Will Fish go for the stadiums deal?
I remember when Nick Fish ran for Portland City Council in 2004. He had the election won, but after he landed a couple of big endorsements, he got complacent, and he let Sam the Tram Adams team up with Opie Sten and steal the seat away from him. Next thing you knew, the Tramster was mayor.
One of the memories from the 2004 race is Fish's television ad. He was shown standing in front of PGE Park, complaining to the camera that the extremely expensive renovation of that stadium for minor league baseball, undertaken with borrowed money at taxpayer risk and expense, was wasteful. If elected, he said, he would not let boondoggles like that one happen again.
It looks as though we'll get a chance to see whether he was telling the truth or not. As reported here yesterday, his colleagues on the present council, especially Sam and Fireman Randy, are getting ready to borrow tens of millions of dollars -- $75 million is the figure they're currently throwing around, in the first, "liars' budget" stage of the planning -- to redo PGE Park yet again. This time, it would accommodate professional soccer. The borrowed money would also be used to build a new stadium for professional minor league baseball in Lents Park, all at the behest of Merritt Paulson, the zillionaire son of Bush's Treasury secretary, who showed up out of nowhere with a fat wallet and bought the local soccer and minor league baseball teams around 16 months ago.
It's insanity. At last report, the city still owed something like $29 million on bonds issued from the last PGE Park renovation, in 2001, and a cloud has been cast over its ability to repay them partly out of county car rental taxes, which was the original promise to the lenders. As discussed here, state attorneys have questioned whether it is legally permissible to repay the bonds out of those fees. If it turns out it isn't, the city will have to find some other source of repayment -- most likely property taxes. The bonds bear interest at rates ranging from 6.5 percent to 7 percent a year; about half the $29 million of existing debt will be hanging around until 2018, and the whole bond issue won't be paid off until 2021.
In pitching the latest idea, Fireman Randy has declared that the city can just go to the bottomless well of municipal debt for the money to fix up and build the stadium for the private soccer and baseball teams:
Mayor-elect Sam Adams, currently a city commissioner, has said he won't support dipping into Portland's basic operating budget to pay for either soccer or baseball. But he and Leonard -- who's taking the lead on the issue with Adams' blessing -- have said they'd be willing to use the city's stellar credit rating to borrow the money for construction.The whole "stellar credit rating" assertion is puzzling to me, and it's a shame (but not surprising) that the O would report it as fact. The city's credit rating is certainly good, maybe even very good, but it is not excellent.
The city lists the ratings of all of its bonds here. It has about $100 million of "Aaa" bonds outstanding -- that's the highest rating. But that's $100 million out of nearly $3 billion in outstanding debt (not counting unfunded police and fire pension liability, another $2 billion). All the other bond issues of the City of Portland carry lower ratings. The old PGE Park bonds have a rating of Aa1, which would be very good but not excellent. Some of the city's recent "urban renewal" bonds are at the Aa3 level, which is the low end of very good; other "urban renewal" bonds come in at A3, which would be considered good but not very good. Some of the city's bonds would have even lower ratings were it not for bond insurance, which used to guarantee an Aaa rating but now gets you up only to an Aa3, which is very good bordering on good.
The city's credit rating certainly does not allow it to borrow at low interest rates. Most recently, when the city has borrowed money for various "urban renewal" schemes, it has paid interest rates of about 6 percent. It seems highly likely that any bonds issued for new pro sports stadium projects would require the city to pay interest of about that amount. Six percent of $75 million is $4.5 million. That's a lot of money, and it's just the interest for one year.
Especially when you think that a large chunk of the debt is going to make PGE Park a soccer venue. That game is gaining in popularity, but it is no means a sure thing that a Portland franchise will necessarily succeed. Indeed, it is not a safe bet that the entire league won't go under at some point long before any new bonds were paid off.
"Major league soccer," although sounding like a contradiction in terms to some of us, is no doubt a worthy thing. And the city should let the team's owner renovate PGE and build the Beavers another stadium somewhere if he has the desire and the wherewithal to do so. But not with public money. And not in a public park.
I've already speculated here that Fish has been sucked into the craziness that permeates Portland City Hall these days. If he votes for this proposal, that will be confirmed beyond a doubt.
UPDATE, 2:44 p.m.: Dwight Jaynes gives his usual thoughtful and well informed take on the proposal here.
| Posted at 4:27 AM | Permalink |
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Comments (29)
USA Major League Soccer - Unofficial Average Attendance: 16,267
Assume 36 games a season (30 regular season + 6 exhibition/playoffs).
That means each spectator must generate $7.75 of operating income to support the bond payment.
"Welcome to Fog Cutter Field - Home of the $10 beer"
Posted by Garage Wine | September 4, 2008 6:19 AM
Better check the math ... only half of the regular-season games will be at home. Have to order that second $10 beer, I guess.
Posted by Al in SE | September 4, 2008 7:03 AM
Thanks, Al. Now I'm ready to work for the City.
Posted by Garage Wine | September 4, 2008 7:06 AM
He'll roll over - You know how it is over there, you want some money for your project, then you support my project.
Since the business end of Sam's leash looks like its being held by Randy get used to it.
Posted by Steve | September 4, 2008 7:40 AM
The neighborhood committee meeting in Lents regarding the Lents Park piece of this proposal will be held tonight from 6:00 - 7:30 p.m. at the Wattles Boys and Girls Club, 9330 SE Harold.
Posted by Ms. Contrarian | September 4, 2008 8:12 AM
Maybe I'm confused, but doesn't PGE Park ALREADY host soccer games? I've been to PGE Park for Timbers soccer - and although I bought my ticket the day of, and showed up late, there weren't enough people to make finding a good seat difficult.
If another (?) soccer team wants to use the Park, and they can fill it up to capacity and demonstrate a need for a larger facility, I'll sign off on the investment. When the existing teams can't fill the existing stadium, that's not the time to build a new one.
"If you build it, they will come" only works in the movies.
Posted by Chris Coyle | September 4, 2008 8:16 AM
Hey, how easy would it be to require the city to do an environmental impact statement on the proposed new Lents stadium? It sounds like it would increase car traffic and dreaded CO2 emissions. Funny how city fathers are willing to go in hoc for a facility which will increase dreaded CO2 emissions but at the sametime it can't support more lanes on the Columbia River Crossing project because of its perceived CO2 impact.
Another ridiculous thing is this political process of using selective towhhall meetings, where the relatively few folks showing up are mostly those who stand to gain plus city government staff. Most in attendance show support for whatever government-handout-project being proposed, and the local media and cityhall say in effect, see there is overwhelming support for this such and such project. All I know is most taxpaying residents are definitely on the short end of the stick in this insane town.
Posted by Bob Clark | September 4, 2008 9:20 AM
Thank you for your interest. I would, in addition, like around $70 million to construct a cricket pitch in another of your lovely parks, to seat 40,000.
And a personal tram from my Lake Oswego home (low taxes!) to all of my new venues.
Thank you Sam, Randy, and Pottie, and Vera by default.
Posted by Thurston Merritt Paulson III | September 4, 2008 9:23 AM
Sorry folks, but Soccer is only "Major League" in the eyes of it's promoters. In the past, these leagues have failed financially and there is no guarantee it won't happen again.
It would also be enlightening to see what sort of attendance figures the Los Angeles MLS Team has vs. the L.A. Dodgers. Especially since they paid a tidy fortune to get David Beckham to play in the states.
Posted by Dave A. | September 4, 2008 9:32 AM
@ Dave
Total payroll in 2008
LA Dodgers: $118 million
LA Galaxy: $9 million (Beckham earns $6.5 million -- meager by MLS standards. Most of his money comes from endorsements.)
Average Attendance
LA Dodgers: 45,329
LA Galaxy: 25,075
So while the Dodgers draw almost double the attendance, their salary costs are more than ten times that of the Galaxy. MLS has a very low salary cap so the costs to owners (after the expansion fee) are much lower than they are in other sports in the US.
Posted by Peter | September 4, 2008 9:44 AM
The Dodgers have more than ten times the attendance:
Dodgers with 81 home games @45,329 per game:
3,671,649 annually.
Galaxy with 14 home games at 25,075 per game:
351,050 annually.
Posted by Gen. Ambrose Burnside, Ret. | September 4, 2008 10:35 AM
Peter:
One last item. Los Angeles is one of the largest cities in the USA. Given that Portland Timbers attendance numbers is about 5,000 or less; what makes anyone think they will be much better if an MLS team comes to Portland?
Posted by Dave A. | September 4, 2008 10:59 AM
My jaw will drop if he votes against it, since I've viewed his appeals to the long-term interests of the common man as pretense all along.
Posted by Cynthia | September 4, 2008 11:15 AM
Dave:
The Timbers are averaging 8,200 this season. Will this go up with an MLS team? Undoubtedly. MLS has national television exposure, better marketing and better players. The current Timbers operate in a league that is obscure even by US soccer standards. Their marketing budget is pitiful. The same attendance increase would happen if the Winterhawks were replaced by an NHL team or the Beavers were replaced by an MLB team. People want to see the top league. MLS is the top league in the US (while still far below leagues in Europe).
Also worth noting that Seattle's current USL team averages 2,500 per game. They have already sold 16,000 season tickets for their MLS team, which begins next season. Toronto averaged less than 2,000 for their USL team. Now that they have an MLS team they average around 20,000 per game.
Posted by Peter | September 4, 2008 11:20 AM
Sounds great. Let Paulson take it to his bank.
Posted by Jack Bog | September 4, 2008 11:25 AM
Chris,
Major League soccer has specific field dimensions that the current park cannot accommodate. Plus, MLS requires real grass fields, which is a FIFA requirement. USL soccer (the current Timbers league) allows artificial turf and narrow field dimensions. Portland used to host International friendlies, world cup qualifying games, and women’s world cup games. We lost these venues when the previous owner cared less about Soccer City USA.
Travis
Posted by Travis | September 4, 2008 12:45 PM
I am a life-long baseball fan ,
who often gets day-of-game calls
from friends to go to PGE for a ball game. As we are in many different parts of town , PGE is great in it's CENTRAL location.
We will NEVER go way out to Felony Flats [Lents] to get our cars broken into and have our ignition screw-drivered for joy rides. NEVER RANDY , NEVER.
Posted by billb | September 4, 2008 12:56 PM
Travis,
the field dimensions at PGE are fine, and besides the lines at PGE can be washed off and painted on to whatever size is needed if they are not. Also, Field Turf (which was just laid down at PGE before this season)IS sanctioned by FIFA. A handful of MLS stadia have artificial turf, but a couple of those are temporary. Grass is obviously preferred by any soccer fan, but it's not a problem for Portland. By 2011 new turf will probably be needed anyway, here's to real grass.
Pease man
Posted by Mike Sherwood | September 4, 2008 1:07 PM
"Major League soccer has specific field dimensions that the current park cannot accommodate. Plus, MLS requires real grass fields, which is a FIFA requirement."
c'mon, now you're just making things up.
firstly, MLS has no specific field dimensions, they use FIFA's regulation. FIFA laws of the game, law 1 - the field of play: 50-100yds wide by 100-130yds long. PGE Park dimensions during Women's World Cup (the only definite measure i could find online): 75yds by 120yds.
Again from law 1: "Matches may be played on natural or artificial surfaces, according to the rules of the competition."
New England (Gilette Stadium), New York (Giants Stadium), Toronto (BMO Field), Salt Lake (Rice-Eccles Stadium) all play on turf. they'll be joined next year by Seattle on the turf at Qwest Field.
I know you guys are looking for anything, anything to throw at this to make it look unworkable, but at least stick to facts.
Posted by wise | September 4, 2008 2:28 PM
I mispoke on that MLS requires grass but not so fast grasshopper.
FIFA changed the rule of the game in 2004 to allow artifial turf but the use of turf in international competition is still in the comment stage. FIFA recognizes that there have been advances in turf design; however, there remain restrictions on the use of artifical fields. FIFA recognized artifial turf “To encourage the use of artificial surfaces in climates where natural grass is not an economic or environmental option.” Yet, artifial turf still may not be used in final rounds of international competition. Each regional confederation may also limit qualifying matches to national fields that use natural grass instead of artifial grass. CONCACAF's standing competition and technical executive committees is still reviewing the use of artifical fields for qualification play.
Look at each of the international friendlies played in the US: they place down grass and sod over the turf (most recently Giants stadium against Argentina).
And regarding the women's world cup "measurements," that is because the city had to pay "a total of $250,000 to lay out new grass and other upgrades at PGE Park to make the facility ready for soccer."
BTW, do you know the gross economic benefit to Portland for hosting these women's soccer internationals? $10 million per game.
Posted by Travis | September 4, 2008 3:42 PM
Grass, no grass, who cares...you are talking about significant maintenance costs for a once-in-a-blue-moon international friendly match? When the US held the World Cup back in the day, they simply trucked in real grass for the few games in Portland and then tore it back up. Probably more cost efficient for such an infrequent occurrence.
Jack should hold a contest to see the creative (and productive) ideas we can come up with to better spend $75M of public funds. That's about $150 per citizen in Portland, by the way, and my vote is to just give it back to me.
Posted by Mike (the first one) | September 4, 2008 3:57 PM
If Fish votes to support any public bonds or public subsidy for this boondoggle, he's lost my vote forever. Adams and Leonard already lost my vote (and respect) in perpetuity.
Similarly, this issue will be my litmus test whether to vote for Fritz or Lewis for the November election. Anybody know where they stand?
There is no end to the hypocrisy: we can build a sports facility, a theater, or a floating boardwalk, but the City of Portland won't help pay for the Sellwood Bridge replacement...Because it's not their job.
But subsidizing sports venues and "iconic" transportation solutions is?
I honestly wonder if they aren't trying to run up the muni credit card in advance of the inevitable bankruptcy filing.
Posted by Mister Tee | September 4, 2008 4:40 PM
I'm with Mister Tee.
Posted by Max | September 4, 2008 4:44 PM
This is just a stupid proposal. Portland has already shown that it does not support baseball in what is a beautiful facility right near downtown.
Who the hell thinks things will be different in Lents?
Baseball is a "middle class" sport? Lents is a "middle class" area? Who does this guy think he's bulls****ing?
This ain't Boston. The folks out in Lents are working class, ethnic Russian and Ukranians, Latinos, Asians. Is there ANY evidence that they attend CURRENT games at PGE?
You think if you just plop a stadium out at Lents people will attend?
This is city boondoggle at its worst, and the economic facts against city funded sports stadiums are very bad.
Posted by john | September 4, 2008 6:55 PM
Right now, Jerry Jones, the owner of the Dallas Cowboys, is wanking about how he's owned the Cowboys for the last 20 years, and that he's finally worth about $1.5 billion. Amazingly, Jones decided that Texas Stadium wasn't enough for such a grand team, so he convinced the city of Arlington to pay for a new $1.1 billion stadium. In the process, no seats are actually going to be available to the general public because they're already reserved, and those seats start at about $100 per game. However, this is somehow going to be a boon to Arlington.
Once again, you ever notice how the people pushing the hardest to have a city pay for their indulgent projects always have the money to pay for it themselves?
Posted by Texas Triffid Ranch | September 4, 2008 8:43 PM
John, you're right, PGE is a beautiful facility-actually even more so than Fenway in Boston. And if you want to quibble, being at Fenway is an exciting experience in the dungeons under the seating above. The aisles, the concession courses in PGE Park are just as big (confining) as Fenway. That's what makes it all exciting. Accept PGE Park for what it is, with its history, and embellish the positives. Add some seats along and over the sidewalk to the east when the market justifies it. Make do with what yews got.
Posted by Lee | September 4, 2008 10:19 PM
If I lived outside the city of Portland, I would probably attend the PDX Bevo games because the Portland taxpayer is subsidizing the entertainment. But because I'm the taxpayer chump, I boycott most subsidized activities in the city like the Bevos hoping maybe if there are enough public failures, someday (hopefully before I die)PDX taxpaying citizens in frustration will take a chain saw to cityhall and cut it down to frugal size. Hey, Bob Dylan like: How many times must this taxpayer cry, until he is heard. The answer my friend is a very, very long time.
Posted by Bob Clark | September 4, 2008 10:27 PM
http://www.oregonlive.com/news/index.ssf/2008/09/portland_metro_area_is_billion.html
Lake Oswego can barely afford to replace their sewer main: they are facing a doubling of their sewer bills to pay off the bonds.
And Portland's deferred maintenance and avoidance of capital intensive infrastructure modernization are much worse than Lake Oswego's.
Sadly, $75 million is mere lunch money to the Adams/Leonard/Saltzman crowd: who cares when your spending OPM (other people's money), and you set them up on a 20 or 30 year installment plan? If you can't afford it, F*@cking Finance it!
Posted by Mister Tee | September 5, 2008 3:46 AM
Interesting - On page 6 of the disclosure document, it looks like every year they have from a $25M to $38M surplus. Yet we keep getting told there is no money for roads - ha ha.
Posted by Steve | September 5, 2008 1:11 PM