Category: Portland Timbers

The Portland city council voted unanimously yesterday to approve the proposed $50 million expansion of the Timbers‘ stadium that will be entirely paid for by the team owners except for $2 million in ticket taxes that the city will waive. Except now it’s really $5.1 million, what?

Peregrine has agreed to pay the $50 million cost of building the expansion. In exchange, the city has agreed to forfeit its share of ticket revenues, losing out on about $5.1 million between 2018 and 2025.

As this was explained previously, the city’s contribution is just kicking back its 7% ticket tax on the 4,000 new seats. There are 17 MLS home games per season, so over seven years that’s 119 games, times 4,000 is 476,000 tickets total — meaning the Timbers would have to charge $153 a ticket for this to make any sense.

The Oregonian offers a slight clue, indicating that there was a last-minute switch in the tax break, but not explaining what it was:

The city asked the soccer team to switch from a 10-year tax exemption it had granted the club in May to a seven-year exemption so that the city could ensure the team would resume tax payments by 2026. That way, the city could secure income for large debt payments on the stadium coming due then, officials said.

Okay, but how does seven years of tax kickbacks amount to more money than ten years of tax kickbacks? Unless now the city is kicking back taxes on all tickets, not just the 4,000 new ones? (Providence Park holds 22,000 seats currently, so that math would work out, sort of, if you squint.) And how does this make sense at all:

Although the new tax break is about $3 million more in the near term, it will result in the Timbers paying higher taxes after 2025, officials said.

“The exemption is basically similar value,” Portland’s Chief Administrative Officer Tom Rinehart said. “There is more money exempted up front for Peregrine” and the revenue flow is greater in later years.

But, but, exempting more money sooner is a greater cost, because present value decreases the farther you get into the future, and AAUGH!

Anyway, this is still a relatively small amount of money, albeit relatively larger than the previously reported relatively small amount of money. The question remains: Why? What possible reason does the Portland city council have for giving the Timbers owners $5.1 million just so they can have more tickets to sell? Does any large enough business get to ask for city checks just because “economic development”? If I agree to spend $50 in Portland, will the city council reimburse me $5.10? The people demand answers, already!

Aw, man! I was afraid that Portland Timbers plan to spend $50 million of their owners’ own money to expand their stadium, asking for no public money at all, was too good to be true — and turns out it is, as the team’s owners want a ten-year exemption from ticket taxes on the new seats, just because:

Commissioner Nick Fish, Wheeler and Golub all noted that the proposal asks the city to waive taxes on tickets that would not otherwise exist without the Timbers spending $50 million on an expansion.

“It seems reasonable to ask for an exemption on taxes that would not already be generated,” Fish said.

Yeah, no, that’s not a reasonable thing to ask for at all: It’d be like me buying a new car and asking to be exempted from gas taxes for any additional miles I drove as a result, or me getting an advanced degree and asking to be exempted from income taxes for any additional salary I earned. Investing in property is a perfectly normal business practice, and paying taxes on the increased revenue you get is a part of doing business, and something you have to factor into your revenue calculations — asking to have taxes kicked back to you is a subsidy, pure and simple, regardless of whether you dress it up in “these are taxes we wouldn’t be paying if only we weren’t earning more money.”

To make matters worse, the Oregonian reports that the city pays for maintenance and insurance on the building, and those costs will go up some once there’s a bigger building to maintain and insure. “We will see an increase in our costs,” Portland spectator facilities and development manager Susan Hartnett told the paper. “Obviously, with the expansion, it will go up. As will the repair costs, with more square footage.”

It’s still not a huge subsidy — about $2 million over the course of the decade for the tax break, plus whatever the increased maintenance and insurance costs tack on — so the deal still looks pretty good for Portland, assuming Portland taxpayers have any interest in the Timbers having a bigger stadium. (Better access to tickets for otherwise sold-out games, I guess?) But it’s an important reminder that sports team owners — and development tycoons in general — see themselves as very different from you and me: Whereas our taxes are the price we pay for having the benefits of a democratic government, their taxes are a gift they’re giving to the public, and which they can ask to have rescinded at any time if they want to use the money for something else. Nice work if you can get it.

The Portland Timbers owners are planning to spend $50 million of their own money on a 4,000-seat expansion of their 21,000-seat stadium:

…and that’s it, really. In a normal world, this would be an everyday occurrence: Team decides it can make more money with a bigger stadium, team spends the money to build it as an investment, team (hopefully) comes out ahead. It’s how sports worked in the pre-subsidy days of the 19th and early 20th centuries, it’s largely how sports works in Europe, and it’s only worthy of note here because the North American sports business model has become so based on getting public money for these things. It’s like a little taste of a happier world where I could retire this website and write about something else. (Not that I don’t write about other things too, but you know.)

As for the expansion itself, it’ll be a little freaky looking, with a vertically stacked stand that is supposed to recall the Globe Theater somehow filling in the gap in a more traditional sweeping, curved grandstand. Which is also fine: Piecemeal, jury-rigged stadium designs are also common in international soccer (in part because of that practice of expanding them only when the money is there), and the result should end up resembling Buenos Aires’ Boca Juniors‘ La Bombanera. There’s really nothing at all to complain about here, so happy Friday!

 

AAAUGH stop it stop it stop it enough with the sports columnists stumping for new stadiums and arenas oh god here’s another one:

There are a lot of things that might be said on Sunday as the local Major League Soccer championship franchise raises its title banner. But with so many people standing outside, looking in, one has to be, “Can we move this party to a bigger room?!?”

I’m saying it. Not the Portland Timbers. It’s a delicate discussion given that the city, not the Timbers, owns the stadium. But it’s one that needs to happen.

Check that out: The MLS champion Portland Timbers aren’t demanding a new stadium, and in fact are just in year five of a 25-year lease for a stadium that just got a $40 million renovation, most of it at taxpayer expense. And the city isn’t talking about it either, as the column goes on to make clear:

“I can’t remember hearing a darned thing about it,” said commissioner Steve Novick.

Well, here we go then. The lid is officially blown off.

I have seen a lot of journalism in my day, but never before have I seen a columnist take credit for a scoop on information that he admittedly concocted in his own brain. Congratulations, John Canzano and the Oregonian, you have reached a new low, which is impressive given the competition.