City of Memphis contemplating suing the NBA over the lockout

The Memphis Grizzlies, the cities National Basketball Association (NBA) franchise, currently play at the FedEx Forum.  However, with the NBA currently locked out, and looking more and more likely that there is going to be a big cutback in the length of the season (or possible no season at all), the city of Memphis has started to worry.  The reason?  The FedEx Forum is actually paid for through revenues produced by the team.  However, if there is no team playing there, then that means the city will have to make the bond payments.  Fox Memphis say the City Council is estimating that these will be somewhere in the neighborhood of $18 million.  Those who will have to bare the burden?  Most likely the local taxpayers.  Things are getting urgent, city councilwoman Julie Fullilove notes:

“Should this lockout stay until December, then there’s a very big bill there that the city of Memphis will be responsible for, and whether or not we file a lawsuit, which may set precedent among other cities in this nation, is something we’ll have to wait and see. But it’s only being proactive that’s he’s offering this resolution.”

So with less than a month and a half away from the deadline when Memphis will start having to cough up some cash to make bond payments, the city has started to look at the potential for a lawsuit against the NBA.  Curiously, when Fox Memphis talked to the individual in charge of the bond, he noted that there is currently a surplus in the account to pay the bond through 2028.  He  even notes that he is confused where the city got the idea that they needed to pay up $18 million soon, and that it would be the taxpayers who would have to pay it.

So there we have it, the City is thinking of suing the NBA for being locked out, claiming it will cost them part of the bond payment.  The guy in charge of bond payments says there is more than enough money for the next decade and a half.  The $18 million doesn’t seem to add up that the city would have to pay because of basketball not playing, as they only receive about $3.5 million a year currently from ticket sales and revenue.  I think this may just be a political powerplay to help the politicians in the city council to look good.  I don’t think it really will do much, and I doubt that they have much of a case against the NBA.  Case in point to this being about politics, the City Council Chairman noted:

“I want the citizens of Memphis to know that we are not sitting by idly, waiting for this to hit us and for us to say we’re sorry.”

Still, it would be curious to see if cities can take action over lost revenue because leagues do not play because of a lockout.  I wonder, would the city sue the players if the players were on strike?

Moving professional sports teams is not economic development, it’s checkers!

At least that is what California Assemblyman Chris Norby is saying about the plans to bring a new stadium (Farmers Field) to downtown Los Angeles in the hopes of bringing the National Football League back to LA.  Norby’s full quote, seems to hit the subject spot on, he notes:

“Moving professional sports teams within the state is not economic development, it’s checkers – and ultimately there is a public price that must be paid,”

That’s right, he is saying that a sport team coming to town is creating something new for the economy, its just moving and shuffling around the spending in town.

This round of talks about having the NFL come back to LA comes hot on the heels of a measure passed by the state, which is expected to be signed into law that would expedite any legal challenges made against the stadium construction plan for Farmers Field.  In the article linked above, it is noted that the revenue from the stadium is already being linked to financing a new convention center downtown.  It seems that Los Angeles and Anschutz Entertainment Group (AEG) who is leading the stadium project are potentially making quite the gamble.

While others are saying the new stadium will create 10,000 new jobs for the L.A. area during these hard financial times, Norby again seems to be skeptical.  The article notes:

Assemblyman Chris Norby, R-Fullerton, questioned the value of many jobs that would be created by a new stadium — ushers, ticket sellers, popcorn vendors and other such positions do not provide long-term stability, he said.

And the research literature seems to back him up.  The only question is if anyone is actually listening to what the research and now, Mr. Norby have to say.

Will LA get an NFL team?

Anschutz Entertainment Group (AEG) has moved closer to building a stadium in Los Angeles, gaining development rights to build a stadium to attract a National Football League (NFL) team.  Last week they gained backing from city leaders, which seemed to put them as the front runners to bring the NFL back to LA.   The frontrunner for moving to LA has been the Minnesota Vikings who were getting close to ending their stadium deal with the Metrodome. Well, Mr. Wilf who owns the Vikings, came out yesterday and said that he is making good progress towards getting a public and privately financed stadium build in Ardent Hills, a Minneapolis suburb.  This could all be talk to keep Vikings fans in Minnesota happy before making a move to the second biggest media market in country.  Or, Mr. Wilf could be playing things smart and seeing if he can get a better deal in the Los Angeles or Minneapolis area.

Either way, both areas seem to have private and/or public backing to build an NFL stadium worth hundreds of millions (if not over a billion) dollars.  It’ll be curious to see who ends up with the Vikings, and whether AEG will go ahead and build the stadium in either case.  If AEG does build the stadium, there are other potential teams they could try to bring to LA in the future if the Vikings decide to stay up North.

Vikings one step closer to a new stadium

The Minnesota Vikings, in need of a new stadium for many years now moved one step closer towards getting a new stadium today by hosting a press conference about a new potential stadium deal.  Ramsey County and the Vikings came to an agreement for a new billion dollar stadium, of which the Vikings would contribute $407 million of the costs.  If the deal is passed, the new stadium will be built ten miles north of Minneapolis.  The big issue is whether the deal will actually get full approval from the Minnesota Legislature to get the other $600 million dollars from public funding.  Pro Football Talk notes that the press conference to announce this new deal was a bit awkward, but is a big step closer towards a new stadium for the Vikings.  It is said the Vikings would be ready to play in the new facility three years from now if the Minnesota legislature passes the bill soon.

I wonder if having the roof cave in because of excess snow during this last football season will help convince people that the Vikings need a new stadium

H/T (Hat Tip) to Shawn for the heads up on this.

NFL Owners walk away from the bargaining table. Is a lockout on the way? Plus some other NFL news…

NFL Owners walked away from the bargaining table on Wednesday and immediately canceled the second day of meetings with the NFL Players Association (NFLPA) on Thursday, as well as canceling an owners meeting which was scheduled for next week.  This means that after two years the owners and players still have not come to any agreement about a new contract, and thus moved one step closer to the lockout which many are dreading.  Gary Roberts, editor-in-chief of “The Sports Lawyer told USA  Today that with the current way things are going, as well as the standard of such labor disputes, that the owners and the players will probably not come to an agreement till September.  So what’s the big issue that is causing the problems?  Well as stated earlier here on the blog, the NFL wants to take back an additional $1 billion a year from the players (bringing the amount they take from one to two billion), the players want more financial transparency from all of the teams.  Some other issues on the table include: Revenue Sharing, Drug Testing, Rookie Wage Scale, an Expanded schedule to 18 games, better benefits for retired players, a new salary cap agreement, and international play.  I think some of these issues like international play could probably be easily agreed upon, but the expanded schedule and new salary cap agreement are probably going to be quite difficult to negotiate.

We are exactly three weeks away from March 3rd, the day when the current Collective Bargaining Agreement (CBA) expires.  In a league which has become some powerful from a financial standpoint, the owners and players both have a lot to lose if there is no agreement until September (or possibly later).  Projections are that the league would be out about $1 billion if they do not get going until September, and thus miss the preseason.  If a new CBA takes longer, the league would lose out on a lot of ticket, concession, and other revenue which goes along with the playing of regular season games.  The players also would lose out on a lot.  The issue isn’t just one about losing potential earnings and not having paychecks worth a good deal of money, but come March 4th, the players will lose their insurance coverage.  Really both sides stand to lose quite a bit if the lockout continues for a long time.

The owners do have a bit of insurance though.  Through various television deals, the NFL owners have guaranteed themselves $4.5 billion even if there is a lockout (that’s about $140 million per team).  The players tried to block the owners from getting this money, which they dubbed “lockout insurance”, however courts ruled that this money belongs to the owner and will not block them from getting it.

In a final piece of NFL news Anschutz Entertainment Group (AEG) owners of the Staples Center and the aforementioned Sprint Center in Kansas City have signed a deal with Farmer’s Insurance giving the insurance company naming rights for the new stadium they are planning to build in Los Angeles to hopefully attract an NFL franchise.  The deal is rumored to be worth around $700 million and would be a 30 year naming deal if the stadium was built.  Current estimates have the stadium construction costs at around $1 billion, thus these naming rights would cover 70% of these estimated costs.  While the NFL owners complain to players that they don’t have the money to build new stadiums because of the poor economy and the high salaries of players, AEG has gone out and shown the NFL that in some markets, the demand is high enough for a stadium project to potentially be worth private investment.

Probably the best moment of all of this lockout stuff in the last two weeks?  When Chad Johnson (Ochocinco) pictured above appeared at the State of the NFL address as a member of the media (he started his own media company, the Ochochinco News Network) and proceeded to try to grill NFL Commissioner Goodell about the lockout demanding that Goodell give an honest answer when this deal would get done.  Goodell of course dodged the question with an answer that really didn’t give a true answer.

All signs point to no deal anytime soon.  If the NBA goes to a lockout as well, the NHL may be the only major professional sport league playing in the winter next year in North America.

West Ham vs Tottenham, the Battle for the Olympic Stadium

This week the Premier League clubs West Ham United and Tottenham faced off in a battle for the ages, this one was not on the pitch, but was rather waged over the control of the 2012 London Summer Olympics Stadium.  The stadium which has been under construction will seat about 80,000 for the Olympic games and will be used for the opening and closing ceremony, as well as track and field events.  Originally the plan for the £537 million stadium was for it to be converted down to a 25,000 seat stadium to host athletic and other events after the Olympic Games.  In November of 2010, things got a bit more interesting when it was announced that there were two final bids for the stadium, both of which were coming from two notable Premier League clubs.

The first bid by Tottenham was also partially backed by Anschutz Entertainment Group (AEG), who are famous for their work on the Staples Center in Los Angeles, the Sprint Center in Kansas City, and potentially a new football stadium in Los Angeles next to the Staples Center.  Some had said that the AEG-Tottenham joint bid was a sure winner, especially after AEG converted the Millennium Dome into the O2 Arena, which is the world’s largest grossing concert arena.  The bid for the Olympic Stadium was said to a minimum of £250 million to convert the Olympic Stadium into a 60,000 seat venue for both Tottenham and large-scale concerts.  Tottenham’s biggest criticism seemed to be that the team is based a whopping 5 miles away from the Olympic Stadium, which is noted as being quite an issue for its supporters to travel.

The second from West Ham, U.S. based concert group Live Nation, and the Newham Council.  This plan decided to keep the track around the pitch in the stadium, and convert the venue into a 60,000 seat venue for West Ham matches, concerts, as well as other future athletic events.  It was reported by ESPN Soccernet that the Newham Council had given at least £40 million backing to the West Ham bid, which is said to be a conversion that will cost around £100 million.  The main issue with the West Ham bid seemed to be that the team was going to move out of 35,000 seat Upton Park to a stadium with 25,000 more seats, making some think that they would not be able to fill the Olympic Stadium.

As things began to heat up in the battle, both bids were presented with arguments from both clubs in the London Evening Standard.  In effort to try to make their bid even more pleasing Tottenham offered to even renovate Crystal Palace’s training facilities.  Today it was reported by the BBC that West Ham’s bid had won, and that the Hammers would be moving in at the new tenant after completing conversion of the stadium after the Olympics.  Where does that leave us?  Well Tottenham will probably now have to go back and start looking at their plans to move just north of the current location of White Hart Lane and build a 56,000 seat stadium as they had originally planned, and as had been approved by the Mayor of London.  That leaves Upton Park, which the club is claiming could be vacated and be used for redevelopment by 2014.

Green Bay Packers Stock

I came across an interesting article on the stock that has been issued by the Green Bay Packers over the years.  Rather than simply extort money from the local government when they needed cash for things like the renovation of Lambeau Field, or other big ticket items, the Packers have periodically issued some very limited equity offerings.  The Packers have a unique organizational form for the NFL.  The team is a publicly owned nonprofit corporation that was incorporated in 1923.  While this organizational form is relatively common in Europe, especially in Germany, and also exists in the Canadian Football League, I believe that the Packers are the only “Big 4″ professional sports team with this organizational form in North America.

About 4.7 million shares are held by 112,158 stockholders.  No individual can own more than 200,000 shares.  Packers shares cannot be trades and the team pays no dividend.  Shares can be resold to the team at a small price.  The first stock issue, in 1923, raised $5,000.  The last, in 1997, raised $24 million for the renovation of Lambeau Field.  The team holds an annual meeting where stockholders can vote on the board of directors.  As an incorporated nonprofit, the Packers issue annual audited financial statements.   I have not been able to locate a link to those audited financials, but the article linked above discusses some information in recent reports.

LA Football Stadium Designs

The push for professional football in Los Angeles has been getting some more solid backing in the last month.  Early in December it was reported that Los Angeles Lakers legend, Magic Johnson was putting together the money to try to put up a bid to bring a professional sport franchise to Los Angeles.  It was even noted that Magic sold all 100 Starbucks franchises which he owned, bringing in what is estimated to be around $100 million to the money he had already been raising.

The lack of a National Football League (NFL) team in Los Angeles since Al Davis moved the Raiders north to Oakland in the mid-1990′s (where he would be right next to another team, the San Francisco 49ers).  The Raiders had trouble selling out their 90,000 seat stadium (the Coliseum) at that time, and thus games were subject to blackout in the Los Angeles area.  It was because of this that Al Davis felt the need to move to Oakland.  In more recent years, Los Angeles has been something that teams in the NFL wanting new stadiums have used over and over as their way to get funding for the stadium.  Simply put, having no team in Los Angeles allowed teams to threaten to move to LA unless local governments built nice new stadiums for them.  The city of Los Angeles itself has had many talks and discussions about bringing in a new team, and the discussion has always lead to whether teams should use the Coliseum, or build a new stadium.

Anschutz Entertainment Group (AEG) is helping to push things forward as they have now announced three finalists for designs of a football stadium for LA.  The stadium would be built on the lot next to the Staples Center (also owned by AEG), and is thought to be a big push towards bringing a team to the city.  I can see some issues with this though.  AEG is taking a bit of a gamble if they go ahead and build a stadium without knowing for sure that they are bringing a team to LA.  Already AEG has spent money on the Sprint Center in Kansas City in the hopes of attracting a National Basketball Association (NBA) team to KC, yet the building still sits there without a professional franchise playing there.  While they have been able to host conventions, concerts, and a few college basketball games and NBA exhibitions, there is no future guarantee of a permanent tenant.  A football stadium in LA could be an even bigger disaster.  Events and concerts are already held at the Staples Center, and thus a new football stadium may not have as many events and concerts as the Sprint Center does.  Additionally, the lack of a permanent tenant in a football stadium in one of the largest markets in the country after spending an estimated $1 billion on such a project could be a problem.

Also, AEG isn’t the only one trying to build this stadium, Ed Roski, a LA Real Estate developer has gone to the city claiming that he could build a stadium for cheaper within the city.  It seems that there is a race between AEG and Mr. Roski, yet this could be a losing battle for whichever side wins, especially if they have to help foot the bill for an empty stadium.

You can click here to see the three finalists that AEG has chosen.

Investing in MLB Player Futures?

Old fashioned financial instruments like stocks and bonds aren’t paying the rate of return they used to, I guess.  The New York Times reports on an emerging investment trend: aspiring MLB players in Latin America.  Some US “investors” with ties to sports agents (shocking!) are setting up baseball “training academies” in the Dominican Republic.  These academies enroll kids as young as 13 who aspire to a professional baseball career and provide them with a place to live and baseball training.  If/when the kid signs a contract with a MLB team, the investors take a cut of the signing bonus.  The fraction of the signing bonus taken by the investors can be as high as 50%.  The trainees don’t attend school – they spend 100% of their time in baseball training.  One owner claimed that his operation will generate $1 million in profits this year on a $400,000 initial investment.  Not a bad rate of return in the current financial environment.

The article suggests an unsavory element to the process, hinting that the academies exploit the trainees.  The training facilities could be charitably described as “spartan.”   One is surrounded by a barbed wire fence and “contains one large bedroom with bunk beds and a small bathroom with two showers” for 30 trainees.  I have no idea about the state of primary and secondary education in the Dominican Republic, or what sort of job prospects these kids face there.  The article does not describe the quality of training they receive. I have no idea what fraction of the trainees sign major league contracts.  If these young men sign major league contracts that they would not be able to sign without attending the academies, then they are getting a significant benefit from attending the academy.

The driving force behind this investment vehicle is the fact that the MLB draft covers only players in the US and Canada.  Prospective baseball players from the rest of the world are not subject to the MLB draft, and can be signed by MLB teams as free agents.  Hence the significant signing bonuses and the young age of many of the players.  If these prospects were subject tot he MLB draft, the signing bonuses would be reduced because of the monoposony power generated by the draft mechanism.  Of course these academies would not exist if not for the potential profit to be made from these signing bonus.

Liverpool + Moneyball = Unhappy Fans & Media?

The Liverpool sale has been widely discussed here by both Brad Humphreys and James Reade.  Just recently, Paul Hayward of The Guardian wrote up an editorial piece about how it would be bad news for Liverpool if their new owners took a Moneyball approach to managing the club.  The author perpetuates fear of statistics and analytical thinking and analysis of players in sport, especially in football (soccer).  Mr. Hayward especially notes that Arsenal, one club in Europe who is run with such an approach by their manager Arsene Wenger (who has a degree in economics).  He claims that the dictatorship that Wenger runs at Arsenal has been bad for the club, and lead to many bad decisions, yet if one looks at the standings over the last few years, it is quite clear that Arsenal seems to have fared better from one year to the next.

Two reconnaissance stops were the clue. At Fulham, where Roy Hodgson, coincidentally, was manager, success sprang from the restoration of stalled careers – Danny Murphy, Bobby Zamora, Zoltan Gera – and the digging out of hidden treasure (Brede Hangeland). At Arsenal, NESV was touring the Bloomingdales of worldwide scouting: a club where analytical models were so ingrained that Arsène Wenger shipped out Gilberto Silva for taking a fraction of a second longer to redistribute the ball than he had a season earlier.

The authors main argument: statistics may work for baseball in North America, but they will not work for football in England.  He even states:

The urge in matters of scouting is to defend not a computer model but the human eye, intuition, knowledge, the moment of revelation. There was no Moneyball when Liverpool spotted Kevin Keegan or Alan Hansen or when Manchester United, to quote Sir Alex Ferguson, first saw on a parks pitch a young, spindly Ryan Giggs – “a dog chasing a piece of silver paper in the wind”.

Already, this piece has seemed to pick up some ridicule from popular sport sites in the U.S. , though I will be curious how it is received in the U.K.  I understand many fans are suspicious of people using numbers and stats to understand their favorite sport, but if the results produce wins, should they really complain so much?  Looking at the Arsenal model again, they seem to have done quite well both on the field and financially in the last few seasons.