Jack,

One must wonder if the business plan for this deal was as clear or concise as your analysis. At some point someone down there has to agree that it does not pencil out, or show us how it does. Please.

Just another quick thought. There have been a lot of folks showing up to undress the mayor at council meetings for his personal issues. If the intent is to unseat the man maybe it's time folks show up on a regular basis to publicly expose all the failed (or doomed to fail) projects by the city. Your first few paragraphs here could be easily regurgitated in 3 minutes or less.

"the business plan for this deal"

The only thing I've seen is Paulson put together a 4-page puff piece. However, he did go on a date with Randy to MLS HQ in New York, so he knows what works with Randy. God knows what kind of promises Randy made that he has to play CYA now.

It's hard to tell what CoP has in cash. Last year, Adams said he had no cash and needed a new tax to raise $450M to fix roads. This year, for his economic revival plan, he has $500M in reserve accounts.

You are right, though, if you want to unseat Sam, you need to put together an encyclopedic list of all the fabublizing he has done. That really shouldn't be that hard once you start putting together things like the above and the Tram and his work for Vera on PGE Park.

Sociaopaths love to talk about themselves and accuracy is not really prime.

I'm assuming the plan is to pay this all off with urban renewal revenue from the broader UR district. That's why he's claiming it "won't cost the city anything" because people assume UR money comes from some magical spigot and isn't diverted from the general fund (it is).

This will all be moot when MLS grants franchises to Vancouver and Miami, which is what I am predicting.

The paragraph about 'other money' is the one that warrants further examination. Concession deals, TV deals, and to a lesser extent ticket taxes and rents...these are big cogs in whether a team is profitable in a location.

I have my doubts these are gonna make up the gap and get things in the black.

The paragraph about 'other money' is the one that warrants further examination. Concession deals, TV deals, and to a lesser extent ticket taxes and rents...these are big cogs in whether a team is profitable in a location.

There's also sponsorship/advertising revenue and stadium naming rights, which bring in a lot of money.

On top of which there will be many more events besides the 15 league games. You will have PSU football, international matches against touring teams from Europe (such as Chelsea, which is playing up at Seattle this year) and high school football. One would hope there would be playoff games on top of the regular season matches.

Moreover, there are international club tournaments that MLS teams are eligible to take part in. Participation in the CONCACAF tournament would mean a home-and-home series of games with a top-level Mexican club. (See where the tourists come from?)

And finally, there are further potential matches involving a Timbers developmental team and the possibility of a women's pro team.

As with the Convention Center Hotel; IF it is going to be such a great investment then WHY is public money necessary to initiate the project?
Why aren't the private investors breaking down the doors of "junior" Paulson's offices to fork over the cash?
Hummm????
Gibby...I'll sign up to speak at the council meetings if you will!

What contingency plan does the city have if MLS were to go out of business, like other leagues have done in the past? Given the state of the economy, this would seem more important to know than ever.

There's also sponsorship/advertising revenue and stadium naming rights, which bring in a lot of money.

Not any time soon.

My favorite agreement is the "Paulson has personally guaranteed the city won't be on the hook!" Sounds ironclad to me!

"One would hope there would be playoff games on top of the regular season matches."

"And finally, there are further potential matches involving a Timbers developmental team and the possibility of a women's pro team.

Roger - public money is not meant to fund hopes and dreams; this is what venture capital is for.

Remember, folks, there's going to be an infusion of federal stimulus dollars soon. Although President Obama warned city mayors against using the money for pet projects, I don't think our mayor attended that meeting. Keep your eyes on www.recovery.gov.

Rest assured, Portland, this is a catastrophic mistake. There is seldom ever a way that a publicly financed stadium can ever accrue financial gain for the community.

However, a publicly financed stadium can be a godsend to vested interests, including resident politicians who will of course be given excellent seats free of charge all in the name of goodwill and the magical phrase, "economic development."

Public money is used because the risk to the use of private capital is simply too great.

"Major" League Soccer is still bush-league in America. This deal stinks to high heaven and I wouldn't even support it if it was proposed for MLB (another dying league).

But it's almost shovel ready!!!

Don't you know that this is a form of stimulus?

By questioning its effectiveness you are only adding to the problem.

I'm afraid that dissent is a luxury we'll have to forego in the new economy.

As with the Convention Center Hotel; IF it is going to be such a great investment then WHY is public money necessary to initiate the project?

We've covered this before, but once again: Because the city owns the buildings and land in question. In the real world, landlords pay for renovations, then recover those expenditures through increased rents.

Also in the real world, public money is frequently used on behalf of projects that foster a higher quality of life for a municipality. This is why we have performing arts centers, parks, zoos and high school football stadiums.

Roger Paulson, why don't you project a dollar value for your "sponsorship/advertising revenue and stadium naming rights"? Then we could hold you or someone accountable for the guess. I would be surprised if the amount exceeded $1.5 Million and that is a drop in the bucket for paying off the debt service alone.

Also, since the taxpayers would own the stadium why would MLS/Paulson have the rights and income to the stadium naming?

"What contingency plan does the city have if MLS were to go out of business, like other leagues have done in the past?"

CoP pays for the bonds out of the general fund like we do with the PGE Park shortfall.

"Paulson stadiums deal defies simple math"

Simple math is already beyond Randy and most of the soccer nuts' comprehension, can you do it in flash cards?

This is unbelievable, except if you view it in the proper context.

This video explains the context of what is going on.

http://www.youtube.com/watch?v=9nJ7LM3iyNg

Well, it's always the case that the folks who "rob you with a fountain pen" (Guthrie) are like being approached by mobsters who just had a big novocain shot: they are insistent about making you an offer you can't understand.

In fact, in their world, this is a feature, not a bug. There's simply no way to disguise the effort to put the taxpayers on the hook if you don't create a lot of special effects, smoke, mirrors, and lots and lots of unquantifiable whirly shiny things (like "make people feel better about themselves" just the latest gag-inducing argument for the soccer thing).

The kind of clear, objective presentation you are calling for is fatal to their effort. Hence, don't hold your breath.

Roger:

Naming rights are a joke. Columbus has one of the most successful MLS teams and its naming rights have sat, unsold, for ten years.

Regarding your argument about how great this'll be for PSU football and the community groups who'll use the field and how great it'll be cause've all the international games we'll get: This one's also been debunked. The international teams will only play on a grass field. But if there's a grass field, the team will only let the Timbers play there because the community and PSU will chew up the field too much.

Thus, all the promises made about all the uses at the new new PGE Park can, at best be only half-true. I'm betting less than half, when we're done.

-Breezy

Roger,

The difference between a public park, a zoo, or a high school football stadium and the MLS stadium rip-off is WHO actually gains from its development. For the first three, there is no financial "profit" resulting from the public investment (and typically there is very little in terms of costs to enjoy the facility).

Compare that to a publicly-purchased PRIVATE stadium . . . do you really think Paulson and Co. will be sharing any of the profits with the City? They already admit that if the thing goes belly up, the City is on the hook for the entire cost ("ah yes, but they get a lovely stadium that belongs to the City" - with no means to generate revenue, what a deal!).

lw -- re: naming rights

Per a study done by the consulting firm HVS Convention Sports & Entertainment, naming rights deals for the last six MLS stadia bring in an average of $3 million a year.

That figure is skewed significantly by the Home Depot Center in LA. Naming rights there are $7M annually. This is offset a bit by the figures for Toyota Park in Chicago, which are the lowest in their chart and probably incorrect.* So, throwing out the high and low figures, just like in the Olympics, you end up with the four most recent naming rights deals bringing in $1.75M annually.

Since you mentioned $1.5M, I'll go with that to make another point: On this deal, that's not a drop in the bucket. $1.5M annually probably covers 20 percent of the bond payments.

*(For all you skeptics, some amplification on tossing out the Chicago numbers. The consultants show Toyota paying $825K annually. That's less than PGE is paying here now, and half of what Rio Tinto -- whoever they are -- is paying for naming rights in Salt Lake City.)

If the new stadium is renamed, what happens to the money that was or is being paid to call the current building PGE Park?

One last thing Roger. In Reno, Nevada the Reno Aces are building a new AAA stadium. Virtually ALL of the costs to build and operate the stadium are coming from the ownership group. The City of Reno is paying for some modest street and infrastructure improvements and nothing more. If Mr. Paulson wants this deal so bad; maybe it's high time he put up his own damn money instead of trying to scam the taxpayers of Portland for this deal.

Roger -

Do rents go up from what is currently charged for PSU and / or high school teams to use the "new" Paulson Complex?

If so, hhow does taking more money from pinched school budgets benefit us?

Roger Paulson, thanks again for proving my point. Economics is important to understand. I was including all of your "sponsorship/advertising revenue and stadium naming rights" in the $1.5 Million total. Your citations of other MLS naming rights revenue (a very short list compared to all the MLS teams), are all based on agreements made in the "good times" of the past few years. Things are different now and expecting even $750 K from Portland businesses for naming rights would be a stretch.

Secondly, as others have noted, Portland does not have a company like Toyota that have PR budgets that would/could pay that amount in just that one category for PR.(we don't have many big companies left, period)

In the cases of sponsorships, I know of two recent sponsorship deals that fell through-one for the Convention Center HomeShow last weekend and the Jazz Festival. There are many more sponsorship failures to come as a friend of mine points out who insures these kinds of events and venues.

Who the hell in the US watches Major League Soccer?!

Hell, if the "Michael Jordan" of soccer, David Beckham, cannot fill stadiums down in Los Angeles, then what makes the City Council and Hank Paulson think that MLS will be a hit here?

Some corrections:

Miami has already thrown in the towel on it's bid for an MLS team.

There's plenty of big name corps in Portland who would like to see their name on a MLS stadium: Adidas, Nike, Columbia Sportswear, just off the top of my head.

Beckham has done just fine for LA: big turnouts and a spike in jersey sales. What else do you want? Maybe you are confusing the two LA teams? He even boosts attendance at the away games (compare the home attendance for Salt Lake's team last year for example).

Plenty of financial reasons to critique this plan w/o resorting to "MLS is bush league" and "Beckham sucks" comments.

As Bill mentioned earlier, US-born soccer connoiseurs will want to watch a higher-level international game with known players. They are unlikely to support a local team if they have not already supported the Timbers or the Beavers.

It seems to me that the bulk of support will come from the Hispanic community which already embraces soccer in Mexico and in South America. There are not a lot of deep pockets in that group although the numbers may certainly be there.

That is, if they are not too busy getting a street named after Cesar Chavez at our expense.

come on , PDX , let's do what we do best 'thirsty thursday 20$
'BLAZZER-MICRO/BEER-BUCKETS' , and topless ladies soccer , jeez do I havta do Baby Paulson's job.

Gene, in the big realm of things, Columbia Sportswear isn't big. Can you give any proof that any of the three you mentioned have given any indication that they want to sponsor/name/fully support MLS?

The key fact for me is that Merritt - gag - has the money to build the whole project.

While our brain-dead commissioners set their staff loose on "creative financing" schemes, Merritt could simply write a check.

That is my creative financing idea for the day - let the rich bastard write a big check.

@ Gene: If Miami -- a much larger, much more cosmopolitan city with a much much much greater number of people who have grown up with soccer as their primary sport of interest, and with close connections to many Latin and South American cities -- has "thrown in the towel" on MLS, then why would anyone in their right mind think that Portland should or could fill that gap?

Why don't they name it the Cesar Chavez stadium? Kill two birds with one stone. Then the handful of Timber fans that are so eager to throw their beloved team under the bus and the Chavez people can pool their money.

Addressing questions and comments posed above:

If the new stadium is renamed, what happens to the money that was or is being paid to call the current building PGE Park?

That contract expires before the MLS team would begin play.

Do rents go up from what is currently charged for PSU and / or high school teams to use the "new" Paulson Complex?

Re: PSU, I don't know.
Re: High schools. I also don't know, but the high school games at PGE Park now fall under a "community access" clause in the current deal, and presumably would stay there.

And lw ... thank you for proving my point. Together, we've just demonstrated that a single component of a revenue stream you dismiss as "a drop in the bucket" actually covers 20 percent of the debt service.

Also, adidas is already sponsoring MLS. Among other things, they have exclusive rights on the uniforms.

It doesn't pencil out. There's no way Paulson makes a penny on this deal unless the taxpayers take it in the shorts. Under even the best-case scenario, there isn't enough revenue here to pay the debt service and the team's expenses. And the best-case scenario ain't gonna happen in this economy.

Roger Paulson, as pointed out, CoP owns now and in the future PGE Park and Lents, and receives the revenue from PGE for naming rights. Why then would we want to give that revenue to Paulson to pay back the debt the city assumes? Peter pays Paul. The naming revenue shouldn't be a component in the calculation of what Timbers MLS brings to the table.

I think you know- what is the percentage that would come to Portland MLS of Adidas' sponsorship? I believe it would minimal.

When you realistically look at sponsorship, advertising and naming, it is a "drop in the bucket" because there is more than debt service cost to the whole package costs. Besides, Jack calculated a low percentage rate for the debt cost. There's still the principal. Then theirs business costs, and all the rest.

The number one revenue stream for the MLS is upping the franchise fees for expansion teams by $10 to $20 million every two years.

It is a Ponzi scheme, of sorts, and if the league survives 6 more years, Lil' Richie Paulson will more than be able to recoup his $40 million.

That's obviously his gamble, because there is no way the thing has any value as a going concern.

The city needs to get completely out of the financing loop. Lease him the property if you must, but don't go on the hook, in any way, shape, or form, for any debt.

It seems to me that the bulk of support will come from the Hispanic community which already embraces soccer in Mexico and in South America. There are not a lot of deep pockets in that group although the numbers may certainly be there.

That is, if they are not too busy getting a street named after Cesar Chavez at our expense.

Would you like to try that again?

Hey Rodger....why don't you write the check for the stadium since you are so enthusiastic?
btw...I am well aware of how commercial real estate tenant improvements are negotiated, so please no lectures.

Words are cheap: "It won't cost the city any money"...Does that remind you of how McIntyre and Sizemore sold the property tax limitation by saying "Schools will be held harmless"? It sounded good, but didn't mean a thing. Sounds good to say that the city is off the hook, but Jack's comments make it pretty clear that the city could hold the bag, bigtime.

First, why does everybody expect for this deal to pencil out for Paulson in the first year? Businesses rarely turn a profit in the first few years of existence. Granted this is a different sort of business, but the idea is create something that will be profitable in the future, not so much as right away, although that would be nice. Paulson views this as a growth industry in America and wants to take the risk of it. Portland would also be taking a risk as well, but that is life. There are no certainties except for death and taxes, and if you're a government entity, I suppose it's only taxes. So, the hope is that in the future the revenue will be increase so more taxes will be taken out and Portland will be better situated to earn from it. That's the theory, whether that is reality is another question.

Second, Rio Tinto is one of the largest mining companies in the world. So, I don't think naming rights of a stadium need to be limited to companies headquartered in the area. I mean, Toyota is not headquatered in Chicago.

Third, "big name" European clubs don't like to play on artificial turf, but that does not mean they will not on their little exhibition trips. Chelsea FC plays in Seattle this summer, which is on an artificial turf field.

Fourth, if you followed American soccer, you would know that Miami (and Florida) is where soccer goes to die. Two MLS teams already failed in Florida (Miami and Tampa Bay) in the last 15 years. While there is a large Latino population in the area, it doesn't mean they are all soccer fans. Much of the Caribbean is a bigger baseball market than a soccer market, so the fan support isn't necessarily there, whereas Portland has proven its soccer community.

If Vancouver and Portland are awarded expansion clubs, as they are the two favored cities now, that would set up quite a rivalry with Seattle already in the MLS. That sort of rivalry would definitely create a traveling contingent, where there would be 6 matches a year between the clubs.

Fifth, I am a huge fan of European soccer as evidenced by my willingness to get up on Saturday mornings, sometimes as early as 4:30 am, to watch matches online. If Portland had an MLS squad, I would be there to support it and I know other people would be there as well. Moreover, I know far more soccer fans that don't follow European soccer as religiously as I do that would follow an MLS club in Portland.

Finally, I freely admit I would like to see an MLS club in Portland so I am biased. But, I do agree that the City should hold Paulson's feet to the fire. He should put more at risk here. He keeps talking of a public private partnership in terms of the stadium, but none of it is private. The only private part is his payment of the expansion fee. When I have seen other "public-private" partnerships for building stadiums, money is put up to build them by the private party and the public contributes. Paulson needs to contribute more.

LURid:

"They" is shorthand for the small committee fielding the street name change request.

"Our" is shorthand for the entire citizenry of Portland, which includes business people on the streets in question who have legitimate concerns as well as some Hispanic citizens who don't agree with this plan, favoring the renaming of Delta Park, among other possibilities.

Professional soccer is extremely popular in Mexico and in South America. In fact, in most other countries with the exception of the United States. Professional soccer is not a top tier sport in this country at this time. I'm not making it up; it's a fact.

In the real world, landlords pay for
renovations, then recover those expenditures through increased rents.

Not always. In many cases, long-term tenants make improvements, at their own risk and expense. At the end of the lease, they become the landlord's property.

What if Paulson puts up the money with a private bond issue (that will probably be junk rated) and buys a credit default swap with Citibank?

Gene - There's only one David Becker and he plays the Home Depot Center at Cal State Dominguez Hills, which seats 26,000. That venue serves all MLS interest in So Cal, or about 20M people in one of the biggest and most international mega-cities in the world.

MLS has good reason to want Portland and Portland has 19,000 seats at PGE Park to offer (that is a seat-to-population ratio far more favorable than LA). If they want to play here, in a forest of internationally minded, high income condo dwellers, we have a stadium for them already. Does MLS want it or not? I don't think they have as much leverage as Firehose or the Barely Legal boffer think they do.

>Gene, in the big realm of things, Columbia Sportswear isn't big.

Plenty big enough to sponsor an MLS team. And no, I have no idea if these companies are interested I was just refuting the claim that Portland has no big corps left that would be targets for MLS sponsorship.

>@ Gene: If Miami ... has "thrown in the towel" on MLS, then why would anyone in their right mind think that Portland should or could fill that gap?

Miami has a lot of professional teams, is in a state with a lot more, is going through a vicious housing market crash (if you think PacNW is bad try Florida), and it's bid was predicated on Barcelona funding the team, which fell through.