Friday roundup: Grading Mariners subsidies on a curve, Cobb County could close parks to pay off Braves debt, Beckham punts on another stadium deadline

Congratulations to the team that had never won the hockey thing winning it over the other team that had never won the hockey thing because it was a new team! And meanwhile:

Look out, Saskatoon, here comes Mark Rosentraub with his tales of arena milk and honey

My apologies for not keeping you up to speed on events in Saskatoon, where the city has been considering building a new downtown arena, at a potential price tag of $375 million plus land costs, to replace the 30-year-old SaskTel Centre. That’s been going on for a few months; I mention it now because University of Michigan sports economist Mark Rosentraub is in town (in Saskatoon, I mean, not in my town or yours, unless you live in Saskatoon) to give a talk about building a new downtown arena, and how totally awesome it would be:

“Sport venues have been very, very successful,” said Mark Rosentraub, professor of sports management at the University of Michigan…

“There is no city where we have not been able to literally put something together something where the public sector gains and the private sector gains,” he told CBC Radio’s Saskatoon Morning.

Setting aside Rosentraub’s odd syntax — it’s a transcribed radio interview, I’ll cut him some slack — you may be forgiven for wondering, What, what the hell is he on about? Isn’t this entire website a 20-year record of cities that have not been able to put together something where the public and private sectors both gain?

Rosentraub has long been an odd duck in the sports stadium world. Way back in 1997, he wrote a book called Major League Losers, which, as you can probably guess from the title, talked about private sports stadiums as bad deals for cities. Since then, though, he’s been more sunny on the prospect, noting that building venues downtown can move economic activity to the city center — true, if your only concern is where people spend their money and not how much they spend in your metro area overall. It will be left as an exercise for readers to determine whether this change of message is related to Rosentraub’s side business of working as a consultant for cities and teams that want to build downtown stadiums and arenas.

Anyway, building a new arena isn’t an inherently terrible idea, if the city will own it and get any increased revenues from it, and — crucially — if those new revenues will be enough to make it worth the $400 million-ish price tag. The only sports tenants are the minor-league junior hockey Saskatoon Blades and the National Lacrosse League team the Saskatchewan Rush, so this deal would have to pencil out based on being able to draw more concerts to town. Could Saskatoon make an extra $25-30 million a year just by offering more concession stands and restrooms? That’s the interesting and important question that needs to be asked, rather than nattering about how an arena can “anchor” an “entertainment district.” I can recommend several sports economists, or even arena managers, who could begin to address that question, if anyone in Saskatoon is interested.

Russell Wilson gets in helicopter with wannabe Portland MLB owner, struggling newspaper devotes precious staff time to covering it

I’m not honestly sure exactly what has sparked this sudden flurry of interest in applying for MLB expansion franchises that MLB isn’t even offering yet — I guess MLB commissioner Rob Manfred keeps vaguely talking about how expansion would be nice, but that seems a bit much to be basing entire development plans around — but if you want a summary of where the madness is leading in a nutshell, you could do worse than this photo caption from the Oregonian:

Russell Wilson and Ciara take a selfie Saturday after holding a news conference in Northwest Portland to discuss their investments into the Portland Diamond Project’s effort to land a Major League Baseball team.

Yes, this is where journalism is right now: The quarterback of the Seattle Seahawks and the singer of “Goodies” took a helicopter tour of potential stadium sites with potential MLB owner Craig Cheek, were “whisked in a Mercedes SUV to Saturday’s news conference” (per the Oregonian), then posed for some photos in front of an “MLB PDX” backdrop. And then some poor college football writer who is one of the few people left in the newsroom had to write the whole thing up for the Oregonian, probably with occasional breaks to check Indeed.com for alternative career opportunities.

If you were hoping for any word on what an actual Portland baseball plan would look like, or what MLB would demand for an expansion franchise (either in terms of a franchise fee or stadium amenities or whatever), or really any details at all, needless to say this was not the article for you. Art Thiel at SportspressNW made a slightly better attempt, but even he was forced to rely on speculation and a few hints dropped by Manfred over the years, because really there is no solid information at this point at all. When a news vacuum exists, it will apparently now be filled with selfies, which is as good an epitaph for our age as any.

Poll of Austin voters finds they want soccer stadium to pay property taxes and rent and share revenue; poll of Crew owner finds he don’t wanna pay none of that

With Columbus Crew owner Anthony Precourt having set a June 30 deadline for the city of Austin to approve a stadium deal so he can relocate his soccer team — you’d think that a guy who has his heart set on moving to one particular city wouldn’t be in a position to set ultimatums, but as we’ve seen, arbitrary deadlines are an integral part of the stadium game — things are starting to heat up in the stadium-proposal-mulling department:

  • A report released by the city of Austin on Friday has ruled that Precourt’s preferred location at McKalla Place is “a suitable site for a Major League Soccer stadium,” while also evaluating how it would work for a mixed-use development that would include affordable housing — which came down to we don’t have time to fully study this, but we could if you want. It also estimated that preparing infrastructure for the site would cost about $16 million for soccer (vs. $30 million for the housing plan), noting that “typically the City would request the developer to pay for these costs but the sharing of those costs can be negotiated through a public-private partnership.”
  • An accompanying economic impact study by Brailsford & Dunlavey found that the stadium would provide a net present value of $16.8 million in new tax revenues over its lifetime, assuming that 50% of soccer ticket buyers were from within Austin, 40% traveled in just for the game from outside Austin, and 10% were visitors who stayed overnight — numbers that B&D apparently made up out of whole cloth, or at least if there’s a reason behind them, it’s not in their report. Also not in the report: any analysis of the economic impact of an alternative use of the land, such as for a mixed-use development.
  • Also on Friday, Precourt issued the latest iteration of his stadium proposal, which is heavy on photos featuring soccer boots and fans being bathed in confetti, but if you dig way down to page 155 includes the detail that Precourt would pay to build the stadium and would then donate it to the city, which sounds generous except when you consider that then Precourt would get out of paying property taxes on the land. Precourt would pay only $1 a year rent over the course of a 20-year lease, and would collect “all naming rights, sponsorship, and advertising revenue within the Stadium Site,” though at lest he would also be responsible for “all capital repairs, replacements, and improvements” to the stadium over the course of the lease.
  • An online survey of 600 likely Austin voters found that 43% think Precourt should purchase private land, and only 19% think he should use public land; 83% think the city should charge fair market value for any public land used; 87% think Precourt should have to pay property taxes; 84% think the city should get some revenue from stadium events; and 83% think Precourt should pay for infrastructure costs of a new stadium. In other words, likely Austin voters overwhelmingly oppose pretty much everything about this deal.

The Austin city council has two work sessions and two public meetings scheduled in June before Precourt’s self-imposed deadline; they clearly have their work cut out for them.

Friday roundup: The news media are collectively losing their goddamn minds edition

It’s a full slate this week, so let’s do this!

Rhode Island house speaker now says he’ll okay $38m in PawSox stadium subsidies if he can make the city cover any state revenue shortfalls

If you’re a close follower of Rhode Island state politics — we’ve gotta watch something now that Roseanne has been canceled, right? — you’ll recall House Speaker Nicholas Mattiello as the guy who keeps declaring Pawtucket Red Sox stadium plans dead because the people of Rhode Island hate it. Though he’s also the guy who kept holding hearings on a stadium proposal anyway, and now he’s the guy who decided that giving $38 million to a minor-league sports team is just peachy so long as the money is capped there:

Mattiello’s plan — its fine print is still being written — will follow the contours of ballpark legislation passed by the Senate earlier this year, he told reporters Tuesday, but remove state backing from more than $80 million in proposed borrowing.

“I think the most important thing that we can say about it is, once we set up the framework, that there is no state guarantee,” Mattiello said. “The state of Rhode Island taxpayers will not be responsible for any of the debt associated with that project.”

The new plan goes like this: The stadium would still cost $83 million to build, which would be paid back by a combination of the team, state, and city. But the state’s share would be limited to tax money from a tax increment financing district around the stadium — in other words, increased property taxes would be kicked back to pay for the stadium construction instead of going into the state’s coffers like it normally would.

This would indeed solve one of the big problems with TIFs — that sometimes they don’t actually generate any revenue and local governments are left holding the bag — but not the more fundamental problem, which is that they often just cannibalize money that the public would be getting anyway, if, say, a new stadium means that a bunch of development gets built there instead of across town.

Anyway, with the state limiting its exposure under Mattiello’s plan, any TIF-related shortfall would have to be covered by … who would it have to be covered by, exactly?

“If revenue comes up short, the Pawtucket Redevelopment Agency will have to figure out how to deal with it,” Mattiello said.

Oh, excellent, so if the state can’t find enough taxpayers to pay its stadium bills, then city taxpayers will have to pick up the slack. I’m so glad that Rhode Island’s elected officials are there to be watchdogs of the public interest, aren’t you?

MLS decides Cincinnati has held breath and turned purple enough, awards city expansion franchise

Six weeks after voting to approve $63 million in soccer stadium subsidies and yet still not getting an MLS expansion team, Cincinnati finally has an MLS expansion team:

“We fought hard over the last six months … to get a stadium site that is unprecedented,” [MLS commissioner Don Garber] said. “This could be Bernabéu. This could be Anfield. You have a stadium that’s going to be built in a great, great part of the community.”

Nice name-checking of the homes of the two Champions League finalists, though I regret to inform you that F.C. Cincinnati is never going to be in the European Champions League finals, for many, many reasons.

Anyway, the holdup was apparently to get all the t’s crossed and i’s dotted with Cincinnati’s stadium plan, which makes sense from the MLS’s point of view. Though maybe less sense when one considers that the t’s aren’t actually any more crossed than they were back in April:

Opponents of FC Cincinnati’s West End stadium could launch a petition drive to put a key part of a $50 million public financing package on November’s ballot, a referendum effort that could deprive the club of $17 million in public funding from the city for infrastructure and site preparation.

If voters killed such funding, it probably would not derail the stadium for the new Major League Soccer franchise, but organizers see it as a way to make the project more fiscally responsible for taxpayers at a time when the city of Cincinnati faces a budget deficit of up to $34 million.

So okay then. Either MLS thinks that the referendum drive will fail because the city structured its stadium vote as a no-referendum-backsies-allowed “emergency” measure, or they figure they can get some public body to pay the $17 million either way, or they were just sick of waiting around and needed to start selling season tickets. In any event, Cincinnati is now MLS’s 238th franchise (press reports say 26th, but it sure feels like 238); Sacramento, Detroit, and everybody else, please come back later to begin a new bidding war, because everybody gets bees an MLS franchise!

Minnesota made a squillion dollars from Super Bowl LII, say people paid to say such things

If you were running a business, how would you figure out how much money you made at the end of the year? You could do an estimate of how many customers entered your store each day, estimate how much you think they spent on average, subtract a theoretical number for your costs per item sold, and call that your best guess. Or you could, you know, actually look at how much cash you have at the end of each day, and count.

The latter method is how economists prefer to calculate the impact of sporting events: Add up the tax revenues during the big game or games, and compare it to tax revenues during a normal month. If you’re an economic impact consultant who’s paid more to come up with big numbers than accurate numbers, though, it’s often better to use the former method, since there’s a lot more wiggle room for truthiness.

Which brings us to yesterday’s headlines that hosting Super Bowl LII brought in $370 million in new economic activity for the state of Minnesota:

That was the net new spending from the 10-day event Jan. 26-Feb. 4, according to an economic impact report released Tuesday by Gov. Mark Dayton.

The results, which are in dispute, came in $50 million over pre-event projections by Rockport Analytics made years in advance. Rockport, based in Pennsylvania, also wrote the final report.

If you’ve been reading this site for a while, you’ve probably already spotted the first problem, which is that this is economic activity, not economic benefits. So part of that money includes $179 million in spending by the NFL’s broadcast partners, much of which likely went directly into the pockets of the NFL, never actually touching the Minnesota economy. As far as actual tax revenue goes, the report estimated $32 million in new receipts.

That number, though, was goosed by including increased property tax receipts, I guess on the grounds that hotels are worth more when they can sell Super Bowl stays once every couple of decades?

And then we have our old friend the substitution effect, where one has to account for any money that would have been spent locally anyway, either because it was spent by locals who’d be in town regardless, or because Super Bowl tourists displaced other tourists (and locals) who steered clear of town because they didn’t want the hassle of dealing with football fans. The study trimmed about 18% from its projected economic activity for substitution, a number that it arrived at thusly:

“The average visitor spent $608 per person per day,” said Ken McGill with Rockport Analytics, a consulting company that looks at the economics of big events and wrote the report on the 2018 Super Bowl. “We interviewed, and we literally intercepted visitors … and asked them where they were from, what they were spending in certain categories and whether they’d come back.”

This, needless to say, is not rigorous science, since people are terrible reporters of their own spending activities. And, on top of that, Rockport wasn’t able to intercept anyone who would have been in town if not for the Super Bowl, since they were off doing something else.

Fortunately, Minneapolis’s chief financial officer is calculating the actual changes to city tax revenues during the Super Bowl, and will present those numbers to the city council in June. While we wait, maybe we can pass the time by seeing how things went the last time tax officials fact-checked an economic consultants’ claims:

Minneapolis All-Star Game impact overstated by 27-72%, says state revenue department

Ah, well. We’ll always have the excited headlines.

Calgary council forms new committee for Flames arena talks, without pesky mayor who knew how this stuff worked

As rumored last month, the Calgary city council has gone ahead and formed a committee to reopen talks with the Flames owners on a new arena, a committee that will edge Mayor Naheed Nenshi out of a central role in negotiations. Nenshi, though, either thinks the rest of the council will hold a hard line or is just making a brave face of it, because he had this to say:

“I think hitting the reset button is a good idea, but the reset button has to be hit on both sides,” Nenshi said.

“Given that we were not the party that walked away I think it’s important everyone come back to the table and maybe with new faces around the table as well.”…

“It will be hard for the committee to convince me to put a lot more public money on the table,” Nenshi said Monday. “I think it will be hard for the committee to convince council to do that.

“I think it will be hard for the committee to convince Calgarians to do that.”

The concern here, ultimately, isn’t who does the negotiating on behalf of Calgary residents, it’s whether they give away the store. Nenshi still wields influence on the council, and obviously still has the bully pulpit to embarrass all concerned with facts, so it’s not like the Flames owners have carte blanche now. Still, this is something to keep an eye on, to be sure that it’s genuinely the Calgary council telling the team, “We’re willing to talk so long as you’re not asking us to give away the store,” and not “Okay, we pushed out the guy who understood economics, when do you want us to jump and how high?”

Columbus arena hurt by lack of ticket tax, Hartford arena hurt by presence of one?

Columbus’s Nationwide Arena, the privately built and publicly bailed-out home of the Blue Jackets, is running out of money unless the county rides to the rescue with a citywide tax on sports and entertainment tickets:

The initial proposal outlined in January was for the city to levy a tax of 3 to 8 percent on tickets to arts, cultural, entertainment and professional sporting events within the city limits and for Franklin County to contribute sales-tax revenue.

Together, those sources could generate $15 million to $20 million a year, with $4 million being earmarked for the arena and the rest going to artists and organizations that the arts council supports.

Basically, what’s going on is that the county funded the arena bailout, including future renovations, with a casino tax, and Columbus residents just haven’t been gambling their money away like everyone had hoped. And while initially the county arena authority proposed just a tax on tickets at the arena, that’s expanded to a tax on all tickets anywhere in Columbus, and arts groups and their supporters are understandably miffed about the prospect of having to be taxed in order to fund a competing entertainment option just because the Blue Jackets needed to make more money.

(Ticket taxes, as has been covered here ad infinitum, tend to come out of the pockets of those selling tickets, not buying them, as they’re already charging the maximum that the market will bear; though there’s some argument that a citywide ticket tax would hit ticket buyers a bit harder, since they wouldn’t be able to avoid it by going to see some event other than hockey.)

So we have the specter of Don Brown, executive director of the Franklin County Convention Facilities Authority, saying of a money-losing arena, “To keep that magic happening, we have to keep reinvesting in the arena itself.” Magic!

Plenty of other local governments have funded their sports venues with ticket taxes, of course, among them Hartford, Connecticut — where the public operators of that city’s arena want nothing more than their ticket tax to go away:

The overseers of the XL Center in Hartford say the venue is feeling the sting, in more ways than one, from a 10 percent state admissions tax that kicked in six months ago.

The levy has played a role in the 16,000-seat arena striking out on as many as a dozen events, mainly concerts, that it bid on, according to Michael Freimuth, executive director of the Capital Region Development Authority (CRDA), XL Center’s management overseer…

The problem, Freimuth said, is that the tax curtails a show’s potential profit margin “by such a degree that it results in the building losing actual events and the subsequent revenues.”

Connecticut’s is a statewide tax (though some venues have gotten exemptions, including the Hartford arena at times in the past), so it’s not entirely clear what the arena managers or concert promoters are griping about — it’s not like they can get out of the tax by just going to, say, Bridgeport. Though I suppose griping is how concert promoters get better deals — Freimuth told the Hartford Business Journal that “They say ‘you just took my margin down, split it with me,'” which indeed sounds like something a concert promoter would say.

The lesson here is: You can’t get blood from a stone, or much more money from a concert industry that has other options, especially when you’re a market like Columbus or Hartford that big-name acts can just skip if they aren’t feeling the profits. Though if you’re a concert promoter, you totally can try to get a state to cut your taxes to boost your profits by threatening to blacklist them. And if it seems like letting sports teams and promoters play states off against each other in a bidding war to the bottom is bad public policy, yeah, maybe Congress should have listened to David Minge.