I don’t think that any of the women’s franchises are going to be able to afford the upkeep of that arena. It’s going to have to be tied to a major franchise like the Blazers.
The economy has also changed from 30 years ago when there was more focus on consumer goods and now people are more focused on experiences. If we lose that arena and don’t have a top tier arena then big events will just pass us by. To some extent that’s already happening and I think it would be a huge pity for Portland.
I don’t think taxpayers should bear the whole brunt of it, but we should understand it is part of our community’s interest.
I wish we could also focus on spurring investment through the (free) reduction of regulation rather than through investment. When I talk to people involved in development, their chief complaint is how hard it is in this community to build anything, not how the government won’t give them money to do it.
Living for many years in Wisconsin close to Green Bay, I became a dedicated fan of the ownership model of the Packers -- owned 100% by thousands of Wisconsin and other residents to ensure the team never leaves Lambeau Stadium. What a shame that the Blazers couldn't have been sold to the hundreds of thousands of its fans to provide funds for ongoing improvements in its stadium facilities, player recruitment, etc. But the idea that tax generated funds should be used to update a facility used primarily as a venue for a single team that can split town any time makes absolutely no sense to me.
Yes, I wondered exactly this. For that matter, the City might have bought it in the short term and then had the time to sell shares to the public. Most of all, the assures that the publicly funded improvements are for the profit benefit of every public owner and not just one or two private ones.
Maybe you should do a little reporting next time. That arena is more than a venue for the Portland Trailblazers, it is the principal venue for large shows that come through Portland and right now usually skip us. Had you called a couple of promoters you would know that. It is also crucial to the future of the Visionary Albina Vision project. Also, what happens to that part of town, which is already in decline, if it’s sitting there with an empty arena for 30 year? What a visible sign of failure. You guys do a lot of good reporting, but things like this and your negative story about the James Beard market are dangerous, irresponsible, negative, smug, and lazy. If your effort is to contribute to the decline of your city, well done.
I'm torn. I get your argument, Allan. What happens to the building if the Blazers leave? Will it still be used for the other venues or will iti become a decaying blight on the landscape/horizon for all who drive by it on I-5? Mike Thelin's comments, though unnecessarily snarky and insulting right of the chute, may be correct. And the consequences are not just financial. We are a city in deep decline. There's little remaining of the civic pride we had just a decade ago. We have handed the keys to a bunch of activists with no comprehension of history and planning who will rejoice in the loss of this beacon to American capitalism and greed. This may be the biggest blow from the economic doom loop that we are unarguably mired within. The psychic consequences will be harsh. We would be wise to think carefully before letting the Blazers go. Portland is headed to life-support.
It’s one thing to use public funds to induce a major sports franchise to move to your city, perhaps quite another not to use public funds to stop one from leaving. If the Blazers leave, how many jobs will be lost? How much visitor revenue? Taxes on players considerable earnings? How will nearby restaurants and other businesses fare? What will happen to redevelopment plans in the vicinity? Will the Moda Center became another abandoned and derelict structure like the Lloyd Center? Just asking.
Ha ha ha. You mean like the Memorial Coliseum isn't that already? No argument from me, Joe. And I am not advocating for a loss of the franchise, I know that a very many things are held in the balance - other developments, etc. But, in a purely cynical and satirical way, I also see that this is the common practice in Portland: spend millions on properties that never get fully rented and used. The loss of this franchise would not stop large arena concert rentals or other lesser sports franchise uses, just merely reduce rentals and income, in the same way splitting up the Coliseum business to the Expo Center, Convention Center and Rose Quarter created our first derelict property there. As I write elsewhere here, they did the same with performing arts buildings too - may do it again at PSU. There continues to be a certain level of idiocy afoot here. Anyway, Phil Knight is not gonna let them destroy his building plans there, right? I doubt anything we express here is gonna change things.
Having moved to Portland from Oakland, CA, in 2015, we're familiar with the sports teams' demands for updated stadiums. We voted for a bond to bring the Raiders back from LA, then lost them to Las Vegas. I suspect Oaklanders are still paying on that Bond. Now the Oakland 'A's are halfway to Las Vegas, "temporarily" playing in Sacramento. Oaklanders are still paying.
I get it, it sucks having to pay for nice things that make a city livable for the middle class. Heaven forbid we use tax dollars for something other than homeless services, drug treatments for addicts, or public employee pensions. Public officials should focus on making access to Blazer games more accessible to lower income families. Don't forget, people said the same about Portland's investment in Providence Park Stadium for the Timbers. I have multiple friends who predicted with 100% certainty the Timbers would fail and Portland taxpayers would have to eat the investment. Keep in mind, without that investment, we would not have the Portland Thorns. Although, it will be interesting to see how the Peacocks vote on this issue. End of the day, you know they will get the money
Oregon, and especially Portland need to face reality. Economically, we have become a second class state without the resources to take care of our own. We rank low or last in those things we aspire to be good at: public school achievement, housing affordability the sustainability of our health care system, behavioral health measures, the condition of our roads and bridges and the agencies responsible. Portland ranks last in major cities in recovery post pandemic. We rank high in the things we want to be low or more effective in; homelessness, overdose deaths, crime per capita, housing construction, bankruptcies and average tax rates. We have the lowest return to office rate of all major cities. Multnomah County is barely adding population while high income residents leave. We have a City and County who famously cannot cooperate on major issues like behavioral health, homelessness and public safety. Intel and Nike are struggling and laying off people, Dutch Brothers left Oregon. OHSU, our other major employer is laying off too. WE can't attract a major corporate headquarters.
The big question to me is: Why do we think we are a major sports City or State? Who wants to own a team in a financially declining, politically dysfunctional state where businesses are moving out not in in today's environment.
We are at an inflection point. Use the $600M to start working together to solve these deficiencies.
What to do with the Rose Center? I don't know, but we better start thinking outside the box. We can't replace the Keller. We have a struggling Convention Center and companion hotel which we helped finance. We have an aging Coliseum. We have struggling housing market. Let's shore up what is failing first.
I had the pleasure work in food service in the Rose Garden Suites Level from day one. Levy Catering was a great employer. The arena was state of the art (with some glitches). The complex is not surviving the Paul Allen era. He wasn't perfect, no billionaire is. BUT this is a stick-up w/o a gun. This puts to rest any idea of bring another sports team (Baseball ) to this market. The Keller is getting the ax even tough it is the only place to put on Broadway shows in this town. In some ways the Memorial was superior to the Moda --but between the two, we can make it work. This shakedown makes Chauncey's transgressions seem pale in comparison.
#1) Remember, we are talking about remodeling the arena, not tearing it down, so any other events like concerts, etc. should be fine. Unless we are assuming all entertainment avoids Portland because we don't have a basketball team. Huh?
#2) If any sports team is demanding the public make their venue more comfortable or they will leave, then don't let the screen door hit you on the way out. The word for this is extortion. I like that we have the Blazers here, but if they are going to hold us hostage until we pony up a $600 million dollar ransom......
#3) The ER Commission created a ticket surcharge in the 90's (maybe late 80's) that was a dedicated fund for venue improvements. EVERY SINGLE TICKET, for every single event, pays the surcharge. What happened to that money ?
#4) This is the same argument Metro used to extort a multi million dollar bond for Oregon Zoo improvements. They claimed the zoo was responsible for 27% of all economic activity from tourism, which is, of course, nonsense. Unlike the profitable Blazers, however, the zoo loses over $80,000.....PER DAY.
#5) How about raise Blazer ticket prices to cover the remodel?
#6) How about we split the difference with the new owners? Make it $300 million, use ER funds and a ticket price increase to cover our part, and WE WILL LET THE BLAZERS STAY.
#7) If we cave, this will not be the last time. Next time it will be over a billion, and our investment in keeping them here becomes more difficult to negotiate.
#8) What message are we sending to other sports franchises that may want to locate here ?
What do we tell the folks trying to get a major league baseball team in Portland? C'mon in, we have a few hundred million bucks just burnin' a hole in our credit rating ....just waiting for you to ask.
#9) In the 90's I rented some of the Coliseum Exhibit Halls. When the ER Commission passed its surcharge ticket tax, which affected me, the beneficiaries were the Blazers. New score board. New floor. New seating. New locker rooms, and on and on. In addition, the Blazers were given 85% of ALL parking revenue, from all events, and also a good percentage of concession revenue (yeah, that's one of the reasons why food is so expensive at the arena).
Meaning: Portland is already paying to keep the Blazers here.
#10) Why did lour local governments approve an arena on that postage stamp piece of property in the first place ? (Hint: it was owned by Pacific Corp, and, well, that was probably negotiated by a couple of commercial real estate brokers while putting out on the 15th hole). The result? A convoluted mash of access roads and parking lots. Now The Oregon Dept of Transportation is trying to figure out how to reconfigure I-5 opposite the arena. How much is that estimate again ?
#11) Never mind. Our local bureaucrats will fumble us right into another unaffordable public subsidy because that is their particular expertise. Doing the wrong thing at the wrong time for the wrong reasons......with your money. OK to buy season tickets cuz' we will be remodeling that arena.
Well, here we are once again, dear Allan, swimming in the same tributary. I too had been giving this thought and have for years wondered whether holding on to a national sports franchise is an advantage or a curse. And here, there are so many unanswered variables that I have always suspected that the leaders challenged with these decisions throw their hands up in the air and simply give in. Because, if nothing else, disappointing fans can crush political careers. I think this is the predictable knee-jerk reaction of the Mayor and Governor, both who in the haze of unrelenting criticism of their leadership, don't want to sit on the wrong side of this much-needed debate, judged by a prejudiced and an uninformed voting public.
The "Development Cancer Cell" practice
As I have written before, from my watchful point of view, Portland has had an obscene problem with urban development since the early 80s. I love change, I am all for change, I am one of the last people to complain even when it takes place at my doorstep. Change is good, we evolve or we die. But, it really ought to be properly measured, thoughtful change and not a toss of the dice gamble - particularly using public money.
Let's first take a recap look at this practice. Beginning with the spiraling effects of assuming the need for more space than the once magnificent Memorial Coliseum offered.
Once the home of our biggest sports franchises, and every boat, auto and RV show, product show, trade and association exposition and music concert, eventually it's seating capacity short-changed the sports franchisee who capped out on sales. And a false argument was made that it was too busy, so in demand that a 2nd facility was needed to take on events it was losing.
This is nothing new. Practiced since the 70s, major retailers around the country have understood the core philosophy of build, divide and conquer more market share. K-Mart would build a 20,000 s.f. retail store in a new market, build sales share and between the 8th and 15th year of operation, it would subdivide that market, building a 2nd location 15-25 miles away - dividing and multiplying like a human cell. And that strategy makes sense, as long as there is a market clamoring for your products or services. And when that slows or dries up, the spread of these cells become dead, empty wrecks.
So, in no particular historical order, this is what City development did. They remodeled the aging expo building in North Portland and moved product trade shows to that intensely suburban setting, far from downtown and providing truly awful ingress/egress from I-5, once you trekked there. They built a beautiful convention center to shuttle the remainder of the trade show and convention meeting expos there - essentially assuring the Coliseum received none of this business. They approve a giant new sports arena for the benefit of the largest sports franchise in the city and expected that the ever-struggling minor league hockey team would keep the aging Coliseum financially afloat. We went from a single, though aging, building that profitably met the needs of multiple user markets and split it into four properties. And did the consumer demand increase four times in size? In fact, was there ever any reasonable projection that it could quadruple over a foreseeable time frame? Not a chance in hell.
Instead, we have four buildings: a coliseum that sits empty and deteriorating, unable to produce sufficient cash flow to offset needed upgrades. We have an Expo center, that, yes, has more business now than it did before it was put into service to take business away from the coliseum. But, it clearly sits far too empty and too idle most of the year. It is not a profitable center and without public monies to maintain, repair and upgrade it, could not finance it's own continued function. We have a magnificent convention center that currently sits empty and unused most of the year, the expected flood of new rents and leases have never materialized as hoped for. And the current post pandemic reaction in the market causes them to project a 2-4 year low rent cycle before returning to it's former operation. Only the Rose Quarter arena seems to operate in sufficient capacity to make itself profitable. The sports and music concert business seems to generate sufficient revenue to keep the operators happy.
Great. They were able to do this at the expense of three other under-utilized, under-performing city assets that suffer as a result of steering the greatest market share of business to the Rose Quarter. And, in all that profit taking, year after year, did any one, the City or their operator, ever withhold some income to offset the needs for improvements? I mean, that is the way most businesses operate: as an asset ages, the business defers income to eventually repair or replace it when it reaches a critical target age. Apparently, everyone here knew that the Rose Quarter would need these at age 30. Where's the war chest savings to cover that?
And because this will become a recurring theme, I need to also include the City and their same arts building, cancer cell practices.
Here we had an aging Auditorium in need of severe upgrades in the late 60s; so they purchase the Paramount Theater, spent millions rehabbing it and moved some of the arts business out of the auditorium, to the renamed Arlene Schnitzer Hall. (God, forbid, if the Oregon Symphony were to die the same death as the Portland Chamber Orchestra, the Schnitzer would lose most of it's income.) Then, they concluded that the Keller was not enough and decide to build a trio of live arts spaces that become the Newmark, Winningstad and Brunish Theaters. (Yes, they do offer different sized spaces to meet differing production needs, which was cited as a need to justify construction.) They built this with no real evidence that there was demand for more theater rental spaces and without having a single local theater company moving permanently into any of them. (Within five years, one long running company, PCT, with it's own building spectacularly went bankrupt and their two theater spaces were razed. It should have sent a signal to leaders that these companies exist solely on charity and charity alone.)
With no local companies moving in, Ashland eventually sent a resident company to Portland which attempted to create a professional operation and it tanked in under 5 years - eventually getting bailed out by the lure of a free building when the Armory was remodeled privately. Thus, with the demise of PCT, the most biggest remaining local companies (PCS and ART) move from renting to securing their own buildings - effectively assuring these new City-owned properties get little rental from local companies - as it does to this day. (Again, in commercial RE, at least a developer gets some anchor tenants committed under contract before construction begins. Why not the City?)
Eventually, in order to secure sufficient funds to keep the three theaters operating, the City moves income from their other buildings (Keller, Expo and Convention) and folds them into one all-encompassing budget - expecting that the success of some will keep the others afloat. Sound familiar? Sure enough, where 1-3 theater spaces, kept at capacity sales were all that might be needed, we have presently 5 city-owned theater properties - most which are under-utilized and underperforming. And all this while the theater companies at the Armory (PCS) and the old Scottish Rites Hall (ART) are in current severe financial hardship. With all that, the City now contemplates remodeling the Keller and building a new theater space on the PSU campus - effectively adding a sixth rental property to the mix.
It is, as Mildred Schwab was quoted saying: "if you build it, they will come." Build more convention and trade space, get more event rentals; build more theaters, get more audiences; build more arenas, get more sports ticket holders. But, hello? Where are all these new, money-spending patrons coming from? And where is this unlimited source of entertainment allowance coming from? The greater metro area is still a relatively finite market. It is not growing in the same way the city owned rentals - sports, trade, convention and theater were developed. The market share of disposable income, spent on theater or sports or live music or trade and product shows did not grow 4 or 5 times in size. It couldn't. Not ever.
And yes, I realize that convention business growth comes from outside the area, we clearly did not properly predict how much of this we could sell either, as many other municipalities have built competing convention centers to lure those same, and always limited, number of rental opportunities to their economic centers. We are all still competing, even at that level, for the same finite convention opportunities. So again, dear leaders, did we really need to build 4-5 times the capacity for theater rental opportunity we could never fill?
And as a final note to this section. Remember too, that Nike and their investment developers are gambling on an eastside development of the old grain terminal and hotel sites adjacent the Rose Quarter that will succeed or fail on whether the franchise stays in their blood-money remodeled Rose Quarter. There is a lot more at development stake here than just the fate of these city properties. You got to assume Phil or his partners have already called the governor and mayor to receive assurances that project will not be harmed in this $600 million decision.
The "Economic Boost" myth
What does it really bring in the way of money to the city? Jobs. It certainly creates job opportunity, a lot of non -professional wage-earner jobs for locals. It likely creates a small number of full-time jobs and a lot of part-time jobs for security, maintenance and food service workers. To the degree that product sales consume supplies, it creates sales and job opportunities to those suppliers. And, naturally, those incomes trickle down to daily household and company products and services. But, while boosting employment and spending, the net result is merely keeping local dollars local. Or does it?
Equally, some locally dollars leave the local economy as every guest team takes a piece of the gross back home with them. Secretly, we have no idea how many dollars pass out of our local economy that are never recovered in net even as the team travels to other markets and brings their share home. What we can be sure of is this: a super majority of all sales dollars (except broadcast revenue) are collected from the greater OR, southwest WA market and not all of it returns here. So net sales gain may not be a net profit to our economy. And remember, this is disposable entertainment dollars spent by locals. If not spent at the Rose Quarter are we suggesting it wouldn't get spent at all and everyone would have giant savings? No. They would simply spend it elsewhere, on other local entertainments and those entertainments would employee workers and provide the same trickle down to the economy. There is a chance that the loss of jobs could mean a similar loss in population spending locally, but the numbers could be nowhere near as bad as the job loses at Nike or Intel the last two years.
I would also argue that the local business hoping to sell products or services to this temporary pool of consumers arriving for a game (from parking rental to local dining, food or ticket scalping), see very little profitable gain exclusively from the sports franchise. By clear example, did anyone, with any far reaching vision, notice that the Rose Quarter project itself was a spectacular commercial failure? Built with the promise of so much adjunct food, drink and entertainment business that was going to profit from the consumers spilling out from the exterior walls of the arena feeding the addition of restaurants and microbrewery? Where are they now? It's a simple answer in hindsight, yes. Sports consumers, shelling out $100 a seat, will pay for the inside experience, but scarcely have extra disposable income to drop another $50 a person on external food and entertainment services. And why should they, since the real magic to them is courtside, not outside the building? No, I am betting that the loss of the franchise would not harm many of the local businesses. I invite clear evidence to refute this.
That brings us to the revenue to City and County offset by the cost to both in the form of services and surrounding area maintenance. We have no idea what the City collects in permits, fees or personal property (business) taxes specific to the franchisee operation, but one has to wonder if it nets a gain after considering the costs the city has to provide adjunct services in traffic management, neighborhood heightened security, crime response, care and maintenance of City properties adjacent and serving the franchise property. And we have no idea what property tax revenue the County receives as the property is owned by the City of Portland. Are they exempt?
I admit, Allan, I have not read the recent calculations on this, but the stated conclusion does not surprise me. Every time I start to give this some thought, I have trouble conceiving that there is a financial net gain. It may only serve to enhance city image and promote citizen unity - two advantages I would not completely ignore. Then again, it only takes one summer of largely peaceful demonstration and protest to sully Portland in the eyes of the rest of the world. How much goodwill does this franchise buy back?
The "Arts as Collateral Damage" scenario
Admittedly, being in the arts as well, I am prejudice here. But, I am as equally hard on the idiotic business practice of local theater companies as I am on a City wishing to hold a national sports franchise by giving away public dollars to keep them here. (If it were so damn profitable, why didn't the city just buy the team? At least something they own might return a profit.)
Over the many years I have been in and out of Portland theater, I have watched it decay. I am self-critical and understand that I may be seeing this from a distorted point of view, the practice of believing everything was better in the past. But, I try not to and try to rely on real numbers to prove this point: the performing arts in Portland is in a long, continuing decline in financially sound theater companies, number of annual productions, gross revenues and net return. Costs, as they would, increase, while consumers balk at paying cost-comparable ticket prices. Because of the growing loss of patrons, ticket pricing has not risen with inflation and more and more of the cost of operation and production season is borne by charitable contribution (about 70%!) Yes, this is likely due, in part, to the change in consumer habits. The industry has done an abysmal job of competing for entertainment dollars, poorly proven to the public the unique experience benefit of live theater, poorly educated future generations of audiences on same. At the same time, the entertainment industry and technology continues to offer other entertainment sources, at highly competitive prices, that make live theater costs higher per individual consumer. More people, can see more entertain for the cost of ISP and streaming services than they can on theater tickets. So when the average local production cost for a play is $40 and a musical $60, and a national bus tour cost of a musical is $120, you can see how consumers jealously guard where they might spend their money.
But, and this is a big one, households have not stopped spending disposable income. They have merely stopped spending it on live theater and instead spend it, when not on products or services providing "in home" entertainment, on local food, drink, music and sports. How odd then, that sports fans will pay $100 a seat for a single 90 minute NBA game, but not $60 to see a 120 minute musical. Well, we know some of the reason is who is controlling the expenditure. It isn't likely that a majority of the sports ticket buyers are wives and girlfriends. No the men are buying those tickets, they are controlling how the household disposable income is spent - even if it's done by withholding that money from the household - and spending it directly. Minor-league teams like the Beavers/Mavericks and Portland Buckaroos, were not selling the volume of tickets or, adjusted for inflation, at the similar high cost of today's local franchisee. So there was a time, when a household could do both - allow for the wife to buy tickets to live theater or a movie regularly and still allow the husband to see live local sports. Not so much anymore. Now, I maintain, it's an either/or - Spend several grand on an NBA season ticket and there is far less household money or time left to afford and attend live theater.
Consequently, I do want to propose that this debate include considering just how much of a negative impact a national sports franchise can also have on the local arts market. Due to a restricted number of local consumers (whether by taste or amount of disposable dollars), local theaters cannot charge ticket prices to cover their costs, while a national sports franchise demands and gets national ticket prices out of that same local consumer. The result is, the franchise can, thanks to City subsidy, consume so much of the household's disposable dollar, what disposable income remains is too little to allow spending on (by example) local theater. In effect, the national franchisee forces local consumers to pay in excess of local prices, to participate in their entertainment, and the result is a shortage of remaining dollars to spend on other local entertainment. (Remember the guy spending $100 for a ticket, but not another $50 for food and drink at the brewery 50 feet from the Rose Quarter doors? He can't and won't afford both.) So, I maintain, the arts and theater arts suffer as a result of this inequity. And I blame the City for helping to achieve this gross imparity, as they subsidize so much of the cost, the operator is guaranteed a profit.
One has to wonder why their charity ends there. With five theater properties, largely never in profitable rental use anyway, why are they less charitable to the local theater companies that are nearly bankrupt? Where's their subsidy? (Oh, yes, it's collected from an Arts Tax, but largely left undistributed. How do we let them get away with this?)
By example, if ART and PCS could get $100 a ticket for their play or musical, and fill their meager 250 seat houses (not over 14,000 general admission seats like the Rose Quarter), each would operate in the black, regardless of the charity they collect and receive. If ART sold 200 seats for 24 performances (4800 seats or less than 30% of all seats at a single NBA event at the Rose Quarter) at $100 a ticket, their gross revenue would be $480,000. That is sufficient, even with their sometimes foolish production spending (and I've looked at their annuals, it's often stupid), they could easily run a financially successful company. (And I am not counting any of the adjunct income made at each NBA game in product, food and drink sales.)
It's pretty clear, as long as the City wants to underwrite big franchises, performing arts in Portland will become an ever-shrinking enterprise - going the way of traditional Opera - where one company barely keeps financially afloat to serve their shrinking audience base. Perhaps that change is inevitable too. But, at least leaders should consider this loss just as they consider spending $600 million in blood-money to keep this franchise in Portland.
Amen. Amen. Amen.
Let my team go.
There was a time when they were called the Jail Blazers. This is all about money, and the owners should go to jail for this blackmail attempt.
I don’t think that any of the women’s franchises are going to be able to afford the upkeep of that arena. It’s going to have to be tied to a major franchise like the Blazers.
The economy has also changed from 30 years ago when there was more focus on consumer goods and now people are more focused on experiences. If we lose that arena and don’t have a top tier arena then big events will just pass us by. To some extent that’s already happening and I think it would be a huge pity for Portland.
I don’t think taxpayers should bear the whole brunt of it, but we should understand it is part of our community’s interest.
I wish we could also focus on spurring investment through the (free) reduction of regulation rather than through investment. When I talk to people involved in development, their chief complaint is how hard it is in this community to build anything, not how the government won’t give them money to do it.
Living for many years in Wisconsin close to Green Bay, I became a dedicated fan of the ownership model of the Packers -- owned 100% by thousands of Wisconsin and other residents to ensure the team never leaves Lambeau Stadium. What a shame that the Blazers couldn't have been sold to the hundreds of thousands of its fans to provide funds for ongoing improvements in its stadium facilities, player recruitment, etc. But the idea that tax generated funds should be used to update a facility used primarily as a venue for a single team that can split town any time makes absolutely no sense to me.
Yes, I wondered exactly this. For that matter, the City might have bought it in the short term and then had the time to sell shares to the public. Most of all, the assures that the publicly funded improvements are for the profit benefit of every public owner and not just one or two private ones.
Maybe you should do a little reporting next time. That arena is more than a venue for the Portland Trailblazers, it is the principal venue for large shows that come through Portland and right now usually skip us. Had you called a couple of promoters you would know that. It is also crucial to the future of the Visionary Albina Vision project. Also, what happens to that part of town, which is already in decline, if it’s sitting there with an empty arena for 30 year? What a visible sign of failure. You guys do a lot of good reporting, but things like this and your negative story about the James Beard market are dangerous, irresponsible, negative, smug, and lazy. If your effort is to contribute to the decline of your city, well done.
I'm torn. I get your argument, Allan. What happens to the building if the Blazers leave? Will it still be used for the other venues or will iti become a decaying blight on the landscape/horizon for all who drive by it on I-5? Mike Thelin's comments, though unnecessarily snarky and insulting right of the chute, may be correct. And the consequences are not just financial. We are a city in deep decline. There's little remaining of the civic pride we had just a decade ago. We have handed the keys to a bunch of activists with no comprehension of history and planning who will rejoice in the loss of this beacon to American capitalism and greed. This may be the biggest blow from the economic doom loop that we are unarguably mired within. The psychic consequences will be harsh. We would be wise to think carefully before letting the Blazers go. Portland is headed to life-support.
It’s one thing to use public funds to induce a major sports franchise to move to your city, perhaps quite another not to use public funds to stop one from leaving. If the Blazers leave, how many jobs will be lost? How much visitor revenue? Taxes on players considerable earnings? How will nearby restaurants and other businesses fare? What will happen to redevelopment plans in the vicinity? Will the Moda Center became another abandoned and derelict structure like the Lloyd Center? Just asking.
Ha ha ha. You mean like the Memorial Coliseum isn't that already? No argument from me, Joe. And I am not advocating for a loss of the franchise, I know that a very many things are held in the balance - other developments, etc. But, in a purely cynical and satirical way, I also see that this is the common practice in Portland: spend millions on properties that never get fully rented and used. The loss of this franchise would not stop large arena concert rentals or other lesser sports franchise uses, just merely reduce rentals and income, in the same way splitting up the Coliseum business to the Expo Center, Convention Center and Rose Quarter created our first derelict property there. As I write elsewhere here, they did the same with performing arts buildings too - may do it again at PSU. There continues to be a certain level of idiocy afoot here. Anyway, Phil Knight is not gonna let them destroy his building plans there, right? I doubt anything we express here is gonna change things.
With the State, County and City all in massive debt, it's time to let them go. Go, Thorns!
Having moved to Portland from Oakland, CA, in 2015, we're familiar with the sports teams' demands for updated stadiums. We voted for a bond to bring the Raiders back from LA, then lost them to Las Vegas. I suspect Oaklanders are still paying on that Bond. Now the Oakland 'A's are halfway to Las Vegas, "temporarily" playing in Sacramento. Oaklanders are still paying.
I get it, it sucks having to pay for nice things that make a city livable for the middle class. Heaven forbid we use tax dollars for something other than homeless services, drug treatments for addicts, or public employee pensions. Public officials should focus on making access to Blazer games more accessible to lower income families. Don't forget, people said the same about Portland's investment in Providence Park Stadium for the Timbers. I have multiple friends who predicted with 100% certainty the Timbers would fail and Portland taxpayers would have to eat the investment. Keep in mind, without that investment, we would not have the Portland Thorns. Although, it will be interesting to see how the Peacocks vote on this issue. End of the day, you know they will get the money
Oregon, and especially Portland need to face reality. Economically, we have become a second class state without the resources to take care of our own. We rank low or last in those things we aspire to be good at: public school achievement, housing affordability the sustainability of our health care system, behavioral health measures, the condition of our roads and bridges and the agencies responsible. Portland ranks last in major cities in recovery post pandemic. We rank high in the things we want to be low or more effective in; homelessness, overdose deaths, crime per capita, housing construction, bankruptcies and average tax rates. We have the lowest return to office rate of all major cities. Multnomah County is barely adding population while high income residents leave. We have a City and County who famously cannot cooperate on major issues like behavioral health, homelessness and public safety. Intel and Nike are struggling and laying off people, Dutch Brothers left Oregon. OHSU, our other major employer is laying off too. WE can't attract a major corporate headquarters.
The big question to me is: Why do we think we are a major sports City or State? Who wants to own a team in a financially declining, politically dysfunctional state where businesses are moving out not in in today's environment.
We are at an inflection point. Use the $600M to start working together to solve these deficiencies.
What to do with the Rose Center? I don't know, but we better start thinking outside the box. We can't replace the Keller. We have a struggling Convention Center and companion hotel which we helped finance. We have an aging Coliseum. We have struggling housing market. Let's shore up what is failing first.
Don't knuckle under.
Wasn't there an article not long ago stating that everyone in Portland has the responsibility to help Portland recover?
This applies to professional sports teams. I am OVER professional sports acting like toddlers. Only want what they want, or they take thier toys.
I say screw the greed, the bamboozal, the smoke and mirrors, the amnesia/dementia. Bye Blazers, Bye. Go grift somewhere else.
I had the pleasure work in food service in the Rose Garden Suites Level from day one. Levy Catering was a great employer. The arena was state of the art (with some glitches). The complex is not surviving the Paul Allen era. He wasn't perfect, no billionaire is. BUT this is a stick-up w/o a gun. This puts to rest any idea of bring another sports team (Baseball ) to this market. The Keller is getting the ax even tough it is the only place to put on Broadway shows in this town. In some ways the Memorial was superior to the Moda --but between the two, we can make it work. This shakedown makes Chauncey's transgressions seem pale in comparison.
#1) Remember, we are talking about remodeling the arena, not tearing it down, so any other events like concerts, etc. should be fine. Unless we are assuming all entertainment avoids Portland because we don't have a basketball team. Huh?
#2) If any sports team is demanding the public make their venue more comfortable or they will leave, then don't let the screen door hit you on the way out. The word for this is extortion. I like that we have the Blazers here, but if they are going to hold us hostage until we pony up a $600 million dollar ransom......
#3) The ER Commission created a ticket surcharge in the 90's (maybe late 80's) that was a dedicated fund for venue improvements. EVERY SINGLE TICKET, for every single event, pays the surcharge. What happened to that money ?
#4) This is the same argument Metro used to extort a multi million dollar bond for Oregon Zoo improvements. They claimed the zoo was responsible for 27% of all economic activity from tourism, which is, of course, nonsense. Unlike the profitable Blazers, however, the zoo loses over $80,000.....PER DAY.
#5) How about raise Blazer ticket prices to cover the remodel?
#6) How about we split the difference with the new owners? Make it $300 million, use ER funds and a ticket price increase to cover our part, and WE WILL LET THE BLAZERS STAY.
#7) If we cave, this will not be the last time. Next time it will be over a billion, and our investment in keeping them here becomes more difficult to negotiate.
#8) What message are we sending to other sports franchises that may want to locate here ?
What do we tell the folks trying to get a major league baseball team in Portland? C'mon in, we have a few hundred million bucks just burnin' a hole in our credit rating ....just waiting for you to ask.
#9) In the 90's I rented some of the Coliseum Exhibit Halls. When the ER Commission passed its surcharge ticket tax, which affected me, the beneficiaries were the Blazers. New score board. New floor. New seating. New locker rooms, and on and on. In addition, the Blazers were given 85% of ALL parking revenue, from all events, and also a good percentage of concession revenue (yeah, that's one of the reasons why food is so expensive at the arena).
Meaning: Portland is already paying to keep the Blazers here.
#10) Why did lour local governments approve an arena on that postage stamp piece of property in the first place ? (Hint: it was owned by Pacific Corp, and, well, that was probably negotiated by a couple of commercial real estate brokers while putting out on the 15th hole). The result? A convoluted mash of access roads and parking lots. Now The Oregon Dept of Transportation is trying to figure out how to reconfigure I-5 opposite the arena. How much is that estimate again ?
#11) Never mind. Our local bureaucrats will fumble us right into another unaffordable public subsidy because that is their particular expertise. Doing the wrong thing at the wrong time for the wrong reasons......with your money. OK to buy season tickets cuz' we will be remodeling that arena.
The money could be spent in so many different and better ways.
Well, here we are once again, dear Allan, swimming in the same tributary. I too had been giving this thought and have for years wondered whether holding on to a national sports franchise is an advantage or a curse. And here, there are so many unanswered variables that I have always suspected that the leaders challenged with these decisions throw their hands up in the air and simply give in. Because, if nothing else, disappointing fans can crush political careers. I think this is the predictable knee-jerk reaction of the Mayor and Governor, both who in the haze of unrelenting criticism of their leadership, don't want to sit on the wrong side of this much-needed debate, judged by a prejudiced and an uninformed voting public.
The "Development Cancer Cell" practice
As I have written before, from my watchful point of view, Portland has had an obscene problem with urban development since the early 80s. I love change, I am all for change, I am one of the last people to complain even when it takes place at my doorstep. Change is good, we evolve or we die. But, it really ought to be properly measured, thoughtful change and not a toss of the dice gamble - particularly using public money.
Let's first take a recap look at this practice. Beginning with the spiraling effects of assuming the need for more space than the once magnificent Memorial Coliseum offered.
Once the home of our biggest sports franchises, and every boat, auto and RV show, product show, trade and association exposition and music concert, eventually it's seating capacity short-changed the sports franchisee who capped out on sales. And a false argument was made that it was too busy, so in demand that a 2nd facility was needed to take on events it was losing.
This is nothing new. Practiced since the 70s, major retailers around the country have understood the core philosophy of build, divide and conquer more market share. K-Mart would build a 20,000 s.f. retail store in a new market, build sales share and between the 8th and 15th year of operation, it would subdivide that market, building a 2nd location 15-25 miles away - dividing and multiplying like a human cell. And that strategy makes sense, as long as there is a market clamoring for your products or services. And when that slows or dries up, the spread of these cells become dead, empty wrecks.
So, in no particular historical order, this is what City development did. They remodeled the aging expo building in North Portland and moved product trade shows to that intensely suburban setting, far from downtown and providing truly awful ingress/egress from I-5, once you trekked there. They built a beautiful convention center to shuttle the remainder of the trade show and convention meeting expos there - essentially assuring the Coliseum received none of this business. They approve a giant new sports arena for the benefit of the largest sports franchise in the city and expected that the ever-struggling minor league hockey team would keep the aging Coliseum financially afloat. We went from a single, though aging, building that profitably met the needs of multiple user markets and split it into four properties. And did the consumer demand increase four times in size? In fact, was there ever any reasonable projection that it could quadruple over a foreseeable time frame? Not a chance in hell.
Part 1 of 4
Part 2
Instead, we have four buildings: a coliseum that sits empty and deteriorating, unable to produce sufficient cash flow to offset needed upgrades. We have an Expo center, that, yes, has more business now than it did before it was put into service to take business away from the coliseum. But, it clearly sits far too empty and too idle most of the year. It is not a profitable center and without public monies to maintain, repair and upgrade it, could not finance it's own continued function. We have a magnificent convention center that currently sits empty and unused most of the year, the expected flood of new rents and leases have never materialized as hoped for. And the current post pandemic reaction in the market causes them to project a 2-4 year low rent cycle before returning to it's former operation. Only the Rose Quarter arena seems to operate in sufficient capacity to make itself profitable. The sports and music concert business seems to generate sufficient revenue to keep the operators happy.
Great. They were able to do this at the expense of three other under-utilized, under-performing city assets that suffer as a result of steering the greatest market share of business to the Rose Quarter. And, in all that profit taking, year after year, did any one, the City or their operator, ever withhold some income to offset the needs for improvements? I mean, that is the way most businesses operate: as an asset ages, the business defers income to eventually repair or replace it when it reaches a critical target age. Apparently, everyone here knew that the Rose Quarter would need these at age 30. Where's the war chest savings to cover that?
And because this will become a recurring theme, I need to also include the City and their same arts building, cancer cell practices.
Here we had an aging Auditorium in need of severe upgrades in the late 60s; so they purchase the Paramount Theater, spent millions rehabbing it and moved some of the arts business out of the auditorium, to the renamed Arlene Schnitzer Hall. (God, forbid, if the Oregon Symphony were to die the same death as the Portland Chamber Orchestra, the Schnitzer would lose most of it's income.) Then, they concluded that the Keller was not enough and decide to build a trio of live arts spaces that become the Newmark, Winningstad and Brunish Theaters. (Yes, they do offer different sized spaces to meet differing production needs, which was cited as a need to justify construction.) They built this with no real evidence that there was demand for more theater rental spaces and without having a single local theater company moving permanently into any of them. (Within five years, one long running company, PCT, with it's own building spectacularly went bankrupt and their two theater spaces were razed. It should have sent a signal to leaders that these companies exist solely on charity and charity alone.)
With no local companies moving in, Ashland eventually sent a resident company to Portland which attempted to create a professional operation and it tanked in under 5 years - eventually getting bailed out by the lure of a free building when the Armory was remodeled privately. Thus, with the demise of PCT, the most biggest remaining local companies (PCS and ART) move from renting to securing their own buildings - effectively assuring these new City-owned properties get little rental from local companies - as it does to this day. (Again, in commercial RE, at least a developer gets some anchor tenants committed under contract before construction begins. Why not the City?)
Eventually, in order to secure sufficient funds to keep the three theaters operating, the City moves income from their other buildings (Keller, Expo and Convention) and folds them into one all-encompassing budget - expecting that the success of some will keep the others afloat. Sound familiar? Sure enough, where 1-3 theater spaces, kept at capacity sales were all that might be needed, we have presently 5 city-owned theater properties - most which are under-utilized and underperforming. And all this while the theater companies at the Armory (PCS) and the old Scottish Rites Hall (ART) are in current severe financial hardship. With all that, the City now contemplates remodeling the Keller and building a new theater space on the PSU campus - effectively adding a sixth rental property to the mix.
Part 2 of 4, I hope
Part 3 of 4, I hope
It is, as Mildred Schwab was quoted saying: "if you build it, they will come." Build more convention and trade space, get more event rentals; build more theaters, get more audiences; build more arenas, get more sports ticket holders. But, hello? Where are all these new, money-spending patrons coming from? And where is this unlimited source of entertainment allowance coming from? The greater metro area is still a relatively finite market. It is not growing in the same way the city owned rentals - sports, trade, convention and theater were developed. The market share of disposable income, spent on theater or sports or live music or trade and product shows did not grow 4 or 5 times in size. It couldn't. Not ever.
And yes, I realize that convention business growth comes from outside the area, we clearly did not properly predict how much of this we could sell either, as many other municipalities have built competing convention centers to lure those same, and always limited, number of rental opportunities to their economic centers. We are all still competing, even at that level, for the same finite convention opportunities. So again, dear leaders, did we really need to build 4-5 times the capacity for theater rental opportunity we could never fill?
And as a final note to this section. Remember too, that Nike and their investment developers are gambling on an eastside development of the old grain terminal and hotel sites adjacent the Rose Quarter that will succeed or fail on whether the franchise stays in their blood-money remodeled Rose Quarter. There is a lot more at development stake here than just the fate of these city properties. You got to assume Phil or his partners have already called the governor and mayor to receive assurances that project will not be harmed in this $600 million decision.
The "Economic Boost" myth
What does it really bring in the way of money to the city? Jobs. It certainly creates job opportunity, a lot of non -professional wage-earner jobs for locals. It likely creates a small number of full-time jobs and a lot of part-time jobs for security, maintenance and food service workers. To the degree that product sales consume supplies, it creates sales and job opportunities to those suppliers. And, naturally, those incomes trickle down to daily household and company products and services. But, while boosting employment and spending, the net result is merely keeping local dollars local. Or does it?
Equally, some locally dollars leave the local economy as every guest team takes a piece of the gross back home with them. Secretly, we have no idea how many dollars pass out of our local economy that are never recovered in net even as the team travels to other markets and brings their share home. What we can be sure of is this: a super majority of all sales dollars (except broadcast revenue) are collected from the greater OR, southwest WA market and not all of it returns here. So net sales gain may not be a net profit to our economy. And remember, this is disposable entertainment dollars spent by locals. If not spent at the Rose Quarter are we suggesting it wouldn't get spent at all and everyone would have giant savings? No. They would simply spend it elsewhere, on other local entertainments and those entertainments would employee workers and provide the same trickle down to the economy. There is a chance that the loss of jobs could mean a similar loss in population spending locally, but the numbers could be nowhere near as bad as the job loses at Nike or Intel the last two years.
I would also argue that the local business hoping to sell products or services to this temporary pool of consumers arriving for a game (from parking rental to local dining, food or ticket scalping), see very little profitable gain exclusively from the sports franchise. By clear example, did anyone, with any far reaching vision, notice that the Rose Quarter project itself was a spectacular commercial failure? Built with the promise of so much adjunct food, drink and entertainment business that was going to profit from the consumers spilling out from the exterior walls of the arena feeding the addition of restaurants and microbrewery? Where are they now? It's a simple answer in hindsight, yes. Sports consumers, shelling out $100 a seat, will pay for the inside experience, but scarcely have extra disposable income to drop another $50 a person on external food and entertainment services. And why should they, since the real magic to them is courtside, not outside the building? No, I am betting that the loss of the franchise would not harm many of the local businesses. I invite clear evidence to refute this.
That brings us to the revenue to City and County offset by the cost to both in the form of services and surrounding area maintenance. We have no idea what the City collects in permits, fees or personal property (business) taxes specific to the franchisee operation, but one has to wonder if it nets a gain after considering the costs the city has to provide adjunct services in traffic management, neighborhood heightened security, crime response, care and maintenance of City properties adjacent and serving the franchise property. And we have no idea what property tax revenue the County receives as the property is owned by the City of Portland. Are they exempt?
I admit, Allan, I have not read the recent calculations on this, but the stated conclusion does not surprise me. Every time I start to give this some thought, I have trouble conceiving that there is a financial net gain. It may only serve to enhance city image and promote citizen unity - two advantages I would not completely ignore. Then again, it only takes one summer of largely peaceful demonstration and protest to sully Portland in the eyes of the rest of the world. How much goodwill does this franchise buy back?
The "Arts as Collateral Damage" scenario
Admittedly, being in the arts as well, I am prejudice here. But, I am as equally hard on the idiotic business practice of local theater companies as I am on a City wishing to hold a national sports franchise by giving away public dollars to keep them here. (If it were so damn profitable, why didn't the city just buy the team? At least something they own might return a profit.)
Part 3 of 4.
Part 4 of 4 - last in the series
Over the many years I have been in and out of Portland theater, I have watched it decay. I am self-critical and understand that I may be seeing this from a distorted point of view, the practice of believing everything was better in the past. But, I try not to and try to rely on real numbers to prove this point: the performing arts in Portland is in a long, continuing decline in financially sound theater companies, number of annual productions, gross revenues and net return. Costs, as they would, increase, while consumers balk at paying cost-comparable ticket prices. Because of the growing loss of patrons, ticket pricing has not risen with inflation and more and more of the cost of operation and production season is borne by charitable contribution (about 70%!) Yes, this is likely due, in part, to the change in consumer habits. The industry has done an abysmal job of competing for entertainment dollars, poorly proven to the public the unique experience benefit of live theater, poorly educated future generations of audiences on same. At the same time, the entertainment industry and technology continues to offer other entertainment sources, at highly competitive prices, that make live theater costs higher per individual consumer. More people, can see more entertain for the cost of ISP and streaming services than they can on theater tickets. So when the average local production cost for a play is $40 and a musical $60, and a national bus tour cost of a musical is $120, you can see how consumers jealously guard where they might spend their money.
But, and this is a big one, households have not stopped spending disposable income. They have merely stopped spending it on live theater and instead spend it, when not on products or services providing "in home" entertainment, on local food, drink, music and sports. How odd then, that sports fans will pay $100 a seat for a single 90 minute NBA game, but not $60 to see a 120 minute musical. Well, we know some of the reason is who is controlling the expenditure. It isn't likely that a majority of the sports ticket buyers are wives and girlfriends. No the men are buying those tickets, they are controlling how the household disposable income is spent - even if it's done by withholding that money from the household - and spending it directly. Minor-league teams like the Beavers/Mavericks and Portland Buckaroos, were not selling the volume of tickets or, adjusted for inflation, at the similar high cost of today's local franchisee. So there was a time, when a household could do both - allow for the wife to buy tickets to live theater or a movie regularly and still allow the husband to see live local sports. Not so much anymore. Now, I maintain, it's an either/or - Spend several grand on an NBA season ticket and there is far less household money or time left to afford and attend live theater.
Consequently, I do want to propose that this debate include considering just how much of a negative impact a national sports franchise can also have on the local arts market. Due to a restricted number of local consumers (whether by taste or amount of disposable dollars), local theaters cannot charge ticket prices to cover their costs, while a national sports franchise demands and gets national ticket prices out of that same local consumer. The result is, the franchise can, thanks to City subsidy, consume so much of the household's disposable dollar, what disposable income remains is too little to allow spending on (by example) local theater. In effect, the national franchisee forces local consumers to pay in excess of local prices, to participate in their entertainment, and the result is a shortage of remaining dollars to spend on other local entertainment. (Remember the guy spending $100 for a ticket, but not another $50 for food and drink at the brewery 50 feet from the Rose Quarter doors? He can't and won't afford both.) So, I maintain, the arts and theater arts suffer as a result of this inequity. And I blame the City for helping to achieve this gross imparity, as they subsidize so much of the cost, the operator is guaranteed a profit.
One has to wonder why their charity ends there. With five theater properties, largely never in profitable rental use anyway, why are they less charitable to the local theater companies that are nearly bankrupt? Where's their subsidy? (Oh, yes, it's collected from an Arts Tax, but largely left undistributed. How do we let them get away with this?)
By example, if ART and PCS could get $100 a ticket for their play or musical, and fill their meager 250 seat houses (not over 14,000 general admission seats like the Rose Quarter), each would operate in the black, regardless of the charity they collect and receive. If ART sold 200 seats for 24 performances (4800 seats or less than 30% of all seats at a single NBA event at the Rose Quarter) at $100 a ticket, their gross revenue would be $480,000. That is sufficient, even with their sometimes foolish production spending (and I've looked at their annuals, it's often stupid), they could easily run a financially successful company. (And I am not counting any of the adjunct income made at each NBA game in product, food and drink sales.)
It's pretty clear, as long as the City wants to underwrite big franchises, performing arts in Portland will become an ever-shrinking enterprise - going the way of traditional Opera - where one company barely keeps financially afloat to serve their shrinking audience base. Perhaps that change is inevitable too. But, at least leaders should consider this loss just as they consider spending $600 million in blood-money to keep this franchise in Portland.
Kurt:
You've said it all (and provided some intriguing life lessons along the way).