Friday roundup: Titans seek $300m in tax kickbacks to keep stadium “first-class,” Bucs could be next

access_time personNeil deMause

Happy first Friday roundup of 2022! A couple of days ago I thought maybe we’d have a refreshing lull in new stadium demand news to start the year, but then hell started a-popping to make up for lost time:

  • When the Tennessee Titans moved from Houston in 1997, they became one of the teams to get a state-of-the-art clause requiring their city to spend whatever it takes to keep their new stadium “first-class” relative to other NFL stadiums. (The St. Louis Rams, who moved two years earlier, ended up using their clause to demand a whole new stadium, then when that didn’t happen to break their lease and move to Los Angeles.) Now, a year after dropping hints and some renderings about what kind of upgrades they were looking for, Titans owner Amy Adams Strunk has revealed the price tag: $600 million, half of which would be funded by kicking back future sales taxes from 130 acres of land around the stadium. This would be part of a lease extension for the Titans, which makes one wonder why the state-of-the-art clause in the old lease is even in play, but when you have Nashville Convention and Visitors Corp. CEO Butch Spyridon saying “there’s a sizzle that comes with Nashville because of the entertainment industry” and “you can’t buy that kind of aura,” it may be too much to hope for hard-nosed bargaining.
  • “Tampa Bay Buccaneers will not seek a new stadium, county commissioner says” is the headline in today’s Tampa Bay Business Journal, but it leaves out what Hillsborough County commissioner Ken Hagan also said: “They’re going to want to ensure that we’re continuing to make that a world-class facility so you don’t need a new facility.” Bucs owners the Glazer family just got $29 million in renovation money in 2016 (plus $10 million in federal pandemic stimulus money in 2020); no word yet on what the Glazers will be asking for this time around, but given that Hagan is already setting this up as at least it’ll be cheaper than a whole new stadium, expect it to be a lot.
  • New York Gov. Kathy Hochul ended up not discussing Buffalo Bills stadium spending in her State of the State address, but a team spokesperson and Erie County Executive Mark Poloncarz both say there should be an announcement soonish.
  • The Voice of San Diego has a long story about San Diego’s Frontier neighborhood, an integrated community with low rents built by the federal government to solve a World War II housing crisis that the city demolished in the 1960s in the name of “urban renewal” and replaced with its sports arena. There was a lot of that going around in Southern California at the time.
  • For those readers who complain that this site focuses too much on sports subsidies when plenty of non-sports construction projects get equally huge taxpayer gifts — there aren’t many, since most readers appreciate that life is short and corporate welfare is long, but I hear from you occasionally — here’s a story about how the state of Texas is giving Samsung $981 million in property tax breaks plus $260 million in infrastructure improvements for a new chip plant in the Austin suburb of Taylor. Good Jobs First has calculated that this will be the largest subsidy deal in Texas history, but Taylor Mayor Brandt Rydell responded, “Whether we would end up on some list and wind up being criticized for the project, that is not something we were concerned about.” Damn naysayers, always saying nay! Anyway, hope Taylor residents are okay with paying property taxes while the giant electronics company down the road doesn’t.
  • And finally, your moment of vaportecture:

 

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A railing fell over at the Washington Football Team’s stadium, may as well just tear the place down

access_time personNeil deMause

As you may have heard, during Sunday’s game between the Washington Football Team (new name coming real soon now) and the Philadelphia Eagles, a bunch of Eagles fans who weren’t supposed to be in an ADA seating area leaned on a railing to see Eagles quarterback Jalen Hurts and the railing collapsed, resulting in no serious injuries but much excited news reporting. And since this is the WFT, who are owned by Daniel Snyder who everyone hates, and everyone apparently hates their stadium, too, this led to lots of calls to tear the damn place down already:

Hurts and the fans learned something firsthand that we’ve all known from a distance – FedEx Field is the biggest dump in the NFL and sadly represents the awful person who owns the team.

The stadium needs to go, and so does Daniel Snyder.

—USA Today

They should have finished the job and torn down the rest of the stadium. Washington Football Team fans would have probably helped.

—Washington Times

Army cadets and prep school students fell from the stands at the 1998 Army-Navy game at since-demolished Veterans Stadium.

The incident was used by the Eagles and Phillies to advocate for new, government-funded stadiums in Philadelphia. Dan Snyder should pony up.

—Defector

Okay, pointing and laughing is fun until somebody gets an eye put out, but calling for the demolition of a 24-year-old stadium to spite the team’s owner when he’s in the middle of angling for a new stadium funded with potentially a ton of tax kickbacks is maybe not the best way of gaining revenge.

One of the most important tactics for getting a new stadium approved is to get people seeing the old place as obsolete — something that might normally be a challenge for a building not even 30 years old. But if the public image shifts from “stadium that the team just got built not long ago” to “dump that needs to be razed yesterday,” that makes Snyder’s job that much easier. I’m not saying Snyder personally went around loosening bolts on that railing any more than George Steinbrenner took a crowbar to that Yankee Stadium expansion joint in 1998, but things falling down at a stadium you want to get a replacement for is hardly a worst-case scenario for an owner. So ridicule all you want, but don’t be surprised if Snyder ends up shame-faced all the way to the bank.

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Bills fans argue about whether team needs dome because its QB hates snow

access_time personNeil deMause

The Buffalo Bills played a home game yesterday in freezing temperatures with high winds and snow, which should come as no surprise to anyone familiar with Buffalo winters. Still, with the team losing, and debates over a new stadium ongoing, and Twitter being Twitter, this naturally enough turned into a fan throwdown over whether it’s necessary to build a billion-dollar-plus dome because the team’s quarterback threw a bunch of interceptions:

This is an extremely Buffalo debate, and normally shouldn’t be taken seriously — the average career length of an NFL quarterback is a little over four years and Josh Allen is already in his fourth year, so odds are decent that he wouldn’t even be a Bill by the time a dome opened — but, sure, let’s take them seriously for a second. Are the Bills especially bad at playing at home in inclement weather?

Since Allen arrived in 2018, the Bills are 20-12 at home, and 19-13 on the road, which is 3% better at home; home-field advantage has been basically nonexistent in the NFL the last three years, so if nothing else we can say the Bills aren’t any worse at home than the rest of the league, despite whatever may have happened on Sunday. At least, it doesn’t seem worth basing a billion-dollar decision on; though even if Allen were terrible at home, the obvious solution would be to get a new QB, since that would be a whole lot cheaper than building a dome.

As for the actual stadium news, there may or may not be some today when New York Gov. Kathy Hochul gives her State of the State address, with one Albany lobbyist saying a Bills stadium would be “high profile” in her speech while Erie County Executive Mark Poloncarz said any deal was “not imminent.” Tune in at 1 pm to see who’s right!

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Bickering over new Flames arena cost is dead, long live bickering over who’ll pay to fix old Flames arena

access_time personNeil deMause

Two weeks after the Calgary Flames owners walked away from their $600 million arena deal (including about $300 million in public subsidies) over who would pay the last $10 million in cost overruns, the plan has been declared officially dead by city officials:

The apparent fallback plan is for the Flames to remain at the Saddledome, where they have played in 1983. (The arena got an $18 million upgrade courtesy of the city in 1994, after the Flames owners dropped hints that they would move without one.) The Flamesnation fan site helpfully links to a CBC report from 2020 that used a Freedom of Information request to unearth a 2018 engineering report that projected $48 million in needed work over the next decade:

  • Architectural, $33.8 million.

  • Building envelope, $1.7 million.

  • Structural, $3.1 million.

  • Mechanical, $3.5 million.

  • Refrigeration system, $1.7 million.

  • Electrical, $4.9 million.

  • Elevator, $90,000.

Most of that “architectural” work is repair work to the Saddledome’s distinctive saddle-shaped roof, which uses a unique system of concrete panels suspended from cables, making it hard to predict exactly how much work will be needed, since you can’t just go look at how other concrete-cable-suspended roofs have fared at age 39 and up.

As for who’ll pay for it, the CBC noted that the Flames are responsible for paying for building repairs via a maintenance account that’s funded by ticket surcharges. Flamesnation, however, implies that who pays is still up in the air:

So here’s what probably happens next: the two sides will sit down and come up with a plan to determine how extensive the work required for the Saddledome’s extended lifespan will really be. (And how much it will cost.) And then they need to discuss who pays how much of the expected costs.

The Flames have 11 years left on their lease at the Saddledome, so one would think Calgary could just point at that and say, “You agreed to do upkeep, you have the money, you’re only paying us $1 a year in rent, go have fun.” Though it’s always possible that the team and the city will sit down to discuss a lease extension beyond 2033, at which point building upgrades will almost certainly be on the table. It would be nice if somebody would file a Freedom of Information request to get a look at the lease; I can’t immediately tell if you have to be a Canadian to file one (this explainer says you need to be an “interested person”), so maybe some reader or journalist from Alberta would be interested in helping out with this? You know where to find me.

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Friday roundup: The perils of just-get-things-done-ism, and a happy zombie apocalypse to all!

access_time personNeil deMause

One of the special joys of running a web news outlet is the regular stream of emails you receive from people wanting to pay you to run their “articles” (really thinly disguised ads and/or link spam) on your site. I had a whole plan for a year-end roundup of the funniest of those, but various things happened this past week and — anyway, there was only one I really wanted to share with you, and that is this:

Hi Neil,

I noticed you shared an article from CDC.gov when you talked about the zombie apocalypse, here: https://www.fieldofschemes.com/category/mlb/los-angeles-angels-of-anaheim/

We recently published an article about a related topic, basement bunkers and why it isn’t just for wealthy preppers, that I thought might be interesting to your readers.

Followed a week later, when I didn’t respond, by:

Hi Neil,

I wanted to check in and see if you got my note about the zombie apocalypse?

Truly we live in the screwiest of all possible worlds.

On with the last news roundup of 2021, the year that ended up feeling like a repeat:

  • Calgary Herald columnist Rob Breakenridge is usually one of the more level-headed sports commentators — he’s even had me on his radio show — but his column this week falls into the trap of what might be called just-get-things-done-ism, arguing in the wake of the collapse of the Flames arena deal that both the city and the team owners need to “put egos aside and figure out how this can be salvaged.” Sure, if it’s just a matter of egos; if it’s a matter of this being a plan that looked pretty bad for the city and was looking worse and worse for the team as cost overruns piled up, maybe walking away from it is the better part of valor? There’s definitely a trend in urban governance punditry to credit elected officials who “get things done,” whether those things are a good idea or not — and getting things done is a skill, but also sometimes the best deals are the ones you didn’t make.
  • The city of Pawtucket, having lost the Pawtucket Red Sox to Worcester’s $150 million stadium bribe, is looking at replacing the team’s historic stadium with … a new $300 million high school? This would allow the city to sell off the site of one of its existing high schools and possibly repurpose the other as a middle school, so it’s a good lesson about how public assets are fungible, and the state of Rhode Island would reimburse most of the costs, so it’s arguably not a bad deal — still, for that price tag, I hope Pawtucket’s high school students get some crazy fancy cupholders.
  • Doesn’t look like I actually ran a link to the final environmental impact report for the Oakland A’s Howard Terminal stadium proposal, at least not before earlier in this sentence. Reading through that is another thing I didn’t get to do this week, but now that I’ve just finished canceling vacation plans for this month in the face of (waves hands around to indicate the entirety of everything), there should be plenty of time to discuss it here before planned hearings starting on January 19.
  • The Super Bowl is set to be played at the Los Angeles Rams‘ multi-billion-dollar new stadium, and already people are warning of its “notorious parking and traffic problems” and what a mess they could create. It’s tough to be notorious already at barely one year old, but I guess that’s one way of being “unprecedented and unparalleled.”

I could probably scrape up a couple more news items, but sometimes the best news item is the one you never write, right? Happy new year to all, thanks to everyone who threw money in the tip jar or joined this site’s Patreon, and I’ll see everyone back here on Monday.

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Tampa stadium for Rays has a study, a pet website, and some lawn signs, if that’s not momentum I don’t know what is

access_time personNeil deMause

The Tampa Sports Authority is set to issue two reports to the city of Tampa and Hillsborough County by March on a new Tampa Bay Rays stadium — one on building one for full-season play, and one for a shared model where the team plays half its home games in Montreal. The Tampa Bay Business Journal says talk of a new stadium in the Ybor City neighborhood has “gained momentum in recent weeks,” which in this case refers to the Rays partnering with a website that runs feel-good stories about local businesses while getting funded by those same local businesses, plus a bunch of signs reading “RaYbor City: Future Home of the Rays”:

Momentumy!

The rest of the article is filled with assorted tidbits about a potential Rays stadium, some more unintentionally hilarious than others:

  • The study will “analyze the stadium’s economic impact on areas like ancillary retail, commercial, and housing development” and “provide a check on the Rays, including on the stadium cost.” To that end, it will be conducted by Irwin Raij, who has previously worked for MLB on both the relocation of the Montreal Expos and the pursuit of an Oakland A’s stadium deal, so you know he’s impartial. No, not “impartial,” what’s that other word…
  • Ken Hagan, aptly IDed here as “Hillsborough county commissioner, TSA board member and leading stadium advocate for over a decade,” says a new stadium could have a sun shade like the Miami Dolphins‘ stadium rather than a full roof to save money; points to the $131 million, 24,000-seat College World Series stadium in Omaha as a potential model; and then in the next breath says, “We can’t build a minor league park. I mean, what if they picked up and left?” Ummm, wouldn’t you have them sign a lease first? Is Ken Hagan seriously thinking about building a stadium on spec and then saying to Rays owner Stuart Sternberg, “Do you like it? Will you stay now?” I have some followup questions!
  • Sternberg has previously offered to pay for half the cost of a $700 million stadium, and TSA President and CEO Eric Hart said, “We need to make sure we have a clear understanding of what half looks like.” I was all set to make fun of this — Hart with a pencil and paper doing long division, trying to calculate half of $700 million — but then, in the stadium world “half” often can end up meaning “a whole lot less than half” after tax breaks and infrastructure payments and the like are factored in, so hopefully that’s what Hart means, and not just that he misplaced his calculator.

Hagan also teased some potential “creative” funding options for the public’s half, or “half,” including “primarily user fee driven, tourist tax dollars,” which will be a challenge given that Hillsborough County doesn’t have all that much surplus tourist tax money, and vowed that “there’s not going to be any general revenue dollars,” which isn’t that reassuring given that tourist tax money can be used to pay for all sorts of things that the county would otherwise need to use general revenue funds for. So, so many followup questions…

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Mariners owners seek $117m in public cash for Single-A stadium in Modesto, inflation really is out of control

access_time personNeil deMause

It’s finally a bit of a slow news week, and I didn’t post anything yesterday, which usually means I would try to post something today, but all there is is this item about the owners of the Single-A Modesto Nuts looking to build a new stadium for — I’m sorry, how much money?

The proposal is based on Modesto and Stanislaus County providing the bulk of the funding for the stadium, which has a preliminary estimate of $85 million to $122 million. The proposal calls for private investment of $5 million to $10 million, and the city and county issuing bond debt to cover the balance.

That’s right, the Nuts owners — or technically “a group of Modesto business and civic leaders,” but surely they’re doing it on behalf of the Nuts owners, who in this case happen to be the owners of the Seattle Mariners — are looking to get as much as $117 million for a stadium for their lowest-rung minor-league affiliate, which would hold all of 5,000 fans (11,500 for concerts). That’s still slightly short of the reigning minor-league stadium subsidy record of $150 million for the Worcester Red Sox, but at least that’s a Triple-A stadium that holds 9,500 fans, even if it does look like a giant shipping container. Spending $117 million for a Single-A stadium is unheard of, or I guess was unheard of, until now. How is the Modesto business coalition trying to justify this crazy taxpayer expense?

Lynn Dickerson, the former Gallo Center for the Arts CEO and a member of the stadium project team, said it would not only provide the Nuts with a new venue but help with the revitalization of downtown and make Modesto a destination for residents from across the Central Valley and the Bay Area.

Yes, surely San Francisco residents will regularly make the hour and a half drive to watch the Mariners’ youngest minor-leaguers once they can sit in a new 5,000-seat stadium rather than the old 4,000-seat one. What else ya got?

Stadium proponents say it would help make Modesto a more attractive, desirable city and draw high-skilled, high-wage workers and spur the building of offices, housing and stores in downtown.

Okay, that’s about enough of that. There’s reportedly an economic impact study that the stadium proponents have given to the city and county, but the Modesto Bee doesn’t link to it or quote from it, either because they haven’t been allowed to see it or they can’t be bothered to read it, they don’t say which.

Scroll way down in the article, though, and you start to see where the Nuts owners and their friends are getting their chutzpah:

One reason plans were drawn up so quickly is Major League Baseball’s new facilities requirements for minor league teams. Under the new regulations, the Nuts will have to upgrade John Thurman Field, which opened in the mid-1950s, or submit to the MLB a plan for a new stadium by the start of the 2023 season.

The proponents of the new stadium say failure to do so could result in a fine or the revocation of team rights in Modesto and the end of minor league baseball here.

Yep, this is just one more bit of fallout from MLB’s takeover and downsizing of the minor leagues, which has allowed them to hold teams for ransom if local communities don’t cough up money for new stadiums. The difference is that nobody has asked for $117 million for one until now, but as Boyett Petroleum president Dave Boyett, a member of the stadium committee, told the Bee: “People said they’ve talked about a downtown stadium for years. I mean, I’ve talked about wanting to go to Mars, but somebody’s got to start somewhere.” Sure, next minor-league team up for a new stadium may as well ask for a rocket to Mars as part of the deal — after all, you can’t get if you don’t ask.

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That secret Bills study shows new stadium would be money loser for taxpayers

access_time personNeil deMause

So the answer to Friday’s question about why the promised economic projections had vanished from the Buffalo Bills‘ new stadium report when it was finally released in the news-cycle dead zone just before Christmas weekend is: I didn’t scroll down far enough in the original news report to see it. The economic impact report section was done in January 2021, and includes the following … you know, let’s call them “findings” for now until they’re proven guilty:

  • The presence of the Bills generates $385.8 million a year in state economic impact and $15.8 million in state taxes. For Erie County, the numbers are $350.2 million a year in economic impact and about a $2 million a year loss in revenues (thanks to county costs of hosting the team); for Buffalo, it’s $44.2 million in impact (presumably mostly from visiting fans who stay in Buffalo hotels or eat at Buffalo restaurants, since the games are in suburban Orchard Park) and $328,000 in city tax revenue.
  • For the entire Pegula Sports and Entertainment company, which also includes the Sabres, the Buffalo and Rochester arenas, and the Sabres’ practice risk, the corresponding figures are: $784 million in annual state economic impact and $30.1 million in tax revenues; $700.6 million in county economic impact and $2.1 million in tax revenues; and $220.2 million in city impact and $1.5 million tax revenues.
  • All those numbers were calculated by taking the estimated actual spending by Bills fans (“gross expenditure”) and applying a multiplier for the number of times each dollar is re-spent in the area, using the standard IMPLAN planning software.
  • Since not all gross expenditure is net new spending — lots of money spent on Bills tickets and the like would be spent in Buffalo, or at least in New York state, regardless of whether the team existed — the study subtracted “key adjustments” first, removing spending by people from the jurisdiction in question, under the assumption that while fans from inside Buffalo might spend their entertainment dollars there one way or another, those from outside the city (or the county or state, depending on which numbers were being adjusted) amounted to new economic activity.

Accounting for cannibalization of existing spending is good, but there are still some big assumptions in there, such as that no outside visitors would be spending their entertainment dollars within jurisdictions if not for the Bills. There have to be at least some people from, say, Rochester who would choose to go to a Sabres game instead if the Bills didn’t exist — which would actually be a net positive for the city of Buffalo, since the Sabres play in the city while the Bills play in Orchard Park, but let’s ignore that for the moment.

Meanwhile, there’s an even huger implicit assumption: that without a new stadium, the Bills would move out of Buffalo. In fact, aside from a section on the economic activity directly caused by hiring construction workers, there’s nothing in the entire report about the benefits of having a new stadium rather than the old one; it just says, in effect, “We’re a big business in this city/county/state, and you wouldn’t want anything to happen to all the money that people spend at our games if you didn’t make us happy, capisce?”

That report from the Buffalo News back in September, in other words, that a new stadium “would generate an estimated average of $793 million annually for Erie County and Buffalo economy over the next 30 years” was 100% inaccurate. What the report actually says is that the entire Bills/Sabres/other stuff entertainment empire controlled by Kim and Terry Pegula handles money that eventually amounts to more than $700 million in economic activity (that specific $793 million figure seems not to appear anywhere in the document), so if not building a new stadium put all of that at risk, it would potentially cost the local economy that much.

But, sure, let’s take the CAA Icon analysts at their word: Without a new Bills stadium, the Pegulas would take the NFL team, and the Sabres, and their arenas in Buffalo and Rochester, and move them all to Greensboro. And none of the people visiting from out of state would set foot in New York otherwise. What would all this be worth to local taxpayers?

Adding up all the state and county and city tax revenues from all of the Pegulas’ business comes to $33.7 million a year. At a dirt-low interest rate of 3%, that would be enough to pay off maybe $600 million in stadium costs. So even under the most Pegula-friendly scenario, where the entirety of all their sports and concert businesses disappeared from the state of New York without a new Bills stadium, the $700 million minimum that the Bills owners are reportedly asking for would leave taxpayers swimming in red ink. And if only the Bills and their tax revenue would get blipped by the lack of a new stadium, then spending anything over about $230 million on a stadium would be a sure money-loser for New York state.

That’s a pretty damning bit of math, and one that we all could have known months ago if either 1) Gov. Kathy Hochul had agreed to release the report when it was first requested, or 2) the Buffalo News, which had access to the report, had bothered to think about the numbers rather than just skimming the summary. I would love to think that now that it’s all out in the open, the entire house of economic-impact cards would come crashing down and no one would ever mention that “$793 million in economic impact” claim again; this not being my first rodeo, though, I’d put the over/under on the next time it gets repeated in the press as  … Thursday? Thursday sounds about right.

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Friday roundup: Bills reveal new stadium could cost $1.5b more than renovations, Jays mull SkyDome upgrade

access_time personNeil deMause

Happy next-to-last Friday of 2021! Whether you’re traveling for the holidays or hunkering down to avoid spreading Omicron, Field of Schemes never sleeps, or at least not when we forgot to do an early weekly news roundup on Thursday so as to avoid having to work on Friday, whoops. But good thing we waited, because newsmakers are following their year-end tradition of making news when nobody is paying attention, so if anyone is reading this, you’re not just killing time until your Zoom holiday call, you’re sticking it to the man.

On with the show:

  • New York Gov. Kathy Hochul’s administration has finally released that 2019 Buffalo Bills study of new stadium options that she had been refusing to release, doing so on the last night before Christmas Eve, as one does when one wants news to sink without a trace. The study, by consultants CAA Icon, includes price tags for a stadium in Buffalo ($1.99 billion) and in suburban Orchard Park ($1.55 billion), as well as two renovation options for the current stadium ($1.91 billion and $459 million, depending on whether they rebuild the whole thing or just the allegedly-falling-down upper deck), and says of the project’s economic impact … wait, there’s nothing on economic impact. What happened to the promises of $793 million in increased economic activity? Did they leave those pages out? Is this yet another study, not the one Hochul has been withholding? That one was supposed to be co-written by CAA Icon and Populous, and this one just says CAA Icon, though Populous’s name is on the renderings, but anyway everybody’s on vacation now, don’t try to call for answers!
  • SportsNet reports that the Toronto Blue Jays owners have decided not to replace whatever SkyDome is called these days (I know, I know, it’s Rogers Centre, but I like to avoid corporate names wherever possible), but rather do a $200-250 million renovation that would include a “redesign of the lower bowl,” no more details available. Nor are there any reports on whether the Jays owners plan to foot that whole bill themselves or seek public money; SportsNet says “details should be wrapped up next month,” so tune back in next month, I guess!
  • Washington Football Team owner Daniel Snyder is reportedly looking at stadium sites in Prince William and Loudoun counties, according to state senator Jeremy McPike, who said Snyder could be looking at a stadium with less capacity but with a dome (retractable? he didn’t say) surrounded by development. Sen. McPike also didn’t provide any details about cost or public cost beyond asserting that “the days of taxpayer fully-funded stadiums have fully gone by the wayside” — though not taxpayer mostly-funded stadiums — but nonetheless said the idea was “something to keep our mind open to” because, uh, something about economic development impact, no followup questions, please, it’s Christmas!
  • The Advocate’s editorial board says spending $300 million in public money toward a $450 million re-renovation of the New Orleans Saints‘ Superdome is “a bargain in comparison” to losing the team and/or being ruled out for future Super Bowls, which would definitely happen because so sorry, out of room for this editorial, happy holidays!
  • Big article in the New York Times last Friday about the Arizona Coyotes situation that didn’t really break any new ground, but it does include Glendale city manager Kevin Phelps saying that he’s come to the conclusion that Coyotes owner Alex Meruelo didn’t just forget to pay his tax bill but rather has a company policy of dealing with disputes by refusing to make payments and daring creditors to sue: “It may be built into the culture and value of the organization that they can wear a creditor down and negotiate a better deal.” Try this at home with your landlords and credit card companies, kids, and see how far it gets you! As always, membership in the 800-pound-gorilla club is the gift that keeps on giving.
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Flames owner walks away from $300m arena subsidy over $10m in cost overruns

access_time personNeil deMause

So yeah, if you weren’t up and checking Twitter last night, Calgary Mayor Jyoti Gondek took to the tweets to announce that the Calgary Flames arena deal had gone and imploded over a matter of $9.7 million in cost overruns:

To briefly recap: The original plan, approved back in 2019 by then-mayor Naheed Nenshi, had the city providing roughly $213 million toward a $550 million arena for Flames owner and billionaire oilman N. Murray Edwards. That rose to $250 million the following year, and to around $300 million this summer, with the city and the team splitting the first $25 million evenly, with taxpayers covering transportation cost overruns and Edwards covering construction cost overruns after that. When an additional $16.1 million in added costs for roads, sidewalks, and solar panels popped up — some of it in a grey area between construction and transportation, since it included sidewalks adjacent to the arena — Gondek proposed splitting them 40/60. At which point the Flames owners said “too rich for our blood” and scuttled the whole thing.

Even if you consider the entire $16.1 million as the city’s responsibility under the original deal, that’s only $9.6 million extra that Gondek asked the team to kick in, so it’s kind of nuts that Edwards and his fellow owners picked this as a hill to die on. The Calgary Sports & Entertainment Corporation, the Flames’ ownership group, later put out a statement pretty much confirming Gondek’s version of events:

It is clear that the City and CSEC have been unable to resolve a number of issues relating to the escalating costs of the Project.

Accordingly, as the City and CSEC have been unable to resolve these issues, CSEC has determined that there is no viable path to complete the Event Centre Project…

The failure of the City and CSEC to find a viable path forward was not based upon simply the “the last dollar” on the table; but rather was based upon the accumulated increase in CSEC’s share of the costs, including the infrastructure and climate costs, the overall risk factors related to the Project and the inability of CSEC and the City to find a path forward that would work for both parties.

That last bit implies that CSEC is really walking away less because of a dispute over $9.6 million than because it budgeted $275 million originally (plus some money in ticket tax surcharges) for its share of the arena, and now that it turns out its price tag would actually be closer to $350 million, it’s not worth it anymore. Which is possible — remember that it’s really hard for arenas to bring in enough new revenue to pay their own construction costs, or even a large chunk of them, plus there’s no telling whether there could be more cost overruns in store thanks in part to the price of pretty much everything going up right now — or it could be that Edwards is just throwing a hissy fit because hell if he’s gonna be the one to pay for his arena costing more than he projected it to be.

As for what happens next, the CSEC statement says the team’s “intentions are to remain in the Scotiabank Saddledome,” which would be great news for those who thought that maybe building a $600 million arena for a wildly profitable NHL team owned by a billionaire wasn’t the most pressing use of tax dollars. On the other hand, if this really is just a squabble over a few million dollars, it’s easy to see both sides coming back to the table and hashing out a new deal, or maybe deciding Flames fans don’t need quite such lavish sidewalks to lounge around on before games.

Finally, since I’m going through old Flames posts, I can’t fail to note this one from a little under two years ago:

Calgary Mayor Naheed Nenshi says he’s not concerned about cost overruns because the Calgary Municipal Land Corp. “is the project manager on that project, they know how to build stuff on budget and on time”; all those who are reassured by this, please raise your hands.

Say it with me now: The only reliable estimate of sports stadium and arena costs is “more.”

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