That Virginia bill to create a football authority to build a Washington Commanders stadium isn’t just authorizing legislation, it turns out — last night it also got financing details during a senate committee hearing, and the numbers are jaw-dropping: $1 billion in state money toward a $3 billion stadium, to be paid off from “a projected $3 billion dollars in tax revenue from the new stadium” over 30 years.
The first question to ask, obviously: Would this be actual new tax revenue, or money kicked back from existing taxes in a stadium district (a TIF), or what? WUSA-TV, which appears to be the only news outlet that was paying attention to last night’s state senate finance and appropriations committee hearing, cited bill sponsor Sen. Richard Saslaw (D-Fairfax) as promising that borrowing $1 billion for a stadium “does not create a penny of debt.” (Yup, he said that.) WUSA also cited George Mason University business professor and former Commanders exec George Perry as saying this “doesn’t appear” to be taxpayer funding, though in an accompanying video Perry also warned that a football stadium open only a handful of days a year shouldn’t necessarily be expected to spark a ton of surrounding development, so who the hell knows, man.
The bill’s financing plan doesn’t look to have been posted to the senate committee’s website yet, despite a promise there that “presentation materials are posted to our Web page at the beginning of each meeting,” so this one news report is really all we have to go on so far. Further updates on Monday, I hope; in the meantime, settle in from the sticker shock over maybe the biggest NFL stadium subsidy proposal in history with some other news from the week that was:
- The Arizona Board of Regents approved the plan for the Arizona Coyotes to rent Arizona State University’s 5,000-seat arena for the next three seasons, though the team will have to start the 2022-23 season on an extended road trip since the arena won’t be open until December. Coyotes owner Alex Meruelo will have to spend $20 million to build a new outbuilding with separate locker rooms for the NHL team, and will pay an undisclosed rent on the arena.
- NFL commissioner Roger Goodell said “the bottom line on it is we have to get a new [Bills] stadium in Buffalo,” and MLB commissioner Rob Manfred said there’s a “sense of urgency” for a new Tampa Bay Rays stadium because not having one “hampers the ability of the business to operate,” and NHL commissioner Gary Bettman said “the sooner people figure out how to get a new [Calgary Flames] arena, the better it’ll be,” everybody drink!
- Check out what $50 million in renovations (half paid for by public tax dollars) to the Carolina Panthers‘ stadium to accommodate the new Charlotte F.C. MLS team buys you: If you had “new locker room with a giant team logo on the ceiling and a special room just for the soccer players to store their stinky cleats in,” you’re a winner!
- The Baltimore Sun editorial board is fine with spending $1.2 billion on Baltimore Ravens and Orioles stadium upgrades because spending state lottery revenue is “not a taxpayer bailout” (yup, they said that), but wants the state legislature to get more details on what exactly the renovations would look like and cost before cutting a check. Yay, bare minimum of democracy!
- Lexington, Kentucky, already home to the indie-minors Atlantic League baseball team the Lexington Legends, is going to get a second team in the same league that will play in the same stadium while the Legends are on the road, and it will be called the Kentucky Wild Health Genomes after a local genomics-based medical clinic. I have lots of questions and I’m sure you do, too, but suffice to say that putting your corporate name in the actual team name and not just the stadium name (the genome people are doing that as well) will make it an awful lot harder for those of us who don’t bother using corporate-branded stadium names to not mention their company. Though I suppose we could always say “Lexington Atlantic League Baseball Team” — no, wait, that’s not specific enough, pretty sneaky, sis!
- If you would like a “Pay For Your Own Damn Stadium” sticker, the Center for Economic Accountability has got you covered. If you would rather have a billion dollars in cash, please buy an NFL team and then contact your local state legislature.
Gotta say, the CEA’s explanation of the whole mirage/scam is so nice and concise that it should be a bit that replies to every idiotic tweet about stadium subsidies.
Also, totally getting a sticker.
That should be *bot. Don’t get an Android phone, boys and girls.
And I thought it was just my off brand android phone which seemed to have the ‘learn’ function in autocorrect installed backwards or scripted from right to left and upwards or something.
Surely it is not beyond the tech companies to be able to create an autocorrect learn function that actually learns???
One of the biggest problems with taxpayer funded stadiums is that there is no incentive for owners to do anything to control cost. When Fed Ex field was constructed in 1996 it cost about 250 million dollars. Adjusted for inflation that is still under 500 million in today’s money. Fed Ex field is a perfectly good stadium. Why in the world does the new stadium need to cost 6 times as much money? Will fans be getting 6 times the experience? Why do owners get to design the new stadium and then tell the city what their portion of the bill is? If this is a public, private partnership, then the government should be there for the entire process. This would include telling the team that they can’t afford this or that amenity.
Those flat screen TV’s aren’t going to pay for themselves.
It is true if the public is funding it, the costs soar so much. Gillette wasn’t expensive either.
The Rams’ stadium was, though. Rich guys pretty much always spend money like it’s going out of style when it’s not their money, but sometimes they do so when it is, too.
Well construction in LA and NY is going to be expensive. Also aren’t most of the costs for Sofi based on what’s going to be around it.
Nope. $5B just for the stadium, though the stadium does include things like a 6,000-seat theater.
https://www.usatoday.com/in-depth/graphics/2022/01/29/nfl-sofi-stadium-super-bowl/9225905002/
Like him or not (and he’s reeaallly easy to dislike) but Bettman has grown the game enormously in his stint as commissioner. Colorado and Dallas were immediate successes, Tampa Bay and Nashville took a bit to become entrenched markets but they’ve gotten there, and Carolina seems to be stable now after having some issues. But his handling of the Arizona situation continues to be a black eye for him and the league and beyond stubbornness, I don’t understand why he’s willing to die on this hill, year in, year out. No other major sports league has had a city unilaterally cut their subsidy and dare a team to leave, no other major sports league has had a team get evicted in modern times, with the city stating flatly they can make more with those 41 dates freed up, no other major sports league has had a team almost get evicted ahead of schedule due to refusing to pay their bills, and no other sports league has proposed playing an indefinite number of seasons in a college arena with 25% capacity of what real arenas have (the Chargers in Carson is the only thing close but even then, they had a deal to move to a new stadium in hand.) Move this team to Houston, Portland, Quebec, whatever, just get something done.
The Coyotes would have been moved if they had to pay for a stadium in Arizona. But they have never paid anything toward stadium construction, and have only paid minimal rent on the buildings provided to them. That will continue with the ASU arrangement. They remain hopeful, with good reason, that somebody will continue to put up arenas and rent them for a pittance. It is almost certain that another city will gift them a free stadium; what reason is there to think otherwise? The lesson of Glendale will is utterly lost on the other cities’ pols, who always think “It will be different this time!” That is true only if “different” can be equated to “even more costly.”
Bettman has grown the business, Joe. I’m not so sure he’s grown the actual game… but then, that really isn’t his job.
I would take issue with the “Dallas” claim. Ownership was already committed to moving to Dallas before Bettman became commissioner, even if they didn’t actually move until after he had taken office. Ownership needed out of Minnesota for some unpleasant personal reasons as well as stadium issues. Minnesota was never as bad a hockey market as successive North Stars owners made it seem.
The sun belt strategy has worked for the NHL in some instances and failed miserably in others.
Certainly the business overall has grown… from about a $750m entity when Bettman took over to, what, $4Bn today?
That seems like phenomenal growth over 30 years. However, I think we need to look at what other leagues have done in the same time frame. MLB, the NFL and the NBA have all grown at a significantly faster rate than the NHL has. While MLS is a much smaller business than the NHL, one could argue it has grown faster (in total owner equity/revenue) than the NHL as well. If we are willing to look at European or other non North American leagues as well, the NHL just continues to slip down the “growth” table.
Do we look at Bettman’s record in isolation and say it’s fantastic growth?
Or do we look at the other major league professional sports and ask why he has under performed the index, and how much his sometimes bizarre sunbelt strategy has been responsible for that?
May be these will help:
Professional Sports Franchise Valuation
https://www.toptal.com/finance/mergers-and-acquisitions/sports-franchise-valuation
Economic Values of Professional Sport Franchises in the United States
https://thesportjournal.org/article/economic-values-of-professional-sport-franchises-in-the-united-states/
He has definitely underperformed “the index.”
He gets praise because the previous leadership of the NHL set a very low bar. This is the group that only had 6 teams well into the 60s. This is the league that chose SportsChannel over ESPN in the 80s because some of the owners had side deals with SC. This is the league that didn’t have games on TV in Chicago because they were owned by a guy who thought that hurt attendance (while his attendance was in the toilet).
The NHL has moved into new markets with mixed success, but that’s really not that impressive, especially since they had to move a few teams to do that.
They were just following the demographics and the pattern of expansion that began in 1967. The NFL, NBA and MLB all did the same. Bettman does not deserve credit for noticing that Miami, Dallas, Tampa and Las Vegas are huge cities.
Meanwhile, they haven’t done a great job in keeping the loyal fans they started with in Canada, New England, etc. Interest in hockey is still fairly high there, but participation is slipping and its struggling to keep kids* interested.
That’s not entirely – or maybe even mostly – the NHL’s fault, but needs to be factored into any calculation of the “growth” of the game.
*Recall that there was that SI piece in the early 90s about how hockey was poised to be the second most popular sport. The video games and growth of in-line hockey were bringing in kids. They were doing an ok job of marketing stars.
But two lockouts later and they’ve slipped to a distant fourth or fifth.
Phoenix is a great sports town. The metro area is big and growing. That’s what it comes down to, honestly.
Two years ago, the Suns were borderline irrelevant. Now they’re a hot item. Same can happen for the desert dogs, if they put a winner on the ice.
Glendale really was the problem. Just the wrong location for an arena that needs to be filled on weeknights.
The Forum had the same problem in the 90’s. People forget that Lakers games rarely sold out before Shaq arrived, and even after he did it was not the nightly full house it became once they moved downtown.
We will find out that Glendale really was not the problem. When the team wins, the arena in Glendale is full. People in other cities have driven through worse traffic to get to lesser arenas to see good teams. In a few years, you will be able to say “Tempe really was the problem.”
But by then, Mesa, Scottsdale, Chandler and Gilbert will all be vying to build an arena and be the Coyotes new host organism…
Yes – Phoenix is a large metro area and actually a pretty good sports town. The thing to remember is that most people are from somewhere else and carry their old team allegiances when they move here, so people can be pretty passive on the home teams if they’re not doing well. The thing with the Suns is that people are passionate about them. Even when they sucked people still talked about them and wanted them to do well. I don’t see that with the Coyotes.
The distance thing is a factor, but for all the complaining from the East Valley folks about “having to drive an hour to Glendale to see a game” (don’t know how many times I’ve heard this) the team needs to win first if they’re going to succeed.
Count me as one who doesn’t think this move to Tempe is the magic fix for all of their problems. People tuned out on the Coyotes a long time ago as it’s been one issue after another for the last 15 years. They’ll sell out at ASU but they’ll still have a problem selling out a larger arena in Tempe on a consistent basis unless they become a successful franchise. But hey – at least we won’t have to hear about how no one goes to games because it’s too far away anymore! Really, there are no more excuses if the Coyotes don’t succeed if they get a new arena.
That Virginia/Commanders deal is staggering in a way. In another way, it makes sense.
Santa Clara, Atlanta and Las Vegas have blown away expectations for ancillary development and/or tax revenues*. That means three out of four comparable recent projects would have been justifiable even with a local government contribution at the $1 billion number that Virginia is offering. (Not sure about Minnesota, with would be the fourth comp.)
*acknowledging that some people — especially econ profs (aka “economists”) who focus on tax revenues rather than the off-hours economic activity stimulated by stadiums — will say that the ancillary development/tax revenue boost could have or would have happened without the stadiums.
Note: Ben’s comment about economists who “focus on tax revenues rather than the off-hours economic activity stimulated by stadiums” should not be taken to mean that sports economists don’t look at whether off-hours economic activity is stimulated by stadiums. They do, and it doesn’t, at least not to any degree that can be measured in actual dollars and cents.
So…. economists and/or econ profs (who have the same or better training but generally do not go work for hedge funds or Goldman Sachs) are smart enough to know when something is so miniscule it is beneath the detection threshold, but critics of economists are not?
Sounds about right.
Off hours economic activity surrounding stadia tends to be very much negative from what I have read. The costs (both real and opportunity) stay with you but the benefits do not.
Kentucky Genos?
For $3bn, they could probably just keep the team in Fed Ex Field and give every fan in a 100 mile radius free limo rides to the games.
Or the Saints’ model… get the city/state to not build you a new stadium but write you a check every year to cover the revenue you think you are losing by not having a new stadium.
It’s just a bribe anyway, so why not make it cash and hand it over in a brown paper bag in a darkened corner of a parking lot?
Speaking of parking lots… why build a stadium at all? Just agree to pay Snyder the total revenue he thinks he can generate from seat, PSL, concession and other streams and have him go play in a parking lot.
Hey! Then the state could actually charge admission for citizens to come see and maybe make some of their bribe money back!!!