As Beckham presses case in Miami, soccer deals a mixed bag for cities around the country
A review of Major League Soccer stadium agreements across the country shows most facilities have benefited from significant public funds.
03/29/2014 4:00 PM
03/30/2014 4:59 PM
Miami-Dade County plans to charge David Beckham some amount of rent if he builds a Major League Soccer stadium on public land. But across the country, government hasn’t necessarily done well as professional soccer’s landlord.
Only two of 12 existing MLS stadiums have been built without local tax-payer funding for construction — as Beckham and his investors have promised to do — and on public property, a Miami Herald analysis has found. And the terms of those deals, in Los Angeles and Columbus, Ohio, were quite different, leaving little in the way of a blueprint for Miami-Dade.
The county isn’t looking for precedent as it considers crafting its own agreement, Mayor Carlos Gimenez said.
“I don’t look to the other stadiums,” he said. “What I said I want is fair market value for rent.”
“Fair” is subjective, but at least one of the two existing privately funded stadiums on public land seems to have gotten relatively cheap land for construction.
Last year, California State University-Dominguez Hills, home to the StubHub Center where the LA Galaxy and Chivas USA teams play, received just under $800,000 in rent and shared profits from the 88-acre stadium and sports complex, according to the university. That’s about $9,100 an acre.
For comparison, consider that in 2013, administrators for the state-owned fairgrounds in Ohio, which houses the Columbus Crew Stadium, said they took in about $335,000 from the 15-acre facility — about $22,300 an acre.
Comparing land values is difficult, particularly between a large market like Los Angeles and a smaller one like Columbus. It’s just as tricky to weigh complex stadium deals side by side. Some involved low-interest financing subsidized by the government. Others included improvements to roads and pipes.
The Herald analysis, which relied on public records, media reports and interviews with MLS and local officials across the country, compared the total cost of the soccer-specific stadium projects. It excluded investments in larger redevelopments, which are sometimes planned around stadiums. It included land value if the government purchased property specifically for soccer.
The Herald found that only one stadium, which is under construction in San Jose, Calif., has relied solely on private funds and private property. In all other cases, local or state governments have contributed at least the land, in return for varying levels of payment, or gone as far as to pay for the whole thing.
“Usually, the community puts in some portion of the funding,” MLS President Mark Abbott said. “This has been a successful strategy for us.”
The proportion of public funding has generally increased over time, he added. The Columbus and Los Angeles stadiums, built in 1999 and 2003 respectively, were the first two to be constructed for MLS.
If Miami-Dade were to follow a similar model with private construction funds and public land, it would be unusual, said Abbott and John Alschuler, the real-estate development adviser working for Beckham, whose first-choice stadium site is on county-owned land at PortMiami.
“This is not a typical MLS deal,” Alschuler said. “A typical MLS deal would require a significant public subsidy.”
Except in San Jose.
There, owners of the San Jose Earthquakes partnered with developers to purchase 14.5 acres from the city, which had acquired a total of 75 acres using bonds and federal grants for a planned airport-related project that kept shrinking until the municipality didn’t need so much land anymore.
San Jose bought the land for about $25 a square foot and sold the stadium portion to the developers for about $11 a square foot — about $480,000 an acre — said Nanci Klein, the city’s real-estate director and deputy director for economic development. The discounted rate took into account the public benefit that would be derived from the stadium, she said. A practice field and public fields are planned adjacent to the facility.
The stadium is expected to anchor a larger hotel-and-commercial complex built by the same developers, who are in negotiations to purchase the remaining property from the city, according to Klein, who said she’s proud San Jose has a privately funded stadium going up on private property, paying taxes.
“We love it,” she said.
The city hasn’t seen any profits from the project yet, though, and it remains to be seen how well the Earthquakes will do financially once the stadium opens.
South Florida is especially sensitive to public involvement in sports deals in the wake of the Miami Marlins’ ballpark, which was largely publicly financed and contributed to the resounding recall of former County Mayor Carlos Alvarez.
Gimenez, his successor, has said the county would lease port land to Beckham’s team for more than just symbolic rent if the investment helps create a public space. Renderings of the potential project show a plaza in front of the stadium with steps leading down to Biscayne Bay and a pedestrian walkway connecting it to the mainland. After building the nine-acre stadium, Beckham’s group is interested in overseeing development for the rest of the 36-acre site.
Qualifying for an MLS franchise requires a commitment to build a stadium, which allows teams to profit from concessions, naming rights and events such as concerts. Miami is slated to become the league’s 21st team.
Thirteen MLS stadiums have been built since 1999, including the one under construction in San Jose. One of them, in Montreal, was not built for MLS but renovated with public dollars once the Montreal Impact team joined the league.
A 14th stadium has been approved in Orlando, where the government has begun eminent-domain proceedings to take over a church that did not agree to terms to sell its property. An expansion team is scouting locations for a 15th stadium in New York City.
The 19-year-old league’s other five teams play in stadiums that were not built for professional soccer. Game-day attendance per stadium across the league averages about 18,000 fans.
For now, Beckham and his investors have planned a 25,000-seat stadium, though if the franchise were to partner with the University of Miami, it would consider going up to 40,000 seats.
While not seeking county funds for construction, the Beckham investors are lobbying for a state subsidy that could amount to $40 million over 20 years. The group has not said how much it expects the stadium to cost or how much money it would have to bring in for it to make business sense.
MLS doesn’t fund stadiums itself. But the league functions a little like a cooperative in which teams share some revenues — so its leaders have no interest in seeing franchises making huge stadium investments that could hurt their bottom lines, said Rick Eckstein, a sociology professor at Villanova University in Pennsylvania who has studied stadium financing and criticized publicly backed deals.
He likened stadium agreements, with all their fine print, to sausage-making: “You put things in, and you don’t want to know what it is.”
A key problem, he said, is that team owners often talk up development around a stadium site, but local governments don’t always include a contract provision requiring that franchises follow through.
“This is standard fare for stadium deals,” Eckstein said. “Something is promised and when they don’t deliver on it, it doesn’t matter. There’s no ramifications.”
Sometimes, it’s the stadium itself that overwhelms public finances.
The suburb of Bridgeview, Ill., got heavily into debt to finance all of the $96 million Toyota Park for the Chicago Fire in 2006. A 2012 report by the Chicago Tribune headlined “Soccer Ball and Chain” found that the project had caused the village to incur a sizeable debt — and some years the village fell so short of its debt payment that the gap amounted to the size of its police budget. The average homeowner’s property-tax bill tripled in less than a decade.
A Bridgeview village spokesman declined to comment.
In another instance, the town of Harrison, N.J., borrowed money to purchase land and build parking for the otherwise privately funded New York Red Bulls’ Red Bull Arena, which opened in 2010.
The small town took on so much debt that its credit rating at one point was downgraded to junk status. Harrison also sued the Red Bulls after the team refused to pay property taxes on the stadium. A judge ruled in Harrison’s favor, but in the meantime the municipality had to cut jobs and hike its property-tax rate.
The town did not respond to a request for comment.
Not all stadiums have led to financial woes.
The state of Kansas and Wyandotte County covered 75 percent of the cost to build Sporting Kansas City’s $200 million namesake park, which opened in 2011. Two of the team’s owners, who are top executives at a medical computer systems firm, were required to build an office park and move more than 4,000 highly paid workers into the same area as the stadium.
The debt the city took on to finance the stadium is being repaid more quickly than expected. And half of the office park has already opened, said Lew Levin, the county’s chief financial officer. In the past year, two high-end apartment complexes have gone up within two miles of the stadium, he added.
“Our elected officials have said they would not have supported this project without the commitment of that office campus,” Levin said.
In Houston, the city and Harris County spent a combined $35 million in land acquisition and infrastructure improvements for BBVA Compass Stadium, which was built by the owners of the Houston Dynamo in 2012 for an additional $60 million. A new community redevelopment agency funnels tax dollars back to the neighborhood, which has seen new investments in commercial and residential property, said David Turkel, director of the county’s community services department.
“It was just dead,” he said of the area, on the edge of Houston’s downtown, before the stadium agreement. “That was kind of a spark plug. Now you’re talking about a major convention hotel coming in.”
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