Amarillo by Mornin’ – A Stadium Building Story

On February 1st, the City of Amarillo, TX broke ground on their brand new downtown $45.5 million publically-funded baseball stadium, the future 2019 home of the AA-level minor league Missions baseball team, a team currently based in San Antonio.

amarillo_baseball_stadiumAs I wrote about last week, I dislike these public-money stadium deals, for two reasons. First, the promised “economic development” too often is an illusory sales pitch that never comes true. Second, I get mad because sports teams owners should build their own doggone stadiums rather than depending on tricks with public dollars.

Despite my distaste, it’s useful to study these things to understand how they might come about. I describe that in the second half of this post.

As the Missions baseball team hits the road to “Amarillo by morning, straight up from San Antone,” in 2019, will we be getting a new publicly-funded stadium in San Antonio to keep pace with the panhandle? (Incidentally, if I don’t have you humming that George Strait cover song by the end of this post you deserve a full refund.)

I asked San Antonio mayor Ron Nirenberg whether he was aware of any negotiations with The Elmore Group to build them a nice new AAA minor league baseball stadium, in order to welcome the Colorado SkySox team slated to move to town in 2019. Nirenberg described the silence between the city and the Elmore Group as “crickets.” DG Elmore, owner of the Missions baseball team, replied to my query that “At this time, we do not have comments or information to share about a new ballpark.” About Amarillo’s stadium, Elmore replied “it will be ready opening day 2019.”

The combination of silence and “no comment” in San Antonio does not necessarily mean nothing is happening. City Councilman Robert Trevino, whose downtown District 1 was reportedly the destination target for a new baseball stadium as recently as last year, described meetings with the Elmore Sports Group at the National League of Cities summit in Charlotte in November 2017. The Elmore Group hosted at least 5 San Antonio City Council members including Trevino, for a tour of Charlotte’s downtown minor league baseball stadium, presumably to warm them up to the opportunity in San Antonio. Trevino, a professional architect, said urban design considerations around a baseball stadium weigh heavily with him. He says his support for a future stadium would depend on whether existing downtown development plans already in place and elements such as parking and transportation coordinate well with a new stadium.

missions_baseballThat coordination, necessary to achieve economic development, is often lacking, according to Heywood Sanders, professor of Public Administration at UT San Antonio. Sanders points to Houston’s Toyota Center – home of the NBA Rockets, as a relatively successful development on Houston’s east side of downtown.

“The city and business interests (of Houston) wanted to develop downtown. The decision was a very conscious and well thought out one,” says Sanders.

Sanders contrasts that with the San Antonio experience. “If you’re going to do it, how do you do it? Do you plan surrounding development in a coherent, well thought-out way, or do you just plop the structure down and cross your fingers?” Sanders asks rhetorically. “If ever there was an example of the latter, there are two examples in San Antonio. First, the Alamodome, and then subsequently the AT&T Center.” Those have failed to spur surrounding development, to say the least.

So I’m nervous about any promised economic development based on past history. But also, financially, what can we learn from Amarillo’s public stadium deal?

One interesting element, at least to me, is the way the $45.5 million deal patched together money from sources designed to avoid political backlash. I’ll describe those in detail as they’re clearly from a playbook that sports owners and political leaders use over and over again.

The biggest source of funds for the stadium will be a hotel occupancy tax (or “HOT” for those of you who like cool acronyms.) The HOT gets collected as a sales tax on hotel rooms booked in Amarillo. Voters narrowly approved $32 million to be used for constructing a stadium in 2016.

The HOT allows officials to say, with a straight face, that mostly non-residents – hotel visitors to Amarillo and hotel owners – pay the taxes for financing this stadium over the long run. You can probably see the political advantage of using the HOT.

Hotel_Occupancy_TaxThe second most important source of funding for the stadium is already-collected HOT money that will be dedicated to the stadium project. Also importantly, HOT funds are specifically intended to be spent on projects to spur Amarillo’s downtown and tourism business. That’s the purpose of the HOT. Knowing all that, you might reasonably say, and many will say, that the public financing of Amarillo’s stadium is using money already set aside for this type of project and doesn’t burden residents with any new taxes.

A third source of funding will be a tax only levied on downtown commercial real estate owners.

 

If you were a grumpy cynic like me, however, you might think the following two things: first, the creation of a HOT is the original sin. Once you vote for a tax dedicated to downtown public development projects, you inevitably end up with things like stadium deals and downtown convention centers, whether they make long-term sense or not.

“Well, heck, we have the money already!” is a logical thought process of civic leaders, and the first step towards a badly thought-out plan.

Second, a better version of a HOT – in my imaginary ideal world – would create less restricted uses for the funds. Instead of building stadiums for privately-owned sports teams, my ideal civic leaders would use HOT money to fund other things like parks or libraries or complete streets or any number of projects that don’t direct public money toward hosting a private company’s business.

The finance term for this idea is that “money is fungible.” In other words, if you’ve got $10 million in saved up funds, or $32 million in future tax revenue, is a stadium really the best public use of public funds? Obviously hotel owners don’t support city governments that set up a HOT without restrictions to benefit them. But in my imaginary ideal world, local governments don’t only do what hotel owners, and sports team owners, want.

 

Please see related posts:

 

Super Bowl Stadium Thoughts

Raiders to SA bad idea

 

 

Post read (45) times.

Super Bowl Stadium Thoughts

minneapolis_stadiumIn case the broadcast of the Super Bowl on Sunday didn’t make it crystal clear on high definition TV, there’s one very specific reason why the NFL chose to hold a giant tourist event in freezing Minnesota in February. (Hint: It wasn’t for the fan experience.)

The reason: Money.

Specifically, $1.2 billion spent to construct the new US Bank Stadium in Minneapolis. Even more specifically, the estimated $498 million in taxpayer subsidies for the stadium. That amount of public money keeps sports franchise owners toasty warm in their luxury boxes, bless their hearts.

The NFL’s reward for extracting our taxpayer funds is the Super Bowl. Historically the NFL chooses a warm-weather city in Florida, Texas, Arizona, or Louisiana for the Super Bowl. Football fans, one would sort of think, prefer their walkable pre-game experience without putting on eight layers of clothing. For the right amount of taxpayer money, however, the NFL will send die-hard fans to the weather-equivalent of planet Hoth.

Awarding Super Bowl locations follows the construction of new stadiums by NFL cities, just like night follows day. Here, have some data:

New $1.2 billion stadium for the Vikings in 2016? Super Bowl LII in Minneapolis in 2018.

New $1.4 billion stadium for the Falcons in 2017? Super Bowl LIII in Atlanta 2019.

$550 stadium renovation of the Dolphins’ stadium in 2016? Super Bowl LIV in Miami 2020.

$150 stadium renovation for the Buccaneers in 2017: Super Bowl LV in Tampa 2021.

New $2.6 billion stadium for the LA Rams in 2020: Super Bowl LVI in Inglewood, CA. in 2022.

If I were a gambling man, I’d wager my life’s fortune on Super Bowl in 2023 in Las Vegas, after the peripatetic Raiders’ new stadium gets built on the sturdy foundation of taxpayers’ wallets in Nevada. Please, somebody, tell me if there’s a sports book at Caesar’s Palace that will accept my wager on the location of Super Bowl LVII in 2023.

Anyway, those new stadium price tags aren’t the amount taxpayers subsidize billionaire sports owners, but rather the total estimated costs of construction. Here are the estimated taxpayer subsidies associated with those specific stadium construction projects:

Minnesota: $498 million

Atlanta: $200 million

Miami: $75 million

Tampa: $29 million

LA-adjacent Inglewood: $0. The LA Rams’ owner reportedly turned down an offer of $477 million in public subsidies from St. Louis to keep the Rams from moving to California. Yay!

Las Vegas: $750 million

By the way, I love the owner of the LA Rams for that. That’s the way a good NFL owner does it.

The way the rest of the owners do it, however, is to extract maximum taxpayer dollars as a subsidy for their privately-owned sports businesses. Which makes me mad.

Did you know that Patriots owner Robert Kraft also built Gillette Stadium without using any taxpayer money?  Karmically speaking, that explains everything about their success in the last 17 years, no?

Back in 2002, Houston received its award from the NFL for building the $449 million NRG stadium, two-thirds of which was funded by taxpayers. That entitled Houston to host two Patriots championships during the 2004 and 2017 Super Bowls. So that was nice. Maybe taxpayer funds help you host, but karma wins championships?

I’m sorry, where was I?

Oh yes. Besides the inherently anti-capitalist practice of using public subsidies for private owners’ gain, I don’t believe the public gets good value for its money.

The New York Times filed a glowing economic development report in mid-January on the surge in economic development around Minneapolis’ new US Bank stadium. The story features excited architects, developers, real estate agents, and the leaders of a public-private partnership promoting their neighborhood, and lots of pictures of cranes at construction sites. The story name-drops future company office spaces, a big number of planned housing units, and potential hotels with plans to move there. What’s not to love, at least according to developers? This echoes the familiar argument that taxpayer money into the pockets of billionaire owners is justified because it spurs local economic development.

Now I’ll adopt my grumpy Bill Belichick-persona about the Times’ glowing report. Studies regularly debunk this myth of development-through-publically-subsidized stadiums. The University of Chicago polled economists on whether taxpayer costs for stadium building outweighed public benefits, with 83 percent agreeing, and 2 percent disagreeing. (The remaining economists polled did what economists do, which is respond with some version of “it’s complicated.”)

A Brookings Institute report on the subject in 2016 does not equivocate: “after 20 years of academic research on the topic, articles published in peer-reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.” Take that, New York Times.

On the subject of the myriad ways we taxpayers subsidize private sports team owners, do you remember the Tax Cuts and Jobs Act passed in December 2017? Whatever the merits or demerits of the final bill, I had pinned my hopes on a little-discussed provision of the proposed House bill that forbade federal taxpayer subsidies for sports stadiums via tax-exempt municipal bonds.

Frankly, I loved that little reform provision with all my heart.

The House version of the bill would have eliminated that subsidy right up until the very end. Oklahoma Senator James Lankford (R) and New Jersey Senator Cory Booker (D) tried to team up in the Senate to eliminate subsidies in the bill’s Senate version as well. And then, in the wee hours of legislative reconciliation, the final bill re-opened up federal subsidies for sports stadiums via tax exempt municipal bonds. Nevada Senator Dean Heller (R) bragged about “preserving” the subsidy in the final bill, presumably because of the upcoming stadium to be built for the Raiders in Las Vegas, using taxpayer money.

The Empire struck back! Billionaire sports owners won again. Senator Heller was Lucy to our Charlie Brown, snatching the ball away from our kickoff at the last minute. A little part of me – the uber-nerdy federal tax-reform-following part of me – died that day. (The other part of me died when the Pats didn’t win Sunday.)

 

 

Post read (50) times.