Three Sports Facilities With “Issues” …

If you live anywhere other than in Washington DC or its surrounding suburbs, you might have a positive sports outlook this morning.  Such is not quite the case here in “The DMV” – – the District, Maryland and Virginia.  Just a quick overlook:

• The Commanders are 4-9 and in last place in the NFC East
• The Wizards are 3-20 and in last place in the NBA’s Southeast Division
• The Caps are 14-8-3 and in fifth place in the NHL’s Metropolitan Division
• The Nats aren’t playing but finished dead last in the NL East last year.

And yesterday, the owner of the Caps and the Wizards reached a “handshake deal” with the Governor of Virginia to build a new arena in Alexandria, VA and to move those two teams out of the District.  You cannot imagine the outpouring of anger/resentment here this morning.  Not since Cruella de Ville sought to skin dalmatian puppies to make a spotted overcoat has anyone done anything approaching the level of evil that was on display when the team owner and the Governor held their press conference.

The Caps and Wizards play in a facility called the Capital One Arena.  It is about 25 years old, and it needs more than a facelift but less than a full tear-down-and-rebuild.  The owner asked the District for $600M for the “renovations and upgrades”.  The mayor here has fundamentally ignored this request; she did not – – figuratively of course – – flip the bird at the request but she absolutely paid it no attention.  Into that vacuum charged the Governor of Virginia seeing this as an opportunity for him to leave the legacy of his administration.  [Aside:  The Virginia Constitution limits Governors to a single term so each one enters office as a “lame duck” with only 4 years to craft their “legacy”.]

I have always opposed the “corporate welfare” that is poured upon billionaire sports owners.  If I were to create a more perfect world, that would never happen, but I am not in the business of creating a more perfect world.  The reality is that such largesse is commonplace.  And in a world where benefits of the magnitude of hundreds of millions of dollars are dangled in front of owners, it is foolish to think that they can or would ignore them all.

Think about that for a moment.  Team owners are – generally – billionaires who have made their fortunes in the world of business/finance.  People do not become billionaires if they are not capable of recognizing a “good deal” when one presents itself.  Ted Leonsis owns the Caps and the Wizards – – and a few other sporting assets of lesser import – – and what he did is to look at whatever it was that the governor had to offer and juxtaposed it with the mayor’s indifference to his perceived need for arena improvements and …  He did not become a billionaire by failing to recognize and capitalize on such situations.

Making the outpouring of angst this morning even sillier is that this deal has dozens of hurdles to cross in Virginia before anyone can put a shovel in the ground and get started on the new facility.  I will go out on a limb and predict here that this deal will have more than a dozen twists and turns before it either gets started or dies an agonizing death.  The only sure-fire winners here are the lawyers in the firms representing litigants in the sure-to-be-filed lawsuits central to or tangential to this handshake deal.  This could be a tsunami of billable hours …

Moving on … There is another sports facility nearby here that is the subject of some contention between the team owners and the State where the facility is located.  I am referring to Camden Yards where the Baltimore Orioles play.  The Orioles’ lease to use the facility to play their home games runs out on 31 December of this year.  If you do not have a calendar handy, that is 17 days from today.  One of the negotiation points that has caused some contention there is a provision that would give the Angelos family – – owners of the Orioles – – developmental rights to the State-owned land around the ballpark.

According to reports, it would be the Angelos family that would get the developmental rights and not any subsequent owners of the Orioles should the family choose to sell the team sometime down the road.  That possibility gains credence from a Bloomberg report from about a week ago that one of the founders of The Carlyle Group is in negotiations to buy the team from the Angelos family.

And in a related vein …  The drama involving these two sports facilities will be totally eclipsed in this little Interstate-95 corridor by the multi-dimensional Kabuki Theater that will unfold as the new owner of the Washington Commanders wheels and deals his way into a new stadium in the area.  The reason that it will be a bigger deal than either of the dramas above has nothing to do with the economics of the situation; it has only to do with the fact that the NFL team is a much bigger deal here in “The DMV” than the Caps, the Wizards and/or the Orioles.  I say that because an NFL stadium is often a white elephant in a landscape as compared to a baseball stadium or a combined basketball/hockey arena.  Do some math …

• An NFL stadium will be in use by an NFL team less than 15 days in a year.  That counts an Exhibition Game plus home games plus possible playoff dates.
• There is no local college football team in “The DMV” to use a new facility here.
• There may be a few large concert events that might be held outdoors at the facility so maybe there could be another 20 such events held during the “good weather season” here and the start of an NFL season.
• Total use is 35 days a year at most or about once every 10 days on average.
• A hockey/basketball arena will be in use by those two teams more than 80 nights in a year.
• Concerts and events of that kind can fit into the calendar easily.
• In “The DMV”, Georgetown could be induced to play its 15 home games there, [Aside:  Georgetown now plays home games at the Capitol One Arena.]
• The potential usage for such a facility is at least 100 days a year and maybe as much as 150 days a year.

The nominal economic benefits of a sports facility depend heavily on the spill-over from sporting events onto the surrounding area.  I don’t need a PhD in economics to understand that a facility that provides 150 days of “spill-over” is more likely to generate a lot more economic benefit for surrounding businesses than a facility that is in use 35 days a year.

Nevertheless, there will be a bidding war for the Commanders’ new field starting very soon.  It is too bad for the DC Mayor that she did not get her oft-stated wish to defund the police there.  If she had been able to accomplish that, she would have about $525M extra in the DC budget to use as part of the bidding for the facility.  C’est la vie…

Finally, since everything today involves dealings with billionaires, let me close with these words from Warren Buffet:

“You should invest in a business that even a fool can run, because some day a fool will.”

But don’t get me wrong, I love sports………