Posts tagged ‘East Valley’

Professional Sports Leagues Are Sucking Maws for Subsidies

Forbes produces an annual list of the market value of various sports franchises.  If I were a grad student, a great study would be to try to figure out what percentage of these valuations came from public funds (free stadiums, tax abatements, direct subsidies, etc).  I bet the number would be high.

In the case of the Phoenix Coyote's hockey team, the percentage would actually be over 100%.   The team is worth barely $100 million, at best, but has received hundreds of millions in subsidies.  About 13 years ago the city of Glendale, AZ (pop: 250,000) built them a $300 million stadium.  Almost immediately after that, the team started to threaten to leave, and the pathetic city of Glendale city counsel voted subsidy after subsidy, paying the team $10 million a year in direct subsidies.  When the Goldwater Institute successfully sued to end this practices, the city found creative ways to hide the subsidy, for example giving the team a management contract for the stadium whose price was inflated by the amount of the subsidy (the contract was for $15 million a year but when it was finally competitively bid, it came in at $5 million).

After all that, the team apparently has no shame is coming back to the trough yet again:

The Arizona Coyotes and National Hockey League Commissioner Gary Bettman on Tuesday threatened to move the franchise out of Arizona if the Legislature does not approve $225 million in public financing for a new arena in downtown Phoenix or the East Valley.

Bettman sent a three-page letter to state Senate President Steve Yarbrough and House Speaker J.D. Mesnard encouraging them to push through a public-financing bill that is stalled in the Senate amid a lack of support from lawmakers. The struggling NHL franchise wants out of Glendale, saying it's not economically viable to play there even though that West Valley city financed its 13-year-old Gila River Arena specifically for the Coyotes.

"The Arizona Coyotes must have a new arena location to succeed," Bettman wrote. "The Coyotes cannot and will not remain in Glendale."

Good God, what brass!

Postscript:  I was immediately embarrassed to see that I had use maw's instead of maws.  I make stupid grammar mistakes but this generally is not one of them I make that often.  Unfortunately, on the road, I had no way to fix it. Fixed now.

Another Enormous Subsidy of a Pitiful Few Train Riders

From the AZ Republic

Valley Metro is set to break ground today on the first light-rail expansion, a 3.1-mile stretch into downtown Mesa that city leaders hope will bring a sorely needed economic boost.

The $200 million extension is expected to attract thousands more East Valley riders daily and potentially nurture new development along the line.

If we assume "thousands" means two thousand, then this means the metro area is spending $100,000 per new daily rider for this expansion, not including the additional operating subsidies that will be required to run the trains.  Given that none of these people will likely be able to give up their car, since the route goes so few places, why should they get a $100,000 subsidy?

How about we charge them what it costs?  The payment on a 30-year 5% bond is around $13,000,000 a year.  So if there are 2,000 additional round trip riders boarding or debarking at these new stations each day, that is 1.46 million trips.  So the tickets should be $8.90 per trip plus the cost of actually running the train.  We'll round it to $10, though the cost is probably higher.  If people really think this train is so great, they should be more than willing to pay the $10 a trip it costs for the expansion.

No, they are not?  What this means is that people think this is a really go idea as long as someone else pays.

PS-  If these seem unreasonably high, or simply an artifact of looking at this expansion on a stand-alone basis, think again.  For the original system, the capital cost was $75,000 per round trip rider and the public subsidy in 2010 was $32.73 per trip.  In other words, on the main system, riders would have to pay $32.73 a trip more to be actually covering the cost of the service they are receiving.  So if anything, these incremental numbers for the expansion are probably optimistic.

PPS - I am sure transit authorities would argue that the public did support paying for other people's transit by approving the sales tax increase for this purpose a few years ago.  But the train piece was packaged in with a bunch of highway improvements in the same proposition that people really did want.  It would never have passed on its own.  Transit official may disagree, but the proof is in their actions - they have never allowed the public to vote on the transit piece alone.