The pro sports monster can never be sated

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Mike at Okiedoke has been closely following the latest news of the possible relocation of the Seattle SuperSonics pro basketball franchise to Oklahoma City. Here are a few thoughts on what he's gleaned.

So Oklahoma City voted for the MAPS sales tax in 1993. Construction on the Ford Center began in 1999. The Ford Center opened in June 2002. When New Orleans was devastated by Hurricane Katrina, Oklahoma City cleared the calendar to allow the New Orleans Hornets to play their 2005-2006 and 2006-2007 seasons at the Ford Center.

A group of investors from Oklahoma City bought the Seattle SuperSonics and plan to move the team to Oklahoma City. Because one of the owners didn't keep quiet about that intention, he's been fined $250,000 by the NBA. Seattle has been given an ultimatum -- give us a bigger, better place to play or we're gone.

But surely Oklahoma City, with its five-year-old arena which spent two seasons as host to an NBA team, won't need to build a new facility to be the worthy home of the NBA Oklahoma SuperSonic Bacon Cheeseburger Toasters, right? Right?

Wrong. Hypothetically speaking.

When asked by a SuperSonics employee why the ownership team would consider forsaking the bigger and more prosperous Seattle market for Oklahoma City, chairman Clay Bennett listed the incentives Oklahoma City had offered to the SuperSonics:

  • Any legal fees involving the team’s fight to break the KeyArena lease.
  • Whatever the settlement is to the Seattle Center to buy out the lease.
  • All relocation fees the NBA would force the team to pay other owners.
  • Costs of physically moving the team’s staff and offices.
  • Costs of upgrading the city’s current arena, the Ford Center, to make it NBA-ready.
  • Costs of building a new arena, and when it’s finished, keeping the old facility running.

The Ford Center's not even good enough as a temporary home without modifications, and evidently no upgrades will suffice to qualify it as a permanent home.

Bennett covered his tracks with the NBA by saying he was answering the question hypothetically.

So how is Oklahoma City going to pay for all this? With the extra revenue generated by all the economic growth that occurred because of the MAPS projects, they must have money to keep their streets in excellent repair and plenty left over for incentives to the SuperSonics, right?

Right?

Wrong.

This December Oklahoma City is going to be asking its voters to approve a $760 million bond issue for street repairs and basic capital infrastructure, nearly twice the rumored amount of a 2008 Tulsa street bond issue. Mayor Mick Cornett is even considering levying an impact fee to cover the additional cost to the city of serving new development. (That's not a bad idea, actually.)

At least Oklahoma City voters will be able to vote on necessities prior to having to make a choice about a tax for a new sports arena to replace its five-year old facility.

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9 Comments

Bob said:

The businessmen who own major sports franchises built their fortunes in a variety of different ways. Some were entrepreneurs, others were rich attorneys, investment moguls, etc.

However, they all seem to have at least one thing in common:

They have an insatiable appetite for building new Arenas, and are constantly agitating to build new arenas when the existing arenas are adequate.

This leads to the question: What FINANCIAL benefit do the team owners receive when a new Arena is constructed?

Are they getting actual kickbacks or "consulting" fees from the construction companies?

Are the Franchise Owners really also the construction companies?

The construction companies make the lion's share of the money from a big arena construction project.

Are they sharing the $$'s with the club owners?

CGHill Author Profile Page said:

The timing of this particular bond issue, of course, is to follow on the heels of the last General Obligation series, which began in 2000. If all goes well and the city's stellar credit rating doesn't drop between now and then, the new millage (the city draws a small levy from property taxes collected by the county) will be barely distinguishable from the old one. The basketball thing is more or less coincidental.

Still, MAPS 3 is coming, probably by next year, so ....

Bob said:

Today's Wall Street Journal has a long editorial titled "Road Work" It is authored by Joel Kotkin, Presidential Fellow at Chapman University, the author of "The City: A Global History" (Modern Library, 2006).

To summarize, he asserts local Governments prefer subsidizing high-profile but marginally effective boondoggles -- light-rail lines, sports stadia, arts or entertainment facilities, luxury hotels and convention centers, rather than basic infrastructure such as road and bridges.

Over the past decade, according to a recent Brookings Institution study, public capital spending on convention centers has doubled to $2.4 billion annually; nationwide, 44 new or expanded centers are in planning or under construction.

But the evidence is that few such centers make money, and many more lose considerable funds. The big convention business is not growing while the surplus space is increasing. NEW SPORTS CENTERS ADD LITTLE TO THE OVERALL ECONOMY.

Critically, misguided investments shift funds that could finance essential basic infrastructure.

Pittsburgh has spent over $1 billion this decade on sports stadia, a new convention center and other dubious structures. Heralded as major job creators and sources of downtown revitalization, they have done little to prevent the region's long-term population loss and continued economic stagnation.

Much the same can be said of Milwaukee's new Santiago Calatrava-designed Art Museum, or Cleveland's Rock and Roll Hall of Fame.

And our local leaders assert that our BOK Arena will be the genesis of downtown revitalization.

Bunk. The only sure winners will be Flintco-Manhattan-Matrix.


DJH said:

A perceptive though disdainful view of Tulsa's efforts by an OKC business columnist:

http://newsok.com/article/3112320/1188269450

sbtulsa said:

The fallacy of these icons is obvious.

A tax base must be budgeted just like the revenues they generate. Earmarking part of the sales tax revenues for these projects precludes the sales tax use for other things.

The end game of eco development is to get families to move to Tulsa. Building the great sturctures only gets people to visit Tulsa. Then they make a decision to live here. The primary point in that decision is a job. But then come streets, schools and safety. Money on the great structures displaces the care of roads and public safety. When the visiting family sees TUlsa, at least two of the three decision criteria are no's. What have we gained if this family sees a great sports event, but doesn't want to live in the city and can't find a job here to which thy would move? We have gained an operating expense we did not have before with no additional tax base to cover it.

We are left only with added sales taxes from transient visitors who eat, sleep, drink and be merry, then leave. The enterainment jobs generated are low wage. These jobs do not support as many home buyers as true eco development. The economic multiplir effect on the economy is much less than sa jobs with the SemGroup or other such companies.

No, these edifices are not true eco development. They are a sham that drains our tax base. It is civic tragedy that our government has been hijacked by selfish interests who are not true philanthropists. Where is the next generation of Gilcreases?

susan said:

It all has to do with money and what the City will offer the business that's dealing to get the ball rolling on building up the City so more sales tax for the City.

They also know the tax from all of the River development businesses along the river will pay for itself many times over but they are still coming to the taxpayers for passing the River tax.

You would have to check with the Kaiser Foundation to see if they got all the money they paid for their logo/name to be put on the Arena that taxpayers are paying millions for.

As far as I know Tim Remy, developer/hotel/arena/shops/etc. of Bixby won't be looking for the Kaiser Foundation to hand him a few million for all that he is doing for Bixby, but Tim Remy did get a lot of financial incentives from the City to step out on faith and build with a relatively very small population. They are all counting on the River Development to boost that development.

susan said:

Bixby hired a an Economic Director with no experience at all, and I was told has a PR person working with her to boost her name in the news even though all these new things that are happening in Bixby were already in place. Politics have a way of doing that.

I visioned a lot for Bixby long before this happened and worked on campaigns and important votes that passed that made it a better place to have business there.

I contacted McDonald's to have one put in for Bixby and also the location at 9lst and Memorial -- both happened. Braum's -- it happened.

The most important success though I had a part in was in getting Walmart's superstore to come to Bixby knowing that if you have that other big name stores will follow which they did.

I still have the letter David Glass, President and Chief Executive Officer of Walmart wrote to me in these beginning stages (it takes several years for all the real estate purchasing, etc. to be worked out). He thanked me and let me know he would be forwarding all of my information I sent him to corporate Walmart's President of Real Estate and Construction.
My first suggestion to Walmart was to build at 9lst and Memorial which they did and then to build a Walmart supercenter at the lllth and Memorial location where they are now which they did.

Susan

susan said:

County Commissioner Fred Perry has been reported to say that between $7 million and $8 million has been included in the revised proprosal to pay for a $2,000,000.00 two million dollar feasibility study. That seems like quite a bit of money. A million here and a million there, pretty soon people forget to focus that a million dollars is a lot of money and where is all of that in between the millions going to?

It would be nice to have I.T./software development businesses in Bixby that Bixby could be known for. When you think Round Rock, TX you immediately don't think of the little place with very little development it used to be but now it is known as I.T. haven.

My husband did a complete feasibility study for the City, but he donated that large feasibility study from all time and from many meetings, research, project data, and educating the City Council and public. He donated the very large detailed feasibility study completely free because there was an emergency need of the City of Bixby, and they had no money set aside to pay for a feasibility study for the emergency issue.

If the River Tax passes and that is why the Mayor is getting all of the City Councilors to come together to say that are for the River Tax. They have at this time no other way to get all these millions of dollars given to them from the River Tax money vote. They don't ever bring up the Vision money -- just the need to pass the River Tax vote so they can get these projects done for Bixby so that these investors can benefit massively along the river front.
Two million $2,000,000.00 is set aside to pay for river land acquisition in Bixby where the sand plants are on the river by the Memorial Bridge. If you look at that ugly site, two million dollars is quite a price and I am sure those sand plant businesses will gladly take their money.

Randi Miller has said the City of Bixby will be among the first to receive $3,400,000.00 three million four hundred thousand dollars in order to build up Bentley River Park because it was Randi Miller's understanding that the park needed to be finished as soon as possible so that a major "investor" is putting millions (that is right MILLIONS of dollars into a development right next to Bently park.

The developer could be Sharon King Davis or George Kaiser and his wealthy friends or several other "investors", but since all of these "investors" will be benefitting from the river development, is there a need to tax the voters at all on the October vote.

The most likely source of the public funding remains from the 0.4 percent Vision 2025 sales tax designated for Boeing but never collected.

Are there other large companies like Boeing in the plan or just making these investors richer?

Doug Dawg said:

Michael, I have to disagree with you, BIG TIME, on this one. I've stated my reasons elsewhere (in local Okc forums and in my blog) many times and no need exists to do so here, in this excellent Tulsa blog (and I've said that many times, too).

As best as I understand it, you guys only get to vote on Tulsa proposals, and that's your business, not mine. Vote as you will on proposals that affect your city, that's none of my affair, and I've never chimed in on that broad topic here, even though I disagree with some of the choices that have been advocated here for Tulsa (most recently, the Riverfront proposal) ... as an OKC guy, that isn't any of my business (despite my fond wishes that Tulsa take advantage of the opportunities presented ... I like Tulsa and I want it to prosper).

As for my city's business and mine, I'm proud that OKC will continue to surge forward, again, with this vote. Most probably, OKC will become an NBA city with this vote within a fairly short span of time. But, even if my expectations about the NBA are not met and OKC does not gain an NBA franchise, we will still have one Jim Dandy arena complex expansion and improvement, and that will only benefit all of Oklahoma City in and of itself. Oklahoma City cannot lose if the pending vote passes, it can only win. And, later, with the Core To Shore referendum, we'll have the opportunity to do that once again.

As to the matter at hand, in a little less than a month I will check the "HELL YES!" option on the ballot ... or just the "Yes" if no varying levels of a "yes" vote are provided!

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This page contains a single entry by Michael Bates published on August 27, 2007 10:16 PM.

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