Jazz, Mammoth win $1-a-year arena rent until 2125, how much will that cost Salt Lake City?

One of the most common questions I get from journalists new to the world of sports subsidies is “Where can I find a list of how much public money went to each stadium and arena?” and my answer is always Ha ha ha ha ha ha ha no. There have been attempts, like Judith Grant Long’s 2013 magnum opus Public-Private Partnerships for Major League Sports Facilities, which took her ten years to research and was almost instantly out of date — one reason being that it turns out publicly announced figures for stadium spending are only the tip of the iceberg, with other things like tax breaks and discounted hidden below the waterline. And how much a team owner will benefit from costs they won’t be paying in the future turns out to be really tricky to project, which is how you end up with Washington, D.C. officials saying a Commanders stadium would cost $850 million and a land-use economist saying the actual number is somewhere between $7 billion and $26 billion, depending on the future value of land that D.C. is forgoing collecting property taxes and rent on.

All of which brings us to the latest news from Salt Lake City, where Utah Jazz and Mammoth* owner Ryan Smith just landed an eye-opening lease extension on the land under his arena:

The deal includes provisions that can extend the agreement for as long as 100 years for as low as $1 per year. … The lease was set to expire in 2060. Under the new agreement, Jazz Arena Investors can rent the land for as little as $1 per year, as long as it keeps up with certain provisions over the next 30 years…

After 2055, the arena owner can extend the lease every 10 years for up to seven times, accounting for the remainder of the 100-year deal. After 30 years, the Reinvestment Agency could assess “market rent” rates if conditions aren’t met.

*(Yes, the former Arizona Coyotes have been renamed the Utah Mammoth, in case you missed it. And yes, the plural of “mammoth” is “mammoths,” but these are the Mammoth because oneness or something, or maybe just because whoever filed the trademark request forgot the “s,” who can say?)

Okay, so Smith gets to have his NBA and NHL teams play at the Delta Center for $1 a year — or “less than the cost of a candy bar,” as the Salt Lake Tribune helpfully explains for anyone who doesn’t know how much a dollar is worth — through the year 2125 if he wants, though Salt Lake can start charging real rent starting 60 years from now if Smith moves both teams out by then. All of this is for an arena and surrounding district that Smith just got $900 million in state and city tax money to upgrade, even though neither the state nor the city owns it nor will be getting any revenue from it.

That’s a pretty sweet deal, but how sweet? To figure that out, we would need to know what the going rate is for rent on a large piece of Salt Lake City real estate with a sports arena sitting on top of it, which, needless to say, it’s hard to find comparables for. In fact, we actually need to know not just the going market-rate rent now, but what it is likely to be until shortly before the founding of Starfleet Headquarters. We could guesstimate a current value of Salt Lake City commercial land at about $2 million an acre, but we would still have to know how many acres of land Smith is getting control of (the entire arena district site is 100 acres, but this would only be for part of it, if I’m reading the news reports correctly), plus then subtract out the value of the $1-a-year rent Smith is already set to get through 2055. I’ve asked Geoff Propheter, who did the D.C. subsidy estimate, to run similar numbers here, and he says he’ll get back to me once he can get more details.**

Plus, there’s also the value of the leverage Smith is buying: Because it’s not an actual 100-year lease but just a series of lease options, Salt Lake City can’t demand more rent from him, but he (and his children and grandchildren and AI descendants) absolutely will be able to threaten not to renew his lease if he thinks it will enable him to demand more public money in the future. It’s a perfect “grift that keeps on giving” scenario, in other words, which is maybe not the sort of thing that your city council should be approving unanimously with little debate.

Anyway, if anyone asks you how much public money Ryan Smith is getting for his privately owned arena, feel safe in saying “around a billion dollars” and leave it at that. It may not make for a nice data point on a bar chart, but it has the benefit of being undeniably true.

**UPDATE: Propheter has done a quick estimate of the value of the additional 70 years of lease extensions plus the additional 26 acres of land Smith will be getting on top of the 10 acres he already has, and come up with: $2 billion in present value, give or take. So maybe “around $3 billion” is a better answer for how much public money Smith is set to get overall, depending on how he plays his cards with threatening to opt out of his lease.