This has officially been the longest week ever. Scientists agree! And so does the news:
- Cincinnati Reds president Phil Castellini said it’s his “opinion” that neither the Reds nor Bengals will demand new stadiums when their leases are up soon, just renovations, and shouldn’t he actually be in a position to say more than just an opinion? Anyway, given that the Baltimore Orioles and Ravens just got $1.2 billion for renovations, maybe Castellini is thinking, hmmm, we can still get hundreds of millions of dollars and not have to spend anything of our own on building from scratch, huh?, so yeah, checks out. Castellini also spent the week telling fans that they shouldn’t complain about the Reds getting rid of all their best players to save money because “what would you do with this team to have it more profitable, make more money, compete more in the current economic system that this game exist? It would be to pick it up and move it somewhere else. Be careful what you ask for.”
- New York Gov. Kathy Hochul added another defense of her $1 billion public cash giveaway to the Buffalo Bills owners, saying that people upstate complain about her spending money on the New York City subways, and isn’t that the same thing? Looks like somebody wants to give Crystal Peoples-Stokes a run for her money this year!
- Speaking of fire sales and dumb reasons to build things, the San Jose Mercury News has looked at the Oakland A’s ownership’s insistence that only a new stadium can stop them from continually selling off their best players and noted that A’s owner John Fisher isn’t spending on payroll for his San Jose Earthquakes despite a new stadium. Which isn’t quite the same thing thanks to MLS’s single-entity ownership structure, but it’s at least more investigation than most news outlets have done into this argument.
- And speaking of baseball teams cheaping-out of player spending, it was revealed this week that the Pittsburgh Pirates bring in enough in ticket sales and concessions alone each year to pay for their entire player payroll. Add in at least $100 million a year in national TV revenue, plus local TV revenue, plus league revenue-sharing, and “not having money” isn’t really an excuse for either not signing free agents or demanding new stadiums. (“Wanting more money” is, but that’s not quite the same thing.)
- “Developers and analysts” in Las Vegas aren’t concerned about glutting the market for arenas now that Tim Leiweke’s Oak View Group wants to build one to go along with the 23 others (estimated) that the city already has, because 1) Leiweke “knows what he’s doing” (Vegas convention authority CEO Steve Hill), 2) Leiweke “is following the blueprint that he’s done in the past” (Oak View partner Marc Badain), 3) some performers may prefer a newer arena to an older one (Macquarie Securities gaming analyst Chad Beynon), 4) “we need to make sure that demand matches supply” (Vegas-based advisory firm B Global managing partner Brendan Bussmann), 5) “what a lot of people don’t realize is how many events we actually say no to just because of the lack of availability” (MGM arena manager Dan Quinn). That doesn’t quite add up to “there’s plenty of room for another arena” so much as “if an arena fails due to glut, it probably won’t be the new one that Oak View builds,” but at least Leiweke is talking about using all private money so far, so that’s a relief — at least until one of the other arenas demands public money to compete with the new one.
- In that same Nevada Independent article, Gov. Steve Sisolak backed away from his unsourced-reported refusal to provide public money for an Oakland A’s stadium, saying “there are other things that can be done that can help on the funding” such as a tax-kickback district or infrastructure money. How much money? Maybe that would be a good followup questions, Nevada Independent? No? Okay, it’s your paper, I guess.
- Washington Post columnist Sally Jenkins says Washington Commanders owner Daniel Snyder doesn’t deserve public funding for a new stadium because he may have illegally cheated fans out of ticket deposits and other NFL owners out of revenue-sharing money. Which, those aren’t good things, certainly, but 1) doing not-good things is already Snyder’s brand, and 2) the contrapositive of this would seem to be that if he weren’t doing anything illegal, Snyder would deserve public funding, which is a dubious corollary to hitch your newspaper column to.
- NBC Sports’ Mike Florio says Nashville’s $10-20 million a year in hotel taxes could pay for $700 million worth of Tennessee Titans stadium, which is definitely not how math works, but then understanding how things work has never been Florio’s strong suit.
- The Kansas City Royals could use the Atlanta Braves stadium district as a model for a new downtown ballpark, according to … whoa, Kevin Collison, where’s he been since he stopped being the Kansas City Star’s go-to stadium-boosting columnist? Something called CitySceneKC, apparently, guess times are tough all over. Anyway, arguing that a pretend urban neighborhood in the middle of the suburbs could be a model for moving a team from the suburbs to downtown makes no sense, but you keep doing you, Kevin.
- The Lerner family is considering selling the Washington Nationals, which normally might bring up fears of a move threat and new stadium demands, but the Nats’ stadium is only … huh, 14 years old already? That still seems a little soon, but as economist Rod Fort memorably said, there’s nothing wrong with demanding a new stadium every year if you can get away with it.
- Pawtucket’s $400 million soccer stadium and development project is facing cost overruns thanks to inflation, and nobody knows yet who’ll pay for them, or if the project will be scaled back, or what. Rhode Island is already kicking back $46.2 million in taxes for the project, or, no, WPRI-TV says it’s actually $70 million? If a cost overrun falls in the forest and there’s no one around keeping track, does it count?
- Speaking of cost overruns, Durham will now be paying $10.6 million toward upgrades for the Bulls‘ minor-league baseball stadium, double what it was originally expecting but still little enough compared to the numbers being thrown around in other cities as to sound absolutely insignificant. (Note to readers: $10.6 million is still $10.6 million. I checked.)
- Here’s a fun one: The Wichita Wind Surge have started adding an 8% “ballpark development fee” to all sales at their new publicly funded ballpark, a surcharge that doesn’t appear anywhere on the pricing until you actually get your receipt. This sounds like a tax, but it’s not, as Wichita Mayor Brandon Whipple said it’s the first he’s hearing of it, and suggested that the state attorney general should look into it as “a consumer protection issue.” Sports team owners really do do the craziest things!
- Add Hawaii to the list of states momentarily flush with COVID relief cash that have decided now’s a great time to spend on stadiums, as a bill to dump $350 million on a replacement for Aloha Stadium is making its way through the state legislature.
- The Seattle Mariners are making $55 million in improvements to their stadium, and actually paying for it themselves, which shouldn’t be cause for celebration or anything since that’s what normal businesses do normally, but we’ll take what we can get these days.
While the Fisher comparison to the Earthquakes spending is (somewhat) relevant to the A’s situation, their stadium Pay Pal Park absolutely sucks! Scant “luxury” seating (if that’s what you want to call Home Depot outdoor furniture arranged on concrete slabs), cheap metal grandstand similar to many a high school stadium, built in a terrible location of San Jose (between an airport, freeway, and railroad with no amenities/transit around for miles) and with only 18K-seats to boot. An Erector Set venue is what I’ve always called it. So yes, while MLS’ single entity ownership structure and bottom basement salary cap hinder spending, the Quakes cheap @$$ stadium definitely doesn’t help things.
I totally agree with your assessment there. In fact, all three South Bay venues look cheap. PayPal is in the middle of nowhere and looks like a basic high school stadium. The Tank looks like it was quickly constructed of corrugated aluminum, and the Santa Clara 9ers play in a red sea of what appears to be bleacher seats, seen from the freeway. When I attend events, I’m not looking to sit in swanky plush digs, but the experience would be enhanced if the stadia were a bit more aesthetically pleasing.
Well, if the A’s leave – or maybe even if they don’t – I suspect there would be interest in moving the Quakes to Oakland, perhaps.
I don’t know much about the city, but I know that it once had four major league franchises (although the Seals didn’t last long) and it’s on the brink of having zero. So an MLS ground might be politically viable. And my understanding is that Oakland has turned a bit hipster, which seems to work with MLS.
My fantasy (if you will) is for A’s ownership to deed the Giants a 50% stake in the Quakes (valued at $500 million per Sportico), in exchange for the right to build a ballpark in $an Jo$e. Then, relocate the Quakes franchise to the Coliseum site, with new SSS and soccer fields for East Bay community. Quakes could then be rebranded as either an Oakland or Bay Area franchise (BAFC?).
In semi-fairness to the Reds and Pirates, two teams I used to pay a lot of attention to, I think their logic is “We could spend more, but we’ll never be able to spend enough to compete that way with the big market teams. Our only hope is to load up on underpaid guys on their rookie contracts, but we don’t have enough of those now, so we need to tank a bit.”
That’s basically the Rays approach. The problem is that it’s hard to do because it means drafting and developing very wisely and that’s a lot harder to do than just buying known players with major league experience.
Of course, if the PA had its way, that wouldn’t really be possible either.
That’s a fair assessment. Spending more likely wouldn’t bring some of the small market teams that much closer to being competitive with teams that can (and do) spend $80-120m more on, you know, actual MLB players.
However, since the MLB revenue sharing plan specifically intends that RS payments be used to close the payroll gap between have and have not teams, I would suggest that MLB is well within their rights to simply withhold those payments (in whole or in part) from teams who just wish to farm the subsidy.
The Pirates and Reds may be famous for it, but they are hardly alone. The Rays and A’s, for example, routinely record greater net operating income than some of the big spenders. They are able to do this because they get full revenue sharing payments but spend almost none of that on improving their rosters.
People loved to criticize the Yankees and Big Stein (in the championship seasons), but the one thing Yankee fans can (or at least could) generally count on is that most of the money the team generates gets plowed back into the player roster. There were years when the Yankees NOI was less than $5m during the 90s heyday – on a payroll of, what, $130m? And total equity of $1.3-1.5Bn.
Contrast that with Fisher, Nutting, Sternberg and co… selling off their best players not to keep their heads above water, but to maintain a $30-$60m annual profit.
MLB could easily solve this by linking a teams total revenue, player payroll, net operating income and using those numbers to determine what percentage of a ‘full’ revenue sharing payment a team is eligible for.
If you are Sternberg and you have years in which you cash $55m in revenue sharing checks, generate $48m in profit on $260m in revenue, and have a player payroll of under $50m???
Well… maybe you should be eligible for a maximum RS payment of $10m tops. Use it or lose it.
And Sternberg is just one example… there are plenty of owners doing this exact same thing.
I don’t think MLB could do any of those things without collective bargaining, could they?
I think so. The existing revenue sharing model does include language around those payments being used for ‘reducing competitive imbalance’ or something like that. I don’t have access to the documents, but I do know that the PA has filed grievances over just these clauses in the past.
As far as I can tell, the language that would be required is already in the CBA… and it is the players association that typically pushes the issue. So MLB certainly could enforce their own rules without amending the existing CBA… the players might even love them for it.
There may be something like a ‘notwithstanding’ clause in there that I don’t know about… you know, “we expect you to use this money to increase your payroll so we actually have penant races” followed by a subclause that in effect says “but, hey, if you’d rather just pocket it and sell off your two legitimate major league players for prospects or cheaper has beens, it won’t affect your entitlement to the money”.
I doubt that, given how the PA fought for that sort of language surrounding revenue sharing and luxury taxes. But unless any of us become MLB owners (I’m still some way short of that goal…), I guess we can’t actually know.
There’s nothing in it for the owners to do that.
The big market owners are happy to have non-competitive teams in their division to make their teams look better and they also don’t have any reason to want the poorer teams to drive up salaries.
The players are not going to be able to compel the smaller market teams to spend more money without installing a formal salary floor and the owners will never agree to that without a salary cap, which the players/agents refuse to accept.
So baseball is going to be stuck with this crap state of affairs forever, and interest in baseball will continue to dwindle (not only because of this, but partially).
Most of North America does not live in the biggest five cities. It’s hard to see how the teams in most of the continent will attract new young fans when their nearest MLB team is irrelevant while their local NBA/NFL/NHL/MLS team is actually competitive, e.g. Tampa Bay, Pittsburgh, Kansas City.
I’ve lost patience with owners and players and their PR people trying to sell the public on their version of how things “should” be. “Should” has no power here. There is only the CBA.
Mariners will pay for stadium improvements themselves? Is this a late April Fool’s Day post?
I mean, according to Mariners execs. So it’s always possible I have to come back here next week and say “except for the tax breaks/city-subsidized sandwiches for construction workers/etc.”
Wow, lots of news today!
Thanks Neil!
I didn’t make it, I just wrote about it!
And Economist Victor Matheson weighed in on the Buffalo deal today –
https://www.yahoo.com/news/ive-studied-stadium-financing-over-121246769.html
It was such a busy week that it’s understandable that another monstrous Tennessee sports deal didn’t make the roundup cut:
https://www.commercialappeal.com/story/news/2022/04/11/memphis-grizzlies-rework-lease-fedexforum-city-memphis-shelby-county/7209105001/
RE: the Crawford Architects layout of the new Aloha stadium and surrounding development…
I just gotta know what that freestanding and apparently unsupported half mile (?) long on ramp to nowhere is doing in the upper right of the image?
Is it some new traffic system? A holographic roadway?
Is it a giant boomerang? An Alien spaceship???
And who is responsible for clearing the debris 200ft under the off ramp’s terminus (it appears to end in mid air, sort of like Seattle’s ramps to nowhere used to)?
When will other stadium developments be retrofitted to include this important new feature? (I don’t need to ask who will pay for same, I think we already know the answer to that…)