Pimlico – Field of Schemes

Friday roundup: Team owners rework tax bills and leases, Twins CEO claims team is winning (?) thanks to new stadium, and other privileges of the very rich

October 11, 2019October 11, 2019 Neil deMause

Tons more stadium and arena news to get to this week, so let’s dive right in without preamble:

Minnesota Twins CEO Dave St. Peter told the Minneapolis Star Tribune that revenue from the team’s new stadium is what allowed the team to build a winning ballclub. The Twins actually made the postseason more times in their last decade in the Metrodome (five times) than in their first decade in Target Field (three times), and skimped on adding expensive players at the trade deadline this summer before running its postseason winless streak to 16 games across 15 seasons, but one of the nice things about being a CEO is that you can say things in the newspaper without getting fact-checked.
The Carolina Panthers got a break on their property tax assessment from county officials that will cut their annual tax bill from $5.7 million to $4.7 million, though team execs still want it cut to closer to the $1.8 million they paid last year before it was reappraised this year, and also they already don’t pay any taxes on the land under the stadium because they lease that from the city. The rich really are different from you and me: They can get their taxes lowered just by asking, that is when they don’t get to avoid paying taxes at all.
Also, a clause in Nashville’s lease with Nashville S.C. requiring the soon-to-be MLS team to play at least one game in Nashville in any 24-month period has the team’s financiers balking at loaning money for the stadium — presumably because they’re afraid MLS will up and disappear for a couple of seasons, maybe as part of a labor stoppage, who knows — so the city may just delete that clause. Seriously, lord grant me the negotiating powers of a mediocre rich man.
Golden State Warriors fans are pleased to discover that their team’s new arena isn’t just in the middle of the San Francisco Giants infield, plus it has a really really big scoreboard. But maybe it won’t be as loud as their old arena in Oakland? Or maybe this was just because it was an exhibition game? At least you can enter a lottery to win the right to buy one of 250 tickets per game priced at $25, without which the cheapest opening day seat would be $188, which taken together is the most 2019 factoid I can imagine.
Los Angeles Clippers owner Steve Ballmer and New York Knicks owner James Dolan are still fighting over Ballmer’s plans for a new arena in Inglewood, and they will fight eternally.
The U.S. Supreme Court has given a final dismissal to a case charging that the car rental tax used by Arizona to fund sports facilities was unconstitutional because the money wasn’t being used for transportation projects.
There are 52 pro sports stadiums located in the new Trump-created Opportunity Zones, according to research by Billionaire Boondoggle author Pat Garofalo, which means they’re eligible for some kind of future tax breaks on appreciated value, though still nobody seems quite sure exactly how that works no matter how many FAQs the IRS adds about Opportunity Zones.
The Tampa Bay Rays weren’t the only team to play a postseason game before a less-than-capacity crowd: The Washington Nationals and St. Louis Cardinals did too, though in the latter case maybe partly because of games that started in the afternoon, though games have started in the afternoon before and still sold out, so draw your own conclusions about the death of baseball or whatever.
The Halifax CFL stadium proposal isn’t dead yet, but it’s close, with city councillors readying a motion to kill the $110 million plan because its funding plan is too hazy, which it really is.
The Boston Bruins‘ and Celtics‘ arena may have to replace all its seats again after installing new ones that eliminated any leg room to add more padding. This seems like the sort of thing that somebody should have tested out before ordering all new seats, but hey, that’s just me!
The Pimlico renovation subsidy battle has now entered into the former owner suing his own daughter phase.
The city of Santa Clara has voted again to remove the San Francisco 49ers as manager of their stadium, after the first vote might have been illegal because it took place in closed session. Glad we worked that out!
The Hamilton County Commission approved a plan that will involve spending $30 million to relocate a concrete plant so the county can build a music venue next to the Cincinnati Bengals stadium, with the Bengals helping out by forgoing $30 million in future payments from the county, though the team will also now get free parking space on the land. The music venue is reportedly needed because the waterfront is “an area starved for attention outside of Bengals and Reds games,” which maybe is something to keep in mind the next time you hear that a sports stadium will be enough to revitalize an underused area.
In completely unrelated news, here’s an article about a Columbus bar owner who is hoping that the new Crew soccer stadium being built nearby will be a windfall for her business.

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Pimlico upgrade money would come from Maryland schools budget, why wasn’t this the headline in the first place?

October 8, 2019 Neil deMause

Finally, there’s an answer to the burning question of whether the casino tax money that the owners of Pimlico racetrack want to use to pay for renovations would come from additional casino taxes or money diverted from education funding. It’s hidden halfway down through a followup article in the Baltimore Sun, but there it is:

Under current law, when the 16-year window ends, the casinos would keep paying the money, but it would go to the state’s Education Trust Fund.

Supporters of the plan say they aren’t worried about diverting money to the tracks that otherwise would go to education.

“There are any number of significant policy issues a state has to wrestle with. Education is among them,” Rifkin said. He noted the plan has support from Baltimore’s mayor and county executives in Anne Arundel and Baltimore counties, who are all pushing for more money for schools.

Well, that’s just splendid! The state of Maryland is looking at shifting $375 million from future schools funding to subsidizing horse racing tracks, but you know, it’s a big state and there are a lot of things to be funded, so why worry about what money is exactly being siphoned off from where?

Sean Johnson, a lobbyist for the Maryland State Education Association, did say that he’s “confident there’s enough space to accomplish both our goals on fully funding our schools and the General Assembly’s goals on any number of things,” which implies that he’s maybe been promised the state legislature will backfill the lost casino tax revenue somehow. (Or else he’s just very, very bad at his job of trying to ensure that state money is spent on education.) But even if the money will be replaced from somewhere else, it still has to come from somewhere — and it’s either going to be a new tax or reduced spending on something else, because those are the only two ways that budgets work.

This is something you might think would be important to call out for Sun readers, but instead it comes up in paragraph #16 of an article titled “Before deal to keep Preakness in Baltimore reaches finish line, it will face jostling in the General Assembly.” Because why mention anything about schools funding when there’s a racing metaphor to be had! Clearly that plan of laying off newsroom staff to pay for the cost of their colleagues being murdered is working out just great for the Sun.

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Baltimore Sun: Pimlico to receive $200m in upgrades, funded by elfen magic

October 7, 2019 Neil deMause

The city of Baltimore and the owner of Pimlico race track have reached agreement on a deal to keep the Preakness in town, and the Baltimore Sun has all the details! You just have to, you know, search for them a bit:

The Stronach Group has pledged to donate the land to the city or an entity created by the city for development in and around the track. Pimlico’s antiquated grandstand and clubhouse would be demolished. A new clubhouse would be built and the track rotated 30 degrees to the northeast to create nine parcels of land that could be sold for private development.

That’s a whole lot of passive voice — who, exactly, would be building all this new stuff, and who would be selling land for private development? Let’s keep going and see:

In all, Pimlico would receive $199.5 million as part of the project.

From … somebody! No help there.

Crucial to the plan is convincing lawmakers to extend the life of a subsidy for the tracks called the Racetrack Facilities Renewal Account. The state’s casinos each pay a certain percentage of their slot machine profits into the fund, which is used for upgrades at the tracks.

Backers of this new Pimlico and Laurel proposal want to use that money to help pay off $348 million worth of bonds, to be issued by the stadium authority, that would finance most of the $375.5 million redevelopment.

Now we’re getting somewhere, down in paragraph #11. The state casino tax, it turns out, has been going to that Racetrack Facilities Renewal fund, which provides matching funds for upgrades at Maryland racetracks; so far, Pimlico’s owners have mostly been spending the cash on Laurel Park, another track they own. And the tax runs out in 2032, so the state would have to extend it for another 17 years to use it to pay off 30-year bonds to upgrade Pimlico.

Maryland’s casinos also pay taxes to fund education in the state, though the take is less than what was projected and too often lawmakers just use it as an excuse to grab other education funds and redirect them elsewhere, something that Maryland legislators have tried to remedy by setting up a lockbox for education funds. Would extending the racetrack tax cut into education funding, or would it be an additional tax on top of that? The 2,000-word Sun article that took two people to write doesn’t address this.

(There would also be a 30-year lease by Stronach on the racetrack, with the track owners paying a reported $8 million to $10 million a year toward new luxury suites, and if you’re hoping to learn from the Sun whether that’s part of the $199.5 million in reconstruction money or on top of it, don’t hold your breath.)

In short, this looks like it’s probably very bad economic policy — even the racetrack’s owners say it wouldn’t make sense to pour a ton of money into something that hosts just 12 racing days a year, and horse racing overall is plummeting in popularity — but it’s undoubtedly truly terrible journalism, intended to parrot the line being put across by local politicians rather than explain what it would actually mean for the Sun’s readers. Fortunately, Baltimore has another newspaper option, and … what’s that you say, the Sun bought it and then shut it down? Never mind, then.

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Pimlico sale put on hold

May 3, 2009 admin-neild

As 50-1 longshot Mine That Bird ran away with a shocking Kentucky Derby victory, there was more Pimlico-related news out of Baltimore yesterday, as Magna Entertainment, the track’s bankrupt owner, withdrew its proposal to auction off the historic track and a smaller Maryland track, Laurel Park.

The announcement at least temporarily stalls the brewing battle between state lawmakers and private bidders over control of the track. In April, an emergency measure passed by the General Assembly authorized Governor Martin O’Malley to use eminent domain to seize the tracks after one local bidder threatened to raze Pimlico. A lawyer representing Maryland told the Baltimore Sun that Magna’s next move is unclear.

Meanwhile, after a crowd of nearly 8,700 attended Pimlico’s opening day on April 18, ticket sales for the Preakness, the track’s only money making event, have lagged for two main reasons: The sour economic climate has eliminated sponsors and decreased the number of high priced “Corporate Village” tents, and advance Infield ticket sales are down 17 percent following a new policy banning outside alcoholic beverages from the Infield. With the future of Pimlico already in doubt, track managers from the Maryland Jockey Club might have exacerbated their losses by instituting the new policy.

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Maryland moves to seize Pimlico

April 15, 2009 admin-neild

The future of historic Pimlico Race Course, home of the Preakness Stakes, is in doubt as a messy legal battle over the property is brewing.

Yesterday, Maryland Governor Martin O’Malley signed emergency legislation, passed on the last day of legislative session, that authorizes the state to buy or seize the facility by eminent domain. But there are legal questions surrounding the measure, which was rushed through in reaction to threats by Carl Verstandig, a Baltimore developer, to raze the track and build a shopping center in its place.

When asked by the Baltimore Sun in early April about the city losing the Preakness, Verstandig said, “There are plenty of locations they could use. They could run it in Timonium or any other location. I don’t think it has to be specific to Pimlico racetrack.” But it’s questionable whether the Timonium fairgrounds, located north of the city in Baltimore County, could host a Triple Crown race. The Preakness is run at a mile and 3/16ths, the shortest race of the Triple Crown series. Timonium’s oval is 5/8ths of a mile, hardly suitable for any major stakes race, let alone a classic like the Preakness. Also, Timonium’s stadium holds about 2,000 fans. Preakness attendance often exceeds 100,000, including over 30,000 in the grandstand.

The Pimlico controversy began on March 5, when track owner Magna Entertainment filed for bankruptcy just seven years after grand visions of a renovated, Las Vegas-like facility. Though a loan was secured to keep racing going at Magna’s most profitable tracks, like Gulfstream Park in Hallandale Beach, Florida, and Santa Anita Race Track in Acadia, California, no financial arrangement was made for Pimlico, which recently cut its live racing days from 31 to 20. The 140-acre facility makes money one day a year, on Preakness day.

Now, as opening day nears on Saturday and politicians struggle in Annapolis to save the racetrack, there is no resolution in sight, and a murky legal road ahead. Verstandig, who now says he doesn’t want to raze the track, only to develop land around it, warned the Times in reaction to the emergency bill: “I think they’re leaving themselves open for some major, major litigation.”

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