Category: Salt Lake City NHL team

Ex-Salt Lake mayor drops referendum bid against Jazz arena sales-tax hike

access_time personNeil deMause

If you were getting all excited about former Salt Lake City Mayor Rocky Anderson saying he planned to stage a public referendum on the city’s plans to sell $900 million worth of Utah Jazz arena renovation bonds and pay for them with a sales tax hike — for new readers, yes, this is the kind of thing people can get excited about here, don’t say you weren’t warned — you can stand down, as Anderson said late Friday that he’s not actually gonna do that:

We know many are disappointed that the issue of a new sales tax was never put to public vote. We share in that frustration. However, efforts to pursue a referendum will distract time, effort, energy, and resources from the important work of addressing essential issues facing our city, and undermine the opportunities for working together with SEG on matters of mutual passion and concern. Also, there is no certainty about the prospect of meeting the requirements for the sales tax increase to appear on the ballot for a vote. Therefore, to achieve a cooperative alliance that allows us to work together from this day forward for the benefit of the entire community, we will not pursue a referendum.

That’s a lot of words (and a lot of nosism) that comes down to two things: 1) I’d rather work with Jazz owner Ryan Smith than agin’ him, and 2) that whole referendum thing might not have worked anyway. Door #1 sounds more like a cover story for #2 than the other way around, and FoS commenter Ian noted last week that the referendum felt dodgy from the start: Utah referenda can’t be used to overturn legislative decisions that passed by a two-thirds supermajority in both the state house and senate, and the sales tax hike for the arena easily cleared that threshold. So it looks as if Anderson may have been talking before his ass had had a chance to talk to its lawyers, and now that he’s heard back he’s decided to pivot to “Can’t we all just get along?”

The Jazz/Utah Hockey Club (man, is that going to get old to type by the end of this season) arena deal still isn’t finalized, mind you, since Smith and the city still need to agree next year sometime to a lease extension on the renovated arena and the planned surrounding development. With city and state legislators both overwhelmingly in favor of the deal — even if Utahns as a whole are not — it doesn’t seem real likely that this will be a major roadblock, but stranger things have happened, occasionally. If you’re a local (or ex-mayor) with hopes of changing this sales tax subsidy, you know which clouds to yell at.

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Salt Lake again okays spending $900m on Jazz arena, still punts on lease details

access_time personNeil deMause

The Salt Lake City council finally got around last night to authorizing the $900 million in city bonds that were first approved back in July for renovations to the Utah Jazz arena, plus building out a wider entertainment district around it. The bonds will be paid off via a 0.5% citywide sales tax hike, though what happens if sales tax revenues fall short still isn’t clear.

In fact, a whole lot still isn’t clear about the details of the arena plan, even three months after it was first announced. In particular, Ryan Smith, the owner of the Jazz (and whatever the Utah Hockey Club ends up being called once it gets around to picking a name), still hasn’t worked out a lease deal for the arena and surrounding land, which you really would have wanted to work out before cutting a $900 million check. That’s not going to be resolved until sometime in 2025, so really yesterday’s approval wasn’t any more final than July’s was, though it’s certainly another step toward finalizing the deal.

I’m writing all this from a weird time zone, so going mostly off a very poorly written KSL-TV article, but there are at least some signs of opposition to the deal, including former Salt Lake City Mayor Rocky Anderson saying he plans to subject the arena plan to a public referendum, sometime in the future, maybe. Earlier reporting indicated that the project is popular because it brings together both the business community that wants downtown “revitalization” spending and arts groups that want the Utah Symphony’s Abravanel Hall preserved, but also that Utahns as a whole oppose the tax hike by a 54-38% margin, so maybe not actually popular? Utah journalists have until sometime next year to get their act together and actually report on what’s being negotiated and what people think about it, I’m not holding my breath but we can always hope!

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Jazz owner to pocket $900m in arena renovation money now, figure out other details later

access_time personNeil deMause

Currently recovering from round two of COVID over here at FoS HQ — really wouldn’t have minded if the CDC let people under 65 get vaccine boosters more than once a year, given that they start fading in efficacy after three months, just saying — but I do want to dig into the Utah Jazz arena renovation deal details that have emerged in the last few days, so let’s see what my fogged brain can do with the available info:

  • Jazz owner Ryan Smith plans to move ahead with a renovation of the Delta Center over the next three years, before moving on to building up a “downtown sports, entertainment, culture and convention district” around it.
  • Smith would be able to use $575 million in bonds for arena renovations, plus $325 million more for entertainment district costs. These bonds would be repaid with the proceeds of a citywide 0.5% sales tax hike, which the Salt Lake City council will vote on later this year.
  • Smith has said he’ll spend $3 billion of his own money on the stadium district development, though it’s not clear whether that’s a firm commitment or something he can walk away from once the arena renovations are done, if he no longer thinks the bigger project would be profitable.
  • The city would have “no obligation or liability” to make bond payments that couldn’t be covered by sales tax proceeds, leaving it unclear what the backstop payment procedure would be so that people will actually buy the bonds without risking being left holding the bag if sales tax receipts are negatively impacted by, oh, let’s say, another pandemic, or arsenic dust storms. The proceeds from the sales tax hike alone were previously estimated to be enough to support about $673 million in bonds, but that’s not to say other public funding sources won’t be found elsewhere.
  • If either the Jazz or whatever Smith’s new Salt Lake NHL team ends up being called moved in the next 30 years, its owners would have to pay back all of the tax money plus damages, so that’s promising, at least, assuming there are no out clauses.
  • Smith would add a ticket surcharge of between $1 and $3 (chosen by Smith? by negotiations with the city? no one can say!) that would be used to pay for city affordable housing projects. This is nice and all, but even at $3 a ticket, if the arena sells, say, 3 million tickets in a year, which would be a lot, that’s still only present value of around $140 million, far less than Smith would be receiving in city sales tax money.
  • There’s still no lease agreement between Smith and the city, so things like rent payments and whether the city would get a cut of any increased arena revenues or naming rights or anything is very much TBD.

This giant bundle of ¯\_(ツ)_/¯ goes before the city council tomorrow, where it will be voted on and then possibly sent to the state for a vote and then back to the council. Plus there are still upcoming votes on the sales tax hike and the lease and zoning changes — so there’s a lot yet to be approved, although locking in the $900 million in tax money part would be a nice first step for Smith.

If this seems convoluted to you, be glad you’re not thinking about it with a head full of virus. I do feel confident in saying, though, that this remains at least a $750-900 million public gift to the Utah teams’ billionaire owner, with no firm guarantee of what Smith will provide in return. In other words, par for the course for most sports subsidy deals, where it’s all too often the case that the taxpayer check is written before all the fine print is actually worked out.

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Coyotes arena could cost Salt Lake City $670m or more, plus Meruelo keeps on Merueloing in Arizona

access_time personNeil deMause

This may just be the inevitable fallout of a franchise relocation that came pretty much out of nowhere two weeks ago, but there was a lot going on this weekend with the Arizona Coyotes‘ transformation into the Utah Something-Somethings. Let’s take the news items one at a time:

New team owner Ryan Smith doesn’t want a new arena, he wants to renovate his current one. This makes sense, if only because Smith is already plunking down $1.2-1.3 billion on the franchise, so he’ll want to keep construction costs down so that he doesn’t have to cover too much of them. It could be a tricky rebuild, though, as, like the arenas in Phoenix and Brooklyn, the Delta Center was built with the NBA in mind, so it’s going to require significant reworking to accompany a hockey rink, which is a good bit longer than the Jazz basketball court.

Also, Smith claims that if he had his druthers, he’d be building a new arena south of downtown, but elected officials instructed him otherwise:

“Our elected officials,” Smith said, turning to address those in attendance Friday. “I know you guys get dragged every way possible, you guys literally stopped us in the middle of the process and said ‘These both have to be downtown, so go figure out what you have to do.’” The Delta Center remodel plans were the result.

There’s still no reported price tag for a renovated Jazz arena to accommodate hockey, but the Salt Lake Tribune does have a new estimated total for the 0.5% Salt Lake City sales tax hike that would help fund it, reporting that it “would, in the estimation of the Legislature, raise $54 million per year that would go towards repaying bond on the project; over 20 years, it’s a total that sums to over $1 billion.” The better total would be to use the present value of those dollars over time — in other words, figure out how much in 2024 spending it could pay off, like calculating how much house you could buy with a certain amount of future mortgage payments — and that comes to $673 million, which is a lot more than the $500 million that was reported last month when the legislation was passed by the state legislature. Plus, that doesn’t include the kickback of all sales taxes from a possible sales tax increment financing district around the arena, so the public price tag could still go higher.

The sales tax hike still needs to get passed by the city council, but Bettman says if it fails, there’s a Plan B for raising the funds:

If that tax hike doesn’t pass, Bettman told ESPN700 on Friday that he’s seen a second set of arena plans. “There are a couple of sets of plans which I’ve seen. One is obviously a renovation and a resizing and configuring of this building. And the other is … a new building,” he said.

Uh, that’s not actually a Plan B for raising money, it’s a Plan B for spending it. Either Bettman, or ESPN700, or the Tribune (which reported the above) got confused somewhere along the way, your guess is as good as mine as to which.

Salt Lake City downtown businesses are in for an unpleasant surprise. “Utah NHL rising tide expected to lift all downtown businesses” read the headline on last night’s KUTV story, which quickly makes it clear that the ones doing the expecting are those self-same downtown business owners:

[STK Steakhouse manager Markus] Ericksen knows the introduction of a hockey league could be great for a growing downtown.

“We are excited; we saw a lot of great walk-in business because of the games with the Jazz,” said Ericksen.

Unfortunately, the economic literature doesn’t support the idea that more arena business drives a significant amount of new spending at local dining establishments — here’s one paper from last year that concludes that “basketball & hockey arenas do not appear to generate significant spillovers for the surrounding businesses” — and neither do anecdotal reports from local restaurateurs, who say it’s hard to seat enough fans in the brief time before and after games to get much benefit.

Ericksen has the opportunity to get his steakhouse’s name in the news, so it makes sense for him to use it to promote his business to future hockey fans. Why KUTV chose to investigate the economic impact on local businesses solely by talking to one local business owner and the head of the downtown chamber of commerce — I mean, it’s an easier lift than spending the 60 seconds it took me to find that economic paper, I guess, and then going through having to contact the authors and wait for them to get back to you and set up a Zoom, but it’d be nice to see TV journalists doing at least minimal journalism.

Outgoing Coyotes owner Alex Meruelo can’t make up his mind about pretty much anything. Meruelo had quite the week, saying all kinds of things that he then had to immediately walk back:

  • On Thursday, Meruelo said he’d retained ownership of the minor-league Tuscon Roadrunners, and announced that “we’re gonna move them up to Mullett Arena” in Tempe, where the Coyotes have played the past two seasons. Later that same day, Meruelo said “we haven’t made a decision yet,” and the next day he said, “We’ve talked about maybe playing half the season in Tucson and half the season at Mullett.” He also, according to Tucson TV station KVOA, revealed that “the hasn’t discussed the matter with the Roadrunners, the City of Tucson, or Arizona State University, which owns Mullett Arena in Tempe,” all of which would be slightly important before moving the team.
  • In Friday’s press conference, Meruelo declared that he hadn’t done many press interviews of late because he “didn’t like the media” — leading NHL commissioner Gary Bettman, who was sitting next to him, to interrupt: “Let me translate that a little bit. I don’t think anybody should take that personally. I think he doesn’t like being a public person.”
  • After calling his planned Phoenix arena “the first ever privately funded sports arena and entertainment district in the history of Arizona,” Meruelo declared that he actually plans to ask the city to create a “theme park district” that could levy a 9% sales tax surcharge within the district, which would be kicked back to pay for arena construction. (How much of this would come out of taxpayers’ pockets, and how much would act like a ticket tax where he would have to lower prices on things like concessions and souvenirs to avoid driving away customers, remains the subject of debate among economists, depending on a bunch of factors.) A theme park district would also be exempt from property taxes and “monies derived by the district” exempt from income taxes, which could be a much more significant chunk of change.

Like I said, it’s a lot. It’s entirely possible, though, that the move of the Coyotes from Arizona to Utah could end up triggering a billion dollars or more in public costs across two states, so that two NHL team owners can get new arenas without dipping too far into their own pockets. Or Salt Lake and Phoenix elected officials could vote down all the tax kickbacks, sure, that’s a thing that could happen. But accepting defeat and paying for things yourself doesn’t seem to be in Bettman’s, or Meruelo’s, vocabulary.

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Three ways to think about the Coyotes’ sort-of move to Utah

access_time personNeil deMause

The first rumors that the Arizona Coyotes would relocate to Salt Lake City for the 2024-25 season raised a lot of questions: Why now, when team owner Alex Meruelo was just two months away from bidding on land for a new arena in Phoenix? Would the NHL really be happy with trading one of the larger NHL media markets (albeit with not much historic enthusiasm for the NHL) for a much smaller city that’s also not a hockey hotbed? Why would Utah Jazz owner Ryan Smith be paying $1.2 billion (or maybe $1.3 billion; reports continue to vary) for the team, but Meruelo only receiving $1 billion, with the rest being shared among other NHL owners?

Over the weekend, more details emerged, and they only raise more questions:

  • While all of the Coyotes’ assets, including its players and right to actually play NHL games, are being sold to Smith and transferred to Utah, Meruelo will retain the Coyotes name, logo, and trademarks, as well as the minor-league Tucson Roadrunners.
  • Meruelo will have five years in which to finalize a new arena, in which case he’ll immediately be given the right to buy an expansion franchise for the same $1 billion he received for the Coyotes.
  • Accordingly, Meruelo is going ahead with his Arizona land bid, and if he wins, he’ll presumably begin to pursue funding for an arena, likely using a state “theme park district” tax surcharge that remains murky exactly whether it should really be a public subsidy. (I asked three prominent sports economists and got back one “probably,” one “I don’t think so,” and one “let’s cross that bridge when we come to it.”)

To help make sense of all this — none of which has been officially announced, mind you, with Meruelo himself issuing a “reply hazy, try again later” letter, though the Associated Press says a press conference is expected next week — let’s try conceptualizing what’s going on here in three ways:

  1. Meruelo is selling the Coyotes, and getting a replacement expansion franchise in Arizona once he gets an arena deal. This is how it’s mostly being framed in the media, and is strictly accurate. It sort of makes sense for everyone involved: Meruelo gets more time to negotiate an arena deal without racking up annual losses in Arizona; the NHL gets out of the embarrassment of a franchise playing in a college arena without having to worry about a legal battle with Meruelo, plus that $200 million it’s taking off the top of the sale price; Smith gets a team without having to go through expansion bidding wars; and commissioner Gary Bettman gets a new owner who, according to ESPN, has “spent several years building a level of trust” with him, read into that as you will. The main risk for the league seems to be that Meruelo could end up getting an expansion team at a bargain price if those bidding wars really take off, but the NHL may be fine with that if it means getting back into the Phoenix market with an acceptable arena deal.
  2. The Coyotes are going on hiatus to figure out their arena situation, while Utah gets an immediate expansion franchise to take its place. This is an equally valid way of looking at it, and makes the pros and cons even clearer: The NHL is solving its Arizona problem by putting the Coyotes on ice for a few years, while filling out the schedule by letting Smith jump to the head of the line for a new team in exchange for a 20% tip on the sale price. (Smith is also getting an established roster rather than having to pick players in an expansion draft, though given the current Coyotes roster that may not be that much of a benefit.)
  3. The Coyotes are going to be the NFL’s Cleveland Browns, where the team moves but the team’s name and identity stays. That’s Yardbarker’s take, but I’m not sure the parallel works: The NFL granted Cleveland a new Browns franchise in exchange for stadium funding, yes, but that was all sparked by lawsuits over Art Modell moving the old Browns to Baltimore. If the Coyotes re-emerge eventually, though, it’d be the same in terms of a team in one city being transferred to another one then being replaced, after a break, by a new team with the same name once a new venue has been built, so it kind of works if you squint.

There’s definitely lots of ways the Coyotes’ move to Utah can go wrong: As noted here previously, Salt Lake City would be by far the smallest market with two major-league winter pro sports teams, which will create a ton of competition for both ticket buys and TV eyeballs; and the Jazz’s Delta Center, while clearly a better NHL venue than the Coyotes’ current Mullett Arena if only because it has more than twice as many seats, is one of those NBA-optimized venues that sucks for hockey, at least until it gets the $500 million facelift that the state of Utah has promised it. But you can see where someone in the league offices could have made a good case for “So we want a team in Arizona but don’t have an arena there yet, and we have a guy in Utah who wants a team right now and has a marginally workable arena, maybe this can be the beginning of a beautiful friendship? Also, $200 million cash!” At least nobody here would be paying the purchase price by wiring a fraction of it and then claiming he’d left a bunch of zeroes off as a typo. Probably not, anyway. The NHL is always about trying new things.

As for the bigger picture: What, if anything, does the Coyotes’ sort-of move mean as far as how seriously cities should take relocation threats? The team is leaving Arizona after Tempe voted down $500 million in tax breaks for a new arena there, but that came less because either the team owner or the NHL wanted to leave so much as that Meruelo had painted himself into a corner by getting booted out of his old arena and moving to a 5,000-seat one. And Utah did apparently bump itself to the head of the new-NHL-team line by approving $500 million in arena spending, but only because the Coyotes situation called for an immediate solution and they were standing in the right place at the right time. Leagues and individual owners absolutely do shop around for stadium and arena subsidies when thinking about where to play, but that’s not all they think about — if it were, Arizona would now be getting the cold shoulder from the league, instead of an offer of an expansion slot in the next five years. The only truism here is that sports barons love leverage; how they then use it is up to them.

UPDATE: And The Athletic just dropped a tick-tock of what led to the current Coyotes resolution. Tl;dr: The NHL and NHLPA were both sick of the Mullett Arena situation, Meruelo didn’t want to sell but also couldn’t promise when he’d build a big-boy arena, and this was the compromise that was worked out. If that’s not how you think sports league franchise decisions should be made, go take it up with crony capitalism.

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The Arizona Coyotes are moving to Salt Lake City (maybe, depending, check back later)

access_time personNeil deMause

Yesterday, the interwebs started buzzing with talk that the Arizona Coyotes were, maybe, going to be moving to Salt Lake City next season. Things like:

The NHL is concurrently drafting two versions of a league schedule matrix for the 2024-25 season, one with the Arizona Coyotes and another with the Coyotes franchise playing in Salt Lake City in the event of relocation.

And:

The NHL would purchase the Coyotes from Meruelo in a deal believed to be worth around $1 billion. … The league source said that after purchasing the team, the NHL would then sell the Coyotes to [Utah Jazz owner Ryan] Smith at a price that could be as high as $1.3 billion — much higher than the $650 million expansion fee that the Seattle Kraken’s owners paid in 2021 to join the league. The source said the NHL’s other 31 owners would split $300 million as part of the sale.

And:

The team’s final game is at home against Edmonton next Wednesday. One Coyote indicated today that there are rumours of “meeting about the future” before everyone goes their separate ways for the off-season.

The reason behind this reported shift: Uncertainty around the league about Coyotes owner Alex Meruelo winning a June 27 public land auction for a parcel near the Phoenix-Scottsdale border and then being able to put together an arena financing plan. Though Scottsdale Mayor David Ortega on Tuesday walked back his statement the previous that an arena on the site was “not feasible, or welcome,” saying he’s now fine with it so long as traffic is directed away from his city, the whole deal is apparently flimsy enough that the NHL wants to have a Plan B — or maybe even a Plan A, as Daily Faceoff, citing “multiple sources,” asserted that “there is a real possibility that the Coyotes franchise is not based in Arizona come June 27.”

This morning brings no real updates, with the league remaining officially silent and even Coyotes players having been shielded from the press after last night’s game. So what can we make of all this?

First off, the Utah legislature’s vote last month to approve $500 million in spending on a new or renovated arena if the NHL comes to town definitely got some attention. The money is supposed to come from a 0.5% citywide sales tax hike plus kickbacks of sales taxes from a “10-block revitalization area” around any arena. How much an NHL-ready arena would cost overall remains unknown, as is how much Smith would pay to cover the remaining costs after plunking down maybe $1.3 billion for the Coyotes, but $500 million in the hand is worth some anonymously leaked move threats to the league, at least.

Whether the NHL would actually go through with a Utah move for the Coyotes, especially before the Arizona land auction has even taken place, is less clear. Salt Lake City may have some public money approved, and that’s certainly tasty to the league; it would also be one of the league’s smallest media markets, and by far the smallest with both NBA and NHL teams competing for winter sports ticket sales (1,148,120 TV households, behind Miami’s 1,720,970). Actually going ahead with the move would be a major bet on giving a team to whatever city coughs up a public subsidy and has an owner willing to overpay for a team because he once played roller hockey or something, and let them figure out how to actually sell tickets once the team gets there.

And then there’s maybe the weirdest twist to all of this, according to Sportsnet:

The real key is what the NHL will promise Meruelo to avoid this ending up in court.

Those same sources indicate he could be offered a five-year exclusive window to “bring back” the Coyotes as an expansion franchise — although there would be certain language stating what would need to be accomplished for him to return. (The league definitely desires a return to the market if it leaves.)

Sure, I guess? The NHL is clearly enamored of the Phoenix area’s size — though it’s smaller than Atlanta and Houston, which also don’t have teams and don’t seem to have drawn the same unrequited love from the league — and would be happy to have a team there, even if it’s one owned by Meruelo. If that “certain language” stipulates arena financing being in place and, say, season-ticket deposits from more fans than you can count on one hand, it wouldn’t be the craziest way of the NHL deciding where to stick an expansion team. (That would probably be this.)

All of this remains at the level of rumor, needless to say, even if true it could just mean that the NHL is coming up with contingency plans to ensure that the Salt Lake City arena has dates available for the Coyotes’ 2024-25 schedule. In the meantime, are people already wondering how a Utah Coyotes (yes, there are coyotes in Utah, at least more than there is jazz) would impact the Oakland A’s move options? Of course they are:

The longer any online discussion continues, the greater the chance that it will lead to somebody clowning on John Fisher.

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Utah passes $2B in MLB and NHL subsidies, now just needs MLB and NHL teams

access_time personNeil deMause

The Utah state legislature, in the final days of its session on Thursday night and Friday, passed bills to pay for both $900 million in construction costs for an MLB stadium and $500 million in construction costs for an NHL arena, if Salt Lake City can land teams in both those sports. The bills now go to Gov. Spencer Cox, who is expected to sign them.

As for how the sports venue subsidies will be paid for, that’s still a little bit up in the air:

  • The $900 million in baseball money will start with the kickback of state sales taxes within a 200-acre “entertainment district” around the stadium; property taxes from the district would also be used to pay for potentially $500 million in infrastructure and other non-stadium construction. (The stadium itself wouldn’t pay property taxes, since it would be owned by the state.) The bill’s “sponsors concede other revenue may be needed,” reports the Salt Lake Tribune, to cover half of a planned $1.8 billion stadium construction tab.
  • The $500 million in hockey money — which according to the legislation can be used for either a new arena, renovations to the Jazz‘ arena, or both — will come from both a 0.5% citywide sales tax hike and the kickback of all sales taxes from a “10-block revitalization area” around the arena or arenas, as the case may be. There’s also talk of “reorienting” the Salt Palace convention center by rebuilding parts of it, which would come with an unknown price tag.

This is being widely reported as $2 billion in subsidies, which isn’t quite right because that’s the number you get from adding up all the future tax payments over time, but that’s just how the state would pay for $1.4 billion in spending right now. On the other hand, it also overlooks things like all the future property tax breaks the two venues would get, not to mention any additional costs like maintenance and upgrade funds that might be approved as part of leases with these so-far-hypothetical teams — so “around $2 billion” is probably a fair assessment.

That’s a staggering amount of money for two sports venues of any kind, but the two bills passed with little opposition once it was decided to focus entirely on future sales tax money (and, in the case of the MLB stadium, future we’ll-get-back-to-you-on-that money). Besides, who could say no when former Atlanta Braves star and Utah resident Dale Murphy turned up to sign baseballs for legislators:

There are 75 state representatives in Utah and 29 state senators, making that $19.2 million per autograph, handily breaking Babe Ruth’s record. Guess Dale Murphy really does deserve to be in the Hall of Fame for something!

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Friday roundup: Utah still unclear on where it’d get $1.4B in MLB/NHL subsidies, White Sox have lots of friends in high places

access_time personNeil deMause

It’s been another nutty week in stadiumland, but let’s give thanks for the small things — in this case, for the WP Dark Mode plugin, which has been updated so that it again gives FoS readers the option to avoid eyestrain while still navigating the site as you’re meant to. If you haven’t clicked the little crescent moon in the corner of the screen, give it a try, it’s fun!

Or you can read about the news of the week, which is less guaranteed to be fun, but is still … interesting? Informative? One of those:

  • Fox 13 in Salt Lake City claims that both the proposed MLB stadium and NHL arena would create entertainment districts where sales taxes would be kicked back to pay for the projects. We knew this for the baseball stadium, but for the arena the legislation says “authorizes a qualifying local government to levy a sales and use tax within the local government’s boundaries and for use within the project area” and caps the amount at 0.5%, so it looks like this would actually be a citywide sales tax hike? Either way, it’s a lot of money, and still more money would be required to pay the full $1.4 billion combined cost — including, notes University of Colorado economist Geoffrey Propheter, $1 million a year in kicked-back “possessory interest taxes,” more than half of which would come out of school budgets — but it sure would be nice to see some clarity on this before the legislature wraps up its session … wait, today? Well, that’s suboptimal.
  • NBC Chicago obtained emails showing that Mayor Brandon Johnson and Chicago White Sox owner Jerry Reinsdorf had their comms departments work together to concoct a press statement about the team’s stadium plans in January, and while it’s sort of understandable given that it was about a meeting between the two, it’s also maybe not the best sign of a mayor being interested in driving a hard bargain for his constituents that when the White Sox asked the mayor’s office to vet their press release, the response was “Could we do a joint statement?” Especially when the resulting statement referred to a meeting “to discuss the historic partnership between the team and Chicago and the team’s ideas for remaining competitive in Chicago in perpetuity” and didn’t mention anything about the $2 billion public price tag.
  • Chicago political consultant David Axelrod tweeted that the White Sox stadium plan would be “a game-changer for the city” and immediately got piled on for “peddling disinformation” (The Athletic’s Keith Law), told “You’re not an economist, so how about trust the economists who are” (economist J.C. Bradbury) and “Claiming stadiums catalyze economic development is like arguing vaccines cause autism” (Bradbury again), among many, many others.
  • Comcast Spectacor, the owners of the Philadelphia Flyers, are talking about doing a $2.5 billion redevelopment of the parking lots around their arena, to include “hotels, residences, restaurants, shops and a 5,500-seat performance stage.” Funding for the first phase would come from Comcast and its development partners, while the second phase would be paid for by “yet to be determined,” according to the Philadelphia Inquirer, which isn’t a red flag at all.
  • The U.S. House of Representatives passed a bill handing over the RFK Stadium site to Washington, D.C. for redevelopment which will likely mean a proposal to build a new Commanders stadium there. Every representative from Maryland but one voted against it, as did four of 11 members from Virginia; “It’s most certainly not a level playing field when one interested jurisdiction receives a free transfer of federal government subsidized land,” said Rep. Glenn Ivey of Maryland. We’re still a long way from actual stadium plans or price tags, and the D.C. council may yet vote to use the site for something other than a stadium, but it definitely adds one more potential competitor to what’s been a mostly quiet of late three-way bidding war.
  • MLB commissioner Rob Manfred called the Oakland A’s Las Vegas relocation plans “solid” and immediately got piled on for damning it with faint praise. Manfred also acknowledged that “to most effectively build the [2025] schedule, we need to know at some point in the spring exactly where they’re going to be,” which isn’t exactly giving A’s owner John Fisher a deadline, the commissioner knows who signs his checks. Fisher is apparently hoping that if he agrees to sell his share of the Oakland Coliseum site to the local group that wants to develop it, the city of Oakland will grant him a lease extension to play there through 2027, which isn’t the deal the Oakland mayor’s office has been talking about at all, so we’ll see what the reaction there is.
  • Tennessee’s tourism department has asked the state legislature for the right to deny public access to public records about how much it offers the NFL for the right to host the Super Bowl at the new Titans stadium under construction. “The Super Bowl deal is often embarrassing for the NFL because of the demands they make and for the politicians that agree to give the league things like free high-end hotel rooms and police escorts,” notes College of Holy Cross economist Victor Matheson.
  • Toronto is now expecting to spend $380 million on hosting six 2026 World Cup matches, which is, let’s see, $63 million per match. It says it expects an economic boost of $392 million in GDP and tax revenues of $119 million, which seem both optimistic and mismatched unless Toronto has a 30% sales tax rate, but since World Cup impact numbers are generally garbage anyway — Matheson once called them “so outlandish as to defy common sense” — we can safely ignore them entirely.
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Utah legislators proposing $1.4B in spending on MLB, NHL venues, to be paid for with ¯\_(ツ)_/¯

access_time personNeil deMause

Utah state legislators are pushing ahead with plans to build both an NHL arena and an MLB stadium, despite not having teams in either sport. And also despite not quite having figured out how to pay for either of them:

  • The Utah state house passed a bill to spend up to $900 million on a baseball stadium and surrounding entertainment district, provided a team arrives. However, earlier plans to fund the project with a statewide hike in hotel taxes was dropped amid opposition from rural legislators (and hotel operators), leaving the stadium bonds to be paid off, according to the bill, by statewide car rental taxes, kickbacks from sales and property taxes on the site (hello, mega-TIF!), and a whole lot of ¯\_(ツ)_/¯.
  • The Utah state senate passed a bill to spend around another $500 million (estimated at $1 billion over 30 years, which would fund around half a billion in bonds) to create a different sports and entertainment district for the Jazz and an as-yet-nonexistent hockey team. The money would, according to the bill, allow Salt Lake City to both impose a citywide sales tax hike and also kick back the share of existing state sales taxes designated for building prisons, generating ¯\_(ツ)_/¯ in new revenue.

The two legislative bodies now swap bills, and will have to figure out how to pay for both at the same time. Dan McCay, sponsor of the senate hockey arena bill, said he didn’t want to stack the tax hikes on top of each other for the same people, “so that those become unlivable environments for those who are paying the tax”; if local residents visit both sports venues, though, their tax money will be getting funneled to both projects, plus of course everyone in the city will be dealing with the budget hole created by having taxes kicked back that could otherwise be used to pay for other things.

There’s a whole lot still to be worked out here, even before figuring out whether Salt Lake City would even get teams and what kind of leases they would demand — as we’ve seen before, lease opt-outs and state-of-the-art clauses can end up forcing cities to throw a lot of good money after bad. But the general dimensions of the plan are in place: around $1.4 billion in tax money to be set aside as a lure to get major-league hockey and baseball teams. Normally I’d call that a staggering amount of money for elected officials to give preliminary approval to all in one day, but what with the way things are going in other states, it’s going to take more than $1.4 billion to stagger anybody.

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Friday roundup: Opposition builds (somewhat) to sports subsidy plans in Virginia, Kansas City, elsewhere

access_time personNeil deMause

It’s been a rough week, what with new stadium demands dropping every couple of hours, half of them from Jerry Reinsdorf. But there have also been signs of new organized opposition from all corners, some of them involving heavy hitters:

  • The Northern Virginia AFL-CIO came out against the proposed Washington Capitals and Wizards arena in Alexandria after being unable to reach an agreement with the teams and the state on whether a hotel that would be part of the $2 billion project would employ union workers. “If they’re against it, then the arena deal is probably going to have a very difficult time,” remarked Virginia House Speaker Don L. Scott Jr. afterwards, as the arena bill heads for reconciliation talks between the house, which passed it, and the senate, which didn’t even give it a hearing. “If it dies, it dies.”
  • Virginia state Sen. Louise Lucas, meanwhile, upped the ante on her opposition to Alexandria arena plans, challenging D.C. Mayor Muriel Bowser on Twitter to “compete by both offering $0 in taxpayer dollars to these teams and let them decide where they want to pay to build their own arena.” (Bowser’s account did not respond, unless this counts.) Former Alexandria mayor Allison Silberberg, who is part of the Coalition to Stop the Potomac Yard Arena campaign, was so pleased that she brought Lucas a cake.
  • After the Kansas City renters’ group KC Tenants came out against the upcoming April 2 referendum to renew Jackson County’s 0.375% sales tax surcharge and give the money to Royals owner John Sherman as part of a potential $1 billion in public money for a new downtown stadium, calling it “$167 per household, per year, all to pay for a playground for the wealthy and for tourists,” a group of city residents have formed the Committee Against New Royals Stadium Taxes to likewise oppose the tax hike. The group has “little to no money in its bank account,” according to the Kansas City Star’s account of campaign manager Tim Smith’s characterization, but it does have a parked domain name and its organizers are members of the extremely active Save Kauffman (Royals) Stadium at Truman Sports Complex Facebook group, which is a recommended follow if you want to see how extremely angry many Kansas City residents, and Royals fans, are about this whole state of affairs.
  • Arthur Acolin, a real estate economics professor at the University of Washington, released a three-page report on the proposed downtown Philadelphia 76ers arena that found that disruptions to existing businesses during construction and operation could cost the city and state between $260 million and $1 billion in lost tax revenues. The math is a little rough — it looks like Acolin just added up all the economic activity in the area of the proposed arena and calculated what would happen if it fell by sample round numbers — but as he writes, “the 76ers have provided nowhere near this level of details nor any of the analysis behind their figures.” It was enough to get the 76ers to respond by calling the report “fatally flawed” and “another attempt by those who oppose the project to obfuscate the truth by pumping out misinformation and half-baked theories instead of engaging in productive dialogue,” in a CBS News article that repeatedly refers to Acolin as “Albert Alcoin,” which should get all their copy editors immediately fired, if they had copy editors, which they probably don’t.
  • Arizona Republic sportswriter Greg Moore wrote a column about Diamondbacks owner Ken Kendrick’s threat to leave town if he doesn’t get public stadium money that includes the subhead “I don’t like bullies,” and really the rest of the column is just icing on that four-word cake.
  • I brought my mighty rhetorical weight to the airwaves, or at least the internetwaves, by going on the Sox Machine podcast to talk about why giving Reinsdorf $1.7 billion in tax money for a new Chicago White Sox stadium development (since upped to $2 billion) would be crazytown.

So that’s it, then, the tide is finally turning, and maybe soon we can all stop pushing this damn rock back up this damn hill day after day? Hahaha of course not, the forces of vacuuming up money and giving it to rich people so they can have more money (because that’s what makes them rich people) continue unabated:

  • The Utah legislature advanced a bill to hike sales taxes in Salt Lake City by 0.5% to generate $1 billion for an arena for a nonexistent NHL team, with the backing of Mayor Erin Mendenhall. This would be on top of $600 million or more in proposed hotel tax hikes to help pay for a stadium for a nonexistent MLB team. Hockey bill sponsor state Sen. Dan McCay denied that this was giving in to threats by the Jazz ownership that they could move out of the city limits without a new subsidized arena, then added, “you’d hate to see downtown lose the sporting opportunities they have now,” so, yeah.
  • Chicago Mayor Brandon Johnson delivered up a fresh bowl of word salad about whether he’ll endorse city money being used for a new White Sox stadium: “As far as public dollars, we haven’t gotten into any of those specifics just yet. But I will say that we’re gonna explore all options. … Everything is on the table here. But again, I want to make sure that there’s a real commitment to public use and public benefit. … There’s no guarantee that they’ll get it from the city. What I’ve said repeatedly is that we need to make sure that our investments have real public benefit and that there has to be a commitment to public use. Those conversations are being had, and there are some promising developments that eventually we’ll be able to talk about out loud.” He has it right here on this list…
  • The new $27 million Rhode Island F.C. soccer stadium in Pawtucket will now cost state taxpayers $132 million over 30 years, because the Pawtucket Redevelopment Agency got a terrible bond rate. State commerce secretary Liz Tanner defended the pricey borrowing by pointing out that even though the state legislature could have just appropriated the money and saved taxpayers a ton of interest payments, “there would’ve been a level of uncertainty without knowing whether the legislature was going to pass those dollars or not,” and we can’t have that, now can we?
  • The Dodger Stadium gondola project — surely you remember the Dodger Stadium gondola project — lurched forward again on Thursday when the Metro Board of Directors signed off on its environmental impact report. The gondola still needs approval from the city of Los Angeles and parks and transit officials, plus to figure out who exactly will pay for its potential $500 million price tag, but if nothing else it lives to gondola another day.
  • Oakland A’s owner John Fisher is reportedly focused on staying in Oakland until a new Las Vegas stadium is open in 2028, and also Sacramento is the frontrunner to be the temporary home of the A’s, this is way too blind-men-and-the-elephant for me, maybe let’s all calm down about the latest rumors you heard, guys.
  • And in non-sports news, Louisiana Gov. Jeff Landry defended signing a bill to remove the requirement that recipients of state development subsidies report how many jobs they’ll be creating, because “this program is about capital investment. It is not about job creating.” Just gonna sit here and let that roll around in my brain for a while, have a great weekend and see you back here Monday!

 

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