Monday, October 19, 2009
It's an interesting exercise to figure out what the motivation is for the development group. After all, why divert the revenue from a profitable investment (retail) into an unprofitable one?
Wednesday, October 07, 2009
In late August, when the Mobile City Council and Mayor Sam Jones first toured the $2.5-million addition to Ladd-Peebles Stadium, including 11 new skyboxes, District 6 Councilwoman Connie Hudson said she was surprised to hear the city council would have a suite separate from the mayor’s, which is located just between the 40- and 50-yard lines.Silly, me, until reading this I had not considered the possibility that public officials themselves were direct beneficiaries of the public investments made in commercial sports facilities. The story is titled "Skyboxes at Ladd-Peebles Could Provide Huge Economic Impact." There is nothing in the story that remotely supports that contention. Rather, the story is entirely consistent with the public choice analysis of stadium subsidies, with the caveat that we add direct benefits to the politicians themselves to the analysis. As one spokesperson said, this setup "is standard across the country." Don't you just love the political class?
“It was announced to me on the day we toured,” Hudson said. “We’ve always shared, like we do with the Baybears.”
The 11 new skyboxes bring the total at city-owned Ladd-Peebles Stadium up to 14, as three were built in 1997 in part of the press box addition. In addition to the two skyboxes available to the city, the Mobile County Commission also has a suite, which brings the total of skyboxes for local government use to three, or 21 percent of the skyboxes in the 61-year-old stadium.
Speaking generally, and taking into consideration the differences between facilities in other cities, Bud Ratliff of the Mobile Bay Sports Authority says most stadiums have only two skyboxes reserved for city and county use, but doesn’t see a problem with the current arrangement at Ladd-Peebles.
Wednesday, May 06, 2009
Less than an hour before the National Hockey League commissioner planned to broker a deal to sell the and strip team owner Jerry Moyes of his duties Tuesday, Moyes filed for bankruptcy to sell to his own buyer.
Moyes, as part of a Chapter 11 reorganization filing, agreed to sell the team for $212.5 million to a BlackBerry wireless magnate who plans to move the team to a yet-to-be determined location in southern Ontario, Canada.The move is not a certainty. Already, the NHL and Glendale, which leases Jobing.com Arena to the Coyotes, have objected to Moyes' tactics. And other investors could outbid BlackBerry executive Jim Balsillie's PSE Sports & Entertainment LP.
But the Coyotes, who have played in metro Phoenix since 1996, habitually have lost money in the desert, first when they shared an arena with the Phoenix Suns in downtown Phoenix and most recently in Glendale.
Moyes, who since 2001 has invested more than $310 million in the team, declined to be interviewed. Earl Scudder, his financial and legal adviser, said Moyes had no option but to file for bankruptcy because that was the only way to void the team's lease with Glendale.
"He didn't have a lot of choices," Scudder said. "He had gone through extensive marketing efforts and was unable to get offers for the team that would take care of the creditors." The move shocked Glendale, which contributed $180 million for the $220 million arena that opened in 2003. For the city's hefty investment, the team signed a 30-year agreement with an early-termination penalty of more than $700 million.
I agree with this assessment from Meyer:
Several years ago, Phoenix suburb Glendale paid about $180 million to build a hockey stadium for the Coyotes. The Coyotes had already been in the Valley for several years, losing money all the while, and had shed one ownership team for another fronted by Wayne Gretzky. It was shear madness to build them a stadium, as their chances of financial success were almost non-existant. It was already clear at this point that hockey was not going to be a big draw in Arizona. For this reason, Scottsdale and Phoenix both ended up passing on subsidizing the team before Glendale, out to prove it was a “real” city, stepped up to the plate with a wad of taxpayer money.This is one of the problems with using other people's money to finance risky projects: investors take risks that they otherwise would not. If the project doesn't pan out, it's the taxpayers who are on the hook.
Addendum: I see that Victor Matheson has posted on the bankruptcy as well. As I mentioned to him in an email, I think it's pretty clear that the Coyotes are not in danger of completely folding. Instead it seems that the bankruptcy filing is strategic - a way for Moyes to at least buy himself a little more time in his attempt to sell the Coyotes to Balsillie.
Another addendum: according to this AP update, the NHL questions whether Moyes has the power to file for bankruptcy.
Another addendum: The Chicago Tribune reports that White Sox owner Jerry Reinsdorf is working with the NHL on a deal to buy the Coyotes and keep them in Glendale.
Thursday, March 26, 2009
It's not necessarily the worst thing in the word if you believe that the Olympic Committee is mostly a rent-seeking organization. If you believe in substantial positive externalities generated by the Olympics, it's not so good. I count myself as mostly being in the first group, although I don't deny there is some degree of "publicness" associated with big-time sports. But if anything, the current economy is forcing people to remember that thing we economists talk about until we're blue in the face: we face trade-offs all the time.
Although the Olympic flame was extinguished just a little more than seven months ago, already there are some who wonder whether the 2008 Summer Games in Beijing marked the end of the Olympics as we've come to know them.
"The economic climate has got to be taken into consideration; you just aren't going to have the huge spectacle that Beijing was," said Andrew Bacchus of United Kingdom Trade and Investment, one of the groups responsible for securing financing for the 2012 Games in London.
In these days of global financial uncertainty, it's hard to envision any sports extravaganza approaching last summer's — in its over-the-top theater or the estimated $45 billion that China shelled out.
Monday, March 09, 2009
In the Huskies' favor -- at least from the perspective of getting legislation passed -- they are proposing an extension of a tax that is set to expire in 2014, and that most locals don't pay. The tax is on rental cars and hotel rooms, and is directed towards paying off the public debt incurred in building Seattle's pro baseball and football stadiums.
But the loss of the Sonics to Oklahoma over the issue of funding for a new Arena suggests that Washington voters have had their fill of financing sports palaces, at least for a while. With the state of Washington facing a $6 billion deficit, appetite for this tax-financed expenditure must surely be limited, especially among that chunk of the state that call themselves Cougars.
An economic impact analysis of Husky Sports is here. UW's pitch for the subsidy is here. The university notes that "Most of the public funding we are requesting would come from taxes paid by tourists visiting King County, so very little of the burden would fall on Washington state residents. Also, we believe some taxpayer investment in Husky Stadium is important for helping it continue to serve as an asset for the general public, not just the UW." But as the impact study notes, 74% of attendance at Husky sporting events is local. Hence, this is a simple cost-shifting move of the traditional pork-barrel variety. As a Husky myself, this is really kind of shameful.
Tuesday, February 24, 2009
I wonder if Glendale ever made back the money they spent on getting the Super Bowl. Well, you know what they say about other people's money.
The city of Glendale has been quietly bailing out the money-losing Phoenix Coyotes for several months, according to documents obtained by 12 News.
A record of lease payments by the Coyotes shows the city has been letting the team play virtually rent-free at Jobing.com Arena for seven months. Based on past payments, the break could be worth up to $4 million over the course of a year.The city is giving the team the multimillion-dollar break even as it tries to plug a multimillion-dollar hole in its own budget.
HT to Kip.
Wednesday, December 10, 2008
From the government's criminal complaint against Gov. Blagojevich (some paragraph breaks added):
13.... b. Defendants Rod Blagojevich and John Harris, together with others, offered to, and threatened to withhold from, the Tribune Company substantial state financial assistance in connection with Wrigley Field, which assistance Rod Blagojevich believed to be worth at least $100 million to the Tribune Company, for the private purpose of inducing the controlling shareholder of the Tribune Company to fire members of the editorial board of the Chicago Tribune, a newspaper owned by the Tribune Company, who were responsible for editorials critical of Rod Blagojevich ....
69. Intercepted phone calls reflect that Rod Blagojevich and John Harris, together with others, are corruptly using and threatening to use the powers of Rod Blagojevich’s office as Governor of the State of Illinois to exert financial pressure on the owners of the Tribune Company, the parent corporation of the Chicago Tribune newspaper, to fire Chicago Tribune editorial board members who were responsible for editorials sharply critical of Rod Blagojevich’s actions as Governor and, among other things, calling for his impeachment.....
72. On the evening of November 3, 2008, Rod Blagojevich talked to Deputy Governor A. Rod Blagojevich stated that he was concerned about possibly being impeached in the Spring and that the Chicago Tribune will be “driving” the impeachment discussion. Rod Blagojevich asked Deputy Governor A to check to see if the Tribune has recently “advocate[d]” that he be impeached. In fact, the Chicago Tribune recently had published editorials critical of Rod Blagojevich.
73. In another call between Rod Blagojevich and Deputy Governor A that occurred a short time later on November 3, 2008, Rod Blagojevich and Deputy Governor A discussed an editorial from the Chicago Tribune regarding the endorsement of Michael Madigan and calling for a committee to consider impeaching Rod Blagojevich. During the call, Rod Blagojevich’s wife can be heard in the background telling Rod Blagojevich to tell Deputy Governor A “to hold up that fucking Cubs shit... fuck them.” Rod Blagojevich asked Deputy Governor A what he thinks of his wife’s idea. Deputy Governor A stated that there is a part of what Rod Blagojevich’s wife said that he “agree[s] with.” Deputy Governor A told Rod Blagojevich that Tribune Owner will say that he does not have anything to do with the editorials, “but I would tell him, look, if you want to get your Cubs thing done get rid of this Tribune.”
Later, Rod Blagojevich’s wife got on the phone and, during the continuing discussion of the critical Tribune editorials, stated that Tribune Owner can “just fire” the writers because Tribune Owner owns the Tribune. Rod Blagojevich’s wife stated that if Tribune Owner’s papers were hurting his business, Tribune Owner would do something about the editorial board. Rod Blagojevich then got back on the phone. Rod Blagojevich told Deputy Governor A to put together the articles in the Tribune that are on the topic of removing Rod Blagojevich from office and they will then have someone, like John Harris, go to Tribune Owner and say, “We’ve got some decisions to make now.”
Rod Blagojevich said that “someone should say, ‘get rid of those people.’” Rod Blagojevich said that he thinks that they should put this all together and then have Harris or somebody go talk to the Tribune owners and say, “Look, we’ve got decisions to make now ... moving this stuff forward (believed to be a reference to the IFA helping with the Cubs sale) ... someone’s gotta go to [Tribune Owner], we want to see him ... it’s a political fuckin’ operation in there.” Deputy Governor A agreed and said that Harris needs to be “sensitive” about how he does it.
Rod Blagojevich said there is nothing sensitive about how you do it and that it’s “straight forward” and you say “we’re doing this stuff for you, we believe this is right for Illinois [and] this is a big deal to [Tribune Owner] financially” but what Rod Blagojevich is doing to help Tribune Owner is the same type of action that the Tribune is saying should be the basis for Rod Blagojevich’s impeachment. Rod Blagojevich said Tribune Owner should be told “maybe we can’t do this now. Fire those fuckers.”
Deputy Governor A suggested that Rod Blagojevich say, “I’m not sure that we can do this anymore because we’ve been getting a ton of these editorials that say, look, we’re going around the legislature, we gotta stop and this is something the legislature hasn’t approved. We don’t want to go around the legislature anymore.” Rod Blagojevich agreed and said that he wants Harris to go in and make that case, “not me.” Deputy Governor A agreed and said that he likes it. Rod Blagojevich asked Deputy Governor A to put the list of Tribune articles together....
76.... Rod Blagojevich stated that “our recommendation is fire all those fucking people, get ‘em the fuck out of there and get us some editorial support.”
There’s a good deal more factual detail in the complaint — have a look if you're interested. Thanks to Sean Parnell of the Center for Competitive Politics for the pointer.
Cross-posted over at Market Power.
Labels: public funding