It’s going to be tough for anything to top a sports team owner claiming he needs a new stadium because his 25-year-old one is literally going to “fall down,” but the rest of this week’s news was no slouch, either:
- The county legislature in Dutchess County, New York, will vote Monday on a 25-year lease extension for the Hudson Valley Renegades that would use $12.5 million in federal American Rescue Plan money to renovate the team’s 27-year-old stadium and buy the land under it from the Beacon City School District. The ARP, better known as the Biden stimulus bill, included not just extended unemployment benefits and new stimulus checks for Americans, but also $350 billion to state and local governments to help bridge pandemic-related budget shortfalls; renovating a minor-league baseball stadium does not appear to be one of the permitted uses of this ARP funding, though Dutchess County legislators will presumably claim it’s helping an “impacted industry” recover from Covid losses or some such thing.
- Cobb County, Georgia, may get to stop using general fund money to pay off its Atlanta Braves stadium debt as soon as 2024, according to Braves exec Mike Plant, thanks to the county getting more hotel/motel tax revenue that it’s spending instead. That’s good news in that county revenue is up; whether it’s good news that the county is spending money out of one pot of revenue instead of another will likely depend on whether or not your name is Mike Plant.
- In related but opposite news, Clark County, Nevada, is having to dip into a reserve fund for $11.7 million in Las Vegas Raiders stadium payments after hotel tax revenues fell short thanks to the pandemic, just six months after pulling another $11.6 million from the reserve fund for the same reason. Again, this is bad in that the county has less money on hand to spend, but it doesn’t make the stadium a better or worse expense, any more than buying NFTs would be a less stupid idea if you just got an unexpected cash windfall.
- And speaking of stupid ideas, Raiders president Marc Badain says he’d welcome a Vegas Loop station near his team’s stadium, which makes this a good time to remind him and everyone reading this that the Vegas Loop is just a one-lane tunnel for self-driving Teslas and so doesn’t really have “stations” per se, though it does have whatever the hell this is.
- The Daily Herald, which covers the Chicago suburbs, asks whether the Chicago White Sox could move to the Arlington Park racetrack site in suburban Arlington Heights, immediately answers its own question by noting that “no one actively is suggesting” such a move, then goes on for 34 more paragraphs of speculation about what such a move would look like. Journalism!
- Field of Schemes gets a nice shoutout from Jadrian Wooten’s Monday Morning Economist newsletter this week in his look at some favorite baseball stadiums, which also includes a lovely photo of the Pittsburgh Pirates‘ stadium, which is one of my favorites as well. See, I can say nice things about a stadium without mentioning its $218 million in state and city subsidies about which one Pennsylvania legislator said, “It’s not a grant. It’s not a loan. It’s a groan” … oh, whoops, guess I can’t.
Off topic. Came across this jewel yesterday from the great Bill Veeck.
https://youtu.be/ej7Sv6Z4nns
Enough said (as to the Tampontreal Ex-Rays).
Bang on.
I am with you on ‘it not working’. The Packers in Milwaukee didn’t really work either, nor the Bills in Toronto (not that that was anything but a cash grab from day one).
The one potential difference here would be that, if Bronfman does buy all or most of the team with the intention of moving it, they might still need a place to play early in the season. Montreal is pretty miserable in late March and April. In the old days this would have been dealt with by scheduling northern teams to start on the road for 2-3 weeks. In the modern era, it is dealt with by demanding taxpayers build you an indoor/outdoor stadium with heating and air conditioning.
Having a Montreal team play home games in Tampa for the first month or so solves this issue without needing a very expensive domed/retractable roof stadium. This wouldn’t matter if you are spending someone else’s money, but absolutely does matter if you are mainly spending your own.
That’s a lot of ifs… but it is really the only way I can imagine the so called split market actually working.
Would recently jilted Rays fans still go to watch the team (hopefully at the former Legends)? I don’t know. Maybe. But they wouldn’t have to go in great numbers to offset what would be smallish spring crowds in Montreal.
For the LV Loop, the self driving Teslas all have drivers.
I think the only thing that keeps the Loop from being less of a scam than the average stadium (bit of an apples-to-oranges comparison, I know) is that the former doesn’t seem to have gotten any public money to fund its construction or operation.
Sorry to break it to you, but:
https://www.cnbc.com/2019/05/23/boring-co-lands-first-paying-customer-a-48point6-million-contract-in-las-vegas.html
Hmmmn. Nature abhors a (subsidy) vacuum.
The shortfall on Raiders “related” hotel revenue is no surprise given everything that is happening.
The amount of the shortfall is quite surprising though. The bond payment totals about $18.6m. So, there would have to be a LOT of hotel tax money coming in during normal times.
The Clark County room tax is supposed to be 0.88%.
To generate $18.6 million annually from such a tax would require overall hotel spending of $2.1Bn annually within the county.
Ummmm….
But it gets even better… the county pulled another $11m+ from the reserve fund in December… so these bond payments have to be made (at least) twice a year.
$4.2Bn in annual hotel spending in Clark County? I know there are a LOT of hotel rooms… but, really?
$4.9Bn is listed as the total Clark County taxation revenue for FY 2021 in their budget docs (released about a month ago).
https://files.clarkcountynv.gov/clarknv/Finance/Financial%20Reporting/Budget/FY2021-22%20Final/Final%20Budget%20FY%2021-22.pdf?t=1622744595090&t=1622744595090
John: So if I am understanding you correctly, Clark County has plenty of TOT (Transient Occupancy Tax) to build the Oakland A’s (excuse me, Las Vegas) a shiny, new ballpark (based upon the data in your comment).
They may have to offer to subsidize a few tens of thousands of new hotel rooms being built in order to make the magic hotel tax money tree work for the A’s too, but hey, never count out a politician wooing a sports team…
Elsewhere in the article Neil linked it suggests that the reserve fund was set at $90m to cover “two full years” of bond payments. This suggests that they make payments more than twice a year, though how this is broken down I’ve no idea.
At last count there were over 143,000 hotel rooms in Las Vegas. That works out to a potential of 52,195,000 room-nights per year. In 2019 the average nightly room rate was $132.62. At 100% occupancy that would be over $6.8B. You only need 61% occupancy to get that $4.2B in spending.
In 2019 the occupancy rate was over 88%.
Pretty insane stuff.
http://res.cloudinary.com/simpleview/image/upload/v1616428293/clients/lasvegas/Historical_1970_to_2020_updated_87257ed9-2ac6-4148-976e-bb073487fab7.pdf
So, occupancy was at 88% before the Raiders moved in… I am surprised it was 88% (even for Vegas), but not surprised it is very high.
Except… at 88% pre Raiders, that leaves just 12% available for “Raiders related” increases.
Sounds like we’re all good to go for a:
New A’s ballpark
New MLS downtown soccer-specific stadium
And the Loop!
Las Vegas TOT. It’s heaven sent (literally by the plane loads)!
I contributed to Vegas TOT back in April. Can’t WAIT to do it again! ;)
Now, all Las Vegas is missing is an NBA franchise and all the boxes are checked!
If my math is correct, I’m just an accountant, at 100% capacity with 143,000 hotel rooms or 52,195,000 hrpnpy (hotel rooms per night per year) at an average rate at $132.62 (2019 numbers) that’s approximately 7 Bn in Las Vegas TOT per year.
Of that capacity, only 60% (roughly) or 4.2 Bn is required per year to service bond payments.
That leaves 28% remaining capacity (given 2019 room occupancy was 88%) at 1.96 Bn TOT per year available for new projects (to service new bond payments).
At 100% capacity, that would add an additional .84 Bn to the above or 2.8 Bn TOT per year for new projects.
The Reserve Fund of 90.2 Mn may only be increased by 9 Mn a year until a 2-year cap it met (approximately 10% a year. More to the point. It represents only 20% – 25%, depending on the numbers used below, to service the annual bond payments).
The current bi-annual payment required to service the bond payment is 18.6 Mn or 37.2 Mn annually. Accordingly, a 2-year reserve balance required to service bond payments is 74.4 Mn (90.2 Mn is reported to be that amount to service the 2-year bond payments).
To service the bond payment currently, 11.7 Mn was removed from the Reserve Account, on top of 11.6 Mn removed in December for a total of 33.3 Mn (or 370% of 9 Mn that maybe placed into the Reserve Fund per year).
The Reserve Fund currently has a balance of 54.4 Mn (minus 33.3 Mn for above withdrawals for a previous balance of 87.7 Mn). That represents of approximate decrease of 37.5% in the Reserve Fund in one year, when it may only be increased at 10% a year.
If this trend were to continue, the Reserve Fund would essentially be depleted in 2 years, despite the annual increase of 10% a year.
“Jeremy Aguero, principal with Applied Analysis, said $54.4 million will remain in the fund after this second payment, enough to cover all of the payments through fiscal year 2022. However, Aguero said he does not expect that amount will actually be required.”
As an attorney sitting in Council Chambers, I trust Mr. Aguero. However, as an Accountant sitting in Council Chambers I have serious misgivings (we former dumb “pols” have some skillsets without our city staff. Although, I sorely miss them to catch my grammar / spelling). If Las Vegas TOT doesn’t return to pre-pandemic levels (say 50% capacity as opposed to 88% capacity or even 88% capacity at less than $132.62 average room rate to re-start the tourism engine), I foresee further withdrawals from the Reserve Fund. As to how much, is anybody’s guess.
Still recall Anon’s May 17, 2021 comment with Las Vegas Journal-Review article (the April calculations as to the June withdrawal from the Reserve Fund and resulting Reserve Fund balance were a might off).
https://www.reviewjournal.com/business/stadium/allegiant-stadium-room-tax-still-hurting-from-effects-of-pandemic-2335255/
The whole point. I would not look to Las Vegas TOT to service anymore bond payments.
The average room rate is, in Vegas perhaps more than anywhere, just a suggestion.
I have no idea what percentage of the rooms available there are discounted, but I can tell you that no-one I know who has ever gone there has paid anything like the advertised rate. Maybe all my friends and family have just been insanely lucky when they are booking… but pretty much nobody I know has paid more than $59 a night on average.
A significant percentage have gone for the 4 day three night trips for $400 flight & hotel included deals.
I am sure they aren’t staying in the high rollers suites at that price, but it’s not an off-off strip Alamo motel type place either.
If Reserve Fund is depleted, TOT not enough to service annual bond payments, there’s only one choice left. City’s General Fund. Not Good.