see what the fully fleshed-out proposal looks like. Hopefully the Post-Dispatch will remove its rose-colored glasses long enough to report on that, once it’s available.
I’ve gotten used to newspapers running headlines that contradict not only reality but the stories they themselves head, so when I saw yesterday’s Wall Street Journal headline “Atlanta Braves Owner Says County Wins Big From Development Near New Stadium,” I assumed most of it was probably wrong. And it is, undeniably: The only thing the Braves “owner” — not specifically identified, but probably actually CEO Derek Schiller, since he’s quoted directly later in the piece — says is that (in the WSJ’s words) “taxes and other income generated by the site are helping offset some of the county’s costs incurred by the Braves’ controversial $672 million suburban stadium,” which isn’t exactly the same thing. (The article also notes that the Braves are turning a tidy profit on the sale of three apartment buildings near the new stadium, which is very much not the same thing.)
The article does, however, reference a September study from September by Georgia Tech’s Enterprise Innovation Institute, done on behalf of the Cobb County Chamber of Commerce, which claims that public debt service on SunTrust Park come to $9.5 million a year, while the stadium has generated $18.9 million a year in new tax collections and “other benefits.” That really would be winning big. So is it true?
The report (and some executive summaries) can be found here. It is, just in terms of readability, horribly written — the numbers in the charts bear no obvious relation to those discussed in the accompanying text — but here’s the best I can understand it.
In terms of public costs of the new stadium:
Debt service on Cobb County’s $300 million stadium debt is $22.5 million a year, of which the Braves owners pay $6.1 million in rent, leaving $16.4 million a year for taxpayers to pay off.
$10 million a year is paid off by two Cumberland Special Service District funds (SSDs), wherein businesses “tax themselves in order to contribute to the stadium project.”
The county is putting in $1.2 million a year to a stadium capital maintenance fund, and spending an extra $970,000 a year on public safety and other additional operational costs of the stadium.
That would seem to come to $8.6 million in remaining annual public costs, but the report says it’s $9.5 million. (The difference may be because of added cost of things like building that damn pedestrian bridge, but it’s not clear — like I said, this thing is horribly written.) This is almost exactly what the Atlanta Journal-Constitution came up with in its own calculation, so that checks out.
(There’s still one big problem here, which is that the analysis assumes that the SSD money — which is a tax surcharge on local businesses — would only come in if the stadium were built. But we’ll come back to that in a second.)
On the benefit side:
$817,000 in sales taxes on ticket and concession sales to out-of-county residents
$905,000 in hotel and sales taxes from fans who traveled more than two hours to the game, on the assumption they came specifically for the game, stayed overnight, and spent the average that an overnight Atlanta-area visitor did on food and lodging
$89,000 in sales tax on Braves employee spending (no source given for this, other than the LOCI™ computer model)
$270,000 in taxes on taxable office property in the tax-exempt stadium, including copiers and ice-making equipment
That all leaves SunTrust Park as a $7.4 million annual loss to the county, which over 30 years would be cost taxpayers about $100 million in present value — not as bad as at first feared, but also nothing like “winning big.”
Ah, but that’s just the stadium! The big benefit of the stadium, according to the report, is actually the development that the Braves owners built next to it, plus the “halo effect” of rising property values on adjacent land. This is probably best presented in a chart from the report:
In short, the Braves’ stadium remains a money pit for taxpayers, but they’re building a whole lot of other stuff that’s not a money pit, so yay, win!
The problem here isn’t one of math, but one — really two — of logic. Yes, building a stadium at a public loss next to a mixed-use development project that’s a bigger public gain is a net public gain. But who the hell said anybody had to build the stadium? If people in Cobb County are clamoring to live and work and eat in a new fake urban district in the suburbs, by all means give it to them, but unless you think they’ll only do so if there’s a baseball team playing next door 81 times a year, don’t shackle it to a money-losing stadium.
Also, if Atlanta suburbanites were indeed hankering for more places to walk around and pretend they’re in the city without actually being in the city, there’s every indication that somebody would have given it to them somewhere — just not necessarily in Cobb County. Yesterday’s WSJ article even notes that Cobb may just be benefiting by stealing economic activity from other parts of the metro area:
“We have friends in Buckhead,” one of Atlanta’s upscale neighborhoods, said Mike Plant, chief executive of the Braves Development Corp. “We hear from them. They’re not real happy.”
So basically, what we have is that the Braves owners built a stadium that is costing taxpayers lots of money, but they also held out the carrot of an accompanying development that would steal enough revenue from neighboring areas to put the final numbers in the black — if you assume that nobody ever could have been convinced to build development there without a stadium. This is indeed an exceedingly common gambit, dating way back to the Brooklyn Nets‘ money-losing-arena-plus-a-bunch-of-development plan, and dating right up to the Worcester Red Sox‘ similar minor-league stadium project. It relies on the fact that it’s nearly impossible to say if a mixed-use development would have been built “but for” the accompanying subsidies — so if you attribute all the new taxes being paid to the subsidy, any new development looks like free money.
All of this makes it very, very hard to determine exactly where the Braves stadium falls in terms of historically bad sports subsidy deals, which is precisely the point. Ancillary development projects bring in new revenues, yes, but more importantly they muddy the waters of determining who’s paying what — still nobody, including me, has a good number for how much that Nets arena is costing New Yorkers — and justify handing over public cash to a baseball team that was turning a tidy annual profit even before building new apartment buildings next to its new stadium and selling them for a 22% return on investment.
If the Braves stadium is the wave of the future, in other words, it’s less a revolution in figuring out how to absolve taxpayers of stadium costs than a revolution in how to confuse taxpayers about who’s paying for what. They’ve already succeeded in confusing the Wall Street Journal — tomorrow, the world!
[ADDENDUM: Atlanta-area sports economist J.C. Bradbury responded to this report on Twitter last month — something I missed because Twitter is but a blur passing before my eyes — and came to similar conclusions: “The report isn’t as bad as many I’ve read, but it’s estimated $18.9 mil impact isn’t correct.” He also raises questions about whether the SSD taxes are really “businesses taxing themselves” or just taxes that the county could have levied on businesses and used for other purposes, which is an excellent point that is beyond the scope of this post, because it’s long enough already, but maybe another time.]
The Calgary city council is set to vote today on reopening talks with the Flames owners about a new hockey arena as part of an “entertainment district” — presumably this won’t include discussions just yet on how much the city would have to pay for one, since that only gets people upset — and just in time, the city-owned Calgary Municipal Land Corporation has issued some fresh renderings: Okay, that looks like an arena of some kind, certainly. It’s an unusual touch for renderings to show passersby bundled up against a driving snowstorm, but I guess that’s how we know that it’s Canada, if the Canadian flag didn’t tip us off.
Anything of the interior?
Okay, so the plan is apparently for Calgary to build an arena not just for hockey, but also for portals into adjacent dimensions, from which will extrude a warped version of space-time that will inexorably start to cover the walls and ceiling of the new venue, en route to engulfing all of Calgary, and eventually, our entire universe. Fortunately a lucky few fans will be able to use their glowing wrist bracelets to teleport to safety just in time, but for the rest of us, there will be no escape. Also, those upper-deck seats look like they have terrible sightlines.
There are few places to live in the District, and little to eat. Vacant, decaying buildings make up entire city blocks. There are almost no lights, save for those illuminating surface lots and parking garages.
Okay, then! But what do Detroiters themselves think?
Sean Swierkosz, general manager of the longstanding sports bar Harry’s, watched the Ilitches make progress, “but then it stalled”, he said. “I feel like I’m looking over the fence at my neighbor’s yard at his half-finished project or garage.”
Sure, but, you know, it’s Detroit, right? Isn’t a half-finished project better than none?
Notably, the landscape looks much different just a few blocks across The District’s borders, where Detroit’s neighborhoods are alive with redevelopment. Lofts list for as much as $650,000, and large residential projects are under way in the adjacent historic Brush Park neighborhood. Further up Cass Avenue, new restaurants, bars, and shops flourish on streets resembling the Ilitches’ banners’ renderings.
Does Buffalo want to remain in the football business?
We say yes to that, also. And to stay here long-term, the Bills will inevitably need a new stadium. The price for one will be likely more than $1 billion….
The current county lease on New Era Field will run out in five years. The Pegulas and Poloncarz are starting to stake out positions and float trial balloons. The balloons may not be full of hot air, but they should not be taken as anything more than conversation starters. The closer we get to the deadline on the lease expiring, the more serious the talks will get.
That … is a very confusing metaphor there (hot air normally means it shouldn’t be taken seriously, but hot air is what makes hot-air balloons fly and oh my brain). And the News editorial board, whose members presumably got their position because of long experience with the written word, didn’t stop there:
Some people keep their old car until it falls apart, but as a region we can’t afford to drive this stadium into the ground.
No no no when you drive something into the ground that’s “drive” as in driving a stake not a car, and anyway stadiums don’t have moving parts so they don’t wear out like cars do, oh just never mind.
In any event, readers can skip to the last paragraph of the editorial, which goes like so:
The Bills are part of our civic fabric and if we have to pony up some tax dollars or added ticket fees to keep the team from becoming the Portland or St. Louis Bills, that’s the cost of remaining a major-league city.
You better help pay for a $1 billion stadium that your elected officials say you can’t afford and that the team’s owners aren’t demanding, or else your team will move to one of two cities that have shown no interest in building new NFL stadiums, so there! The editorial writers seem to have forgotten that Buffalo would still have the Sabres even if the Bills moved to Oshkosh or Boise, but these guys were clearly on a roll, so don’t confuse them with facts, okay?
The nonprofit that owns the Green Bay Packers is looking to get into real-estate development near Lambeau Field, something that a local real estate attorney says is part of a trend for needing to make “a destination out of the facilities” to keep people from sitting at home and watching on TV. (Bloomberg also reports that the Packers are envisioning for-sale apartments as being marketed as “second homes for Packers fans across the country,” which is either fabulously optimistic or a sign that capitalism has gone very, very wrong.) I’d say it’s more that real-estate development can be extremely lucrative, especially when your ownership of a sports team gives you a leg up on getting access to cheap land, but the “more people are sitting at home watching on TV” thing is definitely a thing — though increasingly more people are sitting at home looking at YouTube on their phones, which could present an even bigger challenge to sports marketers.
I missed it a couple of weeks ago, but the Texas Rangers have released a seating cross-section for their new stadium, and it’s somewhat misleading — as you can see, they make the new design look a bit better by moving the front row of seats closer to home plate, which doesn’t necessarily help depending on what the rest of the stadium geometry is like — but also somewhat instructive, in that the team is definitely moving the upper deck closer to the field by having it overhang the middle and lower sections more, which is a promising development. Not that this necessarily means Globe Life Field will have great cheap seats — Globe Life Park, its predecessor, has an insanely distant upper deck, at least from what I’ve been able to determine from watching games on TV — but at least it’s a move in the right direction. Of course, this is only a cross-section at one point in the stands — we still don’t know what’ll be up with the seating sections suspended in midair.
[NHL commissioner Gary Bettman] said speculation that a potential NHL lockout in September 2019 might delay a Seattle launch until October 2021 was overblown.
“The focus for everybody is 2020,” Bettman said. “That’s what we’re focused on. There are a variety of factors that could impact that, including the construction timeline. The sooner construction can begin, obviously, the more likely an early start.”
The fight over an NBA team, on the other hand, is just beginning, and could yet end up involving proposals for relocation, not just expansion. So it’s still possible that somebody will end up getting screwed by Seattle’s new arena, even if it’s residents of some other city that gets shaken down for money via a “You don’t want us to move to Seattle, now do you?” threat. Everything’s a tradeoff — especially under modern predatory capitalism.
The Rays tried a decade ago to get a new baseball stadium built there and never fully let go of the idea — which is why there was immediate speculation there was more to the Rays-Rowdies deal than just control of a soccer team.
Most pointedly, were the Rays seeking an alternative St. Petersburg stadium site to their proposed new home in Ybor City, where talks have been ongoing to bridge the funding gap in completing that $892 million deal to build a Tampa ballpark?
Rays execs immediately pooh-poohed the idea, saying they just wanted to get into the soccer business. And there’s reason to believe them, as the reason why the Rays gave up on the Al Lang Stadium site in the first place is because it’s probably too small for even a smallish MLB stadium, so it’s not really a very good option — not to mention that the Rowdies don’t actually own the stadium, just management rights to it.
Ah, but if you’re looking less for a viable stadium site option than for a sorta-viable stadium site threat, now we’re talking. Rays execs have been talking up Hillsborough County, which is the Tampa side of the bay, as more accessible to fans; but Pinellas County, which is the St. Pete side, has more tax money available to help fund a stadium, partly because Hillsborough has already spent its hotel taxes on buildings for the Buccaneers and Lightning. So even if Pinellas officials may not be eager to spend this tax money on the Rays, it’s at least an option that Sternberg and company will likely want to keep open.
All of which is to say: Sternberg probably bought the Rowdies just to buy the Rowdies, but if it helps keep alive some semblance of a bidding war between the two counties, he’ll surely be happy enough to take that as a bonus. He hasn’t done a great job of shaking loose public subsidies for his team so far — he managed to get out of his lease clause that prevented him from looking for new stadium sites in Hillsborough, but that’s only given him a site with a giant funding hole that shows no signs of going away — but where there’s competition, there’s hope. And Rays fans had better hope it comes soon, because the team is … er, actually, coming off a surprisingly resurgent season with a host of exciting young players and turning a tidy profit to boot, so what was the big deal about the stadium again?
People who want an NBA franchise in Louisville say they’d consider building a new arena for it, despite Louisville already having two perfectly good basketball arenas, which is arguably even more crazy than the idea of Louisville getting an NBA franchise at all.
An official in Gov. Mike Parson’s office told the Post-Dispatch that officials with the state Department of Economic Development met with Major League Soccer representatives as recently as Tuesday, and that the Parson administration was interested in working on a stadium proposal.
Anyway, MLS may still be a Ponzi scheme, but Ponzi schemes can last a good long while if they’re run well and can come up with a continual supply of new marks. And with both prospective owners and prospective cities lining up to prove Apocryphal P.T. Barnum right, it looks like it’ll be a while yet before any chickens come home to roost.