Currently recovering from round two of COVID over here at FoS HQ — really wouldn’t have minded if the CDC let people under 65 get vaccine boosters more than once a year, given that they start fading in efficacy after three months, just saying — but I do want to dig into the Utah Jazz arena renovation deal details that have emerged in the last few days, so let’s see what my fogged brain can do with the available info:
- Jazz owner Ryan Smith plans to move ahead with a renovation of the Delta Center over the next three years, before moving on to building up a “downtown sports, entertainment, culture and convention district” around it.
- Smith would be able to use $575 million in bonds for arena renovations, plus $325 million more for entertainment district costs. These bonds would be repaid with the proceeds of a citywide 0.5% sales tax hike, which the Salt Lake City council will vote on later this year.
- Smith has said he’ll spend $3 billion of his own money on the stadium district development, though it’s not clear whether that’s a firm commitment or something he can walk away from once the arena renovations are done, if he no longer thinks the bigger project would be profitable.
- The city would have “no obligation or liability” to make bond payments that couldn’t be covered by sales tax proceeds, leaving it unclear what the backstop payment procedure would be so that people will actually buy the bonds without risking being left holding the bag if sales tax receipts are negatively impacted by, oh, let’s say, another pandemic, or arsenic dust storms. The proceeds from the sales tax hike alone were previously estimated to be enough to support about $673 million in bonds, but that’s not to say other public funding sources won’t be found elsewhere.
- If either the Jazz or whatever Smith’s new Salt Lake NHL team ends up being called moved in the next 30 years, its owners would have to pay back all of the tax money plus damages, so that’s promising, at least, assuming there are no out clauses.
- Smith would add a ticket surcharge of between $1 and $3 (chosen by Smith? by negotiations with the city? no one can say!) that would be used to pay for city affordable housing projects. This is nice and all, but even at $3 a ticket, if the arena sells, say, 3 million tickets in a year, which would be a lot, that’s still only present value of around $140 million, far less than Smith would be receiving in city sales tax money.
- There’s still no lease agreement between Smith and the city, so things like rent payments and whether the city would get a cut of any increased arena revenues or naming rights or anything is very much TBD.
This giant bundle of ¯\_(ツ)_/¯ goes before the city council tomorrow, where it will be voted on and then possibly sent to the state for a vote and then back to the council. Plus there are still upcoming votes on the sales tax hike and the lease and zoning changes — so there’s a lot yet to be approved, although locking in the $900 million in tax money part would be a nice first step for Smith.
If this seems convoluted to you, be glad you’re not thinking about it with a head full of virus. I do feel confident in saying, though, that this remains at least a $750-900 million public gift to the Utah teams’ billionaire owner, with no firm guarantee of what Smith will provide in return. In other words, par for the course for most sports subsidy deals, where it’s all too often the case that the taxpayer check is written before all the fine print is actually worked out.
First, downtown SLC is not suffering from lack of development. Several large hotels and thousands of luxury apartments have been built in recent years. Thousands more apartments are in the pipeline over the next several years. There is no need to “revitalize” downtown SLC with a sales tax subsidy.
Second, NHL hockey will do little to boost the downtown SLC economy. How many Salt Lake Valley residents were saying “I’m just waiting for NHL hockey to come to Utah, then I’ll move downtown”? The redevelopment area is only a small portion of downtown, just the Delta Center, a portion of the Salt Palace and adjacent areas. The entire south end of Downtown is neglected. How is Smith going to pour $3 billion into the 4 block area since taxpayers are funding Delta Center “renovations”? It sounds like Smith is grabbing numbers out of that 4,300 foot thin air.
Third, renovating the Delta Center to provide better sightlines for hockey will degrade basketball sightlines. The history of having both NBA and NHL in small markets has a 100% record of failure. The Golden Seals moved to Cleveland in 1976 and were merged into the Minnesota Northstars 2 years later. After the Kansas City Kings and Scouts competed head to head from 1974 to 1976, both left Kansas City by the end of the 1970s. The Scouts moved to the then new McNichols Arena in Denver as the Colorado Rockies, and 6 years later moved to New Jersey after competing with the more established Denver Nuggets. Will history repeat itself in Utah? I sure wouldn’t bet $900,000,000 that it wouldn’t.
All of those markets had MLB and NFL teams as well. SLC has neither. Remains to be seen if this will work, but there isn’t a great recent historical precedent other than Vancouver, which had hockey first and a series of blunders with their NBA efforts.
While Salt Lake is small- I wouldn’t call it over saturated yet. While not a traditional hockey hot bed- there’s more of history then Vegas.
While this subsidy is ridiculous, the bar for success for this team is pretty low. If Ryan Smith is a better partner for the league then Meruelo, and they draw 12,000+, that’s a win for the NHL.
It’s still a really risky move. Vegas at least has the casinos as potential corporate partners and no other winter competition. Utah doesn’t have a single Fortune 500 company in the state, and winter sports pose major competition for people’s time and money out here. For the NHL to work in Utah, they need to convince families in Holladay and Cottonwood Heights who normally spend thousands of dollars annually on ski passes and lift tickets to go see hockey instead. Ditto for enrolling their kiddos in hockey instead of ski school. Otherwise, they’ll be cannibalizing from the Jazz fanbase.
Maybe it’ll work? It’ll probably go better than Phoenix but that’s an incredibly low bar. They haven’t really presented a plan for how they’ll build durable support once the newness of the team and a hockey-centric arena wear off. The Grizzlies are decently supported, but minor league figures are often a poor indicator for future big league attendance.
It might be risky for Smith, but the league is already ahead on this deal. They dump Meruelo, while maintaining an illusion that these teams are worth billions.
The CSA has 2.7 million people, that’s larger than 5 non Canadian NHL cities. CSAs are good indicators for the # of people you have a shot of selling a ticket to on any given night.
The team is very young, so they have a good player development window to keeping fan interest as the honeymoon period ends, by 2027 this should be one of the better teams in the West.
As you said the bar is incredibly low, it should be pretty easy for Smith & the ex-Coyotes to exceed it
I think the CSA numbers are a bit of a stretch given the geography of the region. The Wasatch Front is boxed in by mountains to the east and lakes to the west, so it’s very skinny and stretched out north-south. I don’t know how many folks in Spanish Fork or Ogden are going to schlep out to downtown SLC on a weeknight and fight traffic. Also, SLC is easily the smallest market to have both an NHL and NBA team. Most of the folks and corporations with the money and inclination to buy season tickets and box seats are already invested with the Jazz.
I agree that the team should have some good success and buoy support, but it goes back to margin of error. A small and crowded market like SLC doesn’t afford much slack if they go through a failed rebuild or stretch of inept ownership or do whatever to alienate the few hockey fans out here. This is definitely a case of a league prioritizing the owner and the public support over the market size. Maybe it’ll work, and the floor is higher than Phoenix, but oy that ceiling here is low.
Vegas has casinos, but also has a far lower per capita income than SLC. In SLC you have many more people who can afford to buy tickets. Vegas has to rely on casinos buying up hockey tickets to give to compulsive gamblers, errrr I mean their best customers.
SLC also has higher per capita income than the Kansas City area.
It’s not a no-brainer for ticket sales like putting an NHL team in southern Ontario would be, but, all things considered, it is probably the best US alternative for escaping Meruelo’s dumpster fire.
I think the best untapped US market available is Houston, simply because of its population size, diversity, and money. There are probably more Canadians working in Harris County courtesy of the energy industry than there are people in the Wasatch Front who could explain the delayed offside rule.
But, Tilman Fertita wasn’t gonna pay the same rate that Ryan Smith did for the Coyotes. Nor was anyone in Houston or the state of Texas itching to hand over hundreds of millions to refurbish an arena like Utah was. So here we are.
(I also think Milwaukee would make a ton of sense as a hockey market, but I’ve no idea if their new arena can host hockey and I understand the nervousness of adding a team to a city losing population).
I agree with you mostly. Not just south of downtown, but west downtown is wasted potential. The Gateway mall – another fun sports development courtesy of the 2002 Olympics – has been mostly a failure. Both the Salt Lake Central and North Temple stations could be incredible hubs for a major development but are surrounded by vacant lots. If Smith wants his real estate bonanza, give him that land and tell him to do something with it. The city of Sandy got him to buy the failing South Town mall complex for their future practice facilities, but SLC can’t get him to take Gateway or Rio Grande? If this plan goes through, downtown will literally have a corridor of segmented mall developments from Gateway to City Creek and Gallivan Plaza. It’s asinine.
Doesn’t he already have a lease agreement for the Jazz?
It expires soon. Or at least this century, which the lease extension would take care of.
Oh, I see.
It appears there is some confusion about this deal because there is *another* $900m deal on the table for a baseball stadium.
That would be paid for by statewide taxes.
Compared to that, this seems like a good deal.
But it means the sales tax in the city will be 8.5%. I can’t imagine that could come close to paying for itself.
Wait, why does this $900m seem better than the other $900m?
Why are the people of (checks mapquest) Utah forcing Ryan Smith to choose between $900m subsidies???
He shouldn’t have to choose. He should get both, clearly.
Because the tax is citywide and not statewide.
Seems like that would be better if you live outside the city, worse if you live inside it.
But the people in the city are more likely to enjoy the stuff the sales tax hike will build. Or at least they can imagine they will.
Hotels nowhere near SLC will not benefit from a baseball stadium.
It’s not a good deal either way.
The proposed $900 million for the ballpark isn’t funded yet. They proposed a statewide hotel tax to pay for it, then killed that proposal when it received so much blowback. I don’t know how they’re going to thread that needle, because the rural caucus in the state legislature is loath to support any kind of statewide tax that would go towards a project along the Wasatch Front. And per the state Constitution, any funding proposal with less than 2/3 approval in both chambers can be subject to a ballot measure to block it. Big League Utah had been wanting that sales tax, but with the NHL coming it bumped up SEG in line. An NHL team in the hand is better than an MLB club in the bush, so to speak.
He owns the Delta Center, so I guess? It made his threats to build a new arena in Draper that much dumber, because he’d be cutting into his own business if he did.
This is honestly a situation to make the deal happen and figure it out once the general election is over and Utah’s local and state governments know who is walking into that door as legislators.
Salt Lake City government want the 2034 Winter Olympics and will most likely get it. After that I fully expect them to ditch the renovation plans and build a new arena with the Winter Olympics in mind along with this new downtown district. So you leave it vague as possible but they obviously have a plan.
Wishing you the best. I enjoy your site, hopefully you have a quick recovery.
Interesting though…in my family, those who are vaccinated seem to have gotten sick the most in the last 18mos.
Just saying…guess I should trust the science and be quiet.
I’m quadruple vaccinated and I’ve never had COVID.
And I’m disabled and frequently use public transport so I’m not exactly hiding from it.
Just saying…..
The only two times I’ve gotten it were when I was close to a year past my last vaccination, and both times not masked.
Get well soon Neil please!
You’re too important!
Nauseating. Disgusting. Delusional. That describes the statements made by the Salt Lake City Council last night about giving a billion dollars to an alleged billionaire. No mention was made of the fact that Smith paid $1,200,000,000 for a hockey franchise that was chased out of Arizona the way the Mormons were chased out of Illinois. Because a fool grossly overpaid for an NHL franchise, the LDS Church should abandon it’s alcohol rules? Smith got the Utah legislature to write a special alcohol law for his 3 block entertainment district. Cheer when a restaurant in your neighborhood closes because they can’t compete. What’s next, sports betting? A Las Vegas style casino to spice up his entertainment district? Maybe that’s how Smith spends the $3 billion on his 100 acre playpen. Now that will revitalize Downtown SLC, the way the area around the Strat is revitalized. And the Mormon Church really wants this across South Temple from their sacred temple? I have a feeling the 28 years in Arizona was just a warmup for the derailment about to hit Salt Lake City.