This is truly unbelievable!

Just for a laugh, here's a statement that used to be on the PGE Park website:
"An outside consultant hired by the Portland City Council deemed the PGE Park deal with PFE (remember them? Marshall Glickman's group?) one of the best in the United States. Payments to the City will be made prior to any distributions to PFE's partners, and any shortfall in payments to the City will be made up by PFE. This virtually guarantees that the City's debt will be repaid."
I like that ... "virtually guarantees."
Adams and Leonard have scarcely bothered to change the language from that fiasco in praising this deal.

This post is exactly right, and is exactly why corruption is so invidious and difficult to prevent and correct.

Just to keep the HMPs properly sorted, the "Paulson Sr" referred to in the blog's concluding graf is actually Henry Merritt Paulson, Jr -- "King Henry II" in the penultimate graf -- the Bushleague Treasury Secretary who presided over the theft of $307bill of WaMu's assets on 25 Sept 08. This HMP should serve some jail time for aiding and abetting the biggest bank robbery ever.

And he just might be required to do so if an investigation underway is thorough and unbiased:
http://seattle.bizjournals.com/seattle/stories/2010/01/18/daily31.html

Our own Sen Jeff Merkley sits on the Banking Committee. He just might appreciate hearing from constituents regarding this matter.

BTW, are felons permitted to be owners of or investors in what passes for major league soccer in this country?

I don't want to knitpick over a deal that was done when it was first proposed.

The greater question is, what will the City of Portland do if the current economic bust cycle causes MLS to file chapter 7 bankruptcy?

I googled "MLS," looked at their wikipedia spot, and found this:

http://www.forbes.com/2008/09/09/mls-soccer-beckham-biz-sports-cz_kb_0909mlsvalues.html

The article states, "Our estimates indicate the league is not yet profitable, with its 13 teams posting an operating loss (in the sense of earnings before interest, taxes and depreciation) of $20 million on revenue of $165 million."

In the same paragraph, "But there are signs of hope. In 2007, the three teams that were in the black--Los Angeles Galaxy, Toronto FC and FC Dallas--had a combined operating profit of $6.7 million."

Does anyone else have a clearer, more informed/insider take on whether MLS can weather 2 to 4 more years of a recession?

the "Paulson Sr" referred to in the blog's concluding graf is actually Henry Merritt Paulson, Jr -- "King Henry II" in the penultimate graf

Thanks. The parallels to the Bushes are so compelling in this case that I got careless. Yes, the guy who raped America on behalf of Goldman Sachs is actually Henry Paulson Jr., and his son, who's been banished to Oregon like a modern-day Lewis and Clark, is indeed Henry Paulson III.

That Portland is kissing up to the two of them proves conclusively that our city is not truly progressive, just easy.

· No impact to the City’s General Fund
· No impact to the City’s ability to provide basic services
· No Urban Renewal funding
Those first two are the same things . . .

All 3 are the same things Vera said when GLickman/Gardiner were going to put Portland on the map with minor league ball and luxury suites.

They're terminal idiots. The dauphin, Merritt, is gonna screw Portland once MLS goes south.

The point everyone is missing is that for Mayor Sam Adams this is a completed success. He's had the vision, the negotiating, the thrill of the deal, and a chance to spin it as "nearly perfect."
No matter what wreckage ensues, this was a rush for him - an all too short high. Of course, it'll wear off soon and he'll be on to the next vision, but for now the project beast has been fed.
If - or more likely when - the fine print generates a few nasty surprises, we'll be told to focus on the future, while learning from our mistakes so that....(all together, everybody)...
"Nothing like this ever happens again."
Then we'll probably sit back and read stories about how the Paulsons also bet against the league and made out like bandits when it failed, recouping their costs and turning a nice profit to add to their fortune.
Let's stop pretending this spectator tax isn't money taken from the People of Portland to help one of the key players who caused our current recession. That money could have gone to any number of businesses here in town. Maybe instead of paying the spectator tax, you could give the homeless outside the arena an extra buck, knowing there's a real chance the Paulson family helped put them there.

To: Ryan Leo

MLS is in no danger of folding. The MLS salary cap is 2.4 million dollars which is about equal to the average salary of one MLB player. A 20 million dollar loss is nothing to the billionaires of MLS. The people that trumpet the idea of MLS's inevitable demise are ignorant or dishonest.

The net worth of all the MLS owners is about equal to Paul Allen's net worth, and he's claimed losses of 100 million a year for much of the last decade.

MLS is not a major league by American standards, but it has potential to be a top 10 league someday, which is good enough. Argentina's and Brazil's national leagues are in the bottom half of the top ten leagues in the world, and are two of the best teams in the world.
Major League Soccer will be great for Portland, and will be "Major League" enough by world soccer standards!

Questioning the future viability of MLS is a dumb angle to to attack this deal from. You guys should scream about the zero coupon bonds.

"You guys should scream about the zero coupon bonds."

I hear that.

I'm trying to figure out the sleight of hand of having Paulson pre-pay $11.1 million in rent on the facitlity (into the spectator fund) and then we loan (or give?) that back as the construction loan. Seems like a shell game, but I can't quite put my finger on it.

Also, the city is paying out of the spectator fund. I'd like to know how much of that will really come from the Rose Garden, and if ticket prices will increase there.

Alright, just gave this a closer look.

On the plus side, Paulson is giving to youth athletic fields, building a clinic that must take people on Medicare, Medicaid and the OR Health Plan. And must allow PSU football to play there.

Now the money stuff. Out of $31 million, Paulson is really putting in about $8 mil.

He's prepaying $11.1 in facility rent, which will go to construction. But rent revenues would normally be the CITY's money. So we're giving it back to him. We're basically waiving 27 years of rent to allow him to use this money for the redevelopment.

Then, on top of that, we're going to bond against $11.9 million in Spectator Fund revenue. Most of which presumably comes from the Rose Quarter.

These will apparently be "zero coupon bonds" which are bonds which we sell at less than face value. In other words, we sell a bond with a face value of $10 for $8 and at maturity have to pay back the $10 face value, plus compounded interest.

I don't know the current going terms for zero-coupon bonds, but from what I can tell, the bill upon maturity is much much higher than the revenue we get at the outset. I messed around with one calculator and found the following: at 7% yield, and a 25 year term, $11.9 million in zero coupon bonds would cost roughly $65 million at maturity.

I believe that money from the spectator fund must be used for improving/maintaining the spectator facilities that it has been drawn from: the ballpark, Rose Garden and the Coliseum.
So once we figure out what will be done to the Coliseum...sorry, the spectator fund will be drained for this project.

As far as the MLS's viability, that will probably depend on the outcome of its current negotiation with the players' union.
The financial model of the MLS seems to be that the league is one entity, so there is little financial competition between the teams for players, keeping the salaries artificially low. The players are attempting to open this up somewhat. I would think how this turns out will have a huge effect on the MLS's financial future.
The current contract runs out on Jan. 31 and there has been talk of a lockout or strike.

There is no doubt that the impending collapse of the collective bargaining agreement between the MLS and its players is behind the Paulsens getting their city council servants to vote on this secret agreement next week; the MLS is going to look much less viable on February 1.

One thing I wish I hadn't done is read a few articles about how WaMu was "saved" by
Wall Street. At least PGE Park is across town. There's a WaMu branch right down the street.
Oh well. You know what they say: All plundering is local.

Further thoughts on the "guarantees".

First, he's guaranteeing to personally (with daddy) finish the redevelopment if Peregrine fails to (pretty good)

He's also guaranteeing to cover cost overruns, but it looks like there is some mechanism which puts the city on the hook for the first $1 million in overruns. But this is through (continuing) not paying rent in years 26- 28.

He's guaranteeing rent payments for the first seven years, if something goes wrong. (After that he's already prepaid through year 25, which we the City are plowing right back into the redevelopment)

The MLS players union recently told the players to report to camp on time. The labor contract will be settled soon.

The future of MLS doesn't hinge on one round of labor negotiations :rollseyes:

Snards, you mention the sports clinic. Here's another example of "partnerships" of government (tax dollars) and special recipients in conflict with other entities providing the same service. It is not fair competition. Why should the health clinics just down the street in NW Portland, or elsewhere in the city, first subsidizing through tax dollars this Paulson Sport Clinic, then have to compete with it?

This same scenario has happened with all the tax dollars given to OHSU's Sports Club in SoWhat. Willamette Athletic Club on Macadam, downtown Bally's, RiverPlace, Lloyd's are hurting from unfair trade. The Y at Duniway failed due to this unfair practice when even their heart wellness program was stolen by OHSU.

There are other unfavorable consequences to the citizens/businesses of Portland when we subsidize favoritism like this Paulson deal.

Sambla: The Sounders made a net profit of $15m last year. The LA Galaxy and Toronto FC made $12m each. In 2010 those figures will rise. The money the entire spends on players' salaries is around $33m. The Philadelphia Union has 9,000 season ticket holders and Vancouver and yes Portland will sell out their entire season when they join in 2011. Montreal will pay a franchise fee of over $35m to join in 2012. Tell me again how the league is going to be less viable?