Wednesday, November 3, 2010

Did Mesa voters get the stop wasteful spending message on election day?
By Evan Weiner
November 3, 2010
(New York, N. Y.) -- In the so-called Republican 2010 electoral wave that the cable TV news talking heads and the radio noisemakers spew out over sometimes static signals, the lathered up carnival barkers on both platforms are screaming that the voters have spoken and they want less government, particularly in places like Arizona where Republicans won. But something funny happened in Arizona, specifically Mesa that the carnival barkers are not talking about. Local voters decided they wanted bigger government and were pro-government spending as they approved a measure that allows the city to spend up to $99 million to help build a new spring training facility for Major League Baseball’s Chicago Cubs.

Try figuring out what voters really want is tough. They want lower taxes yet won’t give up services and programs and sports. Arizona voters, at least in Mesa, are hypocrites.

The Mesa government claims no taxpayers money will be used in building the stadium. Talk about voodoo economics, someone has to foot the bill for the stadium. Apparently Mesa plans to sell off some farmland that the city owns to Pinal County to provide land for the stadium to help pay for the stadium. Chicago ownership apparently will put up some money for the stadium thorough rent and pay for cost overruns if the price of the stadium exceeds $84 million. Mesa will put up $15 million for infrastructure. The team ownership plans to build a “stadium-village” complete with retail space surrounding the new stadium.

The “stadium-village” concept has not really worked in St. Louis even before the 2008 economic crash. Will it work in the Valley of the Sun? It hasn’t in nearby Glendale with a new football stadium and arena.

Arizona is selling off state buildings yet there seems to be money available for a stadium in Mesa and Glendale is putting up about $25 million to keep the National Hockey League’s Phoenix Coyotes solvent in 2010-11

When it comes to sports, Arizona features the dumbest politicians in the country when it comes to sports spending.

Mesa just keeps the tradition going. When in doubt, spend on sports.

Had the Phoenix city council been smart, which they were not, they would have approved a multi-purpose arena back in the late 1980s that would have accommodated the NBA's Phoenix Suns and an NHL team. Instead lawmakers approved a $90 million expenditure that was designed to appease Suns owner Jerry Colangelo. The arena was built in such a way that the building was only good for basketball and not hockey or Arena Football or indoor soccer and that severely limited the potential revenues that could be generated in the place. Making sure they further satisfied Colangelo, the terms of the lease between the city and the NBA team required that the franchise pay the bulk of lease payments in years 36-40 of the 40-year lease agreement. The real rent is supposed to kick in around 2028 but given the lifespan of facilities (the Miami Arena was viable for about 11 years, the Charlotte Coliseum for about 13), it is doubtful that the team will even be playing in the arena in 2028 or 2029.
The arena opened in 1992. In 2003, the city kicked in another $17 million to modernize the place when a second Valley of the Sun indoor athletic facility opened in Glendale, which is west of downtown Phoenix.
After taking care of Colangelo, Phoenix planners decided that a new downtown could be built with the arena and a baseball park as anchors so Phoenix politicians went about the task of getting a referendum in front of the public asking for support to build a ballpark for a Major League baseball team.
Over in Tempe, Phoenix/Arizona Cardinals owner Bill Bidwill, who came to the Valley of the Sun with his St. Louis Cardinals football team in 1988, wasn't too happy with his stadium in Tempe. Bidwill started to shop around looking for an Arizona community that wanted his team and was willing to build a stadium that the public would fund and put most of the stadium revenues in Bidwill's pocket. It took 12 years for Bidwill to find the right partner — Glendale — as votes in 2000 said yes to putting up $300 million of the estimated $465 million dollars needed to build a stadium. The money would come from a rise in the hotel/motel tax and car rentals (that is a mechanism designed to placate the locals, out of towners will pay, you won't, however most of the money on the car rental side comes from locals who rent cars more than visitors), Bidwill would recoup the $165 million through stadium naming rights and through a loophole in the 1986 Federal Tax Act which limits the money a municipality can take from stadium generator revenues to eight cents on a dollar.
Mesa said no to Bidwill in 1999.
Colangelo spearheaded the baseball stadium drive. He wanted a Major League Baseball team and went back to Phoenix-area politicians to make his pitch. They listened again.
In 1994, the Maricopa County Board of Supervisors (despite huge budget deficits and cutbacks in the funding of services) said yes to Colangelo and gave the go ahead for a quarter-cent increase in the county sales tax to pay for a part of the stadium's cost. There was a string attached, the approval had to come by March 31, 1995 which meant Major League Baseball had to either relocate a team to Phoenix (unlikely as there was nowhere to play in Phoenix) or expand. MLB awarded Phoenix and St. Petersburg teams beginning in 1998 when the Phoenix stadium would be completed.
The Maricopa sales tax hike was a problem. Maricopa County residents were not allowed to vote on the issue of funding a baseball stadium with general sales tax revenue. In August 1997, Maricopa County Supervisor Mary Rose Wilcox was shot by Larry Naman after leaving a county board meeting. The shooter testified in court that Wilcox's support for the tax justified the attack. In May 1998, Naman was found guilty of attempted first-degree murder.
Colangelo had his stadium whether Maricopa County residents liked it or not. Colangelo's stadium was supposed to have cost $279 million but the ballpark actually price tag was over $350 million and Colangelo's group had to make up the difference. Colangelo's group paid $130 million for the expansion team, there was the cost overruns and a high payroll and throw in the fact that Major League Baseball didn't give Arizona and Tampa Bay full revenue sharing between 1998 and 2002, and that nearly caused the team to declare bankruptcy by 2004.
While Colangelo was looking for a baseball team, he also wanted a National Hockey League team to take up dates in the city's new arena. In 1994, Colangelo told this reporter that Phoenix was a perfect spot for the NHL. The NHL needed to fill the Mountain Time zone for TV purposes and Phoenix and Denver were in the mix for NHL franchises.
Colangelo, who was not a hockey guy, was spot on. Denver investors bought the Quebec Nordiques in 1995 and moved the team to the Colorado city and Richard Burke put together a group that included Steven Gluckstern and bought the Winnipeg Jets. Burke and Gluckstern moved the team to Colangelo's building in 1996 and that is when trouble started.
The building approved by Phoenix politicians in 1988 had more than 3,000 view-obstructed seats or about 25 percent of the house. No NHL team can survive in a flawed arena even if the building was just four years old. Burke bought out Gluckstern in 1998 after Gluckstern teamed up with Howard Milstein to buy the New York islanders (in a real estate deal).
In 1999, Burke was hoping to move the team to Scottsdale. Bidwill had struck out in his bid to win voter approval for a $1.8 billion football stadium-village on May 18 of that year but Burke had won a preliminary vote on that date for a new arena with the help of Steve Ellman.
Burke got his arena project approved by Scottsdale voters in November 1999 but the arena was never built. Ellman bought the Coyotes in 2001 after the Scottsdale deal fell through. Ellman worked out an arena-land developing deal with Glendale officials in 2001 and moved his Coyotes to a new arena in 2003. Glendale paid $180 million for the building, Ellman did some developing but the real estate deal turned bad and the NHL now owns the team. Glendale could be kicking in as much as $25 million to keep the team going in 2010-11
Glendale is working with a group called Ice Edge Holdings to keep the team in the arena and create a tax district around the building to help stabilize the Coyotes bleak financial picture. The entertainment district might be opposed by Bidwill whose business is across the street from the rink. If the team is not sold by the end of the year to a local group who plans to stay in Glendale, the NHL will allow the franchise to relocate.
Meanwhile Glendale has another problem. The Arizona Stadium and Tourism Authority (AZSTA) is broke. That is the group that has raised funds for the Cardinals Glendale stadium and various Major League Spring Training ballparks that ring the Valley of the Sun. Hotel/motel and car rental taxes (which is 3.25 percent) from tourists that fund the authority are flat.
Arizona public officials decided in the 1990s to become a sports destination. Spring Training would be a big money maker for Arizona as baseball fans would flock to see their favorite teams in March of every year. The authority took in $34 million last year and has $37 million in expenses, $16 million of which goes to the Cardinals football stadium. Surprise (Kansas City and Texas), Scottsdale (San Francisco) and Tempe (Los Angeles Angels of Anaheim) will be getting less money to pay the bills at three spring training facilities. Youth sports will take a million dollar or so hit.
All of this is a product of Proposition 302 that was approved by Maricopa County residents 10 years ago.
The Maricopa County Stadium District and the Arizona Stadium and Tourism Authority are responsible for stadiums around Phoenix. The stadium district was formed in 1991 to make sure Phoenix area-based spring training teams were not lured by Las Vegas.
How expensive is spring training?
The Los Angeles Dodgers now share a new $110 million stadium in Glendale with the Chicago White Sox, who moved from Tucson. Glendale is providing $54 million in financing for the stadium.
Scottsdale and the stadium authorities put together a $23 million package to refurbish Scottsdale Stadium to make the San Francisco Giants ownership happy. About $13.3 million is from the AZSTA funds, $6.67 million from the Maricopa Stadium District, and $3.1 million from the city.
Arizona officials contend that the 2010 spring training slate had an economic impact of $348 million yet there is a deficit.
All of the maneuvering has left an impression. The baseball landscape has changed with all 15 Major League Baseball teams that train in Arizona are located around Phoenix. Tucson has lost three teams (the White Sox, Colorado Rockies and the Diamondbacks). The arena in Phoenix has to fight Glendale for non basketball events. Glendale, not Phoenix or Tempe has the Super Bowl and while Phoenix gets a piece of the event buck, it is Glendale that gets sports spending money from those crown jewel events. The downtown envisioned with the arena and stadium as the pillars of a new downtown Phoenix has not materialized.
The question of whether it was worth spending billions in a state that is broke is never addressed by politicians. Arizona is selling off state buildings to plug a financial gap which in part was caused by poor sports decisions on every level.
They could have said no to Colangelo. They could have said no to Bidwill. They could have said no to the NHL. They could have said no to Major League Baseball. Don't blame the owners for asking for money, they could have asked for whatever they wanted.
There was an awful lot of economic miscalculation when it came to sports planning in Arizona and the battle is far from over. Mesa will more than likely hold onto the Chicago Cubs, the franchise that allegedly is the economic engine of the Cactus League. The next team that needs a spring training stadium upgrade is Milwaukee. The Milwaukee Brewers ownership could be looking to exit Maryvale.

Americans want politicians to cut government spending but not sports spending. It is clear that government has overspent on building sports facilities which has raised taxes in subtle ways – a rise in hotel, motel, car rental, sewer and water taxes along with programs such as payment in lieu of taxes and tax increment funding and just straight cash payments (such as in Louisiana) to a team owner (Tom Benson of the New Orleans Saints). All Americans are paying substantially for sports but there is no move to cut sports programs. Just look at Mesa. All Americans are paying substantially for sports but they is no move to cut sports programs. Just look at Mesa.

Evan Weiner is the winner of the United States Sports Academy’s 2010 Ronald Reagan Media Award, an author, radio-TV commentator and speaker on "The Politics of Sports Business." He can be reached at

No comments: