Let me get this straight. Mayor White started out with a proposal several months ago to allow the local MLS soccer team to build a stadium at their own expense on downtown land that the City of Houston owned but was not using except for extra parking (previous posts here).
So, how did we get to the point where the City is now willing to pony up at least $20 million and exercise its eminent domain power to acquire land for the private owners of the team to build their stadium? Heck, we haven’t even started to talk about who’s going to pick up the tab for the cost of the necessary infrastructure improvements or how much “Central Planning Chief” Peter Brown’s “mixed used development” ideas are going to cost (for the folly of such ventures, see here). By the way, Mr. Brown, what are the names of the other cities that are lining up to provide financing for a soccer stadium that makes you so sure that the Dynamo will leave if Houston doesn’t provide it?
And to top it off, the proposed location of the proposed new stadium figures to increase the cost of an even larger boondoggle.
Granted, we’re talking about throwing away “only” $20-30 million on this deal at this point. That’s peanuts in comparison to what the City wastes annually on the light rail system. But the way this deal has developed leads one to question whether there is any adult supervision whatsoever down at City Hall? If it’s acceptable to throw $20-30 million at a minor league soccer team, then what’s next? $20-30 million for the Aeros?
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Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.
Wouldn’t the $30 million pay for itself in a fairly short period of time? I enjoyed 6 Dynamo games last season and they all had a visible traveling support in attendance. There’s Interliga, Superliga, etc all of which bring visitors to the city, probably more so than the ‘major’ sports do outside of playoffs and championships. Of course, MLS would award the city regular championship games and the stadium would also host some US international games and be a strong candidate for games such as the Mexico Olympic Team vs Finland game going on in Dallas in March. Seems like a pretty good return on $30 million to me.
Fair enough.
But if attracting visitors to the city is your goal, then why not simply invest the $30 million directly in programs or initiatives that would attract a more balanced group of visitors than merely soccer fans? Using the money to attract visiting doctors, businesspeople, students, artists and others to enjoy the benefits of Houston would seem to be a more productive use of the money for the benefit of the community.
Tom,
The deal that is being sought by AEG is for the city to purchase the land and then lease that land to the company so the stadium can be built. The deal effectively takes the property off the tax rolls, so the loss of tax revenues has to also be counted as a financial gift to the team.
If the property is worth $30mil, 2.25% tax rate would be an additional $675k the team would not have to pay if it had to buy its own land. The value of an annuity paying $675k in perpetuity at 5% is $13.5mil, so now we are at $43.5 million as the value of the subsidy being given to the team. Add it costs of infrastructure that could easily cost $10mil to $12mil and the true cost approaches $55mil.
Lets see a study that details what rewards the subsidies given the Astros, Rockets and Texans have generated for the taxpayers before we decide it is in out collective interest to offer a $50mil gift to a private business.