Category: Orlando City Soccer Club

Good article with misleading headline alert! From the Orlando Sentinel:

Parramore residents hope stadium will help kick-start community

They do? Will it?

Soccer faithfuls won’t change Parramore’s fortunes by themselves, [Florida State University professor Tim Chapin] said.

“That sounds like a lot of economic activity, but it’s a tiny drop in a very large pond in terms of the economy,” he said. “There will be a few winners in this, but it’s not a rising tide that lifts all boats.”

A quote from Charles Frizzell, owner of a new sports bar across the street, in instructive: “I don’t know if we would have chosen this location, if it wasn’t for the soccer stadium.” Which, if the biggest impact you’re going to have is that people choosing to open sports bars will move over a few blocks to be closer to the stadium, that’s exceedingly meh impact. Plus, opening a sports bar and keeping a sports bar open are two different things: Reporter Jeff Weiner notes that similar hopes were raised by the opening of the Magic‘s Amway Center in 2010, but then mostly dashed:

Draft Global Beer Lounge, despite taxpayer subsidies, fell into debt before closing at the Church Street Parking Garage, which has since been torn down, while Parramore mainstay Johnson’s Diner also failed after moving into the CityView building.

Commissioner Regina Hill, a Parramore native who represents the neighborhood on the City Council, credits a job at the old Amway Arena, which opened in 1989 and was demolished in 2011, with offering her hope as a young woman.

“It was $7-an-hour, part-time, but it gave me the ability to get off that couch and start to feel valuable,” she said.

Now there’s a headline: “Sports facilities bring hope to low-income communities with minimum-wage part-time jobs to get them off the sofa.” Accuracy is so seldom clickbaity.

The interwebs are freaking out about this article in the New York Times by our old friend Ken Belson, which talks about how Orlando City F.C. owner Flávio Augusto da Silva is seeking overseas stadium investors in exchange for a shot at green cards, “in what may be the first deal of its kind.”

As with so much that Belson writes: No, not exactly. The federal EB-5 program offering to let foreign investors in U.S. development projects jump the line for visas has been around for 25 years (which Belson notes), and was in fact a key part of then-Brooklyn Nets owner Bruce Ratner’s finance plan for his arena project back in 2010 (which he doesn’t). The money there went to pay for infrastructure for the larger site, not the arena per se, but still it means the Orlando deal isn’t exactly a first. (EB-5 loans were also proposed for one of Las Vegas’s many arenas that never got built, at least not yet.)

EB-5 has been criticized for being ripe for abuse, with some developers allegedly using it as a scam to rake in cash without ever building anything, while others have complained that if the U.S. is really going to sell green cards to people will to pay for the privilege, it should at least get the money directly instead of giving it to private developers in the hopes that it will somehow create jobs. (The provision of the EB-5 program that da Silva is using is only available for projects in high-unemployment areas, which is certainly true for the area around the Orlando soccer stadium, though how a handful of temporary construction jobs and less temporary hot dog vendor jobs is going to do much to mitigate this is less clear.)

Anyway, this is indeed a scam, though it’s one that is by no means limited to Orlando’s soccer stadium (which is otherwise being funded entirely out of da Silva’s pocket), and one that’s more about how developers have sweet-talked the federal government into getting them access to cheap capital by bumping certain foreigners with money to the front of the immigration line. Team officials haven’t said how much they’re expecting to raise by this method (they say they have $15 million so far), but keep in mind it’s just a no-interest loan, not a grant, so while da Silva would be saving money, he’s still be on the hook for the principal. It’s worth getting upset about, in other words, but less because da Silva is applying for it than because it still exists at all.

Elliott Turner, aka Twitter’s @futfanatico, also had a piece in Vice Sports on Friday, this one a long analysis of Orlando City S.C.‘s stadium deal, which I’d previously praised as a rare moment when “a professional sports franchise is actually agreeing to pay to build its new stadium, and pay (something) for the land to build it on, and pay property taxes on the stadium once it’s complete,” though the next day I had to unpraise it when it turned out the team was still expecting the city to use its eminent domain powers to force private owners to turn over part of the stadium land. Turner has even more problems with the deal, though, calling it “a new way to milk taxpayers”:

• The team will now operate the stadium, not the city, meaning it will cover operating expenses but also won’t share revenues.
• The team’s non-relocation clause has been cut from 15 to ten years, and it will no longer pay a $20 million fine if it moves before then.
• The city is still on the hook for sewer and infrastructure upgrades that could amount to $16 million, which will wipe out the $9 million profit the city will turn on the land it bought and re-sold to Orlando City S.C.
• Under the previous deal, the club was going to pay $675,000 in annual rent; by owning the stadium itself it won’t pay rent but will pay property taxes, but those will likely amount to less than the rent would have.
• Under the new contract, Orlando City S.C. can deduct future construction cost overruns from the $18 million purchase price it’s paying the city for stadium land.

So how bad is all this? Not real bad, honestly: Operating costs can easily outstrip any revenues. The non-relocation clause is likely a non-issue if the team owns the stadium and would be saddled with it if it moved. Sewer costs are a standard city expense that property taxes are supposed to help cover. And most importantly, that “rent” wasn’t going to pay back the city and county’s $40 million in construction costs under the old deal, but toward paying back a $10 million loan that the city was going to provide toward the team’s share.

The most salient item uncovered by Turner is that the $18 million land purchase price may get eaten up by cost overruns, which is a real concern. But even then, getting a lousy price on land sales is a perfectly cromulent tradeoff for getting out from under $40 million in taxpayer cash obligations. The Orlando City soccer deal may not be the stadium utopia we had hoped for, but it’s at least close, and much closer than the original deal that the team owners originally proposed. I may not be quite shocked and awed by it, but if all stadium deals looked like this one, the world would be a significantly better place.

Aw, man, and I was feeling so good about the Orlando City S.C. soccer stadium deal too! And now this:

[A] lawsuit claims that since the city of Orlando used eminent domain to acquire the land, it needed to follow certain steps before selling it.

They claim in the lawsuit the city owned the property less than 10 years, the city didn’t allow the original owners to repurchase their land and the city did not open up bidding for the land.

Orlando previously tried to use eminent domain to take land from a church for the soccer stadium, but instead gave up and moved the stadium a block over. One piece of the new property was acquired by eminent domain, though, and state law prohibits selling it to a private entity for ten years afterwards; Orlando officials claim they’re not selling that one parcel to the soccer team (presumably they’re just granting an easement to build the stadium on top of it), and anyway court rulings allow private development to be a public purpose, so neener neener.

It’s entirely possible that the whole transaction will be ruled legal, but still, this seriously harshes my buzz. Why oh why can’t we have nice things?

The city of Orlando has agreed to sell 12 acres of land to Orlando City S.C. for its new soccer stadium at a price of $18 million. Is that a fair deal? I’m going to indulge myself now by answering in a manner that I pretty much never have in almost 18 years of running this site:

Who the heck cares?

I’m sure that given enough time and data on land values in Orlando, I (or someone else) could pick apart fair market value for the city property that will now be turned over to the soccer club. (Not to mention the $11 million the city has spent on cleanup and site prep, and whether that’s typical or a special consideration for a project like this.) But for now, let’s just enjoy for a moment that a professional sports franchise is actually agreeing to pay to build its new stadium, and pay (something) for the land to build it on, and pay property taxes on the stadium once it’s complete — you know, like regular people do when they own property. It shouldn’t be remarkable, but it is, and we should bookmark it as an example that things can sometimes be different.

Why this happened in Orlando is complex — part city government that was resistant to coughing up public money, part rich foreign owners who just wanted to get a team in place and didn’t care much about dickering over a few tens of millions in subsidies — and not necessarily easily transferrable to other cities. But even a glimpse at a possible future where new sports stadiums are treated like private investments, not public necessities so that private owners can earn more profits, is enough for me, for today at least.

I’ve been pretty much out of commission today (will catch up on Monday), but this news item required a quick response:

Team owner Flávio Augusto da Silva announced Friday the franchise will privately finance the construction of its downtown soccer-specific stadium. The stadium, originally envisioned and pitched as a city-owned venue, will now be owned and operated privately by Orlando City.

Wait, what? The same Orlando City S.C. that got $40 million in city and county subsidies two years ago? And which was demanding another $30 million from the state? Suddenly da Silva found $70 million in his other pair of pants, and now he doesn’t need public money after all?

The arrangement will save the City of Orlando more than $15 million it had pledged for the project, in land and construction funding — and will bring in additional tax revenue for the city, because the privately-owned stadium will generate property taxes…

In addition to privately financing the stadium, which officials said is expected to cost more than the originally-projected $115 million, Orlando City will buy back the stadium land from the city.

There are a few possibilities here. One is that it is Christmas, or maybe the Rapture, and from now on sports team owners will decide that asking the public to pay their bills is just wrong, so from now on we’ll be paying construction bills and our taxes alike! A related, slightly less implausible scenario is that the Orlando City owners decided that they’d lose a pile of money if they didn’t break ground soon and had to delay their stadium’s opening, so throwing in $70 million in cash plus the cost of land plus property taxes until the end of time is totally worth it.

Or — and I’m sure some of you have thought of this already — maybe there’s another shoe to drop. I’m not sure what this would be (the da Silva press statement doesn’t leave a lot of loopholes for hidden subsidies, though having the city somehow cover operating costs would be one possibility), but there are a lot of suspicious factors here: The notion of a sports team owner willingly giving up already-approved subsidies, for one, but also the timing of this announcement on a Friday afternoon, when there’s little time for journalists to research WTF he’s on about before having to file their stories (and web videos) and head home for the weekend.

And unfortunately, I can’t do much better than that today, other than to raise a skeptical eyebrow and plan on following up on Monday. In the meantime, I certainly hope this is for real, and not one of those hoaxes that the kids today like to put over on gullible journalists.

Back when the city of Orlando and Orange County approved $40 million in subsidies for Orlando City S.C. in 2013, it was supposed to be enough to cover the cost of an $85 million soccer stadium, with plans to add more bells and whistles — more luxury seating, a second “executive club,” and more advertising boards — if $30 million in additional state tax breaks came through. Now, though, with site prep for the stadium still in the early stages, Orlando Mayor Buddy Dyer is suddenly saying the state sales tax rebate is “integral” to the project, and without it … something. Something bad.

You can’t really blame Dyer, since it’s not his money that’s at stake here — I mean, it is his citizens’ money, since they’re Florida taxpayers, but it doesn’t come out of his budget — so it makes sense for him to pull out all the stops to lean on the state legislature to approve the cash. One would hope that state legislators would instead look at the facts that past state sports subsidies have only returned 30 cents on the dollar and that the Orlando project is only promising to create 60 jobs and politely decline Dyer’s demands, but this is Florida, so probably not.