Category: Washington Capitals

Friday roundup: More shouting about Virginia arena traffic, plus rumors of A’s (temporary) death and Coyotes-to-Utah

access_time personNeil deMause

Happy Friday! (Happiness provided separately.) While I have you here, is it a good time to remind you that Field of Schemes is on Facebook, Bluesky, Mastodon, Post, and whatever Elon Musk is calling his thing these days? And that by following FoS in any or all of those places, you can get notifications of new posts as soon as they happen — and not only that, by reacting to posts on those sites, you can help get more attention for Field of Schemes, because that’s how social media likes work, it’s a popularity contest where your votes make the things you like more popular? No, that isn’t what you want to hear right now, you just to read the weekly news recap? Okay, ignore all that for now, you can always come back to it later.

 

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Virginia arena fight: Does $1B in spending cost $1B, or can it be recouped in magic beans?

access_time personNeil deMause

Is there a real public fight brewing over Alexandria’s plans for a $2 billion Washington Capitals and Wizards arena project that would include more than $1 billion in public subsidies? You could read Friday’s Washingtonian article headlined “Is a Real Fight Brewing Over the New Alexandria Arena Proposal?” (in a rare exception to Betteridge’s Law, and maybe not even effective clickbait SEO practice anymore), or you could just read about Saturday, when the city held a town hall on the arena plan and opponents protested outside:

Wearing caps and t-shirts that read “Stop the Move” and sending a bus around an Alexandria town hall with the same message, those against the proposed new home for the Capitals and Wizards made their position clear.

“There is absolutely no reason our taxpayer money should be going to build this stadium,” said Brian Hess, with Sports Fans Coalition. “The quality of life is going to be miserable for us here.”…

“You see the stadium. You see the bright lights. You see the flashy games what you don’t see is the new high school that doesn’t get built,” Patrick Hedger, with Taxpayers Protection Alliance, said.

(It’s arena not a stadium, you won’t be able to see the bright lights because they’ll be indoors, and there’s punctuation missing from WJLA’s transcription of Hedger’s last sentence. But point taken.)

While the protesters cited a long list of concerns about the arena project — “transportation, environment issues, housing affordability, public finance,” checked off John Breyault of the National Consumers League — a major argument is coming down to whether the project will really generate enough new tax revenue to pay for itself, or if it will just cannibalize money that the public would receive anyway, either at the project site or elsewhere in the city or state. University of Colorado economist Geoffrey Propheter already questioned last week whether this should really count as new money, and this weekend he shared some more substantial calculations:

In an email exchange, Propheter clarified that the $20 million a year is how much tax revenue (in income taxes, business taxes, sales taxes, etc.) is currently generated at the Potomac Yards site, which would be immediately removed from the state and city general funds and redirected toward paying off bonds for the arena project. So “the first $20m [per year] made by any post-TIF development, then, is just backfill, not net new revenue.”

As for how much money Virginia could get from Capitals and Wizards employees (including players) relocating to Virginia, that obviously depends on how many are already living there. One Twitter commenter reported team owner Ted Leonsis as saying that 30-40% of team employees currently live in Virginia, but not which employees, and it makes a big difference whether we’re talking about hot dog vendors or Jordan Poole. Leonsis himself lives in a mansion in Maryland, so maybe one demand by the state could be getting the boss to agree to relocate himself to Virginia and pay taxes there?

In any event, that $20 million a year hole is only part of the public cost of this project: There’s also $150-200 million in state transportation spending, plus around $380 million in property tax breaks and the other forgone future sales, income, etc., taxes that would get poured into the TIF to pay off Leonsis’s construction costs. That latter revenue isn’t money that’s collected now, of course, but it could end up getting cannibalized from taxes on spending that as a result of the arena project soaking up economic activity wouldn’t take place elsewhere in the state — or even from spending that would otherwise have taken place at whatever development would happen on the arena site without the arena. All you people who periodically ask me exactly how much sports venues cost the public: This is why there’s no one simple answer! And also why real fiscal projections are needed before anyone should be voting on sports subsidy deals, sure would be nice if the Virginia legislature would commission one and actually show it to the public, still waiting on that.

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Friday roundup: Chicago mayor endorses Sox plan (whatever it is), Jazz owner seeks NHL team (and new arena), Jaguars public price tag still $1B

access_time personNeil deMause

Was it a week and a half for you too? Sure was here! I’m a little afraid that the sports powers that be have decided to address popular anger over the great stadium swindle by dumping so many new subsidy deals on us at once that outrage fatigue kicks in, and I’m even more afraid that it’s working. Are your eyes starting to glaze over like mine at all the billion-dollar-plus figures? Are you ready to stop demanding that your elected officials stop catering to billionaires, and instead just watch some TV, as long as you can afford TV? Some Soma would sound pretty good about now, wouldn’t it?

I’m just joshing you, I know that the only people left reading this site have deep wells of outrage. In which case, the bullet points that follow will be like a long, cool drink of water to slake your thirst for laughing to keep from crying:

 

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Lies, damn lies, and stadium subsidy justifications

access_time personNeil deMause

Lots of news happening this week, including Jackson County releasing really confusing ballot language for its Kansas City Royals and Chiefs sales tax referendum and the Chicago Bears social media department accidentally confusing fans about their stadium plans with a bad play on words. And maybe we’ll get to those later, but right now I need to spend some time looking at the ways in which the media all too often amplify the absolute dumbest team owner arguments for demanding public subsidies. None of this is new — Joanna Cagan and I were writing about it 25 years ago — but it’s all the more important precisely because news outlets keep on repeating these claims, despite two decades and counting of evidence that they’re all hogwash.

First up is Alexandria Living magazine, which ran an article on Monday under the headline “Monumental Arena Expected to Pay for Itself, City Officials Say.” The accompanying story explained that even though the legislation for a new Washington Capitals and Wizards arena development says the city can tap any available tax money to pay off the $1.5 billion in public bonds, “the Sports and Entertainment District is structured to be self-funding, according to city officials, and may even contribute additional funds to the city as a whole.” quoting financial consultant James Sanderson as saying tax money collected from the arena district will be “more than sufficient to repay the debt” and those tax revenues “don’t exist without the project itself.”

The first red flag here is “officials say”: Much like it’s bad journalism to take police reports at their word, basing your report entirely on the claims of politicians who support a project is media malpractice. (The second red flag is “financial consultant”: Sanderson turns out to work for an investment firm, and he’s a lawyer with a bachelor’s degree in architecture, with no economic training.) There’s nothing wrong with reporting what elected officials or even unelected consultants are saying, but they shouldn’t be allowed to craft the narrative of your story, let alone the headlines that will be all that many people will read during their morning doom scrolls.

And the central claim here — that tax revenues from a new development don’t exist if the project isn’t built — is fundamentally wrong, as any economist could have told the magazine’s writers if they’d bothered to call one. For starters, there’s the substitution effect, which is the principle that if people spend money in one place, they’re not spending it someplace else, so a lot of that tax money would have been collected elsewhere in the city or the state if Virginians had done something else with their evenings rather than go see a Caps or Wizards game. (Some would be cannibalized from across the river in D.C., certainly, but not all of it.) And then there’s also the but-for problem, which is that the idea this is all free tax revenue assumes that nothing would be built on the site without the public spending, which is also flagrantly untrue:

But then, this is the whole point of tax increment financing: Not to come up with clever ways of funding projects without tapping public dollars, but rather to come up with clever ways of using public dollars while claiming you’re not. Anyone reading the words “Monumental Arena Expected to Pay for Itself” would reasonably expect that this means an Alexandria arena won’t use money that local government would otherwise have available to spend on other things like schools and health care, but it absolutely will.

For Exhibit #2, we turn to Fansided’s Kansas City sports blog KC Kingdom, which features the equally clickbaity headline “Why a New Royals Stadium Will Help KC Win a World Series.” “There is an underrated reason why a new stadium for the Royals will help the organization win a World Series, and fans should be thrilled to hear it,” begins the post, going on to explain that “the Royals are usually in the bottom third of the league in terms of payroll” but that could change with a new stadium, as the four MLB teams to most recently open new stadiums (the Texas Rangers, Atlanta Braves, Miami Marlins, and Minnesota Twins) all saw upticks in player spending in the years that followed.

Props to KC Kingdom for doing some original research — there’s even a chart! — but unfortunately it makes some basic logical errors. First off, showing that player spending goes up after a new stadium opens isn’t by itself evidence of anything: Player spending goes up every year across all of MLB, so a team could easily increase its payroll and still just be running in place relative to its competitors. Also, not all of the teams cited are really good comparables to the Royals: While both the Braves and Rangers have won World Series recently, they’re both relatively big market teams that were among the league’s top spenders even in their previous stadiums, making a combined seven World Series appearances between 1991 and 2011. (It’s also worth noting that the Royals themselves made it to two World Series just in the last decade, winning one of them.)

That said, there is a kernel of truth to the idea that new stadiums mean more spending, but it’s not because “a new stadium will bring in revenue and pressure for Owner John Sherman to spend money on talent,” like the article suggests. John Sherman is a billionaire, and could always spend on bringing in talent if he wanted to. What would change with a new stadium at an estimated $1.4 billion public cost wouldn’t be access to cash, but the rewards available for spending: Before a new stadium, team owners have an incentive to lowball payroll in an effort to convince fans (and sports bloggers) that the team needs a stadium to be able to put a winning team on the first; afterwards, when you have shiny new seats to sell at shiny new prices, investing in a pitching staff that fans might actually want to pay to see instead of the modern record holder for most career innings pitched with a negative Wins Above Replacement starts to seem like a better idea.

How much do teams actually improve after a new stadium opens? As it so happens, I wrote a whole book chapter that addressed this back in 2006, for the Baseball Prospectus book Baseball Behind the Numbers. And in there, I reported that for all MLB teams opening new stadiums from 1991 to 2005, “a new ballpark [was] worth about 5.5 wins a year.”* That’s not nothing, but as I also wrote at the time, “a $500 million stadium is an awfully expensive way to pick up five and a half games in the standings,” and it would arguably be cheaper for taxpayers just to buy the team a new starting pitcher.

This may seem like a lot of words to devote to picking on a local magazine and a sports blog, but they’re just the latest examples of execrable reporting on sports subsidy deals that shows up everywhere, including The New York Times. And both of these false arguments — stadiums and arenas can pay for themselves, and they’re needed for teams to be competitive on the field — are key items in the sports subsidy playbook: #3 (Leveling the Playing Field) and #4 (Playing the Numbers), as we laid out in “The Art of the Steal,” Chapter 4 of Field of Schemes. Sports owners gonna sports owner, but that doesn’t mean sports writers need to take their claims at face value. If you’re wondering why 58% of voter referendums to fund stadiums and arenas with public money are successful, keep in mind that team owners and their political allies are still able to control much of the media coverage, and bad headlines lead to ill-informed decisions at the ballot box.

*UPDATE: Turns out J.C. Bradbury did a more comprehensive study on the effect of new stadiums on winning percentages earlier this year, and the impact is more like zero:

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Caps/Wizards arena bill would create mega-TIF to divert all taxes to help pay off $1.5B in project bonds

access_time personNeil deMause

Two leading members of the Virginia state legislature introduced legislation to create a sports authority to build a Washington Capitals and Wizards arena in Alexandria on Friday, during a snowstorm, while muttering, “Shh, don’t tell anyone, let’s keep this our little secret.” (Two of those three things are true.) The bill language is here, and a quick perusal reveals that it would:

  • Leave the negotiation of a lease for later on, but require that the teams pay rent (undetermined) and parking fees and payments on naming rights to the arena district (but not the arena itself) and seat license funds (“if any”) to the state. The term of the lease would be required to be as long as the term of the construction bonds, but there’s no indication if the teams would have any out clauses or state-of-the-art language allowing them to leave early if the state doesn’t sink more money into upgrades.
  • To help fund the rest of its $1.5 billion in bonds, the state would collect “all sales tax revenues,” both state and city, from the arena campus, as well as “all personal income tax revenues, corporate income tax revenues, and pass-through entity tax revenues.” (Since the project would be state-owned, it would already be exempt from paying property taxes.) This would be a mega-TIF, the same rarely employed mechanism that was proposed last year for a Commanders stadium in Virginia; they have tended not to work out too well, coming under particular criticism for the part where arena district employees have their income taxes paid directly to their bosses.

Virginia Gov. Glenn Youngkin immediately promised that not all the tax revenue is expected to be needed to pay off the arena project, though none of the many numbers he threw around on Friday actually specified what percentage of the tax money would be siphoned off to pay for construction. Youngkin also didn’t get into how much of that tax money would actually be new and how much cannibalized from spending elsewhere in the state — a common problem with TIFs.

The big announcement from the Republican governor on Friday was that he will now agree to expand funding for the D.C.-area Metro transit system, which was a key sticking point for legislative Democrats on the arena proposal. In fact, state house appropriations chair Luke Torian said that even though he co-sponsored the bill (with state senate majority leader Scott Surovell), he still doesn’t necessarily support the project, but just introduced it in order to move negotiations ahead, as one does.

There’s still much to be resolved, sure, but all signs point to Metro-funding-for-arena-funding being the key horse trade here, with any other details to be worked out later. State Sen. Danica Roem even spelled it out as “I look it as the same way as U.S. House Republicans, ‘Well, we’re not going to give Ukraine funding unless you give border funding.’” Expect plenty of heated public hearings and the like, but whenever you have bipartisan agreement on a sports subsidy deal, it’s awfully tough to undo it, no matter how many billions of dollars are at stake.

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Friday roundup: Bears rumors! Titans vaportecture! Coyotes still about to announce something, sometime!

access_time personNeil deMause

Another week in the books! Will “in the books” soon become an anachronism, once there are no more physical books to keep? Or will “books” just become a term for long documents, and future English speakers will wonder why the phrase isn’t “in the spreadsheets”? Has this already happened and I didn’t notice? Gen Z readers, say your piece!

Moving on to the news:

  • Chicago Bears president Kevin Warren said, “What intrigues me about downtown is I strongly believe Chicago is the finest city in all of the world,” and now everybody thinks this means the Bears would prefer to build a stadium in downtown Chicago rather than it just being a savvy negotiator trying to create leverage for a stadium wherever he can get one paid for by somebody else.
  • Virginia’s billion-dollar-plus subsidy for a Washington Capitals and Wizards arena in Alexandria may now turn on Metro public transit funding, as Senate majority leader Scott Surovell says “making sure Metro is fully funded is a precondition before we have any kind of dialogue about the arena” while Gov. Glenn Youngkin retorted that he wants to see a Metro business plan first because “they’ve got overhead levels that far exceed any of their benchmarks.” Hey, you know what would help fill Metro’s $750 million budget deficit? Here’s a hint, it rhymes with “bot giving a billion dollars to the local sports team owner,” hth.
  • New Tennessee Titans vaportecture! This time the (imaginary) camera moves but the (pretend) people don’t, so we get a horrorscape of fans frozen in place with their arms flung skywards for all eternity! All except for the rock band that is playing forever to a perpetually frozen audience, and the video boards that show moving replays of a forever-static game, this is the most terrifying Black Mirror episode ever.
  • Former Utah Jazz majority owner (and current minority owner) Gail Miller is buying up land around the site of her proposed baseball stadium for her proposed MLB expansion team, hey at least Salt Lake City has more TV households than Las Vegas.
  • The public cost of the new Chattanooga Lookouts stadium has soared from $80 million to $139 million in the last 17 months, which will be fine so long as an extra $500 million worth of development appears from out of nowhere and pays new taxes that won’t cannibalize existing ones, this is fine.
  • “The Orlando Magic are making millions by selling naming rights to a building the team doesn’t even own,” yup, that’ll happen.
  • “[Arizona] Coyotes on ‘precipice’ of announcing location organization will focus on for new arena,” reports an Arizona Sports headline, then the story itself doesn’t have anyone at all saying the word “precipice” with regard to anything, wut.
  • Baseball stadiums built since the early 1990s have crazy-far upper deck seats, reports Travis Sawchik for The Score, will that change with the latest wave of new buildings? Populous architect Zach Allee says there’s a tradeoff that’s “kind of like a balloon” where “if I say I want to be closer to the field horizontally, it ends up pushing the seats up higher,” which isn’t really how geometry or balloons work, and then Sawchik touts the Texas Rangers‘ new stadium for moving the last row of its upper deck 33 feet closer than the last row in its old stadium, but actually they did this by just removing the last 8,000 seats, this is actually a terrible article, I’m sorry I linked to it.

I’m traveling next week, posts may appear at sporadic and/or unexpected times. Have a good long holiday weekend, or as our Toronto readers know it, Monday.

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Alexandria releases charts showing Caps/Wizards arena would still cost public $1B+, but in pretty colors

access_time personNeil deMause

The Alexandria Economic Development Partnership revealed some new slides about the financing of the proposed $2 billion Washington Capitals and Wizards arena complex yesterday, and they are very clear-plastic-bindery indeed:

So according to that first slide, deploying a calculator to translate from percentages into actual dollar amounts, the $2 billion total cost would be repaid by:

  • $420 million in cash from the teams.
  • $420 million worth of future lease payments from the teams.
  • $100 million in cash from the city of Alexandria.
  • $460 million in kickbacks of taxes from the project.
  • $600 million in “private revenue streams,” which is presumably parking and naming rights, but the chart doesn’t say.

That would amount to just $560 million in taxpayer spending, which is a lot less than the $1.5 billion previously estimated. However, it leaves out some important pieces: $150-200 million in spending by the state of Virginia on transportation upgrades, plus around $380 million in property tax breaks, which would get the total subsidy comfortably back up over $1 billion.

Plus, of course, neither the pie chart nor that other Sankey diagram (which isn’t really used the way Sankeys should be, but it does look pretty) nor any of the rest of the presentation to yesterday’s town hall provides any indication of where the numbers came from, so they could all be just entirely made up. (It’s one of the many questions local residents asked at the town hall.) But here they are and we can’t unsee them now, so that’s some data viz money well-spent by the AEDC.

 

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Friday roundup: Sports subsidy protests in Virginia and KC, plus 2023’s biggest non-sports subsidies went to an industry that may surprise you (this is how clickbait headlines work now, right?)

access_time personNeil deMause

No news worth reporting yesterday, but I instead spent my morning recording this interview about the Oakland A’s potential move to Las Vegas, which covered a lot of ground in just half an hour. Tune in to hear what Brodie Brazil and I discussed, or just to see what’s on my living room wall behind the other end of the sofa from where I usually sit for Zoom interviews!

And a few other things of note happened this week, let’s get to them:

  • The newly formed Coalition to Stop the Arena at Potomac Yard rallied yesterday at the site of the proposed $2 billion Washington Capitals and Wizards arena, with former Alexandria vice-mayor Andrew Macdonald saying, “We don’t need an arena to thrive,” and local resident Shannon Curtis saying the project would “create a traffic boondoggle.” In related news, apparently the Potomac Yard Metro station was set for possible closure until this project was proposed because nobody was using it, but now, as discussed before, it would need expansion to handle arena-sized crowds. Hmm, maybe that should be included in the already-$1.5 billion public price tag? Just a crazy notion.
  • People in Southeast D.C., which is home to the new arena where the Washington Mystics play but which may lose the team to the current Capitals and Wizards arena if those teams relocate from D.C. to Virginia, are equally steamed about the whole thing. “I can’t stress enough that we’re not leaving; there’s still a commitment to the neighborhood,” promised Caps/Wizards senior VP John Thompson III, saying the team owners would work with the city to “bring other events” to the neighborhood “to help fill the void” — which sure sounds like leaving, though I guess keeping the arena open and every once in a while holding a concert there or something is technically just “moving out and promising to visit.”
  • As if Kansas City Royals owner John Sherman didn’t have enough prospective stadium sites to play off against each other, now the owners of the old Kansas City Star printing plant site want back in the game. (No details on who would pay for a stadium at that location.) Meanwhile, residents packed the first public meeting by Jackson County yesterday on the Royals’ plans, with KMBC reporting that “many voiced their concern about continuing a tax when they didn’t know where the stadium would be or any specifics about how it would benefit low-wage earners.” The local food and retail workers union also demanded that the project include a community benefits agreement to require that stadium jobs be union, which is already part of the tax extension proposal, and anyway CBAs often don’t work out that well for many reasons. But sure, better-paying jobs are better than worse-paying jobs, can’t get if you don’t ask.
  • The owners of the new Oakland Ballers minor-league baseball team say they signed a deal to rent out the Oakland Coliseum to host one game this summer, but A’s execs blocked them by enforcing their exclusive right to play baseball at the stadium. (Yes, the stadium that A’s owner John Fisher is trying to get out of as fast as possible. Irony is not his strong suit.) A fan group spokesperson said he figures it’s because Fisher was in “a position of embarrassment” because “I think we would have outdrawn them,” which is maybe wishful thinking but also maybe not.
  • Wondering how the biggest sports subsidy deals compare to the biggest non-sports subsidy deals? Check out good Jobs First’s list of the top megadeals of 2023, headed by Ford getting $1.7 billion from Michigan for an electric car battery plant and Volkswagen getting $1.3 billion from South Carolina for its own EV battery plant. Nothing against electric car batteries any more than against sports, but at 6,500 jobs combined, that’s nearly half a million dollars per job, which is a sports-level awful ratio — good job, car companies, even if not good jobs!
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Alexandria mayor claims Caps/Wizards arena plan ‘minimizes the risk’ for taxpayers despite all evidence to the contrary

access_time personNeil deMause

If there’s one kind of article that I wish could be banned from all news outlets, it’s the single-source stenography piece. This happens when someone Important, usually an elected official but sometimes just a rich guy, opens their mouth and says things, and a reporter transcribes it all and puts it into print without asking questions like “Is this true?” and “Am I just being used as a propaganda tool?”

We had a couple of those yesterday, and they contain all the bad hallmarks of the genre. Washington, D.C.’s WTOP ran one titled “Alexandria mayor says funding plan for Wizards, Capitals arena at Potomac Yard ‘minimizes the risk’ for taxpayers,” which is an accurate headline in that, yes, Alexandria Mayor Justin Wilson did indeed say that. How does it do that, according to the mayor?

Wilson told WTOP that Monumental Sports and Entertainment, which owns the sports franchises, will pay a “significant private investment upfront, and ongoing rent that is paid for by the private sports teams, by Monumental.”

The rest of the project’s cost will be covered by tax revenue generated by the complex itself…

“It’s a model that minimizes the risk on the taxpayers, both the state and the city, and helps drive economic growth in Potomac Yard, which is ultimately what we’re trying to do,” Wilson said.

That’s just tax-increment financing, and it doesn’t minimize risk at all. The tax revenue generated at the Capitals and Wizards arena complex would be going toward paying off $1.05 billion worth of bonds, and Virginia taxpayers would be on the hook for that money (plus about $300 million in other expenses) regardless of how much tax revenue came in. As Good Jobs First relates in its TIF explainer, such “underwater” TIFs are distressingly common:

Sometimes, TIF projects fail to maintain enough incremental tax revenue to pay the debt service. This can happen because a recession arrives, causing the property’s value to decline (and enabling the developer to appeal for a lower tax assessment).

It can also happen because a project was inherently flawed. A feasibility study may have overestimated market trends or future rent rates. A corporation may have overstated its likely future growth. Or a retailer may downsize or go bankrupt due to new competition from e-commerce.

When a debt-service TIF goes underwater, if the bond is not a general obligation, the city is not legally obligated to cover the shortfall. But in reality, cities rarely allow TIF bonds to default. So a TIF can become a drain on a city’s general fund.  At one point in the Great Recession, Kansas City had six underwater TIF districts.

And even when the TIF money is enough to pay off the bonds, Good Jobs points out that’s still money being siphoned off from other needs, even as the new development creates new costs for taxpayers:

The treasurer of Adams County, Colorado, once denounced a $26.9 million TIF for a big box retail project, “without a penny [of it] accruing to the county.” He pointed out that if a murder occurs at the mall, the county coroner, county district attorney, county sheriff, county jail, and county court would all incur expenses, none of them supported by the TIF district.

A more accurate article would have pointed out some of this, or maybe even called someone at Good Jobs First for comment, since they’re right there in D.C. And a more accurate headline would have been “Alexandria mayor claims Caps/Wizards arena plan ‘minimizes the risk’ for taxpayers despite all evidence to the contrary,” actually, that’s good, I’m using that.

Bad article #2 is from Kansas City’s NPR station KCUR, and is headlined “Kansas City mayor says answers about new Royals stadium should come soon.” Does he now? What did he actually say?

[Kansas City Mayor Quinton] Lucas told KCUR’s Up To Date that he expects “final deals and arrangements” in the days ahead in order to meet that end-of-month deadline.

“There is active work in a number of different jurisdictions engaged —including the city of Kansas City — because any big investment in a part of our city will require zoning conversations as well as probably incentive discussions,” Lucas said. “That is something that I think gets decided soon. Then, I think we can put this issue to bed.”

There is a smidge of actual reporting in this one, in that the Jackson County Legislature needs to act by January 23 if it wants to put an extension of the county’s 0.375% sales tax surcharge to raise money for Royals and Chiefs stadium projects on the April ballot. But otherwise, this is just “mayor promises stuff will get done soon,” which is some extremely weak sauce as an excuse for running an article — especially when there are tons of important questions reporters could be researching, like whether Royals owner John Sherman would really move the team to a neighboring county without that tax subsidy, and whether that would actually be worse for Jackson County than hiking sales taxes and handing the proceeds to Sherman.

In short, it was a bad day for journalism, but then that’s most days these days. And when people are reading these articles, or at least glancing at the headlines, they’re getting the wrong idea about stadium and arena deals that they or their elected officials may have to be voting on. Everyone may make fun of the Washington Post’s “Democracy Dies in Darkness” slogan, but there’s a nugget of truth beneath the pomposity: Without good information, people can’t make good democratic decisions, and right now there’s alarmingly little work being done at too many media outlets to distinguish information from misinformation before throwing it all on the page and letting God sort it out.

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Alexandria official claims $1.5B Caps/Wizards subsidy will pay for itself, seems to misunderstand how money works

access_time personNeil deMause

Buried in a long Washington Post article today about local opinions in Alexandria, Virginia on plans for a new $2 billion development complex including an arena for the Washington Capitals and Wizards — the opinions, you will be shocked to learn, differ — is this section about the project’s finances:

City leaders have emphasized that the arena and surrounding development included in the deal will more than break even. For every dollar being borrowed to build the stadium and which would need to be paid back, they say, it would generate at least another dollar to increase city services.

“The asset will generate revenue every year, and we will pocket that. The asset will pay off our investment,” [Stephanie Landrum, president and chief executive of the Alexandria Economic Development Partnership, the city’s public-private development agency] said. The city would separately put in $106 million contribution to build the parking facility and the concert hall, she acknowledged, but revenue on tickets would eventually make up that cost, too.

Oh, will it now? How much money the arena complex is expected to generate isn’t in the project summary released last week: That seven-page document weirdly includes methodology for calculating the fiscal impact — or rather the list of tax revenue streams that it looked at, not actually how those were projected — but then only includes numbers for economic impact, which is how much money changes hands between anybody thanks to the project, not how much new cash Alexandria and Virginia would actually have available to spend. And since the projected public costs are around $1.5 billion, it’d require a ginormous stream of new tax money to break even.

What about AEDP’s own web page on the project? Nope, that just says this:

Roughly 2.5 times the economic output of what would otherwise be built based on current development plans*

Which is back to “economic output,” which isn’t actual city or state revenue. And that asterisk just leads back to the same project summary as above, so this fails the show-your-math Snel test, boo Washington Post.

Does Landrum mean anything at all real by her “asset will pay off our investment” statement, then? If we go back to her quotes in the previous Post article analyzing a JPMorgan report on the project finances, we see that she said then, “This money doesn’t exist unless we do the projects”; reading heavily between the lines, this suggests that she’s assuming that any tax revenue collected at the new development would be 100% new, which is the assumption behind TIFs and is generally not true. (It’s also not clear whether Landrum’s group has included the additional costs of services to the new development, which can be substantial.)

The $1.5 billion public cost and how it would be paid off is far from the only objection being raised by Alexandria residents — that would probably be the impact of increased traffic, because America — but it is part of the mix, as befits what would potentially be the biggest sports subsidy in history. And part of the job of informing the public about the finances of a project is actually, you know, informing the public about it, not just reprinting whatever a local advocate claims. So, seriously, boo Washington Post, you can do a lot better than this.

 

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Field of Schemes