D.C. United wasn’t the only MLS franchise to win a big public stadium subsidy yesterday — or at least, not if you count wannabe MLS franchises as well: The Las Vegas city council voted 4-3 yesterday to approve $56.5 million in stadium subsidies and related infrastructure costs for a new stadium to host an as-yet-unnamed, as-yet-nonexistent MLS team that would begin play at an unspecified time. Add in $20 million for a parking garage that will be used by stadiumgoers (for which the team will get to keep parking fees for soccer matches), free land appraised at $38 million to $48 million, plus a full property tax abatement worth between $8 million and $16 million in present value, and you’re talking between $122 million and $140 million in public subsidies, or enough to be the biggest soccer stadium subsidy in U.S. history, if only D.C. United hadn’t set a new record the same day.
It’s absolutely the biggest subsidy ever for an MLS team that doesn’t exist yet, though, so Las Vegas, take a bow!
Meanwhile, it’s worth noting that though the Las Vegas Review-Journal has done some excellent reporting on this deal, it’s still prone to the kind of misunderstanding of basic financial math that plagues too much development reporting. Check this out:
To pay off a $50 million bond, the city would have to borrow $90 million to pay the interest on the loan.
If anyone can identify what that’s supposed to mean, please let me know.
Neil I’ll explain. Essentially when the 30-year bond is paid off, the total will end up being $90 million. The city is “borrowing” $3 million a year from hotel tax revenue it receives to pay off the bond. Essentially, this idiotic City Council is robbing Peter (i.e. funds earmarked for public parks) to pay Paul (i.e. Findlay/Cordish). This is the same City Council who claimed just last year there is no money to pay for additional police officers. It’s widely believed Cordish paid off certain city council members and the individual occupying the Mayor’s office to get this done. The whopper came from one of the opposing council members, Councilman Anthony: “Why can’t you (you being Cordish) take $50 million from the $250 million you have set aside for developing the surrounding area to go towards the arena?” Cordish’s response: “that doesn’t fit into our business model.” And that is why crooks come here, it’s a true free-for-all, as the people entrusted to govern is dumb as a pile of rocks. Well, it’s not my concern, as I live outside the city limits.
I will say this: this subsidy is running next in-line behind the Pacer, Marlin, and Coyote subsidies. This deal is a lot worse than being reported. A lot worse.
Yeah, I understand that $3 million a year for 30 years = $90 million. I don’t understand why the reporter wrote “borrow” $90 million, but maybe he meant “spend”?
I wouldn’t put this in the category of those deals, if only because the developers will be on the hook for something. But it still looks pretty bad, especially once you attach the numbers for the value of the land and tax breaks.
Here’s the thing. Findlay/Cordish will own the arena, not the City of Las Vegas. I understand the particulars in regards to the Pacers getting paid to play in the arena and owning all the revenues, but at least the City of Indianapolis owns the darn thing. There is no financial incentive for this deal in Las Vegas. How’s the city going to make money when the developers are keeping everything? The developers are getting free land, property and sales tax breaks for 30 years, they don’t have to pay for infrastructure costs, or a parking garage (but keep all the revenue for that too). The City of Las Vegas is still on the hook for the new city hall they built, Fremont Street Experience, and the Mob Museum (which was a joke from the beginning). The TIF they are proposing won’t fly, as the other cities and county (and the shopping mall itself) is threathening lawsuits over it. Ultimately, the City of Las Vegas will be paying in excess of $10 million a year for the right to say they have a team in name, but own nothing. Heck, I won’t be surprised if they somehow subsidize the expansion fee. Nothing is off-limits in this corrupt town.
The city isn’t going to make money. But at least Vegas will only be out $120 million or so, and won’t have to pay the team annual fees to play there.
If that sounds like cold comfort, yes, it is. And compared to other MLS deals, it’s pretty awful. But “pretty awful” is nowhere near the worst that these things get.
We keep reading that the “final three” are Vegas, Minneapolis, and Sacramento; I wonder if this eliminates Sacramento and Minneapolis. Wouldn’t we basically have to subsidize our own arena to “stay in the game”?
And by arena, I mean stadium. D’oh.
It’s okay, soccer teams call stadiums “arenas” sometimes because that’s what Europeans say or something.
And I don’t think this rules out Sacramento and Minneapolis at all. It just means that MLS gets to drive the bidding war higher.
mls currently has 19 teams, 3 approved expansion (NYCFC, Orlando, Atlanta) which makes 22.
Vegas, Minneapolis, and Sacramento makes 25. That’s five more teams then are usually in the top flight of the Euro leagues.
Which means an already talent poor league will get really, really shallow.