Jack, your comment is now visible on the Oregon Business website below Emerson's story. The posting time is 5:47 p.m. yesterday.

Sounds like you roused the ire of one of the Portlandia worshipers, an "Ecotopian".

and let's not forget all of the promises about baseball continuing on in Portland from the financiers and politicians....

Truth and having Sacred Cows skewered tend to upset some people. The fact is that either minor league baseball or soccer are money losers for the taxpayers. Portland doubled down on the money losing by its actions. An economics professor ought to know that.

What! Politicians and connected insiders lie to get what they want?

Next thing you're going to tell me is that these folks will juggle the books to steal public assets and hide financial dirty deals.

Imagine that. Snark coming from professional keepers of economic multipliers used to justify stadium investments (instead of private funding) -- diverts attention from the fundamental issue. It isn't this type of stadium or that type, the core issue is public money (except when directly funded through an excise tax) shouldn't be used at all. Private money will make wrong decisions less frequently, and recover from bad decisions better than public money.

I misread Mr. Grumpy's description of the person as an ectopian... although I feel that applies just as well.

The public-private partnership of Merrit Paulson and the Portland City Council killed the Portland Beavers. That didn't need to happen. You were right, Jack. We could have had soccer AND baseball.

The curious thing about the New York Times is that its reporters have done some good reporting over the years on bad stadium deals. But when it came time to do a story on Jeld-Wen Field it published a puff piece on the front page, no less. That story appeared on June 23. The reporter was Ken Belson.

I provided Belson with the facts about the fraudulent nature of the Jeld-Wen Field renovation deal, but he chose instead to focus on how happy the soccer fans are here in Portland.

The econ prof from OSU is simply in a bad mood since he knows his school's football team is going to have another less than wonderful year...gotta take out his rage somewhere (or vent towards someone) I guess, so you became the target. GOOOOOOO Ducks (but behave, please)

On second thought, why would an OSU econ prof pimp for Merritt Paulson? Avoid this person's classes, kids.

But we thought that given the fact that the city was still nearly $30 million in debt from renovating the stadium for baseball, baseball should have allowed to stay alongside soccer.

So, you spend (or waste) some money on your facility for baseball. It doesn't really work out, it's a dud. How would we owe the failed sport anything after that? Isn't that kind of the sunk-costs fallacy?

"Portland got it right"

Great, I guess we can expect full payment back immediately on the $45M we threw into that wreck.

What? A blog deleting comments they don't agree with? I can't think of another person that does that, can you?

I delete comments only if they are made by jerks. I even make exceptions.

You did suggest that the attendance estimates that Paulson delivered to city council (14,000/game) were "the rosiest of projections." So there's something you were wrong about.

Let's wait and see how the attendance numbers hold up over the long, long life of Paulson's sweetheart deal, shall we?

The proposal that you poo-pooed include attendance decreases of 9% from year 1 to year 2 and year 2 to year 3. The proposal estimated 11,780/game in 2015.

Given this year's attendance numbers and the average attendance of MLS teams overall, don't you think it would be safe to admit you were wrong at that the projections were not rosy but instead realistic?

What part of "Let's wait and see how the attendance numbers hold up" can't you understand? The Timbers sold (and gave away) a lot of tickets in the first season, but there's no telling how they'll do next year or the year after that, especially since they may not make the playoffs.

Please take your hangover from last night and go argue with someone else.

So what you're saying is that if in 2015 the Timbers have averaged better than their projected attendance numbers, you'll post a message saying you were wrong? Your issue in 2009 was with their projected attendance numbers from 2011-2015.

For someone who makes a habit out of pointing out when other people are wrong you sure do get angry when people point out your mistakes.

And by the way, the whole point in me referring to your previous comment was this line in your post:

"As long as the somewhat sketchy 'major' soccer league in which the team plays survives, he'll do well. We never suggested that he wouldn't."

Your article in 2009 suggested the Timbers would be unable to draw league average attendance, which in my opinion implies that the Timbers would not be a healthy franchise.

How can anyone declare a sports franchise a "success" before they've even completed one (mediocre) season?

Here's my beef, boiled down to the gristle: the public should never, ever, ever have to invest in a sports franchise. For the utterly clueless amongst you, sports franchises exist for one reason: to make money for those that own them.

It doesn't matter one whit whether a citizen likes the sport--what matters is the shove-down-the-throat approach taken by local government, all on the behalf of...Paulson. The study of what sports stadiums REALLY do for cities has been well-studied; if you don't care to read up on it, I'll sum up: they're all failures. Every single one of them, ever, in history. By "failure", I mean they never gave citizens back what they invested in them.

How long will citizens succumb to stupid pet tricks wrapped in sick sentimentality and rah- rah nonsense? At least one more season, apparently.

Next up: passionate defenses of the beauty of sport and the lessons it holds for us all. Gag. Here's the lesson, kiddies: you're not Merritt Paulson, so you lose. Class dismissed.

Thirty years ago I knew a public official in California who offered the following insight into dealing with controversial public issues.

What he said was this: Whether you're a proponent or opponent of a particular issue, look for the "drop-dead point," the issue that will kill a project.

In other words, think strategically.

In the case of soccer here in Portland, arguing about the merits of soccer, or attendance figures, or any other peripheral issue, isn't going to bring about change.

The drop-dead point here in Portland is that city officials and soccer officials violated Oregon's securities fraud law, ORS 59.135, by concealing and misrepresenting the material facts contained in Major League Soccer's "Venue Design Guide."

That's a felony because the use of the city's bonding authority is part of the plan to fund this project.

The material facts contained in the MLS Guide were concealed and misrepresented during the public review process because they showed that the stadium, even after renovation, would not be able to meet minimum standards for basic spectator facilities. Had that information been made public during the public review process, it's reasonable to assume that the response from the public would have killed this project.

Peter Apanel: The Venue Design Guide published by MLS is a guide, not a list of hard and fast rules and not a list of "minimum standards". MLS is fine with the design of the stadium, the proof being that they accepted the design of the stadium--without exception--when they selected Portland as an expansion city, further proof being that the MLS allows the Timbers to continue to operate in the stadium.

The guide itself uses some exceptionally wishy-washy language to make sure that the reader understands that it's in no way a set of minimum standards, including:

"This Venue Design Guide outlines the general design requirements, recommendations and considerations required to create a venue ideal for Major League Soccer."

and

"Major League Soccer recognizes that each stadium design project is unique with local site conditions that will dictate specific approaches. MLS will consult with the stadium design team as necessary to assure a professional and high-quality final product."

Were MLS to tell the Timbers that they need to close the stadium then you'd at least have a case, but the fact that the Timbers continue to operate in the facility tells me that MLS considers them to meet the minimum standards for an MLS facility. If the MLS accepts the facility as is then there's no fraud case, is there?

"the average attendance of MLS"

So does this mean that any of the teams are actually going to make money without handouts or franchise fees?

In response to the comments by "nobody" on the MLS Guide, let me point out that the legal term "material facts," as used in Oregon's securities fraud law, refers to any information that an investor (in this case, the public) might find important in making a decision.

So, all of the requirements, recommendations, and design standards contained in the MLS Guide constitute material facts.

Also, the language used in the MLS Guide isn't "wishy-washy," as "nobody" claims, and the quote used by "nobody" from page 1 of the MLS Guide conveniently skipped over the part about the the goal of the Guide being to "distinguish between recommended and required design parameters."

Peter considering there wasn't a single lawyer that would take up your case and you were essentially laughed out of court by a judge when you tried to bring it forth yourself one would think you'd finally understand no laws were broke and you should probably take the tin foil hat off before the word delusional starts being thrown around.

Were MLS to tell the Timbers that they need to close the stadium then you'd at least have a case, but the fact that the Timbers continue to operate in the facility tells me that MLS considers them to meet the minimum standards for an MLS facility. If the MLS accepts the facility as is then there's no fraud case, is there?

Though I think it's clear you've got a clear, narrow agenda, I also think I interpreted Peter's comments differently. First, the MLS doesn't "shut down" stadiums. Second, Peter seemed to be talking about misrepresentation of the guidelines to the public, not disobedience of the Venue Design Guidelines.

"Nobody", I'm unimpressed. What's your point? That you don't like the characterization of things painted by Jack and Peter? That's fine, but your verbose nitpicking about "attendance figures" and sock puppetry on MLS's (and others) behalf is just plain silly.

Based on all your comments, you seem desperate to characterize the MLS and the Paulson Timbers as a success. That's fine, but few people actually believe that's true.

Speaking of tin foil hats and delusional: Stan, did you have a point other than ridicule?

Peter and his claims about the MLS Design Guide are like Portland's own version of Orly Taitz and the birthers: batguano-crazy legal theories intended to cover for losing a political battle. Not only are they wrong, but nobody in the public cares and the courts want nothing to do with them.

But maybe in 5 years you'll finally find Timber Jim's birth certificate...

batguano-crazy legal theories intended to cover for losing a political battle

I'll quote you on that in a few years. Meanwhile, say hello to the "Timbers Army", big guy.

I'm still puzzled--what do soccer players have to do feeling robbed by Paulson and City Hall? No, that's not a setup for a joke.

How do ticket sales benefit me, a citizen, after my taxes helped Paulson? If you say "jobs", I have a Yugo to sell you.

How does replacing a baseball team with a soccer team benefit me, a citizen?

Speaking of success, when do I get my check for all that economic benefit coming my way from the Timbers franchise locating here?

And by the way--anybody noticed that the city of Seattle is losing money despite sellout crowds for the SOunders? No? Didn't think you did.

the white meat: Jack Bog said he'd never claimed that Paulson wouldn't do well, I pointed out that in fact he claimed that Paulson wouldn't do well two years ago when he suggested the attendance numbers were overestimates. He's right, there are three more years of attendance before we find out if Jack was wrong. I don't mind waiting.

Peter Apanel has had his legal theories proven wrong in a court of law, I'm trying to engage him so that I can understand his legal theories better, not to prove a point because I don't believe I could ever change his mind. He's done a good job of clarifying his legal position, and I appreciate that. I don't happen to agree with it, but I appreciate that he took the time to explain it in greater detail.

White Meat - I hear what you're saying and I wasn't trying to argue one way or the other whether paying for stadiums is a good use of public money. My only point was that deciding whether to spend money for a stadium is clearly a political decision.

Once the decision's been made, and the money spent, trying to undo a political decision through some crazy legal arguments that nobody takes seriously is wacko. Especially if the arguments involve non-mandatory design guidelines established by a league that is clearly happy with the Timbers and their game-day experience.

So I stand by the Apanel/Taitz comparison.

ack Bog said he'd never claimed that Paulson wouldn't do well, I pointed out that in fact he claimed that Paulson wouldn't do well two years ago when he suggested the attendance numbers were overestimates. He's right, there are three more years of attendance before we find out if Jack was wrong. I don't mind waiting.

I don't equate "Paulson doing well" with "ticket sales". Anybody who's paying attention would realize why: Paulson's ALREADY "doing well" by basically putting most of the risk and burden on the City, not himself or his business partners.

Peter Apanel has had his legal theories proven wrong in a court of law, I'm trying to engage him so that I can understand his legal theories better

Horsesh*t.

My only point was that deciding whether to spend money for a stadium is clearly a political decision.

More, deeper horsesh*t. Calling people "batguano crazy" and other creative slurs was definitely one of your "points".

Let's be real here, shall we? I have--I think the stadium deal was a ripoff perpetuated by monied interests and kneepad-wearing City sycophants doing favors.

In response to Stan and "nobody," where did you get the idea that there's been any court action on my part? That's bizarre and absolutely false. Instead of falsely attacking me, you should study the law.

You can start by Googling "Oregon Securities Law: A Guide For Law Enforcement." It's on the website for Oregon's Division of Finance and Corporate Securities. It's a 19-page PDF. And make sure you read the part about meeting the "smell test." That's on page 17.

OK, so nobody is surprised at all that (so far) MLS isn't failing in Portland? You really thought attendance would be this healthy and well-received for the first season? Either some commenters here and elsewhere were being deceitfully hyperbolic in the past, or they're keeping their surprise to themselves. This was about more than just than the particulars of the deal or principled stands against any kind of public spending for sports/stadiums. People were acting concerned the Timbers were going to be a lemon.

You can be sure if the first season sucked attendance-wise there'd be a nice snarky post or six about it here and few calls to wait and see how it develops before judgement.

"OK, so nobody is surprised at all that (so far) MLS isn't failing in Portland"

Sorry, but the definition of "success" is far more than just "ticket sales". That is, unless you're looking for a way to justify certain behaviors. It's also rather odd to proclaim a sports franchise a "success" when it hasn't even existed for one season of play.

Peter Apanel: I thought I'd read elsewhere that you'd taken court action and had the case thrown out. It wasn't meant as an attack on you, my apologies.

The Other White Meat:

Merritt Paulson paid $35 million to MLS as an expansion fee, according to a Willy Week article published in March 2011 (just prior to the opening) the stadium rehab cost was budgeted to be 31 million but turned out to be 36 million, Paulson was on the hook for all overruns above 1 million, which put his total contribution at $24.3 million for the rehab. So Paulson's got $59.3 million of his own money sunk into the venture. Why do you say the city is bearing most of the risk?

Sorry, I forgot to include the link to the Willy Week article that I pulled my info from:

http://www.wweek.com/portland/blog-26619-pge_park_renovation_.html

I hope the link lasts a while.

It's also rather odd to proclaim a sports franchise a "success" when it hasn't even existed for one season of play.

It sure is. You quoted "success" a number of times. If you search this page for that word, the only commenter here who's used it is you. I did not declare or suggest it a "success" explicitly or implicitly. Only that it's not yet discernibly failing and that so far it appears to be well-received by fans in the area. Which is more than I think some were willing to give it a year ago.

People were acting concerned the Timbers were going to be a lemon.

I don't remember anyone saying that -- certainly not me. You guys are great at refuting arguments that no one ever made.

Nobody, maybe you're right that Paulson has sunk $59 Million, but it is mostly into the franchise and only a small portion into the total cost of the stadiums two renovations which is over $70 Million. Most of that is on the taxpayers dime. Paulson is into the stadium for about $12 Million. The risk is more on the taxpayers-all for a sports team.

Paulson's franchise investment is a commodity that is more easily saleable, especially if MLS stays viable. He can take his toy somewhere else or sell it. Moving Jeldwen field or selling it (which can't be done) makes for recovery of costs unlikely. And don't think that Paulson wouldn't sell if he can reap several Million. That is one reason he took the leap, if you call it that.

lw: The Willy Week article linked above indicates that Paulson threw in 24.3 of the 36 million for this rehab, where do you get the 12 million figure from?

In response to "nobody," you state that you think you read about some court case involving me -- a court case that never took place. Well, apparently Stan read the same article.

So, where did that article appear?

Let me point out once again that concealing and misrepresenting the material facts in the MLS Venue Design Guide violated ORS 59.135. That's a felony.

The law is clear, and so is the evidence. So, there's no problem with the legal case.

The political problem is that the people who are criminally culpable include all of Portland's city council, plus the city auditor, along with a number of high-ranking city staff members, plus Merritt Paulson, and MLS Commissioner Don Garber.

And then you have to add in those who might be financially culpable under ORS 59.137, including Henry Paulson and all of Major League Soccer's team owners.

There's no plausible deniability for anyone, including law enforcement officials.

The legal argument is weak. The MLS design guide would not be a "material" fact to an investor, which is why there's no actionable securities fraud here.

But on the money side, part of the cash put up by Paulson will be recouped at a nice rate of return through the free rent he will get from the city for many years. Although Steve Janik and crew have obfuscated it, that's just a loan by Paulson to the city. It's taxpayer money thinly disguised as Paulson money.

Bojack, I disagree with your assessment of what constitutes a "material fact" in this case.

The securities fraud law applies equally to municipal bonds, as well as private investment offerings.

When municipal bonds are involved in funding a public project, it is not just the investors who buy the bonds, but also the residents of that city who are the investors in that project.

And the only logical time to make material facts known to the public is before the use of the city's bonding authority is approved.

In this case, the city council gave its final authorization to use the city's bonding authority to fund the renovation of PGE Park on August 5, 2009, even though the MLS Guide did not surface publicly until September 3, 2009.

It is legal for city councils to approve bad projects if all of the material facts are made known to the public beforehand. But when materials facts are concealed and misrepresented, and municipal bonds are involved, that's clearly a violation of the law.

There are no loopholes in the securities fraud law to allow for what's been done in this case.

But when materials facts are concealed and misrepresented, and municipal bonds are involved, that's clearly a violation of the law.

What "law" are you talking about? The securities law cares only about what investors in the bonds would think is important to their interests. I admire your tenacity, but what you've revealed isn't actionable.

Paulson was on the hook for all overruns above 1 million, which put his total contribution at $24.3 million for the rehab. So Paulson's got $59.3 million of his own money sunk into the venture. Why do you say the city is bearing most of the risk?

I'm really, really glad you asked, because that 10-grade analysis is why people like Paulson get over on municipalities in the first place.

Paulson and the City entered into a convoluted financial deal that involves a lot more than just "rehab", and it's structured very favorably to Paulson. Rather than rehash the cleverly arranged financing on this blog, go and read this article carefully. Notice very carefully who's financing what, and who's on the hook for what. Also notice what happens if Paulson simply decides to declare bankruptcy and leave town.

Oh, and Aaron says:
t sure is. You quoted "success" a number of times. If you search this page for that word, the only commenter here who's used it is you.

Nice try. So when you say things like "nobody is surprised at all that (so far) MLS isn't failing in Portland", you don't mean success? Silly me, I keep forgetting that "not failing" doesn't mean "succeeding.

What horsesh*t.

I went ahead and told you exactly what I was saying in the next comment, I even bolded the word failing. "Not failing" and success aren't equivalent. You can't say they're a success based on strong ticket sales alone, but you can look at the Timbers right now and safely say they're not outwardly failing yet.

(I also qualified every mention with "so far", or "discernibly", "outwardly", etc. I'm fine with deferring judgement.)

Bojack, the securities fraud law that I've been referring to all along, as I have cited in previous postings, is ORS 59.135.

Municipal bonds are securities.

By their very nature, the process by which municipal bonds are created, bought and sold varies in certain ways from private investment offerings, but that does not exempt the parties involved from complying with disclosure requirements.

Also, let me point out that ORS 59.135 doesn't state that the person being defrauded must be an "investor." ORS 59.135 simply refers to "any person."

"Not failing" and success aren't equivalent. You can't say they're a success based on strong ticket sales alone, but you can look at the Timbers right now and safely say they're not outwardly failing yet.

That grammatical gymnastics performance gets a 5 from the German judge. From the rest of us, a hearty "bulls*it".

It's just nuance, sorry.

The other white meat:

"Also notice what happens if Paulson simply decides to declare bankruptcy and leave town."

It looks like if Paulson declares bankruptcy and leaves town then he loses all of the money he spent in prepaid rent. He only benefits from the prepaid rent if the team remains a going concern and plays at Jeld-Wen, correct?

He only benefits from the prepaid rent if the team remains a going concern and plays at Jeld-Wen, correct?

Nope, and the "prepaid rent" is undertstandably confusing--it was intentionally made that way. In short, it's Paulson giving the city a loan. In exchange, he gets to avoid almost $40 million in taxes over 18 years. If Paulson leaves town in, say, 3 or 4 years, he's already made the money back. Anything after that is gravy. Or, as the Oregonian said:

"for $11.1 million today, Paulson will avoid rent and ticket tax payments totaling at least $38.4 million over 18 years. That translates to some $27 million in interest payments by the city over the life of the loan -- the equivalent of paying an interest rate of 8 percent."

Jack also summed it up accurately here.

Why do people think Paulson worked so hard to get the deal done? Because he "loves soccer"? Good one.

The other white meat: I don't see how he makes his money back in 4 years though, the article you linked to said that the 38.4 million was made back over 18 years (via the rent and taxes that they'd otherwise have to pay in years 2017-2033). The clock doesn't start running on that for another 6 years. I do agree that if he hangs around until 2021 then he gets his money back, and everything after that is gravy.

The clock doesn't start running on that for another 6 years.

Wrong. The "clock" already started running, so to speak. Even City Council explained it in terms that most people should understand, though they scrupulously avoided telling the truth about the actual liability. Instead, they wore Timbers scarves to the city council meeting.

Which reminds me--I want to start a business in Portland, get lots of governmetn support, and make the City Council wear t-shirts with my corporate logo on them. If *that* isn't capitalism at its finest, I don't know what is.

Listen: it's clear that despite several news outlets explaining it, despite criticism and evaluation from several sides, you don't get it. Or rather--you don't *want* to get it, for your own reasons. Why not admit that you're commenting here because you support Paulson's business endeavor? Trying to wrap yourself in some sort of humorous cloak of just looking for information doesn't fool anyone. At all.

It's just nuance, sorry.

You spelled "bulls*it" wrong.

The other white meat: The article you linked to says that the free rent and tax payments starts in 2017. I'm quoting the entirety of the section in the article you quoted for clarity:

"For his part of the deal, Paulson will pay $8 million in cash and will make an upfront payment of $11.1 million for rent and ticket taxes for the years 2017 to 2033. The prepaid rent, which the city refers to as capitalized rent, is akin to Paulson providing the city with a construction loan.
In exchange for $11.1 million today, Paulson will avoid rent and ticket tax payments totaling at least $38.4 million over 18 years. That translates to some $27 million in interest payments by the city over the life of the loan -- the equivalent of paying an interest rate of 8 percent."

So as I understand it, he paid 11.1 million for rent and taxes between 2017 and 2033. The 11.1 million he paid is much less than the 38.4 million he would have paid had he just paid rent/taxes from 2017-2033, that's where he makes his money. The article very clearly states the payments are for rents starting in 2017, which is why I don't understand why you're saying it covers 2011-2016. Am I reading the article wrong?

So as I understand it, he paid 11.1 million for rent and taxes between 2017 and 2033. The 11.1 million he paid is much less than the 38.4 million he would have paid had he just paid rent/taxes from 2017-2033, that's where he makes his money. The article very clearly states the payments are for rents starting in 2017, which is why I don't understand why you're saying it covers 2011-2016. Am I reading the article wrong?

Yes, you're still wrong, because you're not seeiing the entire picture. There will be no taxes of these sorts before 2017. Also, the prepayment is a bargain, for reasons the article points out. Lastly, you're missing the entire point about liability. The city of Portland has the much greater liability, both now and in the years to come.

Again, it's painfully clear what your agenda is, so I'll let others comment on what you're doing instead. By the way, I just realized where I've seen your writing style before. Now I get it.

The other white meat: I've read nothing (either on my own or via the links you've posted) that indicate that Paulson gets any sort of break on ticket taxes until 2017.

Once again, I absolutely agree that once 2017 comes around Paulson gets a great deal, but what you've been saying is that Paulson could declare bankruptcy in 4 years and still come out ahead on the deal and I don't see that. All of the financial benefit for Paulson seems to be delayed. Do you have a link that shows that Paulson isn't paying ticket taxes now?

Peter Apanel: I forgot to respond to you. I tried searching for an article the other day that indicated you went before a judge for any reason and I couldn't find one. Once again, I was wrong and I sincerely apologize.