D-Backs execs still mulling whether to tax fans to upgrade stadium, or demand a whole new one

It’s been almost a year since the state of Arizona passed a law allowing the Arizona Diamondbacks owners to impose a 9% sales tax surcharge at their stadium, and use the surcharge to pay for stadium upgrades. (Or anything else they want, really.) At the time, despite having lobbied hard for the tax option, D-Backs president Derrick Hall wasn’t entirely sure he were going to use it, which makes sense once you realize that tax surcharges on stadium sales largely end up coming out of the team’s pocket. Now, Hall has elaborated on those thoughts from last May, and apparently he’s still thinking about them:

“The theme park district can be activated and can be in place. That’s an option to keep us at Chase Field. Like the roof, it’s not that it can’t be overcome, but what was once $220 million-$280 million in needs is $400 million or so now. We just need to know — pretty soon — what we’re doing. Whether it’s going to be Chase Field, which would be retro and reno and fix everything under the hood first, and hopefully develop around Chase Field. Or if it’s going to be a new site…

“There have been some options. But we’ve put it on hold. I’m back to the point where I need to get in high gear. We need to accelerate to get to a place where we know what we’re going to do. We have through 2027 on the lease. Sure, there can be an extension, but in order to extend, I need to know that that’s where we’re going to stay. It’s time to get that going again, as far as whether we’re going to be here at Chase or somewhere else in the Valley…

“My biggest concern with that is, it allows you the ability to increase taxes and helps service the debt, but I’m not thrilled about taxing our best fans. We’ve got to figure out a balance. If there’s other ways we can raise money or borrow money to have less impact on fans, that’s what I’m looking at now with other consultants, to see what would have less of a burden on our fans pocketbook, because that’s most important to me.”

There’s a lot going on there, but it mostly comes down to: The Diamondbacks still haven’t decided whether they want to renovate their current stadium or build a new one; they aren’t thrilled about using the stadium sales-tax surcharge option because that would “tax their best fans,” and those are the people they want to just charge higher ticket prices to and keep the money, so that wouldn’t help the team’s bottom line; and “somewhere else in the Valley” is still an option, assuming they can find “other ways we can raise money.” That’s still a couple of steps short of launching a bidding war, but in a metropolitan area made up of multiple municipal jurisdictions, you know it has to at least be on Hall’s mind. The D-Backs already used a rumor that the team might consider moving to Las Vegas to get the tax surcharge bill passed; dropping hints that the team might move to Tempe or Scottsdale is a lot less work, and requires less of a drive in a time of high gas prices.

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13 comments on “D-Backs execs still mulling whether to tax fans to upgrade stadium, or demand a whole new one

  1. The Diamondbacks are basically the Coyotes in cleats. A non-descript, boring team devoid of compelling players.

    I would imagine one of the collar communities would pony up. (Won’t be Glendale, but I could see Scottsdale doing it.)

    1. ‘The Diamondbacks are basically the Coyotes in cleats.’

      So true, KT, so true.

      1. haha seconded! this is great.

        They did win a WS in their 4th year, but to be 15 years old and still not really have team colors figured out is embarrassing.

        The Yotes are hanging on to a famous coach and one good logo. The only reason it seems they havent gone bust is that anyone will lend a ‘major’ league team money these days based on sports gambling alone.
        Certainly dont have many attractive relocation options (that I’m aware of). Glendale literally (yes) threw a party the day they were done with them.

    2. Scottsdale probably would do a large giveaway. Tempe – maybe, if their attempted giveaway to the Coyotes falls through. Mesa – they already gave a park, a golf course and lots of $dough to the Cubs, so why not the Diamondbacks too? Paradise Valley? They have no open land so they’d have to knock down some mansions.

      There’s always the Indian tribes, but they seem more savvy than the pols in the cities/suburbs.

  2. Between the need to get into high gear, accelerating, and potentially fixing everything under the hood, are we sure the D-Backs don’t actually want to build a race track?

  3. and… there it is. “We don’t want to tax our best fans”.

    Translation: “We demand the ability to tax people who aren’t Diamondbacks or even baseball fans. It’s the only way our economy ‘works’, at least for us.”

    Of course, they don’t NEED to do this. They are making money anyway (NOI of $34m in 2018 and $27m in 2019, per Forbes), but they would like to make more. And they would like for non baseball fans to be the ones to help them do that via the Federal, State and Municipal taxation systems.

    That is where – and who – we are in 2022.

    1. I cannot believe that he believes there’s a constituency for this argument.

      We don’t want to raise our customers prices because frankly the product is a little suspect so can all of you give us money?

      Just part of the dance, but it give me hope when the grifters are starting to look so threadbare.

  4. I’m still not clear on how a team choosing to tax its own customers is different than just charging them more. I assume it somehow reduces their real tax burden and revenue sharing obligations somehow, correct?

    1. Yeah, it goes straight into the stadium fund instead of being earned income plus an equal expense. Also by using tax money they can get a lower interest rate, since it’d be the state selling the bonds, not the team. (I’m pretty sure the bonds can’t be tax-exempt, though, since this isn’t a “generally applicable tax,” oh god how do I know this stuff without having to look it up, what life did I willingly choose here?)

      1. Thanks. That makes sense.

        That reminds me, the Flames owner argued that money from a tax on tickets or other in-arena spending should count as part of the team’s contribution to a new Calgary arena since they could have just added that same percentage to prices and spent that revenue on an arena.

        That sort of makes sense in an Intro to Econ sort of way, but my first thought was “Then why don’t you just do that instead of routing the money through the city.”

        I take it that the city/state/province also takes on the risk of the bonds, but I’m not sure how much of a risk there is with a major league team.

        1. Sure, it’s effectively team money if it’s a tax surcharge. If it’s the regular sales tax that everybody has to pay, then it’s a tax kickback and thus public money.

          Not sure why teams structure things as a tax surcharge rather than just routing it through sales revenue — maybe it’s a way of ducking revenue-sharing with the rest of the league?

          1. That would help and if all the owners found ways to hid revenue, they could avoid raising the salary cap, I guess.

            And, of course, if the tax doesn’t produce enough to pay the bonds, then the public is left holding the bag. I assume that’s why this arrangement gets a better interest rate.

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