Recommendations from Rice University’s Severe Storm Prediction, Education and Evacuation from Disasters (SSPEED) Center. But do we have enough financial clout to pull this off while financing an array of expensive urban boondoggles?
The Houston area’s entertaining football season kicked off with high school and NFL pre-season football over the past couple of weeks. But the season really takes flight this weekend as the University of Houston hosts UCLA at Robertson Stadium. And for a variety of reasons, that game will be among the most interesting of the first weekend of the 2011 college football season.
The return of exceptional UH QB Case Keenum for his sixth (!) season is one of the obvious storylines. But an even more interesting one is whether UH head coach Kevin Sumlin will be able to steer the Cougars to a key win over a BCS conference opponent in what is his most important season of his 23 year college coaching career.
Last October, as UH’s football season hung in the balance after Keenum was knocked out for the year, this blog post noted that how the Cougars finished the season would go a long way toward defining the direction of Sumlin’s head coaching career.
Unfortunately, the finish wasn’t what Sumlin wanted. After wins over SMU and Memphis had the Coogs entering November 5-3, UH finished the season 0-4, albeit against good teams (UCF, Tulsa, Southern Miss and Texas Tech).
But add to that disappointing finish the fact that Sumlin’s Coogs lost to Rice for the second time in Sumlin’s three seasons at UH and legitimate questions arise over whether Sumlin has what it takes to build a consistent winner on Cullen Avenue.
There is no question that Sumlin can coach offense. Even after losing Keenum last season, the Cougars ended the year fifth in the Football Bowl Subdivision (“FBS”) in passing, 11th in total offense and 13th in scoring. Not what it would have been had Keenum been at the controls all season, but not bad considering that a true freshman QB (David Piland) was under center after Keenum and his backup (Chase Turner) went down in the UCLA game.
However, no one knows at this point whether Sumlin can piece together a decent – much less a good – defense. Sumlin fired defensive coordinator John Skladany after his second season and brought in Brian Stewart last season to implement a 3-4 scheme. The result? Stewart’s defense was far worse than either of Skladany’s two defenses as DC, finishing 110th among the 120 FBS teams.
So, incongruously, the offensive-minded Sumlin’s coaching career is largely dependent upon whether he can turnaround his team’s defensive performance. Indeed, if Keenum stays healthy all season, the defensive improvement doesn’t need to be all that much – Houston’s explosive offense will cover up many warts on the defensive side.
But until the Cougars’ defense can show that it can stop even a hard-chargin’ marching band – something that Houston’s defenses haven’t been able to do consistently since Jack Pardee’s coaching stint over 20 years ago – Sumlin’s promising coaching career (as well as Houston’s BCS conference aspirations) will remain firmly planted in the second tier of big-time college football.
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Major League Baseball has been slow-trading approval of Drayton McLane’s proposed sale of the Astros to a group headed by Houston businessman, Jim Crane.
As a result of MLB’s lethargy, a cottage industry of skeptics – such as the Chronicle’s Richard Justice and Biz of Baseball’s Maury Brown – have speculated that Crane’s somewhat hard-knuckled past in business dealings may provoke MLB Commissioner Bud Selig to persuade MLB owners not to approve the deal.
That’s possible, but not probable.
I have no inside knowledge regarding the Astros deal. However, I’ve been involved in sorting out complex business deals for over 30 years, so I’ve got the perspective gained from that experience to pass along. And that experience tells me that this is a deal that will get done.
First, the suggestion that Crane’s past business dealings are giving other MLB owners pause is laughable.
I mean, really. MLB owners are a group that has endured such owners as George Steinbrenner copping a plea to criminal charges while he owned the flagship franchise in the business. And that’s not to pick on Steinbrenner — MLB owners are not exactly a pristine fraternity (remember the Yawkeys and Marge Schott?). Thus, a highly suspect EEOC complaint and problems with the DOJ over a fraction of the business that Crane’s companies supplied to the federal government’s war logistics over the past decade will not cause MLB owners to blink over Crane.
Similarly, Crane’s failure to close on the deal that he supposedly had to buy the Astros back in 2008 nor his attempt to buy the Cubs and Rangers over the past couple of years pose any real problem. MLB owners understand that the financial crisis in credit markets in 2008 doomed Crane’s earlier bid for the Astros. Likewise, even though Crane was not MLB’s favored bidder for either the Cubs or the Rangers, his participation in the bidding process ultimately increased the prices paid for those franchises. Believe me, MLB owners appreciate that.
Finally, even the somewhat highly-leveraged nature (at least for MLB) of the Crane group’s bid for the Astros (supposedly $220 million of the $680 million purchase price will be debt financed) is not a dealbreaker. Although that level of debt would put the Astros out of compliance with MLB’s self-imposed debt-to-equity rule (supposedly around 10%), at least nine out of the other 29 MLB clubs are currently operating out of compliance with that rule. The Crane group’s proposal is not close to being among the most highly-leveraged of those deals.
So, if none of the foregoing are real roadblocks, then what’s holding up approval of the Crane group’s bid?
It’s anyone’s guess, but my sense is that simple gamesmanship is far more likely the reason rather than any problem with Crane. Given his prior efforts to buy the Astros, Cubs and Rangers, MLB owners know that Crane really wants to own controlling interest in an MLB team. They also know that he understands that he will have no chance of doing so if he pulls out of a deal again.
In short, MLB owners know they can make Crane wait awhile without much risk of him backing out. Uncertainty at the top of an MLB team is rarely good (as reflected by the 44-90 Astros record so far this season). Crane’s soon-to-be-competitors don’t mind grinding the Astros down a bit more before approving the deal.
And why then do I think the deal will ultimately be approved? Well, that’s easy.
MLB’s business model is not exactly rosy right now. One club is currently in bankruptcy (the Dodgers), two other clubs just recently exited bankruptcy (Cubs and Rangers), and another club’s ownership is dealing with fallout from the Bernie Madoff Ponzi scheme (the Wilpons and the Mets). MLB attendance is flat this season and its media revenues are dwarfed by the NFL’s, which continues to distance itself from MLB as the premier sports entertainment business in the U.S.
On the other hand, Crane’s group will pay $680 million for the Astros, the lease on Minute Maid Park, and a stake in the newly created Comcast SportsNet Houston, a regional sports network partnership with the Houston Rockets that will launch in 2012. That sales price for an MLB team and related assets ranks behind only the $845 million that the Cubs sale generated in 2009 and compares quite favorably to the $593 million price that Chuck Greenberg and Nolan Ryan’s group paid for the Rangers last year.
The bottom line is that MLB owners are not employing Commissioner Bud Selig to scuttle a near-record purchase price for a franchise in a down and uncertain market.
And that’s the reason that the Astros deal will get done.
As with most major metropolitan areas, Houston has its share of urban boondoggles.
Let’s see now.
First and foremost, Houston has the financial black hole known as Metro Light Rail, which will continue to require enormous subsidies for decades to come.
But Houston also has the $100 million Bayport Cruise Ship Terminal, which has never docked a cruise ship since its completion in 2008.
Of course, who could overlook the continuing dither over what to do with Houston’s expensive and obsolescent Astrodome?
Or the Harris County Sports Authority’s problems servicing the junk debt it issued in connection with financing the construction of Houston’s Reliant Stadium for the NFL Texans?
And don’t forget the City of Houston’s decision to build a downtown convention center hotel that is almost certainly a huge money-loser, as well as the City’s ill-advised financing of several smaller downtown hotel projects and Metro’s dubious real estate development deals.
Which brings us to the most recent boondoggle — the local governments’ decision to throw about $50 million or so into the construction of a minor-league soccer stadium.
With that track record, I guess I shouldn’t be surprised with anything that local politicians might cook up as the next urban boondoggle.
But really. Financing of grocery stores?
One of the first performers who I saw when I moved to Houston in 1972 was the late Townes Van Zandt at the Old Quarter on Market Square.
When I moved to Houston 40 years ago, one of the first clubs I visited was Anderson Fair.
As regular readers of this blog know, I don’t think that Roger Clemens should have ever stood trial for allegedly perjuring himself in connection with Congress’ investigation into use of performance enhancing drugs in professional sports.
Nevertheless, the government refused to exercise prosecutorial discretion and insisted upon pursuing the case against Clemens.
But to make matters worse than that dubious decision, the prosecution was either so cocky or negligent with regard to prosecuting its case against Clemens that prosecutors violated an order of U.S. District Judge Reggie Walton not to disclose certain information the the jury.
Whether arrogance or negligence, the result was dire for the prosecution – Judge Walton declared a mistrial on the second day of the trial.
So, now the threshold question is whether Clemens can be prosecuted again for the same offense without violating principles of double jeopardy that protect citizens from the government prosecuting an individual multiple times for the same offense.
As Scott Greenfield relates, that issue essentially comes down to the prosecution’s mens rea in exposing the jury in Clemens’ first trial to the forbidden evidence.
If the prosecution did so intentionally in an attempt to get away with violating the judge’s order in an attempt to influence the jury, then the judge ought to dismiss the indictment against Clemens.
On the other hand, if the prosecution falls on its sword and persuades the judge that the prosecutors are such imbeciles that the presentation of the forbidden evidence to the jury was the result of an unintentional mistake, then the judge will probably allow the prosecution to tee up another prosecution of Clemens.
Just out of curiosity – does anyone other than some prosecutors and a few paternalistic judges really believe that the prosecutors in a case under this level of public scrutiny would unintentionally present forbidden evidence to the jury?
It is high time for this case to go away.
The Houston Rockets have been the third best team in Texas for most of the past decade.
In May of 2007, Daryl Morey succeeded Carroll Dawson as the general manager of the Rockets. Over the past five seasons, the Rockets have won about 60% of their games and appeared in the playoffs twice, winning one series (the only playoff series that the team has won over the past 15 seasons).
As this Wages of Wins post and related chart reflects, the Rockets have accomplished the foregoing without having a player ranked in the top 60 of NBA players in terms of productivity over the past five seasons.
And, although all of them are complementary players, the current roster of Rockets players is as deep in terms of raw talent as any Rockets team that I can recall in my 40 years in Houston.
So, on one hand, a case can be made that Morey has done a reasonably good job under the circumstances.
Inheriting a team that was based on brittle superstars Tracy McGrady and Yao Ming, Morey cobbled together a unit that remained competitive despite the loss of both McGrady and Yao.
Sure, Morey made some mistakes (remember Joey Dorsey?), but maintaining a winning culture and building a strong roster of complementary and developing players under the circumstances is no small accomplishment.
On the other hand . . .
Morey has had five seasons to turn the Rockets ship around and he clearly has not done so.
He has not been able to swing a deal in trade or on the free agent market to land the superstar player that would elevate the Rockets’ cast of complementary players to a legitimate NBA championship contender.
And not having at least one player in the top 60 most productive players in the NBA over the past five seasons does not reflect well on Morey’s talent evaluation skills.
The bottom line is that he inherited a team that was the third best NBA team in Texas and the team remains the third best team after failing to make the playoffs for the second straight season.
So, which appraisal of Morey is right?
I lean toward the former because I don’t believe that Morey can be faulted for having to deal with the consequences of the ill-advised McGrady and Yao commitments. Now that the Rockets are finally cleared of those commitments, let’s see what Morey can do.
Yet, professional sports is a notoriously bottom-line business and the Rockets continue to be mediocre. Although he may have an eye for developing talent, does Morey lack the skill set to attract the dynamic superstar or stars that are a typical component of an NBA championship-caliber team?
What say you?
This Reed Albergotti/Cameron McWhirter/WSJ article provides an absolutely devastating account of the way in which Hamilton County, Ohio political leaders pledged an enormous portion of the county’s resources to pay most of the cost of a new stadium for the NFL’s Cincinnati Bengals:
At its completion in 2000, Paul Brown Stadium had soared over its $280 million budget–and the fiscal finger-pointing had already begun.
The county says the final cost was $454 million. . . .
But according to research by Judith Grant Long, a Harvard University professor who studies stadium finance, the cost to the public was closer to $555 million once other expenditures, such as special elevated parking structures, are factored in. No other NFL stadium had ever received that much public financing. [. . .]
On top of paying for the stadium, Hamilton County granted the Bengals generous lease terms. It agreed to pick up nearly all operating and capital improvement costs–and to foot the bill for high-tech bells and whistles that have yet to be invented, like a "holographic replay machine." No team had snared such concessions in addition to huge sums of public money, Journal research shows.
To help finance its stadiums, Hamilton County assumed more than $1 billion in debt by issuing its own bonds without any help from the surrounding counties or the state. As debt service ratchets up, officials expect debt payments to create a $30 million budget deficit by 2012.
"The Cincinnati deal combined taking on a gargantuan responsibility with setting new records for optimistic forecasting," says Roger Noll, a professor of economics at Stanford University who has written about the deal. "It takes both to put you in a deep hole, and that’s a pretty deep hole."
The stadium’s annual tab continues to escalate, according to the county’s website. In 2008, the Bengals’ stadium cost to taxpayers was $29.9 million, an amount equivalent to 11% of the county’s general fund.
Last year, it rose to $34.6 million–a sum equal to 16.4% of the county budget. That’s a huge multiple compared to other football stadiums of the era that similarly relied on county bonds for financing. Those facilities have cost-to-budget ratios of less than 2%. [. . .]
The Bengals had said that with a new stadium, the team’s revenue would increase, allowing it to sign better players, win more games and attract more fans to the area. In 2000, the new stadium’s first year, the Bengals had the same record they’d had the previous year, 4-12. Since then, the team has managed just two winning seasons in the new facility. Its attendance levels have actually dropped.
Houstonians might be tempted to shake their collective heads at how badly Bengals management took Hamilton County to the cleaners in the stadium financing negotiations. But then we are forced to confront that Houston has more than its share of similar boondoggles, such as the financial black hole known as Metro Light Rail, the $100 million Bayport Cruise Ship Terminal (which has never docked a cruise ship since its completion in 2008), the continuing dither over what to do with the obsolescent Astrodome, the Harris County Sports Authority’s problems servicing the junk debt it issued in connection with financing the construction of Reliant Stadium for the Texans, and – most recently – the City of Houston and Harris County’s dubious decision to throw about $50 million or so into the construction of a minor-league soccer stadium.
The expenditure of a billion or two of public money on building a lightly-used light rail system and stadiums for privately-owned businesses has real consequences, such as leaving inadequate funds available to make the improvements to Houston’s flood control system, road infrastructure and other improvements that actually improve the safety and welfare of Houstonians.
As I’ve pointed out before, the relatively small interest groups that benefit from urban boondoggles have a vested interest in preventing citizens from ever examining those threshold issues. The primary economic benefit of such public projects is highly concentrated in a few interest groups, such as representatives of minority communities who tout the political accomplishment of shiny toy rail lines while ignoring their constituents need for more effective mass transit; environmental groups striving for political influence; engineering and construction-related firms that profit from the huge expenditure of public funds; and real-estate developers who profit from the value enhancement provided to their property from the public expenditures.
As Peter Gordon has wryly-noted: "It adds up to a winning coalition."
Unfortunately, once such coalitions are successful in establishing a governmental policy subsidizing such urban boondoggles, it is virtually impossible to end the public subsidy of the boondoggle and re-deploy the resources for more beneficial projects.
How do these interest groups get away with this? The costs of such boondoggles are widely dispersed among the local population of an area such as Houston, so the many who stand to lose will lose only a little while the few who stand to gain will gain a lot. As a result, these small interes
t groups recognize that it is usually not worth the relatively small cost per taxpayer for most citizens to spend any substantial amount of time or money lobbying or simply taking the time to vote against such boondoggles.
But would citizens react differently if their leaders advised them that their lack of action in the face of an urban boondoggle might prevent the funding of much more beneficial projects?
No one knows for sure. But I’d sure like to see local political leaders engage in some truth-in-advertising before the financing of such boondoggles is placed before the voters.
We all might just be surprised.