Tuesday, April 13, 2010

Stadium debt 

Stadium debt, in some cases, hangs around a lot longer than the teams that once played in them. From the Houston Chronicle comes this story that the vacant Astrodome "carries as much as $32 million in debt — nearly as much as the original cost of construction." $32 million may seem like rounding error in an era of $500 million ballparks. Nevertheless, there's a whiff here of the old political trick of shifting benefits towards the present and costs to the future. And not just in Houston:
Olympic Stadium in Montreal was not paid off until two years after the Expos left for Washington, D.C. Three Rivers Stadium in Pittsburgh still was carrying $45 million in debt at the time of its demolition in 2001.

Seattle's Kingdome was razed in 2000, and King County is scheduled to finish paying off its debt in five years.
22 years of payments

Public money will be required to cover Astrodome debt payments for 22 more years, according to county financial projections.
The story goes on to note that the current debt stems from renovations made to address relocation threats made by the Oilers and Astros in the 1980s.
The Astrodome's debt stems from the $60 million cost in the late 1980s of adding 10,000 seats, removing the scoreboard and installing 72 luxury boxes. County commissioners approved the project in an effort to persuade Oilers' owner Bud Adams to keep the team in Houston. The team left town after the 1996 season.

When asked if the expansion looked like a bad investment in retrospect, Precinct 4 Commissioner Jerry Eversole replied, “Hell, yeah!” But Eversole, who was not yet on the Court when the spending was approved, also said it has to be looked at in the context of the times, when two teams were threatening to leave town.

“We couldn't not try to keep the Oilers and we couldn't not try to keep the Astros,” Eversole said.

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Monday, January 11, 2010

No More Super Bowls in Miami? 

A story in today's Boston Herald reports that posted prices for Super Bowl tickets range from $2,000 to $5,000 in the secondary market. Here are some interesting quotes from market participants:
"The corporate orders are way down. Definitely the corporations are under scrutiny because of what’s going on in the world," said Michael Lipman, president and CEO of Miami-based Tickets of America, which sells Super Bowl tickets. "This is a total fan-driven Super Bowl. What teams are in is going to dictate the market and prices."

That doesn’t necessarily mean it will be an easy ticket, though.

"This year because of it being in Miami, it’s extremely popular," said Robert Tuchman, executive vice president of Premier Global Sports, which arranges corporate and group travel to sporting events. "Also, because the economy has bounced back a little bit, there’s more interest than last year in Tampa."

Tuchman’s company, which runs sportstravel.com, has already sold out of packages at the Fontainebleau Hotel in Miami Beach and Epic Hotel in Miami.
Not bad for a recession-wracked economy. As I read the story, I recalled an opinion piece in the Miami Herald last week, which excoriated Commissioner Goodell and the NFL for the following threat:
As Super Bowl XLIV approaches, the National Football League has delivered a not-so-sporting message to hosting South Floridians: Bend over.

NFL Commissioner Roger Goodell warned local officials that this might be the last Super Bowl game held at Dolphin Stadium unless the facility is refurbished at a cost of $250 million, give or take.

Although the league is wallowing in profits, it has no intention of bankrolling the renovations. The Dolphins haven't said how much, if any, the team would contribute.

Most likely, the money would have to come from public funds, possibly hotel bed taxes collected in Miami-Dade, Broward and Palm Beach counties.

It's old-fashioned extortion, but the NFL has no shame. You'd have better luck negotiating with the Gambino family.

Forget the recession. Forget the fact that our boneheaded politicians just committed $490 million to a new baseball park that is doomed to be a budgetary suckhole for decades.

And forget the fact that the football stadium was renovated just a few years ago for $200 million-plus, and that the Dolphins admit they don't need any upgrades for regular-season games.

Mr. Goodell is a fussy fellow. He would like swankier skyboxes and new hi-def lighting, please. He would also like an expanded roof on the stadium to prevent raindrops from dampening the festivities.
Now, it strikes me that the statements of market participants quoted in the Boston Herald ring true: people are willing to pay top dollar for a Super Bowl ticket in February, because it is paired with a trip to Miami Beach, warm weather, and so on. Can stadium amenities really be worth an investment of an additional $250 million, for a single game once every six to ten years, in which the city itself and its natural surroundings, more than anything else, dictate the demand for this particular location?

If this is indeed a standard "relocation" threat being foisted on local taxpayers by the NFL, it does not seem credible to me.

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Monday, October 19, 2009

Ottawa stadium proposal 

This article in the Ottawa Citizen has plenty of details on a plan to spend $100 million or so in public money to renovate Ottawa's empty and "dilapidated" Frank Clair Stadium. The developers promoting the investment are up front about the likelihood that the stadium will pay for itself -- it won't. So they propose that taxes and rents from a proposed retail district adjacent to the stadium be used to pay off the bonds and cover the stadium's operating losses. It appears that the developers plan to sink their own money into the retail district.

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?

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Monday, March 09, 2009

Winless Washington Seeks $150 Million 

Husky stadium is old and renovation is in the cards. But $300 million is a load of money to spend, especially for a winless, directionless program. So the UW is asking for $150m in "tourist tax" funding from the state. Perhaps the basketball team's first outright Pac 10 Championship casts a warm glow over the proposal?

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.

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Sunday, October 12, 2008

Kansas City Royals Increase Ticket Prices 

It looks like the Royals are betting on stadium renovations to boost the demand for tickets.

The Royals rolled out a new ticket-price structure Friday for their first season in a renovated Kauffman Stadium.

And, yes, prices are going up.

The average single-game ticket will cost $24.84 in 2009, an increase of nearly $2 from the average 2008 cost for a nonpremium game.

Club officials said the increase still positions the Royals below the average 2008 major-league price of $25.43 and, based on 2008 prices, would rank 24th among the 30 clubs.

“We feel this is a fair and balanced plan that will allow fans a broad menu of price options depending on their desired amenities,” said Kevin Uhlich, the club’s senior vice president for business operations.

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