Category: Economics

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Depraved Owner of the Week: Tom Benson

Tonight the Bulls take on the New Orleans Pelicans, viagra buy ampoule or last season’s Hornets by another name.  So let’s take a look at Louisiana taxpayer “investment” in the various enterprises of Pelicans owner Tom Benson, site view or extortion by another name, thumb in this holiday double-length edition of Depraved Owners.\n\nName: Tom Benson\n\nNet Worth: $1.3 billion\n\nTeam: New Orleans Pelicans (formerly Hornets)\n\nForbes Team Valuation: Value $340 million; Revenue $100 million; Operating Income $3.3 million\n\nTenure: Since 2012, when he acquired the Hornets for $338 million.  Good luck with that!\n\nArena: New Orleans Arena (1999)\nOriginal Capital Cost (2010): $160 Million\nOriginal Public Capital Cost (2010): $160 Million (18%)\nSource: Judith Grant Long, Public-Private Partnerships for Major League Sports Facilities (Routledge)\n2013 Renovations: $50 million\nPublic Cost: $50 million\n\nCost of Game for a Family of Four (2012-13): $220.40\n\nOngoing Subsidies:\n\nIt’s difficult to separate Tom Benson the Pelican’s owner from Tom Benson the New Orleans Saints NFL team owner, and why try?  Through his ownership of both teams and property adjacent to the taxpayer-owned New Orleans Arena and Mercedez-Benz Superdome, Benson regularly receives oodles in renovation funding and tax breaks from the government.\n\nHere’s part of the recipe for the subsidy gumbo that Benson has cooking with the state of Louisiana Continue reading

ChicagoWorkers

How About a Hotel Tax for Workers?

Hotel taxes are how public financing of sports stadium construction for private companies gets done.\n\nHere’s how it works historically and in principle:\n\n1. The owner of a beloved sports team threatens to leave town if the city/county/state doesn’t build the team a new state-of-the-art facility.\n\n2. Politicians—facing tight budgets, no rx malady but craving private-industry allies and nervous about facing crazed sports fans—agree to pony up.\n\n3. Knowing that raising taxes on citizens for such a thing—especially when public schools and transit services and police forces face budget cuts—wouldn’t sit well with voters, see legislators introduce a new hotel tax to be paid by tourists who stay in local hotels and controlled by some freshly minted government sports facilities commission made up of appointees.\n\n4. The commission issues bonds for the stadium (backed by the government) and pays principal and interest and for ongoing stadium improvements using the hotel tax revenues, while operating outside of the workings of day-to-day, elected-official, as-the-founders-imagined-it-type government.\n\n5. The sports team gets their stadium, sports fans are psyched, taxpayers don’t seem to mind so much, and the politicians get to keep the whole dirty business at arms length: everybody’s happy!\n\nIn Chicago, the commission that manages the stadiums is called the Illinois Sports Facilities Authority.  In practice, hotel taxes cover about 70% of the ISFAs expenses.  Politicians rarely mention the $10 million in direct taxpayer subsidies that go to the ISFA every year, or that the city has to make up for any shortfalls in hotel tax revenue, but the hotel tax pays for the stadiums for the most part.\n Continue reading

HerbSimon

Depraved Owner of the Week: Herb Simon

A look at Pacers ownership before the Bulls visit Indiana on Wednesday night.\n\nName: Herbert Simon\n\nNet Worth:  $1.95 billion\n\nTeam: Indiana Pacers\n\nForbes Team Valuation: Value $383 million; Revenue $98 million; Operating Income $10.9 million\n\nTenure: Herb and his brother Mel purchased the team in 1983. Herb became sole owner after Mel died in 2009.\n\nArena: Bankers Life Fieldhouse\nTotal Cost (2010): $262 Million\nTaxpayer Cost (2010): $252 Million (96%)\nSource: Judith Grant Long, buy cialis sovaldi sale Public-Private Partnerships for Major League Sports Facilities (Routledge)\n\nOngoing Subsidies:\n\nIn 2010, the Capital Improvement Board of Marion County agreed to give Herb Simon and the Pacers $33.5 million over three seasons after the owner complained that he couldn’t make money at the eighteen-thousand seat facility the state built for him, where he pays no rent and keeps all the revenue.\n\nIn December 2012, the CIB decided to pay the Pacers $10 million more in 2013, after the team agreed to extend its lease with the city one more year until 2019.\n\nIn August of this year, the CIB committed $11 million to Herb Simon and the Pacers in 2014 to “offset losses from operating Bankers Life Fieldhouse.”  The team will receive an additional $10 million next year for renovations to the arena.\n Continue reading

Cell_Sold

US Cellular Field and Soldier Field: The Gifts that Keep on Taking

It’s commonly known that there are three types of people in Illinois: 1.) people who have no idea that their tax dollars are used to subsidize professional sports teams, ed malady 2.) people who know that their tax dollars were used to build expensive stadiums for pro sports teams, online advice and 3.) people who know their tax dollars were used to build expensive stadiums and that subsidy payments for these stadiums are ongoing.\n\nFor the people who fall into the “no idea” category, let me be the first to tell you that Illinois taxpayers have contributed about a billion (inflation-adjusted) dollars to the construction and renovation of U.S. Cellular Field and Soldier Field, home of the Chicago White Sox and the Chicago Bears.\n\nOf course, our broke-ass state didn’t have all of this money on hand when our elected officials voted to spend it.  They borrowed heavily by issuing state-sponsored bonds through a government entity called the Illinois Sports Facilities Authority (ISFA).  The interest and principal payments on all of this bond debt cost Illinois taxpayers $33.5 million in 2012.  Much of the bond debt is backloaded, so it gets more expensive for taxpayers over time; debt service payments for Soldier Field, for example, will cost $88.5 million in 2032.\n\nSo for the people in the “aware of the initial but not the ongoing costs” camp, the annual debt payments outlined above are one thing, but the state also pays tens of millions every year to maintain the stadiums that the Bears and White Sox use almost exclusively.  From 2008 through 2012, revenues to the state from these sports venues have ranged from about $2 million to $4 million per year, while state spending on maintenance and improvements for our sports stadiums has between $10 million and $35 million annually.  All told, the state of Illinois has taken a bath to the soggy tune of more than $76 million dollars on its pro sports stadiums over the last five years on record.\n Continue reading

RW

Blackhawks Employ Old Hidden Profits Trick

If there was such a thing as a sports owners playbook the bread and butter play would be “cry poor.”  It’s actually a trick play, ask look variations of which include “blame players’ salaries” and “damn taxes!”  Some old timers just call it “the hidden profits trick.”\n\nFor team owners, pilule the objective is not two-points or a touchdown of course, no rx but to score more profits.  Ticket price increases and hundreds of millions in public subsidies are really good for the bottom line, but any owner running the straightforward “more profits in a market that will bear it in cities that will give it up” play might be stuffed at the goal line.  Why run that when the dazzling “cry poor” play is converted for a score almost every time?\n\nAnd veteran owners know that if you can employ a decoy, someone to help sell the fake—politicians, economists, journalists, etc.—chances of successfully executing the “cry poor” are much improved.\n

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\nThe Blackhawks are raising ticket prices again in order to gain another $10 million in revenue, according to Crain’s Danny Ecker. Hawks owner Rocky Wirtz and Crain’s claim that the hockey team is a financial loser buoyed by profits from Wirtz’s other businesses.\n\nSo the average price of admission to a Blackhawks game next season will be nearly $73, or a 40 percent increase since ’08-’09.\n\n“It’s all part of Mr. Wirtz’s effort to get the team to turn a profit on its own merits,” writes Ecker, citing a “Crain’s estimate” of annual Blackhawks losses between $10 million and $20 million and linking to another Crain’s article from June of this year.\n\n“[Y]ou don’t want (the team) to be dependent on some other business to siphon off profits,” Rocky Wirtz told Crain’s back in June.\n\nThat’s right, the Blackhawks—Stanley Cup champions two of the last four seasons, operating in a huge sports market, setting highs for television ratings and merchandise sales—must siphon profits from other businesses.\n\nWell, it depends on how you define “other businesses.”\n Continue reading