Tuesday, January 09, 2007
Plan C: Too Much, Too Late
It’s amazing what happens when a professional sports team threatens to leave. Politicians trip over themselves to give away money they really don’t have. The Pittsburgh Penguins have threatened to pack up their sticks and move to Kansas City if they don’t get a new “free” arena. And by “free” they mean at no cost to themselves.
The Governor, County Executive, and Mayor have heard the team’s warning and have put together a very generous proposal, at least for the team, called Plan B. This plan relies on money from the slots parlor that will soon open its doors in Pittsburgh ($7.5 million per year), as well as money from the state’s share of gaming proceeds ($7 million). The team will be responsible for an upfront payment of $8.5 million, an annual payment of $2.9 million, as well as foregoing $1.1 million in naming rights revenues. In return, the team will reap revenues from non-hockey arena events, including rentals, concessions, parking, and others along with all hockey produced revenues—a pretty sweet deal for the team considering that these revenues could top $20 million per year.
But one City Councilman (and mayoral hopeful) wants to take it one step further by promising the team a share of profits from a promised redevelopment of the lower Hill District—a $350 million development project being promised by Pittsburgh’s slots license winner. The Councilman suggests that the Penguins should be offered a chance to partner in the redevelopment. If the team does not want to redevelop its own arena, how interested will they be in redeveloping the area around them?
He says the deal is similar to what the Steelers and Pirates received, as both teams will receive revenues from the development between their two stadiums. However, these teams do not receive money from this development other than parking, they only have a say in what development takes place. The Steelers have talked about building an amphitheater on this land, with help from taxpayers, but would not have shared profits with the Pirates.
Finally, since the team’s 30 day clock has already been running for several days, its seems extremely optimistic to believe that all the relevant parties can reach a timely agreement on an arrangement infinitely more complex than Plan B.
The Governor, County Executive, and Mayor have heard the team’s warning and have put together a very generous proposal, at least for the team, called Plan B. This plan relies on money from the slots parlor that will soon open its doors in Pittsburgh ($7.5 million per year), as well as money from the state’s share of gaming proceeds ($7 million). The team will be responsible for an upfront payment of $8.5 million, an annual payment of $2.9 million, as well as foregoing $1.1 million in naming rights revenues. In return, the team will reap revenues from non-hockey arena events, including rentals, concessions, parking, and others along with all hockey produced revenues—a pretty sweet deal for the team considering that these revenues could top $20 million per year.
But one City Councilman (and mayoral hopeful) wants to take it one step further by promising the team a share of profits from a promised redevelopment of the lower Hill District—a $350 million development project being promised by Pittsburgh’s slots license winner. The Councilman suggests that the Penguins should be offered a chance to partner in the redevelopment. If the team does not want to redevelop its own arena, how interested will they be in redeveloping the area around them?
He says the deal is similar to what the Steelers and Pirates received, as both teams will receive revenues from the development between their two stadiums. However, these teams do not receive money from this development other than parking, they only have a say in what development takes place. The Steelers have talked about building an amphitheater on this land, with help from taxpayers, but would not have shared profits with the Pirates.
Finally, since the team’s 30 day clock has already been running for several days, its seems extremely optimistic to believe that all the relevant parties can reach a timely agreement on an arrangement infinitely more complex than Plan B.
