Saturday, January 31, 2015

Super Bowl Economy Gone Wrong

To balance all the headlines you'll see this weekend about the great economic impact the Super Bowl is bringing to Glendale, Arizona, make sure to read Neil deMause's latest for fair.org, "The Super Bowl Windfall Myth."  Full disclosure - I was interviewed for the article.  But that has nothing to do with the fact that I think he does a great job!
Never mind that numerous economists have looked in vain for any evidence that Super Bowl host cities strike it rich. In one study, Holy Cross economist Victor Matheson (12/09) calculated that through 2001, the average increase in economic activity during each Super Bowl was about $30 million...And that’s economic activity, the total amount of money changing hands within city limits — not the amount that comes back to city coffers. When University of Maryland economist Dennis Coates (International Journal of Sport Finance, 2006) studied the 2004 Super Bowl, he found that added sales tax revenues in host Houston totaled about $5 million — well under the $30 million to $70 million that cities spend on increased police presence and other services for the game (USA Today, 1/25/15).
In addition, deMause explains the "Substitution Effect" means much of the economic activity is merely cannibalized from other economic sectors.

I was merely one of many journalists quoted in the article, but I suspect we all kind of said kind of the same thing - decimated newsrooms and the proliferation of new media have saturated the interwebs.  For every one good sports economy story out there, you will see 10 stories echoing whatever a team/league puts out in press release form.
On the occasions where journalists have taken the time to dig deeper, some excellent reporting has resulted. The dubious benefits of hosting the Olympics have gotten widespread coverage (CNNMoney.com, 7/30/12; New York Times, 8/5/14). NPR’s All Things Considered (2/3/14) investigated a British government report that projected billions of dollars in profits from the 2012 London Summer Games and found that the only economist who reviewed the study before publication — University of Michigan professor Stefan Szymanski — termed it “tantamount to a whitewash.”
Of course, hitting the Web to present a he-said-she-said report still is no substitute for real investigative journalism that attempts to determine whose claims are correct. “Our role as journalists is not to present both sides of the story, necessarily; it’s to present truth,” says Pransky. “And all too often, tight deadlines and the need for more content clouds that goal.”
And when you're done with that article, you can further your knowledge ahead of Sunday's game by reading about how the city of Glendale has struggled mightily to pay for its sports "investments".  An excerpt:
The city has found stronger financial footing since then and its bond rating has improved markedly, but not without having to raise taxes, trim 25 percent of the municipal workforce, cut back on paving projects, and reduce hours at municipal swimming pools and libraries. The 9.2 percent sales tax that shoppers and diners pay in Glendale is among the highest in the state.

To fiscal conservatives, Glendale serves as a cautionary tale for suburban cities across the United States that want to throw public money at professional sports projects.
As he navigates the financial situation, Glendale Mayor Jerry Weiers returns to a maxim he has repeated many times in his life: “I’m not living in the past. I’m just paying for it.”

In the case of the Super Bowl, he believes the city is paying dearly. He said Glendale will actually lose a “couple million dollars” by hosting the event. It’s spending huge amounts of money on overtime and police and public safety costs for the Super Bowl but not getting much back.

Friday, January 30, 2015

Florida Lawmakers Going to Do What Governor Scott Won't

I've spent the last week identifying hypocrisy and waste in the state's "new" stadium subsidy process, but it seems Florida's legislative leaders may actually do something about it.  Well, maybe...

According to the News Service of Florida, House Speaker Steve Crisafulli, R-Merritt Island, and Senate President Andy Gardiner, R-Orlando, "want a top state economist to rank four professional sports facilities that are seeking sales-tax dollars to help pay for construction projects."

In a written statement, Crisafulli expressed frustration that the state's Department of Economic Opportunity (DEO), under Governor Scott, didn't rank the projects this year, as expected. 

So while the governor - through lack of action - has indicated determining the projects' return on investment is not a priority, it's a good thing for taxpayers the legislature seems interested in the exercise.

Previous coverage:1/29/15 - Gov. Scott stumbles through stadium questions again
1/28/15 - Stadium bill also makes it easier for spring training teams to leave
1/28/15 - Campaign contributions fuel pro teams' incentives
1/27/15 - Group want to end tax help for pro stadiums
1/26/15 - Fla's "new" stadium subsidy process is no improvement so far
1/25/15 - Teams renovate stadiums even after getting rejected for tax $$
1/22/15 - Gov. Scott's non-answer answers on stadium subsidies

Manfred Says Rays-to-Montreal Rumors Blown Out of Proportion

According to Tampa Tribune sportswriter Roger Mooney, MLB Commissioner Rob Manfred pointed out today exactly what I said yesterday: the Trib's Thursday fearmongering headline was entirely out of context:
“Let me be clear about my comments about Montreal,” Manfred said, “I was asked about what I thought about the exhibition games that were played in Montreal. I did not raise Montreal at all and I certainly did not raise it in the context of talking about any franchise that was trying to get a stadium deal done. I want to be clear about that. What I said about Montreal, I said as a general comment that I think it is good for the game when you have cities that don’t have baseball that demonstrate their interest in the game by doing things like selling 90,000 tickets to two exhibition games. It is an indication of the overall health of the sport. That’s all I said. Nothing more, nothing less.”
Manfred's comments - which included “I think with the right facility Tampa Bay can be a vibrant major league market,” were repeated to the Tampa Bay Times as well.  He added that he was "encouraged" by Rays owner Stu Sternberg's optimism about Tampa Bay.

ALSO SEE: Trib Says, "Economists Be Damned!"

The Trib recap adds this Manfred quote:
“I would say a couple of things: First of all I think it is really important that Tampa Bay get a new facility. When you look around the major leagues with all the world class facilities that have been built in recent years, I think it’s really important for the Rays to get that type of facility, point one. Point two, stadium development efforts are primarily driven by the desires of local ownership, in this case, Mr. Sternberg. My conversations with Stu have left me with a firm understanding that he wants to get something done in Tampa. Tampa is where he wants to be. I’m supportive, really supportive of his efforts and will do whatever I can assist him going forward.”
Same song, different verse.

 

Thursday, January 29, 2015

Trib Says, "Economists Be Damned! Don't Tax Sports Because People Like Them!"

Not to be lost in their crazy headline this morning, the Tampa Tribune also added an editorial that misses the mark on the very incentives I've been reporting on for the last week.

The editorial board's basic logic: Florida should throw more millions at professional teams because lots of fans attend games and Super Bowls are nice.

So far this week, I've reported how Florida's new stadium subsidy "competition" was no competition; much of the "new" tax revenue three stadium renovation projects will "create" are simply from higher ticket prices and inflation; and the politicians behind the controversial law got big-time campaign checks from the organizations that benefited.

Clearly the Trib editorial board wasn't paying attention, because it uses flawed logic to support subsidies that state economists just panned.  In fact, the editorial suggests lawmakers should ignore state economists because “millions of people across the country were introduced to the Sunshine State through the annual baseball ritual in cities from Miami to Tampa, and from St. Petersburg to Vero Beach."

First of all, the editorial board is confusing spring training stadium subsidies with those for year-round facilities like the Dolphins’ Sun Life Stadium and the Jaguars’ EverBank Field.   Those stadiums don't draw many out-of-state visitors and they're already collecting $2 million a year each from the state.  They're now asking for more ($90 million and $30 million, respectively, over the next 30 years).

Furthermore, the state economists that the Trib questions actually supported spring training subsidies, indicating they were the only sports incentives that had a positive return on investment for Florida taxpayers.

Second of all, the editorial board probably didn't even read the sports subsidy bill its endorsing for a second time.  If it had, the board would have found the same thing Senate staffers warned last year: a clause in the bill could cost Floridians some of the benefit from the very same spring training economic boom the Trib heralded.

Third of all, the editorial opines, "the state settled on an equitable process for awarding money to professional sports franchises."  How did the paper miss the fact that the "equitable process" was a joke this year??

Fourth of all, the editorial fails to make a convincing case why the state should go ahead and give the sought-after sales tax rebates to the four organizations that have already started their construction projects anyway.  We all know sports teams/leagues get wealthier with every new TV deal and "because they draw tourists" is not enough reason to dole out state tax dollars.  In fact, if they were, we'd be paying a helluva lot more to the good folks at Disney and Busch Gardens.

Finally, the Trib's last argument for awarding pro teams tax dollars is "intangibles," like "exposure...to Canadian audiences" during Lightning games and other "major media markets" during Rays games.

For what it's worth, the nation's top tourist destination is Orlando - home to just one pro team, and lots of other tourist attractions that routinely expand and renovate without handouts from the state.

Tampa Tribune Takes Embarrassing Turn on Fearmonger Train

The editors* of the Tampa Tribune should be ashamed of themselves.
*If there is even more than one editor left there.

The paper took a perfectly reasonable Chris O'Donnell article that adds a little context to MLB's Montreal fears...and turned it into a "click-bait"-type of headline that unnecessarily adds to the fearmongering:
This isn't a service to readers; it's an intentional distortion of facts to sell newspapers...as well as push the paper's editorial agenda of pressuring the City of St. Pete to back off its contract with the Rays*.
*It's not the first time

As I pointed out earlier in the week, all new MLB Commissioner Rob Manfred did was respond to a question about Montreal's viability with an open-ended, "sure it could work again."  That means the new guy was merely to keep the league's leverage in-tact as MLB supports the Rays' campaign for a new Tampa Bay stadium.  Most of the insiders interviewed in the Trib's story even acknowledge this!

In fact, the only person quoted in the O'Donnell's Trib article who thought the Montreal threats were viable was Hillsborough Co. Commissioner Ken Hagan, who also once claimed a single college football game could create 1,700 jobs in Tampa Bay.

Compare the article's print headline to its online counterpart:
The caption even notes the commissioner only said a few "nice things" about Montreal*.
*The editors/editor at TBO.com also missed a glaring typo

I get that those of us who live in glass houses shouldn't throw stones.  I get that we should we be just as disappointed in MLB for pitting one city against another, and for penalizing Tampa Bay for its bad business decisions of the past.

But Trib & Trib readers: don't believe the hype - I've written countless times about Montreal's longshot bid - Tampa Bay is still a lot closer to building a new Rays stadium than anyone else.

ALSO SEE: Three things the Stadium Saga needs in 2015

Gov. Scott Stumbles Through More Stadium Questions

Governor Rick Scott said Wednesday he would leave the stadium subsidy debate up to the legislature following the executive branch's decision not to rank the four applications, as expected.  {Here's the video}
 
A 2014 law (SB 1216) created a process designed to reduce lobbying and legislative influence on stadium subsidies, but the governor's Department of Economic Opportunity (DEO) merely deemed all recently-submitted applications as "complete," and forwarded the four requests along to the Joint Legislative Budget Commission to make allocation decisions.
 
"The Department of Economic Opportunity put out there announcements yesterday," Scott said. "They put out what they were required to do. I think you probably saw the announcements they put out about what they should be doing; that's what they did."

10 News has investigated questionable claims about return on investment from the four organizations seeking incentives from state taxpayers. In the last two decades, the state has paid $300 million to help fund eight stadiums. The majority of teams that play in those stadiums are owned by billionaires.

Scott, who was once an investor in the Texas Rangers, has been supportive of pro teams and stadium-building. He was reported to have gotten very involved in the legislative debate in 2013, supporting the Miami Dolphins' bid for state tax dollars.

But just as he did earlier this month, Scott offered very little public insight as to where he stands on the issue, or what he is doing to ensure return on investment for Floridians.  Scott said Wednesday he'd "continue to wait for the legislature" to make the tough decisions on sports incentives.

10 Investigates' reported Monday how tax dollars to pro teams are likely to grow significantly this year. And on Tuesday, 10 Investigates detailed the significant campaign contributions the governor and other influential politicians received from the teams that benefited from last year's stadium incentive bill.

The DEO validated the four applications from the Jacksonville Jaguars, Miami Dolphins, Orlando City Soccer, and Daytona International Speedway. This year, the legislature can allocate up to $7 million per year in each of the next 30 years to the applicants; in 2016, another $6 million per year (for 30 years) will be available.

One of the co-chairs of the Joint Legislative Budget Commission, Rep. Richard Corcoran, R-Lutz, said Wednesday he is personally "dead-set against" providing tax dollars to professional teams and leagues. But Corcoran, expected to be House Speaker in 2017-2018, said the issue would be hotly-debated since stadium spending has been "near and dear" to the heart of Senate President Andy Gardiner, R-Orlando.
 
Previous coverage:
1/28/15 - Stadium bill also makes it easier for spring training teams to leave
1/28/15 - Campaign contributions fuel pro teams' incentives
1/27/15 - Group want to end tax help for pro stadiums
1/26/15 - Fla's "new" stadium subsidy process is same as old, except more tax dollars awarded
1/25/15 - Teams renovate stadiums anyway, even when they don't get state tax dollars
1/22/15 - Gov. Scott's non-answer answers on stadium subsidies

Wednesday, January 28, 2015

Florida Lawmakers Increased Stadium Handouts Even as State Economists, Budget Experts Caution Against It

My latest for WTSP-TV goes a little more in-depth into what I first reported last April: Florida lawmakers made it easier for Grapefruit League teams to break their agreements with local cities and counties.

Governor Scott - and most House and Senate members - signed off on last year's stadium bill (SB 1216) despite the Senate's own Commerce & Tourism staff warning it would have an "indeterminate negative fiscal impact" on spring training economics.  Spring training support just happens to be the only sports incentive that state economists concluded had a positive return on investment.

In 2014, the Senate committee's fiscal analysis warned changing the rules on spring training subsidies would make it easier for professional teams to collect tax dollars, as well as allow them to more-frequently come back to the table to ask for more money.

The analysis also points out SB 1216 makes it easier for Grapefruit League teams to break their leases by limiting the damages they'd have to pay to leave.

Nevertheless, the bill was signed into law last summer.
 
Senator Jack Latvala, the sponsor of SB 1216, told me he stands by the need to incentivize pro stadium projects, but ended the interview abruptly after four questions.
 
Previous coverage:
1/28/15 - Campaign contributions fuel pro teams' incentives
1/27/15 - Group want to end tax help for pro stadiums
1/26/15 - Fla's "new" stadium subsidy process is same as old, except more tax dollars awarded
1/25/15 - Teams renovate stadiums anyway, even when they don't get state tax dollars
1/22/15 - Gov. Scott's non-answer answers on stadium subsidies

The Money That Flows From Pro Teams to Lawmakers is Typically Returned Through Tax Handouts

My latest for WTSP looks at the lawmakers expected to issue new tax incentives to pro sports teams, despite criticism of the incentives from the state's official economists.  I've spent the last week reporting on the questionable stadium spending and dubious claims by those looking for it.

Tuesday - Group want to end tax help for pro stadiums
Monday - Florida's "new" stadium subsidy process is just like the old one...with more dough
Sunday - Teams renovate stadiums anyway, even when they fail to get state tax dollars
Last Week - Gov. Scott dodges questions about stadium subsidies

Today, I look at the campaign spending from the sports organizations that benefited from last year's stadium bill (SB 1216), and the hundreds of thousands of dollars in influential contributions they've made recently to the state's most powerful politicians.

One of the biggest recipients of sports contributions is State Sen. Jack Latvala, who wrote last year's stadium bill that increases the amount of money available to professional stadium projects. 10 Investigates reported in May how Tampa Bay Rowdies owner Bill Edwards gave $100,000 to Latvala's political action committee, the Florida Leadership Fund, following passage of SB 1216. The law made the Rowdies -- along with MLS soccer teams and NASCAR facilities -- eligible for state stadium subsidies for the first time.

But after he got his bill passed, Latvala also collected contributions from the Jacksonville Jaguars, Miami Dolphins, and Daytona-based International Speedway Corporation (ISC). All three organizations stood to benefit from the law's passage, as 2015 subsidy applicants are now close to collecting a total of $210 million in tax commitments over the next 30 years. The new MLS team in Orlando is also campaigning for a share of the money.

In addition to Edwards' money, Latvala's PAC also received $20,000 from the Dolphins, $5,000 from the Jaguars, and $5,000 from ISC. The Tampa Bay Rays haven't yet applied for new state funds, but they contributed to $15,000 to the PAC.

In the last three years, the Jaguars also gave more than $20,000 to the Republican Party of Florida (RPOF), which can then spend the money on any candidates it chooses with very limited disclosures.

The Dolphins gave more than $328,000 to state-level candidates and committees in the last three years, including $50,000 each to the Florida Democratic Party (FDP).

Most of the International Speedway Corporation's $224,112 in contributions since 2012 went to the RPOF. There were also numerous contributions from the company's subsidiaries and executives, including CEO Lesa France Kennedy, who gave $47,500 to the RPOF and $25,000 to Rick Scott's "Let's Get to Work" committee over the past three years.

The Orlando City Lions -- and co-owner Phil Rawlins -- have also contributed to Republican leaders. And the Rowdies' Edwards contributed more than $300,000 to Scott and the RPOF in addition to his contributions to Latvala's committee.

DONATION LOOKUP: Political donations from local teams, athletes, owners

Lobbying expenditures have also mounted for the teams seeking state subsidies, led by the International Speedway Corporation, which has spent approximately $487,000 lobbying the legislature the last three years. According to state filings, which give ranges on executive lobbying, ISC spent between $327,000 and $476,000 more lobbying the executive branch since 2012.

Other lobbying expenditures since 2012 include: the Jaguars (between $100,000 and $200,000); Orlando City Soccer (between $235,000 and $345,000); and the Miami Dolphins (between $170,000 and $240,000). All figures are according to estimates found in state filings.

Rays Rumors Quietly Percolate...

There have been a few Rays developments non-developments in the last few days:
  1. WTVT reports the Rays are talking with the City of St. Pete again.  We've heard this one before - don't expect any overnight solution.  The Rays are still 13 years from the end of their contract, so they may have to work a bit to get out of it.
  2. Meanwhile, Charlie Frago reports councilmember Jim Kennedy plans on asking some difficult questions of the team before he votes to let them go.
  3. The Tampa Bay Times reports Hillsborough County quietly hired a law firm tied to former MLB President Bob DuPay - the issue skirted under scrutiny on a consent agenda item in October.
  4. ESPN lays out MLB commissioner Rob Manfred's top-five priorities upon taking office...and the Rays are not among them.  But interestingly enough, unifying the league's business operations is.  Could this mean more revenue sharing, as I've previously suggested?
  5. But Marc Topkin reports Manfred said on Sirius/XM that he'd be a resource to Rays' ownership.  However, "stadium construction is fundamentally a local issue - the owner, the local government, the local communities have to be committed to the project."
  6. Yet, as just about everyone is reporting, Manfred is still keeping the door open to Montreal, saying "it's possible...with the right set of circumstances and the right facility."  So basically, Montreal is still half a billion dollars away from it.  Manfred added nothing is imminent, but of course, he's got to keep the hopes up - how else could he "help" Tampa Bay ownership if he didn't retain the right to fearmonger and threatmonger, Bud Selig-style?

Tuesday, January 27, 2015

Are Florida stadium subsidies just "forced taxpayer handouts?"

The morning after we put out our third stadium subsidy story on WTSP in a week, conservative group Americans for Prosperity is calling on the Republican-led legislature to end the "forced taxpayer handouts" to pro sports teams.

The group issued a statement that read, in part, "This whole debacle really shows that when millions of dollars are on the table, special interests will find a way to get a hold of the money. It would have been good for the DEO to at least evaluate the applicants this year, but it would be even better for the legislature to end the corporate welfare and instead allow Floridians to individually decide which sports facilities to support via their ticket purchases and investments."

Just to recap, our investigation revealed:
  • Florida's new stadium subsidy "competition" is no different than the old incentives, except way more money will be doled out;
  • The process was designed to reduce lobbying in the state capital, but will likely increase it, at least this year;
  • Much of the "new" tax revenue the renovations will create are from higher ticket prices & inflation, not new visitors to Florida;
  • The law was written in a sneaky way so that the Miami Dolphins & Daytona International Speedway aren't required to show their tax receipts will actually increase with the renovations;
  • Daytona and the Dolphins want to use state money to reduce their facilities' capacities;
  • State Sen. Latvala received more than $120k from the teams and owners that benefited from his 2014 stadium bill.
ALSO SEE: Teams' claims about tax dollars unfounded
ALSO SEE: Gov. Scott dodges questions about stadium subsidies

The Associated Press reports: "(Latvala said) legislators assumed the $7 million they set aside would cover everybody that wanted help."

So it sounds like the first year was supposed to be $7 million in assumed handouts - not the search for projects with positive "return on investment" as we were told.  Maybe we'll get a "competition" next year when there's $6 million more in annuities available.

Americans for Prosperity railed against film subsidies too {INFOGRAPHIC}, and their statement is amazing.  Read it all here, but here's a small snippet:

"Because some lawmakers were misled by Hollywood lobbyists promising massive economic growth, illustrious films and shows like Spring Breakers, Magic Mike, What would Ryan Lochte Do?, and even a Victoria’s Secret commercial were approved to receive millions in corporate welfare...It’s time to end Hollywood’s B-rated cronyism drama in Tallahassee. No more handouts for special interests.”