Bill to outlaw tax-exempt stadium bonds still wouldn’t end all subsidies, c’mon Darren Rovell

Oh, Darren!!!

Darren Rovell, ESPN Senior Writer

A group of politicians who are tired of taxpayer money being used to build sports stadiums on Tuesday will introduce a bill in the Senate to prohibit the practice.

Darren, Darren, Darren. You know that’s not what the bill would do. You say it in your very next paragraph: “Cory Booker, D-N.J., and James Lankford, R-Okla., are sponsoring a bill that would prohibit teams from using municipal bonds, whose interest is exempt from federal taxes, to help finance stadium construction.” (Actually only tax-free municipal bonds, but close enough.) So why do you perpetuate the myth that ending the use of tax-exempt bonds for stadiums would stop all sports subsidies, any more than it did when President Obama tried it two years ago?

If you want a good writeup of what the Booker-Lankford bill does and doesn’t mean, hie thee to Vice Sports, where my friend/editor (freditor?) Patrick Hruby lays it all out for you, including:

  • The $3.7 billion that the Brookings Institution calculates tax-exempt stadium bonds has cost the federal government since 2000. (Darren has this at $3.2 billion, which is what’s in Booker’s press release, but that’s just the amount of benefits that stadiums have received; $3.7 billion is the amount it’s cost taxpayers because some of the money just ends up in the pockets of bond buyers.)
  • This has been proposed before and gone nowhere, and it’s likely to fail again (though bipartisan sponsorship is nice, I guess).
  • “Booker and Lankford acknowledge that their bill won’t prevent localities and states from smashing the public piggy bank to pay for sports stadiums; in fact, they all but brag that local governments will be allowed to finance future stadium subsidies with ticket and in-stadium purchase taxes.” This is an apparent reference to a clause that would allow using targeted sales taxes on in-stadium purchases to pay off stadium costs, which Booker and Lankford seem to think they can’t do now — or maybe it would just allow cities to use targeted sales taxes to pay off tax-exempt bonds, which indeed they can’t do now thanks to the “generally applicable taxes” test. Except that if tax-exempt bonds can’t be used for stadiums at all anymore … clearly I need to find and read the actual legislation.

For more on the history of tax-exempt stadium bond ruless and how they became a money pit for federal taxpayers despite being intended to do the exact opposite, see my Vice Sports article from two years back. And while you’re reading up, check out Hruby’s article from last week on the “Death Star” federal tax proposal that would actually shut down stadium subsidies once and for all, if only anybody would seriously consider it.

FC Cincinnati unveils stadium vaportecture, downplays $100m in tax money needed to build it

FC Cincinnati has unveiled renderings of its new stadium plans! Do they have fireworks? Do they have spotlights aimed pointlessly at the sky? Do they have poorly proportioned people and soccer goals that defy physics? You betcha!

Basically, it looks like a soccer stadium, only way more orange. Have your own fun picking apart the artistic skills of the renderers — my favorite is the way in the top photo there appears to be light streaming upward from the soccer pitch itself, which will no doubt be equipped with a fiber-optic turf surface — and keep in mind all the while that the main goal of this exercise is to get taxpayers in Cincinnati (or maybe Newport, Kentucky, across the Ohio River) to cough up as much as $100 million toward building this thing, because who can say no to women in tank tops holding scarves?

Coyotes owner buys out fellow owners, time to pretend this helps build new arena somehow

The Arizona Coyotes‘ mostly silent majority partner, hedge fund manager Andrew Barroway, has bought out the rest of his ownership partners, including the far less silent CEO Anthony LeBlanc, for an undisclosed price. And naturally, somebody thinks that regime change will mean a new life for plans for a new arena:

Sure, okay? KPNX-TV reports that “Phoenix insiders say Suns owner Robert Sarver wants nothing to do with the Coyotes [and] LeBlanc’s departure might change that,” so maybe Barroway is a more personable guy or something, and now arena partnerships will abound! Or at least Barroway will remember to invite his partners to his arena press conference, which would be a start!

The problem remains how to find money to pay for a new arena, when this whole thing started because the Coyotes ownership didn’t want to keep playing in their old new arena unless they were paid a hefty annual fee to do so. Sharing costs between the Suns and Coyotes owners will help some, but then they’ll have to share revenues as well (can’t sell naming rights to a building twice just because two teams play there), so it hardly is a panacea. Maybe it gives some new life to, or at least an excuse for new tweets about, Mayor Greg Stanton’s Rube Goldberg scheme of using tax money to pay for a new arena while pretending not to use tax money to pay for a new arena, but since it’s not like money operates differerently for Barroway than for LeBlanc, I don’t see where this changes much other than the names on the letterhead.

Seattle mayor calls Hansen arena plan “technically alive,” no, that’s not a compliment

There’s been a lot of back and forth lately about whether Seattle Mayor Ed Murray has really decided on renovating KeyArena over approving Chris Hansen’s plan for a new SoDo arena or is just keeping his options open, but this latest quote from Murray sounds pretty decisive:

“The SODO plan is still technically alive and the council, [street] vacations are in the council’s purview, not ours. Work could be done on doing it. If we were going to send it back down to the council though, I would want a very different process than was used the first time,” Murray said.

“Technically alive” is about like “mostly dead,” and while that means Hansen can still hold out some hope, it’s a pretty clear sign that a Key renovation is Murray’s first choice. Which may not matter all that much — the council still has to weigh in, and with Murray not running for re-election his opinion may not carry as much importance — but it’s still not good news for Hansen (who yesterday said he’s still willing to “be patient” in his quest for his own arena).

I’m not so sure that tipping the city’s hand is the best way to go about this — one of the two Key renovation bidders has already dropped out, meaning that the other bidder Oak View Group and Hansen are the only two developers left to play off against each other in an attempt to get the best deal possible for taxpayers. This may not matter too much in terms of getting a new NBA or NHL team — OVG’s Tim Leiweke is a veteran sports guy, and besides which has already invited Hansen to join any ownership group — but it could make a difference in, say, lease terms, which is a very big deal indeed. You’d think any mayor worth his salt would know how to say, “We’re still keeping an open mind to all options,” but then, mayors about to leave office often are thinking more of their next jobs than their current ones, so maybe not.

Flames president threatens to move team to Quebec without new arena, CEO says, “Who, us?”

Traditionally, sports team owners love move threats, because they scare the bejeezus out of city officials, but hate actually making them themselves, because they get fans (and potentially those same city officials) really mad at you as a carpetbagger and possibly make it harder to sell tickets once you get the new stadium or arena or renovations or whatever you were trying to shake loose with the threat. It’s a big reason why sports commissioners exist, to go around dropping relocation threats so that owners don’t have to.

The Calgary Flames owners already tried that gambit, and it didn’t go too well. Now, they seem to have hit upon, inadvertently or not, a new tactic: Have one of your team execs make the threat, then disavow all knowledge of anything he said.

And:

At the end of the luncheon Burke was pushed on whether the Calgary Flames have any options other than staying in Calgary.

“You don’t think we could find a place to go? Let’s see, Quebec. They have a new building that meets NHL standards.”

Burke is the Flames’ president of hockey operations, and has previously been dispatched to disparage the team’s current arena in the middle of a nine-season sellout streak (“the finest state-of-the-art 1988 building in the league”), among other tasks. (He’s also memorable for saying of hockey labor talks when he worked for the Toronro Maple Leafs, “My theory is, make the first meeting as short and unpleasant as possible. Sometimes it’s better to just punch the guy in the face.”) So he’s totally the guy you want out there demanding that the city revive the $1.2 billion stadium-plus-arena subsidy plan that it previously declared dead, then threatening to move the team to Quebec City if you don’t get it — and best of all, since he’s just a flunky, when the media freaks out you can just do this:

Ken King, Calgary Sports and Entertainment Corporation President and CEO made a statement hours after the luncheon that indicated Burke did not speak on behalf of his organization:

“Brian Burke runs Hockey Operations for the Calgary Flames and he and many Calgarians have strong views about this topic. However, he is not our spokesperson regarding a new events centre for our city. We remain committed to our dialogue with the City and very optimistic we will get to a positive conclusion. We admire everyone’s enthusiasm on this subject.”

Now that’s some weapons-grade plausible deniability right there. No idea whether Burke ran his mouth off without permission and King (who still isn’t the team owner, mind you, but speaks more directly for the oil barons who actually own the team) slapped him down, or if this whole two-step was part of the plan from the start, but either way, well played, Flames management team! (Except that Quebec probably wasn’t the best threat location to pick, given that the owner of that arena would want to own any NHL team that played in it, but hey, you can’t have everything.)

Calgary Mayor Naheed Nenshi, meanwhile, refused to take the bait, as usual:

“We will continue ignoring all of this stuff in the media and trying to come up with a deal that makes sense for Calgarians, that makes sense for taxpayers and makes sense for the team,” Nenshi said.

Makes sense for taxpayers and makes sense for the team is usually a tough nut to crack, which is largely why the Flames still play in an arena built in 1983, which omigod that was more than 30 years ago, had they even invented ice then? We’ll have to wait and see whether Burke’s outburst has any lasting ripples in either the media or the city council, but for now, let’s just enjoy it for the perfect performance art that it is.

Top court kills Mets mall-on-parkland plan dead, everybody goes back to drawing board

The plan by the New York Mets owners and their developer pals at Related Companies to build a mall in the Citi Field parking lot, which was shot down by an appeals court in 2015 because the parking lot is still technically city parkland, was shot down for good yesterday by the state’s top court, which ruled, yup, city parkland, what were you thinking?

The justices rejected arguments from the city and the developer that a 1961 law that authorized the construction of Shea Stadium at Flushing Meadows Park also allowed the development of the mall.

“The text of the statute and its legislative history flatly refute the proposition that the Legislature granted the city the authority to construct a development such as Willets West in Flushing Meadows Park,” Judge Rowan Wilson wrote for the majority.

As my Village Voice colleague Max Rivlin-Nadler explains, the Mets and Related were trying to get around the law that parkland must be preserved for a “public purpose” by arguing that they were also going to build housing and a school on a different, non-parkland parcel on the other side of the stadium — the Willets Point land that was recently cleared of auto shops under threat of eminent domain — and besides which:

In an almost surreal moment during the arguments, a city lawyer said that if the Mets were losing a game, fans might be able to go enjoy the rest of the day at the mall. The state, for its part, argued that the “rooftop farm and greenhouse” on top of the mall would compensate for the loss of parkland.

Hard to believe that six out of seven court of appeals judges thought this was ridiculous, right?

What happens now is anyone’s guess: The Mets could still try to develop the parking lots with something that they can sneak in as a “public purpose” (Islanders arena, maybe, if someone actually offers to pay to build it — though Max assures me there’s no political support for that), or could just leave the parking lots as parking lots and build exclusively on Willets Point proper. Which, incidentally, looks like this right now (or the last time I went to a Mets game, anyway):

This whole process in both Willets Point and “Willets Point West” (aka the parking lot) has been a giant mess, with the city letting developers drive the planning process instead of actually figuring out what might make the most sense (and public benefit) on the land around the Mets stadium, much of which is publicly owned. Which is all par for the course in New York City politics — I wrote a whole book about it, after all — but still disappointing. Here’s hoping that now that the courts have rebooted the process it will be done better next time, but I wouldn’t hold my breath.

Detroit council signs off on $20m in Pistons tax breaks, says worth it because it just is

The Detroit city council has approved $20 million in tax breaks for a Detroit Pistons practice facility, clearing the way for the team to move from suburban Auburn Hills to the new downtown Red Wings arena. Here’s how council president pro-tem George Cushingberry explained his reasoning:

“It seems to me that this deal is an $83 million deal and there is approximately $8 (million) to $10 million benefit to the residents of the city of Detroit, just in the first ten years of the tax abatement,” Cushingberry said. “So it’s certainly a benefit.”

(Yeah, no, I don’t get how $8-10 million in benefit would be worth $20 million in subsidies, either. Just go with it, it’s city councilmember math.)

The total cost of the Pistons share of subsidies would actually be $54.5 million, since there’s another $34.5 million in city bonding that still has to be approved by the council. The Detroit News has estimated that Detroit could earn that back via new “jock tax” revenues, which is maybe possible (jock taxes are notoriously hard to calculate because of accounting tricks players and performers can use to offset one state’s taxes against another’s), but in any case none of this would be happening without the more than $300 million that the state and city are giving to the Red Wings to build the arena. This is badly crying out for a better analysis than “the Pistons are spending $83 million on a practice facility, that’s a lot of zeroes!”, but it’s not looking like we’re going to get it.

MLB commissioner: 19-year-old D-Backs stadium isn’t “major-league” anymore, trust me on this

Back in February, soon after the Arizona Diamondbacks sued Maricopa County to get out of their Chase Field lease because the county was refusing to pay for $187 million in maintenance and upgrades (most of them items that the lease appears to say are team responsibilities), MLB commissioner Rob Manfred chimed in that “to be a major league-quality stadium,” the stadium “needs work.” Apparently he thinks no one was listened then, because yesterday, he said it again:

Manfred spoke at the ballpark and reaffirmed statements supporting the club that he made during spring training. He said for Chase Field to remain a major league-quality stadium, substantial capital expenditures must be made. He said if they aren’t, there may come a point when the franchise seeks an alternative home.

Manfred said Major League Baseball has reviewed studies of state-of-the-art ballparks and determined what is required in renovation and capital investment.

“We concur wholeheartedly with the Diamondbacks’ position that there are substantial needs here with respect to this stadium, to keep it as a major league-quality stadium,” Manfred said.

This is, let’s remember, exactly the job that sports commissioners are hired for: Dropping vague move threats when team owners are too worried they’d get burned in effigy if they did so themselves. Manfred got off to a slow start in the blackmail-enabling department, but he seems to be getting the hang of it now. (That bit about “we’ve done studies of what state-of-the-art means” is an especially nice touch, since “state-of-the-art” is an inherently undefinable term that just means “whatever the next guy down the road has that this owner wants.”) Who he’s trying to convince, given that this is going to be decided by a court and not public opinion or an elected body, is anyone’s guess, but at least he’s proving that he can learn to be a more competent shill.

Major Barclays Center redo for Islanders is off the table, says arena exec

Whatever is going on in the crazy behind-the-scenes multipartite talks over where the New York Islanders will make their future home, it doesn’t sound like massive hockey-friendly renovations to Brooklyn’s Barclays Center will be part of it, at least not if you believe arena CEO Brett Yormark:

Barclays Center does not plan to make any “significant design changes” in order to retain the Islanders long-term, according to Brooklyn Sports & Entertainment CEO Brett Yormark…

“We always welcome constructive dialogue regarding optimizing the player and fan experience at Barclays Center,” Yormark said. “However, we have no appetite to make any significant design changes to Barclays Center.”

Reading between the lines here — and in other recent comments by NHL commissioner Gary Bettman also noted in the above Newsday article — and the situation looks something like this:

  • The Islanders owners are moving full steam ahead on building a new arena either on Long Island or maybe in Queens.
  • Their Barclays Center landlords aren’t going to be threatened into spending a huge chunk of change on redoing a building that would require hundreds of millions of dollars of work to make it fit hockey properly, though that doesn’t necessarily mean they won’t consider some smaller lease changes to kick some money back the Islanders’ way to make up for the crummy sightlines.

Really, this is now turning into an old-fashioned arena construction battle, with the Belmont Park site the first contestant, and then plenty of Plan Bs if that doesn’t work out. Plan C would be the Islanders staying put in Brooklyn — neither side seems too eager for that to happen, given that both sides are looking to terminate the lease in 2019 — though Plan C could end up looking better to the Isles owners than Plans A or B if those end up costing too much money for construction, land acquisition, and whatever.

If I had to put my money somewhere, it would probably be on an eventual return to a new arena somewhere in Nassau County (maybe with a brief stopover first at the newly renovated Nassau Coliseum), since that’s where the team’s fan base is, and it’s easier to find available land there than in New York City. But I wouldn’t put a whole lot of money on any one likelihood, because there are so many variables here it’s impossible to predict, beyond that the now nearly decade-long wandering Islanders saga isn’t likely to get resolved anytime soon.

Would-be KeyArena renovators seeking $40m in city tax kickbacks, $50m in federal tax credits

The day after arena managers AEG pulled out of bidding to overhaul Seattle’s KeyArena on the grounds that it was unfair their competitors hadn’t had to reveal financial details of their bid, lookee what happened: The city of Seattle went and released some of Oak View Group’s financials, including this:

The key lines are under “Sources,” where it’s revealed that OVG would be seeking a $50 million federal historic tax credit (previously reported as $70 million), plus $40 million in “city tax reinvestment of NASC revenues,” which presumably is bureaucratese for “tax money kicked back from arena property, sales, ticket, etc. taxes.” By comparison, AEG was looking at closer to $100 million or so in kicked-back taxes, so this is less than that, and possibly a small enough amount that the city can earn it back by stealing business from entertainment venues outside of city limits, though without a real economic analysis that’s more than one sheet of paper — as well as a lease explanation that guarantees that OVG would pay all maintenance, operations, and future upgrade costs, as the city itself requested — it’s tough to tell exactly how this would work out for the public purse.

It’s at least possibly not a terrible deal, though, which is better than most cases — as I always say, there’s a price point where the value of a new arena and the presence of a team (assuming OVG can get one, which seems a pretty good bet eventually) can make a small enough subsidy worth it. Here’s hoping the city of Seattle can stick to its guns, and be ready to walk away if the fine print on OVG’s plan turns out to make it too rich for their blood.