Monday, December 15, 2008

The Other Side of the Coin

Today over at KC Soccer Review I came across a commentary from Bruce Rodgers on @KC Online about the redevelopment at Bannister Mall. It's a generally negative article about the burden being put on tax payers. There are a few points in his commentary that I would like to comment on, and it gets a little long.

As it is when developers seek to burden taxpayers with risk they won’t fully assume themselves, the numbers are all over the place. The $273 million figure in TIF assistance has also been listed as $267 million and $260 million — it all depends on which media outlet is reporting. Nailing down the total cost for redeveloping the abandoned Bannister Mall area also depends upon which news outlet referenced. The Kansas City Star first reported $943 million, a year later $949 million, the Kansas City Business Journal duplicated the Star’s figures and, until recently, Lane4 uses the same amount on its website. A $1 billion to $1.1 billion pops up in articles from commercial real estate development trade publications and websites, and on blogs commenting about major league soccer.

First is the above comment about not having the full price of the project and therefore not the full price that the city and state is covering. What he doesn't mention is that with basically any project there is going to be fluctuation with the price of the project, you're not going to get a straight number on the whole project until it is finished. Up unto this point, that it's just the expected cost of the project. It's the same with the redevelopment of the Truman Sports Complex for the Chiefs and Royals. And like with that redevelopment, the overages are going to be covered by the team/developers. Unlike that development, the team/developers are actually covering the costs of the majority of the development.

Rodgers then says this:
And for taking on this outrageous burden, what will the taxpayers get? As consumers fear more job losses, as businesses continue to layoff employees and retail consumption falls to record lows, Lane4 proposes over 1.1 million in retail space, 1.7 million in office space, 12 soccer fields, a hotel and an 18,500-seat soccer stadium for the Wizards.

He seems to be trying to make a snide comment about what the taxpayers get from the development and talks about the current financial situation in the country. What he seems to miss in his statement is that this development will create jobs for people that are currently being laid off. It will create construction jobs for the next few years while the development is being completed. Once it's completed more new jobs will be created as people will be needed to work in the new area.

Rodgers then goes on to talk about the number of people the development will bring to the area. He questions the numbers saying that if so many people come into the area, then why haven't the Chiefs and Royals had commercial built up around the Truman Sports Complex. My take on why? Because the teams get the money from parking fees to get into the complex. Giving up land to developers to develop the area would likely cut into the money that the team can get from parking, and Glass and Hunt are going to definitely want to keep that money.

He goes on to touch on numbers for the vacancies that are available in shopping centers in South KC. Most of that vacancy likely comes from the open buildings currently in the mall and the surrounding area.

Rodgers then goes on to make this statement:
Buckley admitted the down retail market in a Sept. 19, 2008 article in the Kansas City Business Journal: “I think Eastern Jackson County is a lot like other parts of the city that are pretty well retailed and probably needs to take a little breather,” he is quoted.

It must of have a quick turnaround in market forces because on Sept. 4, 2008, Buckley was quoted on the website as stating, “There is a huge void of retail in this area.”

Maybe it's me, but I don't consider the Bannister area as being Eastern Jackson County. And even so, Buckley is talking about two different situations. In the second quote, Buckley is referring directly to the Bannister area, which certainly has a huge void in any type of retail there.

Rodgers then throws out this gem about MLS and the current expansion.
Overall, MLS attendance has dropped 1.9% for 2008 from 2007. Because of those numbers, expansion plans for the league are meeting resistance. Montreal, one city talked about for expansion, has its opponents to a MLS team there and there’s talk of an all-Canadian soccer league instead of going with MLS franchises. In summing up a MLS team in Montreal, Pat Hickey wrote on, “Looking for growth? It’s nonexistent. The average attendance is lower than it was in the league’s 1996 inaugural season.”

What he doesn't mention in the fact that attendance fell in 2008 is the fact that two of the league's teams played the majority of their games in stadiums that seat just over 10,000 people (KC and SJ). With that being said, of course attendance is going to be down when those two teams are usually getting about 10,000 fans a game.

He then uses the drop in attendance as a reason why the leagues expansion are meeting resistance and specifically notes Montreal. This is a blatant, flat out lie. IF this was true, then why were there 7 bids from investors willing and ready to invest in the league? Why are there still 6 of those bids on the table? The only one pulled, was Montreal, who pulled out/was dropped because the investor didn't want to pay the expansion fee along with the cost of upgrading the stadium in Montreal that they would be using, it had nothing to do with the attendance.

Rodgers again shows a lack of knowledge of the sport by saying there's talk of an all-Canadian soccer league. If there is such talk seriously going on, it's something that I haven't heard or seen, and I spend a lot more time reading about soccer than Rodgers does.

He then goes and says the only reason this development is being done is because the developers have the support from the taxpayers, and so that OnGoal can recoup their investment and then sell the team.

I'd love to see where he's getting that thought process from. Why would the two Cerner Corporation executives, co-founder Neal L. Patterson and co-founder Cliff Illig, who are in OnGoal, want to hurt their standing as "heavyweight civic leaders" as Rodgers says by selling the team and leaving the city on the hook for the stadium and development? He makes the statement "One can assume buying the KC Wizards was an investment for the six, community spirit notwithstanding." but doesn't give any reason behind this statement, just seems to be bitter.

The next thing that Rodgers touches on is the soccer specific stadium.
Obviously, MLS wants to increase the worth of its franchises. One of the ways the league believes it can do that is through expansion into cities that will provide a team a “soccer-specific” stadium. Such a facility — goes the theory — will increase attendance, or if not, at least increase the worth of the team’s franchise and overall MLS.

His talk about it being a theory is misplaced, considering Garber has said that 5 of the 7 teams that played all of last season in an SSS (LA, Dallas, Chicago, Denver, and Toronto) were expected to make a profit next year. That number should increase next year, with RSL getting a full season in their own stadium as well as Seattle coming close to being profitable with their good deal at Qwest, shirt sponsor deal, and large season ticket base already. New York should be joining them in the future too once Red Bull Park is complete. As I've shown, the teams that are in SSS have increased their value by becoming profitable in an SSS.


Unknown said...

In reference to your last point about teams being profitable and mentioning shirt sponsors, why don't the wizards have a shirt sponsorship?

Anonymous said...

My speculation on the lack of a shirt sponsor for the Wizards is that they are waiting to sell when the price is highest. They want significant money to give up the front of the jersey, and will be better positioned to get that money if they sell the space in conjunction with the new stadium opening etc.

Similar to stadium naming rights, the value is higher if you're the first to get the rights. If they sell the jersey space now, they will undercut what they can get in 2010-2011.