Friday roundup: Titans want Miami-style renovation to 20-year-old stadium, Orlando throwing more cash at World Cup hopes, and urban myths about small stadiums

I’m back from vacation, and thanks for sticking with my slightly unpredictable posting schedule for the last couple of weeks. (As opposed to my usual slightly unpredictable posting schedule.) It was an eye-opening trip to, among other places, a city that built a stadium with public money and now suffers from a legendarily bad public transit system, though it just might be unfair to blame the one on the other.

Anyway, stadium news kept coming at us fast this week, so let’s get to it:

NY state spokesperson on last-minute Isles land appraisal: Ha ha, we had it for months but you didn’t ask right, joke’s on you

So this escalated quickly: Yesterday, I noted that Jack Sterne, the Empire State Development spokesperson assigned to the New York Islanders arena project, had told me that an assessment of the value of New York state land being leased to the developers for $50 million would be forthcoming before the ESD board’s vote — and indeed it was, a whole three and a half hours before. And the released documents only included the executive summaries of the assessments, which contained no details of how the land values had been arrived at, making it impossible to determine why their conclusions ($35.9 million to $41 million) were so much lower than those arrived at by looking at comparable nearby land values ($114 million to $340 million).

I immediately emailed Sterne to ask if he could provide more details. He wrote back:

Hey Neil — yes I believe the summaries are in the board materials.

If you’re looking for additional docs you are always welcome to FOIL — https://esd.ny.gov/freedom-information-law-foil

A FOIL — Freedom of Information Law request, in New York state terms — typically takes at least a couple of months to get a response to, and some state agencies have been known to drag it out for a year or more. So this wasn’t entirely helpful with a vote just two hours and change away at this point, and I noted that here in a comment. (Then the board unanimously voted to approve the plan, though the arena still has a couple more hoops to jump through before it’s finalized.)

Norman Oder, who’s been covering the Belmont arena shenanigans at Gotham Gazette, then picked my comment up in a tweet:

Jack Sterne then responded on his personal Twitter account:

And:

Sterne almost has a point: Oder, or I, or anyone else, could have filed a FOIL request months ago to get the full appraisals. (According to the dates on the executive summaries, they were submitted to ESD on December 3, 2018 and July 3, 2019.) If, that is, we had known they existed. But when I had asked Sterne previously for the documents, I got answers that in retrospect seem designed to throw researchers off the trail.

On July 8, I asked Sterne via email: “When I spoke to one of your predecessors early last year, they said that ESD would conduct an appraisal of the arena project land before the final presentation to the ESD board. Is that still happening before the final vote at the end of the month?”

Sterne answered several of my other questions in a subsequent email, but ignored this one. On July 22, I tried again: “Is ESD still conducting an appraisal of the value of state land being leased for the project, and if so is there a target date for releasing that appraisal?”

Sterne’s response:

The appraisals will be completed by the time the General Project Plan is approved by the ESD Board.

Now, this isn’t technically lying: The appraisals had already been completed, in one case for months, meaning they would indeed be completed by the time of the ESD board’s approval vote! It is at best, however, deceptive, since an honest answer would have been “No, we’re not still conducting an appraisal, we already have two in hand!”

It’s also pretty exceptional behavior from a press flack, whose job is usually to try to spin or stonewall reporters or sometimes call them up and yell at them when they don’t like what was written. (Sterne has done that, too, but I’m used to that.) All this, combined with the abbreviated last-minute release of the appraisal documents, is certainly enough to fuel suspicions that there’s something in those full appraisals that ESD — or Gov. Andrew Cuomo, who controls ESD — really doesn’t want anyone to see until all the t’s are crossed in the deal. We’ll find out once they process my FOIL request, I guess — hopefully before the new arena opens for its first game.

 

 

NY state board to give final signoff to Islanders arena plan today, still has no idea how much state’s land is worth (UPDATED)

New York’s state-run Empire State Development corporation board is holding its final approval vote on an Islanders arena development plan at Belmont Park today at 3 pm, which reminds me of something:

An ESD spokesperson contacted the Voice after publication to say that in according with its guidelines and state law, the agency will conduct an appraisal of the Islanders arena project land before the project is presented to the ESD board of directors following the conclusion of the environmental review in 2019.

An ESD spokesperson confirmed to me two weeks ago that the appraisal “will be completed by the time the General Project Plan is approved by the ESD Board.” So, they have four hours left — hope the ESD board members can read complicated land value assessments really fast!

The appraisal is important because the Islanders owners are only paying $50 million for 43 acres of state land for the project, a figure that could be as much as a $300 million discount on the land’s actual value. Or it could not! Land appraisals are hard, which is why it’s important to hire trained professionals to conduct them, well before you have to decide on whether a sale of public land is a fair deal or a complete giveaway!

(It’s maybe worth noting that the state most recently has been saying that the $50 million is really the developers’ private contribution toward a new train station for the project, which would make the actual land sale price be $0. If “actual” has any meaning here anymore.)

I emailed my ESD contact again this morning to ask to see the appraisal, but haven’t heard back. It’s altogether possible the report will appear just in time for the hearing — but that certainly won’t give any time for anyone on the board to read the report before voting, let alone members of the public.

If so, it would be only the latest in a long line of, shall we say, not enthusiastically democratic steps taken by the state in its rush to approve the Islanders plan after a year and a half of mostly behind-closed-doors talks: The initial ESD board meeting last month was held on a Monday afternoon after public notice only went out late Friday; and the Public Authorities Control Board, which is supposed to vet actions by public authorities like ESD, went ahead and gave its approval to the plan last week, despite all the final details not being in yet. Whether the final Islanders deal turns out to be a massive public money pit or not too bad, it looks like we won’t know for sure until after the deal has been decided — the phrase “no way to run a railroad” comes to mind.

UPDATE: The ESD board meeting materials have been posted, and they include two separate appraisals — one dated December 3, 2018, the other July 3, 2019 — that estimate the public land value at between $35.9 million and $41 million. The first provides no information about its methodology at all; the second says it bases its figure on the future income that the site could produce, but says nothing about how it calculated that projected income. Lots of questions here, obviously, which will almost certainly take more than (checks clock) three hours and 10 minutes to answer.

Oklahoma City soccer team owner wants tax money for new stadium, because “economic boost” and “diversity”

When I relayed the news last week that Oklahoma City’s fourth iteration of its MAPS sales-tax hike was being eyed to fund upgrades to the Thunder‘s arena that was already built and upgraded with previous MAPS sales-tax hikes, I neglected to note that USL team OKC Energy F.C. also wants some tax money for a new soccer stadium, because why wouldn’t they? Their existing stadium was entirely rebuilt way back in 2015, which is a lifetime if you’re a stadium or a mayfly.

Team co-owner Bob Funk, Jr. had this to say about why he’d like between $37 million and $72 million in public money for a new stadium for his minor-league soccer franchise:

“This is an opportunity to once again set our city on a global stage. It will connect and unify Oklahoma City’s diverse cross-section of cultures and provide a powerful economic boost to our urban core.”

Note that Oklahoma City already has a USL team, so that’s not enough to set it on a global stage. (Nor is the presence of the Thunder, apparently, though that “once again” implies that global stages expire about as often as mayflies.) Moving the soccer team from one stadium to another, though, would be a powerful economic boost, something that KFOR explains thusly:

The first option represented a $37 million to $42 million investment for an 8,000-seat stadium that would accommodate soccer, high school football, rugby, lacrosse, concerts and festivals.

Organizers believe it could host more than 60 events each year, which would bring $60 million annually to the city.

The second option was a $67 million to $72 million investment with 10,000 seats, shade structures and other amenities to improve the fan experience. Additional restrooms would be included, along with a larger stage and secondary stage. Organizers say this venue could host more than 80 events each year, which would bring over $79 million to the city.

Okay, so, just no. There is no way that the city is going to earn $79 million a year in rent (or sales taxes or whatever) on 80 events a year at a 10,000-seat stadium — that would be $100 a ticket, which would be a somewhat hefty fee for a team or stadium operator to pay.

Presumably what the “organizers” (which seems to mean Funk and a would-be stadium developer, though the article never says outright, because that would be committing journalism) mean here is $79 million a year in economic impact, which is a completely different thing adding up all the dollars spent in a region connected with a development project. That number is still almost certainly inflated — people attending minor-league soccer matches are unlikely to spend $100 total in the local economy, and even if they do they’d likely spend it just the same if the Energy F.C. were in their old stadium, or didn’t exist at all, because there are other things to do in Oklahoma City other than watch soccer — but saying “in economic impact” would have been at least marginally less misleading than “bring over $79 million to the city.”

Anyway, here‘s some vaportecture of the proposed stadium, which will apparently be used to watch dangerously over-capacity concerts involving fireworks displays at night, and to watch invisible football teams while wearing identical red floppy hats by day. Bonus points if you can spot any diverse cross-section of cultures getting unified!

Friday roundup: Developer dreams, MLB expansion dreams, and stadiums that only exist on your TV

Still traveling, so super-brief Friday roundup this week:

Diamondbacks courted Henderson, Nevada for a $1B stadium (then stopped, but still)

Um:

Last year, Henderson [Nevada] officials quietly began a push to lure the Arizona Diamondbacks from the team’s Phoenix home to their city, records obtained by the Las Vegas Review-Journal show.

Um:

According to the presentation, Henderson hired a consultant to conduct a financial analysis, assuming the ballpark would have 32,000 seats and space for 4,000 standing-room-only ticket holders. The Diamondbacks would serve as the primary tenant for a 30-year term and the stadium would be publicly owned and exempt from property tax.

The consultant estimated the ballpark would cost about $1 billion to construct.

Um:

On Jan. 4, [Derrick] Hall, the team’s CEO, sent Derrick an email with the subject line, “Have not forgotten you!”

“Hopefully there is still strong interest there as we go through the MLB motions,” he wrote.

Let’s be clear about one thing: Given the relative sizes of their media markets, the Arizona Diamondbacks owners are extremely unlikely to leave Phoenix for the Las Vegas area anytime soon. (The last contact between the two parties was apparently in February.) But that doesn’t mean they won’t play footsie with Nevada as a way of scaring Phoenix into coughing up that new stadium that they badly want it to, just as it won’t stop Henderson — a small city near Las Vegas that is best known for paying to build a Vegas Golden Knights practice facility and previously suing a developer who promised to build an NFL stadium there but didn’t — from getting free media impressions by exchanging a few emails with an MLB team exec.

Still, it’s another sign that there are still plenty of cities out there eager to fill the threat gap that MLB has had ever since putting a team in Washington, D.C., and that MLB teams are happy to have them do so. The D-Backs’ stadium demands have been in a bit of a holding pattern of late, but I’ve got a feeling they’re likely to heat up real soon now.

Thunder owner seeks $135m in sales-tax money to upgrade arena that already got $195m in sales-tax money in the last 20 years

Way back in the early days of this website, there was a man named Rick Horrow who used to go around to small-to-mid-size cities selling them on the idea of a 1% sales tax hike to pay for big construction projects, usually involving sports venues of some kind. As I recall, Birmingham told him to take a hike, as did Norfolk, but Oklahoma City thought he was the bee’s knees, and signed up for his MAPS plan to use sales-tax money to build, among other things, the new arena that eventually became home to the Thunder.

OKC is now in its 4th iteration of MAPS — one was called, hilariously enough, “MAPS for kids,” which always makes me think of this — and don’t you know it, the Thunder owners think it’s high time for them to get another cut of the boodle:

In the third day of proposals for MAPS 4, officials made a pitch for up to $135 million in improvements to Chesapeake Arena and the Thunder practice facility…

The proposed budget includes $55 to $60 million for fan amenities, $30 to $33 million for other arena improvements, $12 to $15 million for practice facility enhancements and arena maintenance at $23 to $27 million.

I would normally make a quip here, but, guys, I’m so tired. Some days writing these posts feels like shooting fish in a barrel; other days it feels like shooting fish that are continually replenished from some unseen reservoir, and that will continue to appear no matter how many I shoot. Hell, I’ve even already written about teams that keep going back to the well for more cash year after year once they get a new stadium — what more is there to add here, other than, “Yeah, the Thunder owners are doing it too”?

Instead, how about I just link to a page that lists Thunder owner Clay Bennett’s net worth, and describes how as a minority owner of the San Antonio Spurs, he maneuvered for the New Orleans Hornets to be temporarily relocated to Oklahoma City, helping pave the way for him to buy the Seattle Sonics and move them there permanently? Yeah, that feels better. Here’s some vaportecture of people at a bar for your trouble:

Carolina Panthers owner wants public to pay to replace his 23-year-old stadium so he can have one with a roof

Carolina Panthers owner David Tepper, who is already getting an astonishing $160 million or so from the state of South Carolina for a friggin’ practice facility, has previously hinted that he could threaten to move the entire team to South Carolina and suggested that his current stadium, built all the way back in 1996, maybe should have a roof added. But in the nearly 15 months he’s owned the team, Tepper hasn’t outright come out and said he wants to tear down a 23-year-old stadium that he’s being paid $14.6 million a year to play in and have somebody else build him a new one — until now:

Tepper told Ben Fischer of the Sports Business Journal he hoped to build a new retractable-dome stadium in Charlotte, as long as there was taxpayer help.

“At some point, I would make a big investment if I could get the state and others on board in a new stadium that would be great for soccer and great for football,” Tepper said, referring to his bid to bring MLS to Charlotte. “The economy’s big enough for a revenue tax, a hotel revenue increase that would go a long way to help pay for a new stadium.”

Well, sure! The economy is big enough for lots of things! Not everything at the same time, mind you, so any money spent on a new stadium wouldn’t be available for something else, but he’ll make an investment too, so it wouldn’t be all taxpayer money, okay?

No reply yet from Charlotte or North Carolina officials, and Tepper called this a “long-range plan,” so we’re likely going to be hearing about this for a long while, likely years. I can only hope that every article from here on out ends the way NBC Sports’ does:

Tepper is the richest single owner in the NFL, with an estimated net worth of over $11 billion.

In fact, let’s all make a vow right now to refer to Tepper that way on every reference. As with my so far unsuccessful campaign to require that former Reagan, Bush, and Trump official Elliott Abrams be identified by any news media he appears on as “convicted liar Elliott Abrams,” it’s only a matter of truth in advertising.

Calgary just bought itself a new Flames hockey arena, but at what cost?

Welp, that went about as expected: The Calgary city council voted 11-4 yesterday to build a new Flames arena, just eight days after most of them learned about the plan and following just a few hours of debate. The estimate construction price tag is $550 million, with the city and team owners splitting the costs, and the team getting the vast majority of the revenues.

Among the highlights from yesterday’s council meeting:

  • Several councillors asked for a delay until September so that they could fully vet the arena plan — as one remarked, he’s spent more time researching buying a car than he got to on this deal — but the Flames owners said no. And since the deal itself contained a poison pill where it would self-destruct if not approved by yesterday, the council had no choice but to vote it up or down, with no opportunity even to suggest changes.
  • Many of those voting yes cited a figure, provided by the city’s CFO, that the net present value cost of the deal to the city would be just $47 million, thanks to ticket tax money from the arena and incremental property taxes from the surrounding development that would help defray costs over 35 years. This puzzled me at first because the lowest figure I could come up with was $138.9 million, but it turns out the CFO used the city’s projected bond interest rate of 2.5% as the discount rate for calculating the future value of money, which makes taxes that won’t be collected until the 2050s somewhat less worthless. This is not necessarily the best way of choosing a discount rate, and there are other questions about whether all those revenues should really be counted as defraying the public’s cost (see below), but at least the math checks out a bit better. (I still get at least $60 million for the net present value cost, even using the 2.5% discount rate.)
  • There was some concern expressed about the Flames owners’ exclusive option to buy two parcels of city land valued at an estimated $100 million, but it didn’t get much debate in the limited time available.
  • Calgary Mayor Naheed Nenshi said the deal is better than most other North American sports venue deals — a pretty low bar, as regular readers of this site will already know — adding: “It was important [that] we have a great financial deal and I think we did, but it was also important for us to think about the intangibles that we are investing in. I wanted to make sure we had a great balance of social and financial return, and I think we’ve accomplished that here.”

Okay, so it’s impossible to put a value on “intangibles” like ensuring that the Flames stick around for 35 years without move threats (not that the team owners were threatening to leave, except when they were). But what about that financial return?

The biggest problem is counting future property taxes on the surrounding development as paying back the city’s costs. This would only be new development, yes, but there’s no way to guarantee that it would be new development that wouldn’t happen without the arena, at least somewhere in the city. (Studies of whether new arenas spur increased economic growth come down decidedly on the side of “What, are you high?”) Plus, as discussed here previously, property taxes on new development aren’t a windfall, because they’re already needed to pay the costs of all the city services new development requires — police and fire protection, schools for any children living in new housing, etc. — so counting them as available to pay off an arena is double-dipping. If we throw out the property tax revenues, even using the city’s lowball 2.5% discount rate, suddenly the city’s present-value costs balloon to $165 million. (And probably much more than that, since the ticket-tax money would be significantly back-loaded thanks to ticket prices rising over time, but the city hasn’t provided a breakdown of how those revenues would change over time.)

Then there’s the fact that the Flames would get the land for free — as a swap for the site of the Saddledome — and would pay no property taxes on the arena itself, which is typical for U.S. city-owned arena deals but much less so in Canada. These should both be considered subsidies to the team, but there’s no way to put a dollar value on them without more number-crunching, which there wasn’t time for in the past eight days.

So we’re looking at a city net cost of probably somewhere close to $200 million, at minimum. Meanwhile, the Flames owners would put up the same $275 million up front as the city, but would get way, way more in return: All the revenues from selling tickets (except for that 2% ticket tax carveout) and concessions and ad signage and most of the naming-rights money, and so on. A recently revealed study from 2016-17 by University of Michigan sports economist Mark Rosentraub estimated that the Flames could see increased revenues of $48.7 million per year — even if that’s before deducting their debt payments for the new arena, it would leave Murray Edwards and his fellow owners clearing about $30 million a year in new profits, while the city is losing millions of dollars a year on its share.

And that’s the most damning perspective on this deal: Not that it will bankrupt the city of Calgary (it won’t) or that it’s significantly worse than other awful arena deals out there (it’s not), but that the city council has entered into a partnership with a private sports team where they split the costs roughly down the middle, but the private team owners collect virtually all of the resulting revenues. That is a huge gift to the rich dudes who own the local hockey team, and saying well, at least the city won’t take too much of a bath on its part, if you squint at the numbers right is pretty cold comfort.

None of which matters much now, as the deal is done, with Calgary taking its place alongside Minneapolis and Miami and a whole bunch of other cities that were the poster children for holding the line on sports subsidies, until suddenly they weren’t. Can we please stop pretending that the stadium subsidy racket is drying up now? It may require jumping through a few more hoops these days, but owning a pro sports team remains one of the best ways, short of becoming a defense contractor, to make money off of the public till.

Calgary city council is really going to approve $275m in Flames arena funding with no debate

The vote on putting $275 million (and maybe more — see below) in city money into a new Calgary Flames arena doesn’t take place until tomorrow, but it’s already becoming clear which way the council is going to go:

The majority of council members have indicated support for the deal, including Mayor Naheed Nenshi, who last week said the arena would create public benefit through “intangibles.”

“It’s about bringing community together. It’s about uniting people,” Nenshi said. “This deal makes sense on its own merits.”

Also, councillor Jyoti Gondek said a new arena was needed so that people could watch e-sports like League of Legends and Fortnite. With a straight face, presumably, though the Calgary Sun doesn’t say.

Meanwhile, a bunch of economists have noted the same thing I did here, which is that projecting $400 million in new city revenue over 35 years is not the same as $400 million today, which means the city will almost certainly be taking a loss on the deal — and that’s if taxes on new spending don’t simply cannibalize taxes on old spending, which will almost certainly be the case given that this is just a matter of moving an arena a few blocks away. Also, it’s not counting any cost overruns, an agreement on which “still needs to be worked out,” according to the Toronto Star, but the “expectation” is the city would be on the hook for 50% of them.

If that’s all somewhat confusing and seems to call for a more in-depth examination of the numbers, well, tough, because the council is voting tomorrow. This is kind of an amazing ending to a years-long arena debate where the city seemed set on holding firm against any significant public subsidies, but also kind of not amazing, because that’s how these deals tend to happen: not for a long, long while, then all at once.