Category: New York Yankees

Friday roundup: A’s exec says Fisher really does have Vegas stadium money (no, you can’t see it)

access_time personNeil deMause

Before we get to the bullet points, and I know how much you all love the bullet points, there is pressing news we have to discuss first, which is that Athletics owner John Fisher has the billion-dollars-plus he needs to build a stadium in Las Vegas. Sort of. Maybe. According to a guy:

Athletics owner John Fisher and his family will invest $1 billion into the construction of a stadium in Las Vegas and U.S. Bank and Goldman Sachs will offer a $300 million loan, club executive Sandy Dean said Thursday.

Dean made his remarks to a special meeting of the Las Vegas Stadium Authority board.

Dean said four letters will be presented at the Dec. 5 authority meeting asserting construction details and financing will be in place. Final approvals are expected to be made at that meeting to allow construction of the $1.5 billion, 30,000-seat domed ballpark with a capacity for up to 33,000 fans.

So it’s official: Fisher has financing in place for his Vegas stadium … well, no, he will have financing in place by December … or he’ll have a letter (or four) stating that financing is in place?

[One] letter, Dean said, asserts the Fisher and his family have the ability to meet their financial commitment. Dean said [another] letter from U.S. Bank will show that through a review of the owner’s finances that it “concludes the Fisher family has more than sufficient resources to fund the equity investment that’s required to build the stadium.”

Except! Here’s video of Dean saying that one of the letters will be “from John Fisher indicating that his family will invest a billion dollars in support of the project here in Las Vegas.” So which is it: Is the Fisher family committing to spend $1 billion on a Vegas stadium, or just avowing that it  is worth $1 billion? We already knew the latter — Vegas convention center authority chief and unregistered A’s lobbyist Steve Hill keeps saying it, among other things — but that’s not the same as actually figuring out what the family would liquidate to pay for the stadium: the San Jose Earthquakes? The Gap?.

(Dean also said Fisher is still looking to sell minority shares of the team at inflated prices because “it would be good coming to Las Vegas to have outside partners from Las Vegas,” but not because he needs the money, oh no: “The ability to finance the stadium is independent of that.”)

The question all this keeps coming back to isn’t “Where can a billionaire find a billion dollars?” but rather “Is the Fisher family ready to throw a billion dollars of its own money down a stadium hole?” The number of stadiums that can cover their own construction costs is slim; the number that have done so that are in their leagues’ smallest market and include a pricey dome is zero. Which is why people are eager to see Fisher put actual money on the table; promises of a letter next month that will maybe describe actual money on the table is not quite the same thing.

Sorry if all that was anticlimactic. And now, this week’s bullet points:

  • Ohio Attorney General Dave Yost wants to intervene in the Cleveland Browns‘ lawsuit against the city of Cleveland seeking to block the use of the Art Modell Law to block the team from moving to a new stadium in Brook Park. Yost says the team’s claim that the law, which requires that teams be offered up for sale to local owners before being relocated from their current home city, is “unconstitutionally vague” is “wrong,” and since Browns owners Jimmy and Dee Haslam only sued the city, he needed to file a motion to intervene on behalf of the state. Feel the excitement!
  • Philadelphia councilmember Mark Squilla may have come down in favor of letting the 76ers owners build an arena next door to Chinatown, but he has an idea for ensuring that the neighborhood isn’t disrupted: a zoning overlay to “require affordable housing, restrictions on types of businesses, and limits on the size of new storefronts to discourage chain restaurants from crowding out traditional Chinatown retail,” in the words of the Philadelphia Inquirer. Adds the Inquirer: “The precise language mandating how any of this would work has yet to be added to the bill.” This is on top of proposing a tax increment financing district to kick taxes collected in Chinatown back to local businesses to offset any rise in rents as the result of increased property values — pretty sure that would only risk encouraging landlords to increase rents more knowing businesses would be getting subsidies to help pay them, need to go back and check my Intro to Economics textbook chapter on microeconomics.
  • The World Series is over and I didn’t get around to discussing the New York City Economic Development Corporation’s claim that each Yankees and Mets home playoff game generated $20-25 million in economic activity, but suffice to say I talked to an EDC spokesperson who told me (on background, so I’m not supposed to quote them directly so I’m not) that the analysis was based off a previous model from 2022 that puts together assumptions from the city tourism board plus assumptions from the Yankees and then applies a multiplier. Also, they look at “anonymized cell phone data”? No, you and I are not allowed to see the actual model, so no further details about WTF this means will be available.
  • Spotlight on America has a piece on how Tempe, Arizona said no to funding an Arizona Coyotes arena and how other cities could follow its lead, which is all well and good until it concludes by lauding late Seattle Seahawks owner Paul Allen for his commitment to Seattle, when Allen actually paid the city to hold a referendum so he could get $300 million in public money for a football stadium, then refused to open his books like he promised in exchange for the money, seriously, what?
  • Perhaps you would prefer a deep dive into the toilets at the Los Angeles Clippers‘ new arena? Perhaps you would prefer I hadn’t phrased it that way? Sorry, you’re getting both!

 

Share this post:

Stadiums and arenas are set to collect $18B in property tax breaks over their lifetimes

access_time personNeil deMause

It’s been a year since I excitedly got my copy of Geoffrey Propheter’s book Major League Sports and the Property Tax, so I figure it’s maybe time that I actually review it. (What can I say, a lot of shit happened last year.) Propheter is one of the most active researchers and commenters on sports venue deals, and was a property tax analyst for the New York City Independent Budget Office for three years, so he’s the perfect person to investigate the knotty question of how much exactly local governments are subsidizing sports team owners via property tax breaks.

As Propheter says at the outset, “property tax exemptions are government spending by another name”: There’s no functional difference between a government cutting a sports team owner a $100 million check and one granting them $100 million in tax breaks. (Propheter notes one economist’s quip that you could easily eliminate the entire defense budget by replacing it with a “Weapons Supply Tax Credit.”) But where it’s easy to calculate cash allocations, it’s a lot more contentious to establish how much taxpayers are giving up in tax money they would have gotten, if a stadium or arena had been subject to normal tax rates.

Previous attempts at coming up with property tax subsidy numbers — most notably by Rod Fort and Roger Noll and by Judith Grant Long — were general estimates without delving into the nuances of tax assessment. Assessments are more art than science at the best of times, as they require figuring out how much a building is worth to its owner; for sports venues, it’s doubly problematic given the problem of finding other examples to use for comparison, thanks to each city only having a handful of stadiums and arenas, and most of those being tax-exempt.

As of 2022, 79% of the 126 stadiums and arenas for the NFL, MLB, NBA, NHL, and MLS were fully exempt from real property taxes, according to Propheter, the same as in 2000 and up only slightly from 1970. After running through a whole lot of math, he concludes that the 105 current stadiums and arenas receiving tax breaks would have owed an additional $654.3 million in property taxes in 2022 if they’d paid like normal property owners. Topping the list by far: the Minnesota Vikings‘ stadium ($25.1 million in property tax breaks in 2021) and the New York Yankees‘ stadium ($24.2 million) — the latter of which double-dipped on its tax savings by then calling the team’s own bond payments “payments in lieu of taxes” in order to get access to cheap loans.

When Propheter extends those exemptions over the life of the buildings’ current leases, he comes up with a total public cost of about $18 billion (using a 3% discount rate for future value; it’s a bit less if you bump that up a couple points) that governments are handing over to sports team owners by letting them off the hook for full property tax payments on their current stadiums and arenas. The average sports venue that gets property tax breaks, then, gets about $171 million in public money from that source alone, on top of any actual budgeted cash, diverted tax revenues, free land, operating subsidies, or development rights that a team owner is likely to rake in.

So, what’s that to you, if you’re not a team owner or a city budget analyst? As Propheter explains, “Like all spending decisions, allocating $1 to good X means not allocating that dollar to good Y.” In this case, the opportunity cost of giving up that tax money is far from theoretical: Of that $18 billion in tax breaks, he calculates that $7.5 billion comes straight out of money for K-12 education, the most common use for property tax revenues.

There’s lots more in the book to sink your teeth into, especially if you love lots of charts and tables laying out the tax status of each stadium and arena. (You know I do.) It is admittedly priced for the academic market, so if you just want some distilled wisdom from Propheter, follow him on Twitter, where just in the last week he’s written a thread of top research insights on tax increment financing and reported that Virginia’s “72% privately financed” Washington Capitals and Wizards arena actually comes in at 63% public, for a final taxpayer bill of $1.64 billion. Did he include a spreadsheet? Of course he did.

 

Share this post:

Friday roundup: Royals and Chiefs subsidy compromise rumors, Rays name fight looming, plus more gondolamania!

access_time personNeil deMause

It must be Hanukkah, because there’s miraculously already more than a week’s worth of stadium news! (Don’t think about it too hard, just go with it.)

  • Both Kansas City Chiefs president Mark Donovan and Royals president of business operations Brooks Sherman met with Jackson County executive Frank White this week, presumably to discuss putting a referendum on the ballot in April for a sales-tax surcharge extension to fund new or renovated stadiums for the two teams. Fox4 reports that “a source close to the situation” says the team owners might be willing to give up park levy money and insurance coverage they get from the county currently — the insurance money, you may recall, is what had the county figuring a new Royals stadium alone could cost more than $1 billion in present value costs, so this could potentially trim the subsidy demand to more like $500-700 million, which is better without actually being good. More unconfirmed rumors as events warrant.
  • Tampa Bay Rays president Brian Auld has announced that the Rays have no intention of changing their name to St. Petersburg Rays after moving from St. Petersburg to next door in St. Petersburg. The St. Petersburg city council is set to vote next week on a requirement that the team do so in exchange for getting at least $600 million in city money for a new stadium; Auld had previously warned that “Serious people recognize that putting this entire project at risk over a 25-year-old name of our organization is probably not something worth doing,” which sounds like a threat to me, plus a personal attack by calling councilmembers unserious, it would definitely be disallowed if Auld had tried to post it here in comments.
  • Not only is the Los Angeles Dodgers stadium gondola dream not dead, but it has a new price tag: $385-500 million. Plus another $8-10 million a year to operate it. The environmental impact report that gave the new projections says the money could be covered by private bond financing (which isn’t actually a way of covering anything, just a way of borrowing), sponsorships (uh, sure), naming rights (uh, suuuuuure) and fares (though trips to and from Dodgers games, which are most of the point of the thing, are supposed to be free). The report acknowledged that there’s suspicion that the whole gondola scheme is just an excuse to develop the parking lots around the stadium — which former Dodger owner Frank McCourt, who is behind the gondola idea, still owns — but says there’s no proof of McCourt’s plans to proceed with “a larger, more grandiose project in the future,” so just try not to think about that, and focus on the glory that is gondola.
  • Add the Soldier Field parking lot to the list of potential stadium sites Chicago Bears ownership is considering. No indication of whether or how that would work any better than building on the current stadium site, but at this point the team is just kicking tires on any site it can to hope one comes with a huge pile of public cash, which hasn’t worked so far, but they only need to find one sucker to be successful, so can’t fault them for trying. (Except for 100% faulting them for extracting public money for private profit, that’s the whole point of this site, haven’t you been paying attention?)
  • So it turns out it’s the state of Maryland that wants to separate the Baltimore Orioles‘ new lease from its new development agreement, that makes more sense than the other way around. It sounds like the whole issue is more about lack of time to get the documents finalized before next season starts than the state actually looking for some kind of leverage to negotiate a better deal; the O’s may go to a month-to-month lease in the meantime, the better to keep everyone on tenterhooks until they get all the t’s crossed and i’s dotted on their
  • Plans for a new NYC F.C. stadium in Queens cleared a community board vote after the city agreed to build a new police precinct there, which was apparently the board’s main demand. Still unclear: Who will pay for hundreds of millions of dollars in infrastructure costs and whether the team will get hundreds of millions of dollars in property tax breaks, maybe if we’re lucky we’ll find out before the city council grants final approval in the spring, but don’t count on it.
  • Jon Styf at The Center Square wrote a report on economic impact consulting reports for sports venues and interviewed both J.C. Bradbury (who called them “fantasy reports”) and me (who called them an attempt to “put across B.S. as fact”). He left out my explanation of the clear plastic binder effect, but you can’t have everything.
  • A high school football team that had to play all its games on the road because first its home field was destroyed to make way for a new New York Yankees stadium and then the replacement field that opened years later fell apart and was left unplayable has won the state championship! I can’t actually tell if this story is supposed to be heartwarming or scandalous, let’s go with both.
Share this post:

A’s deal isn’t first stadium Reggie Jackson has stumped for on a team payroll

access_time personNeil deMause

The New York Mets visited Oakland this weekend to play the A’s, and yesterday the teams marked the 50th anniversary of the 1973 World Series, in which the A’s beat the Mets in seven games for their second of three consecutive titles. Reggie Jackson was among the A’s alums on hand, and he had a lot to say about the team’s need for a new stadium, which owner John Fisher has promised to build as soon as he gets a billion dollars or so in government infrastructure money:

“No, they’re not going to have a team here. You can’t play with three, four, five six thousand people in the stands,” Jackson said Sunday at the Coliseum before the A’s held a celebration for the 1973 World Series championship team. “You have no suites sold, you have no revenues here. What’s the signage look like? You’ve got to have revenue.”…

I’m very disappointed. I’d love to see the team stay here,” Jackson said. “But I don’t care who you are. You can’t lose $100 million a year. Can’t lose $50 (million). You can’t do that. You can do it once in a while, do it for two to three years.

“You’re not going to be a billionaire long as you keep losing $100 (million) a year.”

Harsh words! And important to hear them from a beloved baseball legend who doesn’t work for Major League Baseball in any — oh, hmmm. But still, he’s just a team employee, not an owner or anyone who hopes one day to become — oh, hmmmmmm.

(The San Jose Mercury News didn’t mention Jackson being an executive assistant to Houston Astros management, but it did mention that according to Forbes’ estimates, Fisher isn’t losing $100 million a year on the A’s, he’s turning a profit of about $30 million a year. Details!)

For the record, this isn’t even Mr. October’s first go-around at publicly stumping for stadium funding. Back in 2006, as the New York Yankees‘ stadium project neared its final approval, it was Jackson who went before the city council as an executive assistant to George Steinbrenner to explain why spending over a billion dollars in public money on tearing down Yankee Stadium and building a new one would be, in fact, a gift from Steinbrenner to the people of New York:

“The Yankees weren’t always a good partner in the Bronx,” admitted Jackson, who said community members now had a chance to “create a new template” to “get what you want” and “share in the revenue.”

Jackson claimed George Steinbrenner was now trying to make amends. “There is some embarrassment in the Yankees,” he said. “The Steinbrenner family has financial wherewithal to make things happen. I see an opportunity now to get engaged, and to ask the Yankees to help you.”

This did not work out at all for the Bronx community, either in terms of direct community benefits spending or in getting new parks built promptly to replace the ones Steinbrenner bulldozed, or the city getting paid for fan parking on public land or, really, anything. But Reggie was never about strict factual accuracy so much as getting in the papers — “they made the tabloids just for me,” as the song goes — which may help explain his 29-years-and-counting career as an executive assistant.

Share this post:

NYC is handing out $377m a year in tax breaks to its pro sports teams

access_time personNeil deMause

The New York City Independent Budget Office, an agency created in 1989 as an independent check on city governance that has provided a ton of good economic analysis over the years throwing cold numerical water on various elected officials’ pet projects, has a report out on city subsidies for Madison Square Garden and the city’s three most recently built sports venues, for the Yankees, Mets, and Brooklyn Nets. And while it includes no overall subsidy numbers — “because the subsidy structures for each are different, cross-comparisons are difficult to make,” writes the IBO — there is this breakdown of property tax breaks alone:

As of February 2023, the DOF assessed fair market values for Yankee Stadium, Citi Field, and Barclays Center are $2.6 billion, $3.2 billion, and $2.6 billion respectively, and the property tax amounts would be $115 million, $121 million, and $99 million, respectively.

That’s foregone property tax amounts per year, mind you. Add in the complete tax break for Madison Square Garden, and the city is currently granting Hal Steinbrenner, Steve Cohen, Joe Tsai, and James Dolan $377 million a year in tax breaks. (The Yanks, Mets, and Nets technically pay a smaller amount of “payments in lieu of taxes,” but as the IBO notes, these are redirected to pay off the teams’ own construction costs, so the city treasury is still getting bupkis.) Even without taking into account that property values are certain to rise, that would amount to more than $5 billion in present value over the next 30 years, assuming all these sports facilities last 30 years, or at least that the tax exemptions do.

This is on top of more than $1.1 billion in other subsidies for the Yanks and Mets stadiums alone. (The Nets arena financing is so complex, being all intertwined with housing development and its attendant subsidies, that it’s nearly impossible to put a number on its public costs.) That brings the total to more than $6 billion, which could build 15,000 units of affordable housing, or an entire new train line linking Brooklyn and Queens, or lots of other things costing $5 billion. (A free 99-cent pizza slice for every city resident every day for a year and a half?) It’s a bunch of money, but “a bunch of money” doesn’t make headlines, numbers like “$377 million a year” and “more than $6 billion” do, so feel free to bandy those about on the socials as you see fit.

[NOTE: This post initially had lower numbers because I typoed “$277 million” for “$377 million.” My fingers regret the error.]

Share this post:

Yankees’ unpaid garage costs hit $162m, everybody but Yankees owners to be stuck with bill

access_time personNeil deMause

One of the older documents on this site is the New York Yankees and Mets stadium costs spreadsheet, which was gradually compiled over the course of several years as it became clear how the complicated financing deals would work for the $2.3 billion Yankee Stadium and $800 million Citi Field that opened in 2009. The numbers bounced around for a while, then finally settled down at nearly $1.2 billion in taxpayer money for the Yankees owners, and $614 million for the Mets owners, where they’ve stayed for more than a decade.

Now, though, it may be time for an update, because as The City (the news website) reports, there’s a fresh figure for how much the city (the city) has gotten stiffed on the new parking garages that were built for the new Yankees stadium:

More than two years after the city Parks Department threatened to boot a Bronx parking lot operator from city-leased land due to its astronomical debts, the operator has accumulated still more unpaid rent and other funds due to the city — with the total now topping $162 million, new financial records show…

In 2021 alone, Bronx Parking Development Company LLC — a nonprofit created to receive the tax-exempt city bonds and oversee construction and management of the parking facilities — accumulated another $17.2 million on its bill for unpaid rent, payments in lieu of taxes (PILOT), and interest due to the city.

The nonprofit is also falling short on payments owed to investors on the $237 million in bonds that were issued by the city’s Industrial Development Agency in 2007 as part of a major project to rebuild Yankee Stadium and the area around it.

That’s a lot of words and nine-figure numbers, so let’s recap: When New York City agreed to tear down the original Yankee Stadium and build a new one in a public park across the street, part of the draw for then-owner George Steinbrenner was that he would get extra parking spaces, particularly in two new garages built on additional public parkland. (Local residents eventually got some new park space back on the old stadium site, but it took a while.) The state of New York kicked in $70 million toward the garage cost, but the rest was supposed to be financed by those IDA bonds, which would be paid off by a nonprofit shell corporation out of new parking revenues.

This worked out spectacularly badly. Nobody, it turned out, wanted to pay $25 to park at the new garages, especially with much cheaper parking available at the nearby Gateway Mall (yet another city-subsidized project, ironically) and tons of public transit, including a new Metro-North commuter rail station that was also part of the new stadium project. Almost as soon as the new stadium garages opened, they were in default on both their bond payments and their rent payments to the city, and they’ve never paid a dime toward either in the decade since.

So, how much of a bag are taxpayer left holding? The bond default, even though it’s on city bonds, is one bondholders look to be stuck with paying for: If you’re one of the investors who thought “City-backed bonds for a baseball stadium garage, that’s a safe place to park my retirement money,” your money is gone now and you ain’t getting it back, sorry.

That leaves the rent payments, which were supposed to be at least $2.3 million a year (for a 99-year lease!) to pay off a $43 million (in 2009 dollars) slice of the city’s $691 million share of the Yankees project cost. If there turned out to be more rent money, the city would get that as a windfall; fortunately I never put that in my spreadsheet, because any rent surplus turned out to be doubly imaginary. That $162 million cited by The City, then, not only needs to be translated back into 2009 dollars, but also includes a mix of money that the city was counting on to pay part of its costs and money that the city was dreaming it would one day get to use for something else that would actually benefit residents.

Enough with all these numbers, you are by now shouting at your screen, how much does this add to the public cost of this monstrosity? The answer is: $43 million. That’s what the garage company was supposed to be paying into the project, and now we can safely assume will never ever be paid into the project, and which should now be shifted into the “city” column, which I will do as soon as I can dig up the ancient Excel spreadsheet that I used to make that stadium costs PDF. (I actually explained this all here way back in 2010 when it first looked like the garages might not be working out that well.)

Even if the stated public price tag of the Yankees stadium doesn’t go up by all that much, though — from $1.19 billion to $1.23 billion, roughly — that doesn’t change the fact that the Steinbrenners pulled off a remarkable feat of fobbing off costs onto Not Me: They created a convoluted financing plan that they promised would be paid for by parking fees, then when the whole scheme collapsed walked away saying “Oh well, not our problem.” This should be a lesson in two things: always read the fine print in stadium contracts, because there could be hidden costs lurking; and the final subsidy costs of sports venues are always subject to change, and the direction is never down.

Share this post:

Friday roundup: When stadium CBAs go sour, Zimbalist explains why he takes team money, and Rob Manfred doesn’t understand how road games work

access_time personNeil deMause

Happy Friday! Before we get to the new stadium news, here’s some hot-off-the-presses old stadium news from me for City Limits magazine, for which I took a hard look at the enforcement problems around the community benefits agreements surrounding the Brooklyn Nets and New York Yankees development deals. The nut graf, as we say in the biz:

One big problem with CBAs: They’re not laws, but rather private contracts between a developer and community groups—in the case of the arena project, groups that were not only hand-picked by the developer but in some cases funded by him. And if those groups aren’t around to hold a developer accountable—or the developer isn’t around and there’s no successor clause—there’s little anyone else can do to enforce an agreement.

That was certainly the problem with the Nets deal, where most of the signatories to the CBA are now long-defunct. And for the Yankees deal, it was even worse: The only people to sign the agreement were elected officials who are now long out of office, and promised regular reports on the community fund’s spending have been withheld from the public on the grounds that no one is authorized to see them — though the fund’s initial administrator says there’s a simpler reason for why no reports have been issued: “During my time, no reports were written.”

Well, lesson learned! Or not, given that the rest of the nation seems intent on repeating the same mistakes over and over and over and…

  • MLB commissioner Rob Manfred said for the umpteenth time this weekend regarding the Oakland A’s and Tampa Bay Rays stadium demands that “we need a solution in both those markets and the time has come for that solution,” which is both some of his typical awkward-as-possible wording and also an excellent example of how sports team owners love to define their not-as-high-as-they’d-like profits as a problem in need of a solution, preferably with someone else’s money. Manfred added re the Rays: “We are getting to the point where wherever it is in the region that has an interest in having 162 baseball games, they need to get to it, get with the club.” Um, the region has 162 baseball games now (really 81, but let’s not bother Manfred with concepts like “road games”), and the Rays don’t exactly have an offer on the table from another city with a stadium, or even the promise of a stadium, so it’s not like if their lease expired today they would be gone. But when you’ve got one move and it’s vague threats, you’ve got to make the most of it, I suppose.
  • Sports economist Andy Zimbalist has fired back at critics of his criticism of sports economist J.C. Bradbury’s study of the Atlanta Braves stadium deal in an interview with Sportico (which didn’t bother to interview Bradbury that I can tell [CORRECTION: it did, it just didn’t quote him much]), saying among other things that getting paid by a team owner to conduct a study of the team’s nine-figure stadium subsidy isn’t a conflict of interest because “If I didn’t get paid there is an element in it that says I am not a professional, I am doing it for some other reasons. The payment thing is, ‘damned if you do, damned if you don’t.’” I am pretty sure that phrase does not mean what you think it means, Andy.
  • Speaking of paid consultants, Nashville Mayor John Cooper and the metro area council are considering hiring one to analyze whether it would really cost taxpayers $1.8 billion to maintain and upgrade the Tennessee Titans‘ stadium for the six-year remainder of the team’s lease, a key cog in the team’s argument that the public should just build a new stadium instead. This is an excellent idea, but may I just suggest that one particular person not be hired for the job?
  • And speaking of Bradbury, he has an excellent rundown in Global Sport Matters (for which I also write) of what every city should know before publicly funding a stadium or arena deal, which pretty much comes down to “don’t.”
  • NYC F.C. fan site The Outfield, which has done an excellent job following the bouncing ball of the MLS team’s never-ending search for a site on which to build a stadium of its own, reports that the club’s owners are reopening talks on building at a site on railyards along the Harlem River, completing a memorandum of understanding with the state Department of Transportation to lease the site. This is still likely just kicking-the-tires stage — The Outfield also notes that “NYCFC still seems to be engaged to a degree in feeling out development in Willets Point,” across the street from the New York Mets‘ stadium — but as a reminder, here are some pictures of what the Harlem River Yards stadium was supposed to look like in 2018, and here’s a projection from the time of how the deal would involve possibly $400 million in state land subsidies, and here’s the team itself backing away from the plan at the time as fast as possible.
  • If Anaheim tries to sell Angel Stadium land to Los Angeles Angels owner Arte Moreno again after the stench of the bribe-solicitation scandal that forced the resignation of the old mayor wears off, a new bill in the California state legislature is seeking to require that the city open it up to competitive bidding first. This is another excellent idea, if only to find out what the land is actually worth, which has been a bit of a point of contention.
  • “Arizona Coyotes plan to privately finance new arena, entertainment district, team president/CEO says” reads the ESPN headline, but the story itself reports that Coyotes CEO Xavier Gutierrez actually said, “It’s going to be privately financed. … And then we have made a request to have the city issue bonds whose sole collateral would only be the land and the real estate, so the taxpayers would never be at risk.” Which is not how “privately financed” or “not at risk” actually work — regardless of the collateral, Tempe taxpayers would be out at least $200 million — but “[person with a fancy title] says” allows for a lot of non-reporting by news outlets like ESPN, the better to move on to writing the next six posts of the day. (An even better time saver: Just make quotes up! Those articles about McDonald’s employees leaping out drive-through windows to save people choking on chicken nuggets aren’t going to write themselves!)
  • And speaking of journalism with room for improvement, here’s GOPHNX reporter Craig Morgan’s opening sentences in his article this week on the arena plans: “Before the special Tempe City Council meeting on June 2, there was genuine concern about the fate of the Coyotes’ proposed arena and entertainment district along the south bank of the Salt River. Some insiders worried that the opposition was too strong, that the issues were too numerous and that the council was lacking the votes necessary to push the project forward.” Or, you know, some people, that aforementioned opposition, did not “worry” those things but presumably “hoped” them. Can someone please tell Craig that there’s no cheering in the press box?
Share this post:

NYC will hand out $344m in tax breaks to the Nets, Knicks, Rangers, Mets, and Yanks in 2022 alone

access_time personNeil deMause

The hits keep on coming from the new NYC news site Hell Gate, which I wrote for last week about how Gov. Kathy Hochul’s $1 billion Buffalo Bills subsidy was eased by the fact that New York state hates letting voters have input into actual budget decisions. On Monday, it was Doug Turetsky, former chief of staff of the city Independent Budget Office and a journalist before that, reporting on how much money New York City’s sports teams saved last year via not having to pay property taxes on their teams’ homes. How much, you ask? How much:

Take Barclays Center. The arena hasn’t paid property taxes since it opened in 2012. It’s a tax expenditure that will cost the city $85 million this year alone, according to the City’s Department of Finance Annual Tax Expenditure Report…

Madison Square Garden, the home of the Knicks and the Rangers, which are each estimated to be the most valuable teams in their respective leagues, benefits from politicians’ largesse too. MSG’s tax break is worth about $42 million this year, according to the Finance Department report…

The city will forgo about $111 million for Yankee Stadium this year and $106 million for the Mets’ Citi Field, according to the tax expenditure report.

That’s a total of $344 million that the Nets, Knicks, Rangers, Mets, and Yankees would normally be paying to the city in 2022, but aren’t because they don’t wanna. For the Knicks and Rangers, it’s because Mayor Ed Koch accidentally (he swore) gave them a special tax break in 1982 with no end date; for the Nets, Mets, and Yankees, it’s because they arranged to build on city- or state-owned land, then arranged to direct all payments in lieu of property taxes back into their own pockets to pay off their own construction costs, a gambit that helped them qualify for tax-exempt bonds that privately funded stadiums normally aren’t eligible for. (The IRS later closed that loophole, but not before the three NYC teams walked through it.)

None of this is unusual — as Turetsky points out, each and every year New York City forgoes about $7 billion in tax revenue via various and sundry tax breaks. Three years ago, I reported for Gothamist on a pair of 20-year-old tax breaks that the IBO had found to be utterly useless at creating jobs or reducing office vacancies, costing the city $400 million over that time. The two programs, the Commercial Revitalization Program and the Commercial Expansion Program, had been launched in 1995 and 2000 with exactly the sort of public oversight you would imagine:

“I have asked, ‘Show me one study, one survey that will prove or at least indicate that if we put this amount of money into commercial modernization and residential conversion that we’re actually going to create the jobs that are being claimed, that we’re going to get a good return for the public investment,'” [state senator Franz] Leichter said during the brief senate debate over the bill. “You know what? There isn’t one survey. They haven’t made one market study.”

True, no studies had been done, admitted bill sponsor Martin Connor. But, he asserted, none were needed.

“Senator Leichter says, ‘Where is the study?’ Well, we’ve all seen studies and reports and false promises in paper. The people in this business, in this real estate market, got together with their consultants and devised this because they believe it works, and they are the people that have to go out and sell. They’re the people who have to go out and sign those leases, sign up those tenants with these employees, and they believe it will work, and I say give them a chance.”

In 2019, I wrote that thanks to a newly attentive city council and that IBO report, “all signs are that [the CRP and CEP] will soon be gone.” Hey, how’s that going, anyway? Doug?

Together, [the Commercial Revitalization and Commercial Expansion Programs will] cost about $22 million in lost revenue this year…

So where’s Mayor [Eric] Adams on reviewing the dozens of tax expenditures made by the city? The executive budget he released last month reiterates the need for “staying focused on the efficient use of government resources.”…

The mayor’s press office did not respond to a request for comments on the administration’s plans for evaluating the array of city tax breaks.

Always remember: Only the little people pay taxes.

Share this post:

Friday roundup: Bills threaten to evict selves in 2023, plus hurricane porn!

access_time personNeil deMause

Why yes, thank you, I was fine in the flooding: Our terrace was briefly a small lake, but it didn’t breach the door to our apartment. Still, I will be demanding a new state-of-the-art retractable-roofed terrace from the governor as soon as my lease expires.

And speaking of demanding things from the governor once your lease expires, the Buffalo Bills, amirite?

  • Pegula Sports and Entertainment senior vice president Ron Raccuia said that the Bills won’t renew their lease in Buffalo in 2023 unless a deal for a new stadium in in place by then. Asked what the team would do if there is no deal by then, Raccuia replied, “We’re not even focused on that, yet,” which will be familiar to parents as the “Don’t make me come in there” move: Threaten first, figure out what to do if your kid calls your bluff later. He also asserted that the current stadium’s upper deck “will fail” in about five years but that it definitely won’t fail before then, which is an oddly specific way for metal to age, confirmed that the planned new stadium would have a $1.4 billion price tag, and said the team owners have “never discussed” moving the team and “our sole focus is to get a deal done here,” which is slightly odd for an interview where you just threatened to leave if you don’t get a deal done. Raccuia did not say how much public money the team would be demanding, but did call a new stadium “the single-largest construction project in Western New York history,” and who can put a value on that? (Aside from economists, but they don’t understand the value of a team to a city’s “psyche and core,” now do they? That’s about enough out of you and your “measuring the value of a team to a city’s psyche with actual math,” Bruce Johnson!)
  • Speaking of evictions, Arizona Coyotes owner Alex Meruelo has officially submitted a bid for land in Tempe for a new arena now that they’re getting kicked out of Glendale. This is only the first step in a possible arena process — later steps will include such niceties as “who’s going to pay to build this thing exactly?” — but first Meruelo has to actually get dibs on the land, so watch this one closely.
  • And speaking of the Coyotes, here’s a nice article in Venues Now about the economic impact study that made Glendale city officials feel okay about evicting them — tl;dr version: hockey fans just buy a hot dog and go home, Elton John fans travel further and make a day of it. This seems slightly dubious to extrapolate to all concerts, but as Venues Now doesn’t actually link to the study, we’ll have to take their word for it for now.
  • Hagerstown, Maryland is getting a new Atlantic League team to replace the Hagerstown Suns, which were disappeared during the Great Minor League Purge of 2019. The cost: Only $59.5 million to build a new stadium, which is surely an excellent investment and won’t result in a deteriorating empty stadium with graffiti on the luxury box furniture once the team folds, you must be thinking of some other league, surely.
  • Alameda County’s sale of its half of the Oakland Coliseum site to A’s owner John Fisher may violate the state Surplus Land Act, because of course it may, all the kids are violating that law!
  • Las Vegas Raiders owner Mark Davis is building a $14 million mansion designed to look like his team’s new taxpayer-funded stadium, as one does.
  • The New York Yankees clearly need a retractable roof, too. (In the headline I teased this as “hurricane porn,” but truly that term should be reserved for whatever the hell this is.)
  • Nice stickers!

 

 

Share this post:

NYC F.C. stadium kerfuffle explained, sort of, if you’re not picky about what qualifies as an “explanation”

access_time personNeil deMause

Last week I griped that Big Media like Fox Business wasn’t telling us what’s in the term sheet for a new NYC F.C. stadium even after its reporters got a look at it, and never let it be said that FoS readers (and Small Media) aren’t eager to help out, because Chris Campbell of the NYC F.C. Substack newsletter The Outfield, which has been following this story closely, jumped in to send over the actual text.

The NYC F.C. plan is a super-complicated dance by the city, the soccer team, the New York Yankees who are part owners of the soccer team, and the bondholders who financed the parking garages that the Yankees wanted but which the soccer team now wants to tear down some of to make way for a soccer stadium, so it should probably come as no surprise that the term sheet has a ton of moving parts:

  • The first step would be splitting the parking garages lease into two parts, a “balance lease” for the garages that would be unchanged, and a “severance lease” for the garages that would end up as rubble or otherwise buried under a soccer pitch. The garages marked for death include Garage 8 (better known as the Triangle Garage because just look at it), plus surface lots on the other side of the Major Deegan Expressway and across 153rd Street and River Avenue from Garage 8, only some of which would be needed for the stadium, but NYC F.C. partners Maddd Equities want to build a whole bunch of other development there and nobody really wants to park there, so sever those puppies already.
  • Maddd will pay the bondholders $46.25 million (actually written out as “$46,250,000 million,” which would be, um, a million times as much) for the garages being demolished. Not only do the bondholders — primarily the real estate investment company Nuveen, which has ended up the majority bondholders — have to approve this, but so would a bankruptcy court, since the shell nonprofit the Yankees had created to run the parking garages is currently in bankruptcy after it turned out that building lots of parking garages in the 21st century for a site with many, many public transit options plus a bunch of cheaper parking options was kinda dumb. (The city would also presumably have to approve forgoing some of its $50 million in future rent revenue from the garages, but given that it’s pretty much written that money off as uncollectable thanks to the whole bankruptcy thing, that’s probably not so big a concern.)
  • While the plan would still leave parking for 5,611 cars at the remaining parking garages, plus 3,516 more at what remains of the “severance lease premises,” the huge section in the term sheet on “parking requirements” mostly makes clear that the Yankees and the parking corporation are having a huge squabble over how many parking spaces are made available for Yankee games.

The Outfield reports that what happened last week to blow up the deal, at least temporarily, was that “both the Yankees and Maddd Equities had last minute changes to the lease terms — terms that they had drafted themselves.” Yankees officials wanted more parking concessions (something about guaranteeing more “attended” parking as opposed to “unattended” parking, if you really want to go down the rabbit hole of understanding valet parking requirements, be my guest), while Maddd wanted to pay less than $46.25 million, which, okay, but why did you put that number in there in the first place?

Either way, it doesn’t sound like Yankees president Randy Levine is correct to complain that the city and bondholders are “refusing to do what they agreed to do in the bond offerings and in the terms sheets,” but rather that the Yankees and the developer are — but Randy Levine pretty much exists solely to serve as misdirection, so this is totally on-brand for him.

There are still a ton of steps before this crazy scheme can become reality — we didn’t even get to the part about decommissioning a highway ramp that nobody can agree who would own — so figure on a couple more years of squabbling and public hearings even if NYC F.C. and the Yankees somehow manage to dig themselves out of this hole they’ve put themselves in. That’s a long time for Nuveen to hold its breath hoping nobody notices that the agreement would actually guarantee them $46.25 trillion, but as a fan of expensive typos, let me say that I sincerely hope it happens.

Share this post: