Stadium Financing for Dummies. And Idiots.

The Post-Gazette continues to publish strange ideas about stadium financing:

If Isle of Capri wins the gambling license (as the Post-Gazette has argued), the new igloo is free.

Well, of course it isn't. Know how to figure that out? Give the license to someone else. See if Isle of Capri builds the arena. They won't. That is, they will only build the arena if the city gives them something. That means it isn't free.

Moreover, try this thought experiment: What happens if the city were to say, "Hey, we hate hockey. Instead of building the arena, how about you give us $289 million for teachers, cops and debt service." We know Isle of Capri would give the money. Because we know the slots license is worth at least $290 million to them. So, in effect, what we have here is a publicly financed arena disguised as a privately financed arena. Same with an auction for the licenses. We know Isle of Capri would have bid at least $290 million. Which we could have spent as we saw fit. Maybe we would have chosen to build an arena for a immensely wealthy communications tycoon who pays guys millions of dollars apiece to skate around on ice. Maybe not. Either way, the arena isn't "free."

Quick: What do you call it when someone offers politicians a bunch of money in return for favorable public policy?

Here's another thought experiment: I propose that the Post-Gazette institute a policy to liquidate enough assets to pay $290 million to everyone in the city named Sam MacDonald. If they institute this policy, I promise to donate $100,000 a year to pay for a foreign desk in London. A foreign desk in London is important for a newspaper, right? Lots of prestige, etc.

And get this: It would be free. What a deal!

What a bunch of idiots.

Hey, whoa! That's strong language! Reasonable people can disagree about this issue, right? No reason to go around calling people idiots.

Well, if that's the case, explain this:

To put it plainly, if you love the Penguins, you should love Plan B. If you love the Penguins and you are opposed to Plan B, well, you're an idiot.

Guess what that's from.

Yep.

Comments

[Eric E]

For once, I agree with you just about entirely. Not only is foregoing money from licensing equivalent to spending it on the arena, but buying a new arena doesn't solve the underlying problem: we are, like so many other cities being shaken down for money. It happens on about a 7-10 year cycle, when cartel members (i.e., team owners) threaten to take part of a city's pride and identity away by moving a treasured team. There are two ways to fix this problem: 1) break the cartel, and let teams compete to be in the big leagues. That way it becomes an advantage to the team to stay in one place. 2) Have the city or a geographically fixed local cooperative own the team, and administer ticket sales by lottery. Either way is pretty much fine with me. But getting shaken down every several years really is not OK.

[Jay]

I have to say this is the most absurd thing I've read. Your topics are off the wall and assinine. You can make the point that there isn't anything free in this case. You must really be appalled to see the words "buy one get one free" in store circulars because you need to buy one in order to get one free. IFF they get the license, the arena isn't manditory, in this case, making it free for the city. So because they sweetened the pot, you're going to make these crazy comparisons? Would you prefer if they weren't offering an arena?

Also, plan B only came about because of the Isle of Capri. Say the Pens didn't build an alliance with IoC, Rendell probably wouldn't have given 2 thoughts about putting a plan B together. No one would have. There should have been something put together of the course of 8 years, and NOTHING until the Pens became proactive. Now you're blasting IoC for using the word free, that's just wonderful logic.

Moreover, there's more involved than just the Penguins. Arenas are used year round, unlike other multimillion dollar parks and fields, that bring the city constant revenue.

Now with your "experiment", you want to put $290 million unaccounted for in the hands of politicians? I think we all know how that will end up.

[Sam M]

Jay,

OK. Let's stick with the grocery store circular example.

So let me get this straight: When you go to Giant Eagle and they offer you buy-one-get-one-free chicken, you actually think they are giving away free chicken.

If you really think that, and there are a whole bunch of people that agree, then I suppose we're getting a free arena.

In the meantime, I was wondering if you would like to have my car. It's free. Really, it is. I will give it to you as long as you promise to give me your federal tax return every year. Forever.

It's a great deal. A free car. How often does that kind of deal come along?

Sound familiar? It should. And you must think its a great deal. You agree to give up something of immense value. (The slots license)And instead of selling that thing of value to the highest bidder, you pick a winner. (Isle of Capri) And anything that winner promises you in return is something that you consider to be... free. Even if you know the winner would never even think of giving you that thing (the arena) if you don't agree to give something first (the slots license.)

Sound to good to be true? Well, guess what. I have two cars. I will give you the 2004 Ford Focus free of charge. All you have to do is buy the 1999 Nissan Sentra. I think $290 million sounds like a good price.

Did I mention that there is a free Ford Focus involved?

Look, you might think the Isle of Capri plan is a great plan. And you might think it is the best way to get an arena.

But it's not a free arena.

Like I said, the city is going to have to forego $290 million worth of something to get that arena. That is, if it just asked for the money, it could spend it on something else.

If it chose to spend that money on an arena, we would call it a $290 million arena. If it chose to spend it on a bridge, we would call it a $290 million bridge.

Just because Isle of Capri is proposing to pay off the city with an arena instead of that arena's equivalent in dollars doesn't mean there is no cost involved.

And as a kicker: As I understand the proposal, Isle of Capri is not guaranteeing an arena. It is guaranteeing an arena right up until the time that arena's cost surpasses $290 million. After that, the city would have to pay.

So if we build a $390 million stadium, we owe $100 million. [ABSOLUTELYINCORRECT. IN OTHER WORDS, WRONG. I CORRECT THIS A FEW COMMENTS DOWN FOR ANYONE WHO IS INTERESTED. APOLOGIES.]

Tell me: How is that different than Isle of Capri giving the city $290 million, which the city spends on an arena?

[Jay]

My point being is that Giant Eagle is not forced to give the chicken buy one get one free. If I was going to the store, had they not done that, I would have walked out of there with half the chicken that I now have. That's why I say in essence, you could argue there is not a free thing in the world. The car example seems well out of line. You're exchanging your funds for it, whereas the with IoC, they could have had a plan to put up just the slots parlor with no added incentives. Instead, they added, at no cost to anyone but themselves (for the most part, I'm sure there may be some hidden taxes and whatnot), unmanditory mind you, an arena, retail buildings, offices, and condos. If IoC wins and they put all of this up, the people of the city would not have to shell out one dime for it. That makes it free for the citizens of the city.

The slots license is not something of immense value to the city. If they hold onto it, it has absolutely no value to anyone. Given to the right clientel, it becomes an everyone wins situation. The city needs the slot operators just as bad as the slot operators need the license. That alone is an exchange that I would deem equal. Not that I mind getting everything out of the competitors as possible, it's great for the city and all the citizens, but it is by no means manditory that you have to add anything to the sweeten the pot, and everything thrown in is an added bonus with no cost to the city.

Also, I do believe you're wrong about this - "And as a kicker: As I understand the proposal, Isle of Capri is not guaranteeing an arena. It is guaranteeing an arena right up until the time that arena's cost surpasses $290 million. After that, the city would have to pay."

As I understand, the extra would be picked up by the Penguins which is an added bonus to the city, because the arena would be handed over to SEA for use on non-Penguin days to do as they please.

It wouldn't be different than IoC giving the city $290 million.... but is that also not free money? The city is not foregoing any amount of money from this arena being part of IoC's plan, because it is money that was never accounted for, and never anticipated. I understand what you're saying, but I don't understand why you're having such problems with the concept of the IoC and the Penguins' partnership.

I'd like to hear your views on the other proposals and their "free" features, like Harrah's "free" donations to the Historic Society or whatever they're pledging to, and Barden's "free" contributions to the Hill District. Every plan has made mentions of "free", but you've chosen to soley identify the IoC plan, as if to try to call them out for a crime they did not commit.

[GC]

Are you an idiot or what? Do you even know what you are talking about? 90 days after the IOC would receive the slots license the money would be put in an account to FUND a new arena. The keyword, fund. I do not ever recall IOC saying it will build a FREE arena. IOC will not be building the arena the SEA and the Penguins would be building it. And if state polotics were not so corrupt the license would be auctioned off as in other states. That is no more a bribe than what Forrest City and Rendell have worked out. How could anyone build a casino in Station Square, the area is so cramped, traffic will be outrageous. I know, I have seen the traffic studies, which FC had done at least 4 times to get something that was close to favorable.

Also you say the PENS and their fans should love Plan B, a plan that has no legs to stand on, there has been no legislature to even approve the funds from the state to support it's own bogus plan. Why do you think that is? If this plan is so great, why don't they move forward with it until the licene is awarded?

Unlike the football fans in this city, Penguins fans are more educated on the process at hand. And anyone that is opposed to a multi-purpose arena for the city, which will bring in jobs and capitol to the economy, is an idiot. How many times do you think Heinz field get used in a year? Maybe 15. That's a great investment, why am I paying taxes for that?

We have the opportunity to upgrade our city, if IOC gets the deal the whole uptown area is committed to a $1 billion facelift, by private investors. Again boosting our economy and bringing jobs to the city. Which you will likely need, because anyone as dumb as you is likely to get fired from any job you hold for inability to research a project before giving your analysis.

[Sam M]

GC says:

"The keyword, fund. I do not ever recall IOC saying it will build a FREE arena."

I never said IOC said anything.

But maybe I just dreamed up the whole "free" thing.

Or maybe, just maybe, someone is talking about a free arena. But maybe I am just an idiot and forgot to point it out.

No. Wait Scroll up. There it is:

"If Isle of Capri wins the gambling license (as the Post-Gazette has argued), the new igloo is free."

And here's a hint: That doesn't mean free to IOC. It means free to Pittsburgh.

Follow the link that comes right before it. It's not hard. Just click on it.

The stadium is not free to the city. It is being offered in exchange for the slots license. Which is an incredibly valuable thing. Now, you could argue that this is a good trade for the city. That the arena is actually worth more than the license.

Or you can argue that it is a bad deal, and that the city could get more that $290 million for the license. (Which I suspect, seeing that IOC is offering $290 million.)

But you cannot argue that it is free.

We are trading something very valuable for something we want. That is a transaction. Not a gift. I would hope that even an idiot could see that.

Another example. Let's say some guy comes up to you and says, "Hey, I will give you this Ferrari in exchange for that gum you are chewing." You stand to get a great deal.

But the Ferrari ain't free.

If someone comes up and says, "I will give you a house in exchange for that crappy old oil painting your grandpa did." Is that a good deal? It is if your grandpa was a crappy painter. It is a terrible deal if your grandpa was Claude Monet.

Either way, these things aren't free. Especially when you consider that in many cases, the only way to gauge the true market value of things is through an auction. Be it for a painting or a car or...

Get this...

A slots license.

OK. Seriously. Last one. Let's say you do have a valuable family painting. And you have a teenage daughter who wants to go to Pitt. One day, the president of the university looks into your window and sees the painting. He says, "Wow. I know you never paid for that thing. But it is worth a lot of money. And you don't seem to be doing all that well. How about you give me that painitng and we call that tuition."

Can it not be said that you "paid" for your daughter's education? With the painting?

And wouldn't it be wrong to say that Pitt gave your daughter a "free" education?

And wouldn't it be better for you to check with Sotheby's first to see what your painting is really worth before "giving" it away? And wouldn't they have an auction? And wouldn't you take that money and pay for college?

Whatever happens, the COLLEGE AIN'T FREE.

Nor is the arena.

And by the way, I never said anything about plan B. I was quoting someone else. Smart guy like you ought to be able to figure that out.

[Sam M]

On the other hand, I suppose I COULD see it as free to "Pittsburgh" if you consider the slots license a "state" property. In that case, I suppose an arena in exchange for the license would be a "state-funded" rather than "city funded" project.

Either way, it ain't free.

[Jay]

As I've stated, using your logic, the word free should essentially be eliminated from the English language, as you can say there's always some sort of exchange for said "free" item. You have to draw the line somewhere, you're getting too far into the technicalities of the meaning of words.

This all depends on your perspective. You see the arena as being part of the deal to get the license, making it a bargaining chip. It can, however, be argued that the arena does not need to be part of the deal for the slots license, thus making it a free addon. When it comes down to it, a gambling company can come in and propose to build nothing besides their own casino with no investments into the city, and that would be perfectly legal. You can argue that any additional features of their plans would be free to the city. Again, all pending on your personal perspective. There's no right or wrong answer, I just wanted to counter your points with a different view.

[Sam M]

Jay,

But doesn't it seem pretty clear that the company that comes in and proposes nothing but a casino stands no chance? If it did, why are all the casino companies offering something? I am sure they are led by fine fellows, but none of them seem primarliy philanthropic in their motivations.

And the fact that the different companies are all sweetening their deals in different ways seems to prove my point. To get the arena, you have to forego the "community development" in the other plans.

This would become even more clear if a fourth company were to come in and just offer money. Say $300 million. Which would allow the city to turn around and buy whatever it wanted with that $300 million. Say it chose a few teachers, a few cops and a few traffic lights.

No one would say that the techers and cops and traffic lights were free. We would say that the casino license generated revenue which the city spent on those things. And we would consider those things to be city-financed amenities. That we procured with money that we could have spent on something else had we chosen to do so.

The same as if the city sold old squad cars and used the money to buy some snow removal equipment. The snow removal equipment would not be free. It would be financed through the sale of real assets.

The casino license is a real asset. We know that because all these people are offering things for it.

Now, there are many, many things the city could trade for. One might be an arena. And you might think that is an excellent trade. Which is another debate entirely.

But regardless of what you think of that plan, it is clear that said arena would be financed through the sale or trade of a real government asset. That is NOT a free arena. I just isn't.

I think that leaders want to go about it this way because, in their heart of hearts, they really want a new arena to keep the Pens in town. For better or worse. And they would be willing to use public money for that arena of they could pull it off. I think that would be a bad idea. I suspect you think it would be a good idea. Fair enough.

But we will never get to that stage. Because the politicians know that a whole host of circumstances make an overtly "publicly financed" arena impossible. That is, if they got $290 million in cash from IOC, a whole lot of people would object to spending all $290 million on an arena for the team's new billionaire owner.

So instead of doing that, a bunch of crafty folks have seized on the idea of just asking for an arena instead of $290 million. Because that makes the arena "free."

But it's not free. Maybe its a great deal. Maybe it's a crappy deal. But it's not free.

If we are going to trade the license for an arena, I would much rather do it in the open, ask for the $290 million and then have an open debate about the best way to spend the it. Who knows? People might choose to dump 100 percent of into an arena. But I suspect not.

Which is why many people prefer this way.

[Sam M]

AntiRust nods:

I was wrong about who gets stuck with any arena costs over $290 million. According to the PG:

"The Penguins' agreement with Isle of Capri stipulates that the gaming company will donate $290 million toward construction of a new arena if it is awarded the city's slots license later this year or early next year. The team probably would be responsible for construction cost overruns."

http://www.post-gazette.com/pg/06260/722559-61.stm

I might caution to pay special attention to the word "probably" in the quote. But that's splitting hairs.

The rest of my points stand.

More importantly, I think it's worth noting that in this construction, IOC would donate not an arena. But money for an arena.

This is not a dispute over the definition of the word "free." Leaders did, in fact, have a chance to auction off the license. They chose a different way. You can decide what you think their motivations were. But no matter what you think, the government is trading something of value for $290 million...

To be spent on an arena.

Again: Not a free arena.

[edog37]

You understand the concept of opportunity cost, but you are disingenuous in its use here. IOC's bid allows Pittsburgh to free up $290M that otherwise would have had to been spent for a new arena. And given the particulars of Plan B, that cost jumps to over $565M. However, that doesn't mean that is what the slots license is worth. In fact, the actual cost of the application fee was $50M, so that is the worth of the slots license right there. Therefore, the payment in kind IOC is providing actually elevates the worth of the slots license itself. Secondly, the city does not get these fees paid to by the applicants, so the actual worth of the slots license to the city is $0. An arena paid for by IOC is that payment in kind. Since the city has nothing to lose, they have no opportunity cost. However, they are the beneficiaries of the opportunity cost put out by IOC should it win the license. Why you should have an issue with this is beyond me.

[Sam M]

But it's not a question of opportunity costs. Take a look at the articles. What happens here is that within 90 days of winning the license, IOC would write a check for $290 million. And someone would in turn spend that on an arena.

IOC is not building the arena. It is giving money. To be SPENT on an arena.

Know why the money has to be spent?

The arena isn't free.

It might be the best deal anyone has ever struck for anything in the history of mankind. But it isn't free.

Moreover, the idea that the slots licese is "worth $50 million" is complete and utter nonsense. To believe it requires you to think that the folks at IOC and Harrahs and Forest City are bleeding heart philanthropists and terrible, terrible businessmen who give hundreds of millions away for no reason.

Do you really belive that? If so, I think Giant Eagle has some free chicken for you.

Look. We can calculate a few things here. Like the minimum amount the slots license is worth to IOC. To get that, you add the $50 million it would pay for the license, the amount it would pay for a casino and all the other things it is offering the city. That clearly comes to more than $50 million.

So does IOC's bid add up to the absolute maximum it would have been willing to pay, in dollars, for the license? I doubt it.

But there would have been one way to figure out that maximum figure.

An auction.

Why is that so hard to understand? And why is it so hard to understand that had an auction determined the ultimate buyer of the license, things that the city would have bought with its cut of the proceeds would have been in no way free?

Same as if you find a diamond ring on the street and buy a car with the proceeds. It's not a free car. To get the car, you had to trade the diamond for money. Which you spent on the car.

Look, this is not a graduate level course in finance or economics. It's basic common sense.

I think that it is possible for honest, reasonable people to support the IOC pan. And I think that it is possible for honest, reasonable people to support public financing of arenas--in all of its many guises. And I think it is possible for people to think Plan B is a great alternative.

But regardless of what you or the Post-Gazette editorial board think, none of these plans delivers a free arena.

And regardless of what certain sportswriters think, you don't have to be an "idiot" to oppose Plan B.

And to say that the "actual worth of the slots license to the city is $0" flies in the face of reality. If it is worth exactly nothing, why is it that all these municipal leaders have their panties in a bunch trying to translate the license into something of value? Who in their right minds would try to get value out of something that has no value?

But let's say, technically, that if said leaders took the license to a bank and traded it in that they would get $0. And let's say that makes it completely valueless from an economic standpoint.

Well, how did it get that way? I know local leaders did not design the slots process. But government officials in other places did. And we would not be having any of these discussions if those officials had instituted an auction instead of this dog and pony show.

But they didn't do that. Too bad. What can we do about it now? Nothing. Absolutely nothing.

But that does not mean that it makes sense to go around talking nonsense about free arenas.

Let's be clear: If the state or local government has a resource--regardless of how it came into possession of that resource--it has several options in thinking about dispensing that resource. If it chooses to dispense that resource on a road, we get a government financed road. If it chooses to dispense that resource on a fleet of cars, we get a government financed fleet.

And if it chooses to dispense that resource on an arena, we get a government financed arena.

We do not get a free arena.

The slots license is a resource worth hundreds of millions of dollars. And the government seems determined to trade that resource for $290 million to spend on an arena. You might think that's a wonderful deal. A tour de force. A wonderful move for the city and state. A humanitarian gesture worthy of a Nobel Peace Prize, a Pulitzer Prize, a MacArthur Genius Grant and a Medal of Honor. You are entitled to that opinion.

But you are wrong if you call it a free arena.

[Sam M]

As if on cue, here's snippet from today's PG story about this ridiculous process:

"Isle of Capri, which wants to build a casino in the lower Hill District, has offered $290 million toward a new arena, a giveback "significantly greater" than that in the other plans, the task force letter stated."

Got that? IOC is not giving an arena. It is offering "$290 million toward a new arena."

IOC is giving $290 million. Things we buy with that $290 million will not be free. They will be bought and paid for. With $290 million.

Whole thing is here:

http://www.postgazette.com/pg/06293/731585-336.stm

Is this really the best way to do this?

This is pure semantics you are arguing. Yes, the arena isn't "free", but then again, nothing in life is "free". It does come back to opportunity cost. However, in this case, the opportunity cost is bore solely by IOC. Why? There is a concept known as fenced money. That means that money is allocated for a specific purpose & can't be used for any other. So, no, the money received from IOC can't be used for roads or teachers or anything else other than a new arena. However, in this case, it is money not found originally in government channels, so there is no opportunity cost bore by the government. So, for the taxpayers, it is "free". Even for government, it is "free". However, for IOC, that is working capital that could have been used elsewhere in their corporation & therefore, it is not "free" for them.

The slots license itself has no "value" to the city, since they are not the ones issuing them. However, the state values them & charged the $50M application fee. The city places value on the license because of the seconday benefits, but is not the primary licensing entity & thus, does not receive any portion of the application fee. I do agree that the licenses should have been auctioned off as did most industry experts. Why that did not occur is beyond me.

As far as Plan B is concerned, here is the risk. As it is currently structured, Plan B relies on "voluntary" contributions from whoever wins the license (other than IOC). What are the guarantees in place to ensure that the license winner continues to provide its contributions over the course of 30 years? This is a question I have posed to Dan Onorato & have not yet received an adequate answer. In addition, portions of this also comes from gaming revenues collected by the state. Now, here is an instance where taxpayers share opportunity cost. These are monies that are being re-directed away from property tax relief, so the taxpayers are sharing in the cost. IOC's plan is to give money out of their pocket up front versus out of gaming revenues collected by the state. That is why Plan B is murky at best....

[Sam M]

I tried to post a verssion of this yesterday but failed, so here goes again:

"That means that money is allocated for a specific purpose & can't be used for any other. So, no, the money received from IOC can't be used for roads or teachers or anything else other than a new arena."

True. But the government chooses the specific purpose. By choosing which casino company gets the license. A good analogy would be an earmark. They are aimed at specific purposes. But they do not provide anything for free.

But this seems even more far-fetched:

"However, in this case, it is money not found originally in government channels, so there is no opportunity cost bore by the government. So, for the taxpayers, it is "free". Even for government, it is 'free'."

This just does not hold. First, it does not adhere to what's going on here. When IOC gets the license, it is not going to bring in an arena on a big flat-bed trailer. It is going to deliver a check for $290 million. And someone is going spend that $290 million to build an public arena. So the $290 million would, in fact, enter public channels before being transformed into an arena.

Setting aside strange examples, try considering how you might think of this if the government had used the process you would have preferred: an auction. Let's say that there had been an acuction and that IOC offered the highest bid. Say $350 million. And the first thing the City of Pittsburgh did with its money was buy a police cruiser. So the city writes a check to Cruisers 'R Us and gets the cruiser.

Free cruiser?

No. Not a free cruiser. A cruiser purchased with money that the government generated through the sale of a valuable resource.

Another question: Are schools and roads in the Allegheny National Forest region "free"? A huge portion of them must be. Because they are funded (or were until recently) through timber sales on the Allegheny National Forest. Got that? The government doesn't have money in its channels. It has trees. Which it sells. And 25 percent of that money goes to local government for schools and roads. Must be free roads and schools, right? Because this money was "not originally in government channels."

Look, all this is tied up in the fact that the government has basically banned gambling until now. The value in the license rests in the government-enforced local monopoly it grants to the casino company. That is, for better or worse, the government has created an EXTREMELY valuable resource. Which it can sell or trade for things that it wants. Those things could have been arenas, teachers, apples, or just plain money. The government chose to enact a process in which it traded the resource for "givebacks."

Givebacks that amount to $290 million that the city wants to spend on an arena.

And another ridiculous example: Let's say your long-lost uncle has a farm next to a new coal-fired electricity generation plant. Long-lost uncle dies and leaves the property to you and your brothers and sisters. But the coal plant is polluting and the electric company is concerned that your family will sue. So it calls your family's representatives to a meeting to offer a settlement. You get a call. The settlement is for $1 million. You agree to the settlement, but by the time you get to where everyone is meeting you discover that you don't get any cash. Your brothers and sisters have already spent the money on having Van Halen play at the family reunion that year.

"What the hell?" you say. "Where's my cut? How could you have wasted the money on Van Halen? I have a lot of debt. Bills. I wanted to educate my kids. Install a burglar alarm in my house."

"What are you talking about," they say. "We didn't waste the money. Van Halen is playing for FREE."

Which by your definition would be true. After all, this was not money "originally in family channels." It came out of nowhere. It hadn't been budgeted. So anything you buy with it is free.

Right?

Or what if your wife wins the lottery. I suppose you wouldn't mind if she spent the whole jackpot on a skating rink in the back yard. After all, it would be free. Because the money was not originally in famiily channels.

So does that mean that:

"This is pure semantics you are arguing. Yes, the arena isn't 'free,' but then again, nothing in life is 'free.'"

Wrong. I can imagine a free arena. The city would get a free arena in this case: If the Penguins' new owner built the arena with his own money and donated it to the Stadium Authority. And did so with no stipulations about roads or infrastructure or use.

That is a free arena.

Not likely to happen. I know. But that is the only way the city would get a free arena. Trading the slots license for an arena might get an arena built. But not a free one.

[edog37]

Now I get it, you have the typical Pittsburgh mentality when it comes to government spending & the like. Someone else ponies up the cash for a civic improvement, & that isn't good enough. Lemieux was told a few years ago that public monies were not available for a new arena. So, he went out & formed a partnership with a private entity that would fund a new arena, & of course, that apparently isn't good enough. My friend, cost comes down to who is spending it, but also, who provided the money in the first place. The city is not spending a dime on this since they will receive money from an outside source. They are merely the pass through. That is all that matters. More importantly, this is money from the source before the first quarter is put into the new slot machine, so even indirectly, the people are not paying for the arena. Why is this such a problem for you?

And before we go further, historically, cities have been the one to put up funding for new stadiums & arenas. Only recently are we beginning to see private sources being utilized on a greater basis. Once again, why is this a problem?

Your will example is also lacking. Let me present this to you. Let's say I a wealthy individual (I am not, but for the sake of this discussion, we'll make that small allowance) & I wish to leave it to my favorite charity to be used for a specific purpose. They have to use this to build a building. As the old saying goes, "never look a gifthorse in the mouth". The charity was the beneficiary & did not bear any opportunity cost. Same thing applies here. The city is the beneficiary & does not bear any opportunity cost. They can't use the money for anything else. Period....

The IOC plan is the best option for this city. It provides for a new arena for the city in the easiest manner.

[edog37]

Now I get it, you have the typical Pittsburgh mentality when it comes to government spending & the like. Someone else ponies up the cash for a civic improvement, & that isn't good enough. Lemieux was told a few years ago that public monies were not available for a new arena. So, he went out & formed a partnership with a private entity that would fund a new arena, & of course, that apparently isn't good enough. My friend, cost comes down to who is spending it, but also, who provided the money in the first place. The city is not spending a dime on this since they will receive money from an outside source. They are merely the pass through. That is all that matters. More importantly, this is money from the source before the first quarter is put into the new slot machine, so even indirectly, the people are not paying for the arena. Why is this such a problem for you?

And before we go further, historically, cities have been the one to put up funding for new stadiums & arenas. Only recently are we beginning to see private sources being utilized on a greater basis. Once again, why is this a problem?

Your will example is also lacking. Let me present this to you. Let's say I a wealthy individual (I am not, but for the sake of this discussion, we'll make that small allowance) & I wish to leave it to my favorite charity to be used for a specific purpose. They have to use this to build a building. As the old saying goes, "never look a gifthorse in the mouth". The charity was the beneficiary & did not bear any opportunity cost. Same thing applies here. The city is the beneficiary & does not bear any opportunity cost. They can't use the money for anything else. Period....

The IOC plan is the best option for this city. It provides for a new arena for the city in the easiest manner.

[edog37]

sorry about the double post....technical problems....

[Sam M]

A "gifthorse in the mouth"?

Man. I would hate to see Christmas at your house.

"Here you go son. A new sweater. And a Nintendo. All for free. Of course, you will have to sign over that casino licence to me first and forego any money you might have made selling it."

Strange way to give a gift.

So strange, in fact, that IT'S NOT A GIFT. A gift is something freely given. With no attachments.

Something given only under the condition that you deliver something in return is an EXCHANGE.

And when you make an EXCHANGE, you are not getting anything FOR FREE. You are EXCHANGING FOR IT.
Payment in kind.

PAYMENT.

Not a gift. Not an inheritance.

Why is THAT so hard to understand?

I have said time and again, I think that a reasonable person could come to the conclusion that exchanging the slots license for a casino is a good trade.

But it's a trade. It's not a free arena.

So yes. I do think it is "reasonable" for you to conclude that the city is doing the right thing. I think that you could reasonably conclude that the IOC plan is the best bargain for the city.

But I cannot accept the notion that this is a free arena when it is obvious that we are, in fact, trading an extremely valuable resource for it.

It is not a free arena.

And for the life of me I cannot figure out why you are so intent on saying that it is. Other than you might get some sort of psychological benefit out of thinking that you are getting something for nothing. Or that you will rest easier watching hockey if you can assume that no public resources went toward your passtime. But honestly, I don't know.

All I know is that when you trade something for something else, what you got was not free. And I know that we have to give the slots license to get the IOC arena.

We are paying for the arena with the slots license. Which is worth hundreds of millions of dollars. Period.

So what? So, you have to trade a slots license for it. Big deal. If you look at the other proposals, the "givebacks" there are minimal compared to IOC. $25M for the Pittsburgh History & Landmarks Foundation (Forest City. Only PITG comes close to IOC by promising $350M in redevelopment money to the Lower Hill. However, IOC's bid is worth $1B to the Lower Hilll. So, it seems to me that the value of the slots license varies widely depending on who wins it. Right now, the biggest prize is a new arena FREE OF TAX MONEY. That is the golden egg my friend.

Given that, I think most people in this town are willing to give the license with that in mind. There isn't another project here in Pittsburgh that has so much emotional attachment or necessity. Yes, I know, you are going to hit on the roads & teachers issue. But that is an empty argument since we will always have issues with that. In both cases, I feel that how we are organized impedes true progress rather than funding, but that is a separate discussion altogether. The point I am making is that currently, a new arena is viewed as the pet project for the city. The question remains how to fund it at no taxpayer expense. IOC provides for that. Plan B might, but it has weaknesses. No, the arena is not "free", but it is taxpayer free & that is all that matters.

[Sam M]

"No, the arena is not 'free,' but it is taxpayer free."

No. It isn't taxpayer free. The taxpayers currently possess a resource worth hundreds of millions of dollars. The IOC plan would have them trade tht resource for an arena.

Giving something worth hundres of millions of dollars in order to get something is return does not amount to getting something for free.

If you go to a swap meet and trade an airc conditioner for a table saw, did you get a free table saw?

No.

Doesn't matter if you built the air conditioner out of scraps or won it in a raffle or if your brother gave it to you. If you trade it for a table saw, you paid for the table saw. With an air conditioner.

Maybe it's a great deal. Maybe it's the best course of action. That doesn't mean you got a free table saw. And I don't see why anyone would want to argue that it does.

Try to think that through. Why would someone want to make that argument?

[edog37]

At least try to understand what I am writing. Yes, it is taxpayer free. There are no tax payer dollars being used, these funds are coming from the gaming company, not public money. There is no additional taxes being raised, RAD money isn't being used either. This money did not come from you or I. My taxes did not contribute one cent to it. Yes, a slots license is up for grabs, but regardless, I don't benefit from that directly, nor does the city. The State is the licensing authority.

People are okay with this tradeoff. Apparently, you are one of the few who aren't. Why?

[Sam M]

Admitting that it is a "tradeoff" is a good first step.

Trading for something is differentt than getting it for free.

Remember how this coversation has progressed. I said it was not a free arena. I have said all along that whle a reasonable person could support the proposed trade, a reasonable person could not, in fact, talk about a "free" arena when the arena arrives only in exchange for a valable resource.

My "problem" arises from a concern about truth. And deeply held suspicions about the way people sell publc projects.

Here's my question: If you think this is so obviously a good trade for the city, why do you support language that presents it as "free"? Why not just be honest about it? And why get so up in arms when someone simply points out that the proposed arena would come through a trade rather than as a gift?

Why so defensive? Why not just say, "OK. I agree. it's not really free. But it's a great deal."

[edog37]

I wasn't sure what lens you were viewing this through. As you can tell, I'm pretty emotional when it comes to this issue. Call it a trade or whatever, it doesn't matter to me. The only thing that does matter is that the new arena is built & the team stays. The Pens have come up with a great plan that does not cost the taxpayers a cent in terms of tax dollars. If they wish to trade a slots license for it, fine. It meets the sanity check for the region & it should be selected.