In the end, the Portland Trail Blazers got their money.
Sort of.
The State of Oregon, Multnomah County, and the City of Portland combined a funding package that will pour over $600 million into the Moda Center in Portland to give the building major upgrades. Not a cent of it comes from contributions from Tom Dundon, the head of the team’s new ownership group.
The pile of cash is sitting right there, for the taking, just waiting for Dundon to sign off and get his taxpayer-funded treasure chest.
However, the Trail Blazers didn’t immediately jump at the deal. Why? Because the City of Portland dared to attach a few strings to their $120 million toward arena renovations and another $275 million for upgrades.
TheCity’s two biggest asks are that the Trail Blazers pay rent for occupying a building the team does not own and make payments instead of property taxes. Rent would start at about $3 million per year and rise by 3% each year over the agreement’s 20-year term, and in-lieu (PILOT) payments would also begin at $3 million but rise by 5% each year. Neither item allows the city to claw back the full amount of its contribution – not even close – but it does make sure the city isn’t simply tossing money at a billionaire with no return on investment.
However, that’s just exactly what Dundon wants. A pile of cash, with no strings attached. He’s been doing his best Gene Wilder as Willy Wonka (“YOU GET NOTHING! GOOD DAY SIR!”) impression for months now. From the team’s standpoint, simply existing in Portland is its primary contribution to the deal. That’s been a nonsense take from the beginning, and that holds true for pretty much every professional sports team in every city.
The team has submitted its term sheet for the money; now the two sides have to negotiate and agree on terms. After months of calling any attempt by the City to add terms to its contributions a “nonstarter,” the Trail Blazers at least appear to be acknowledging that their leverage is rapidly vanishing out from under them.
Team President Dewayne Hankins said the team looks forward to “continuing to work with the city’s negotiating team in good faith, addressing the issues that remain and finding a resolution that allows all of us to move forward together.”
Most of the team’s strategy relied on bluff and bluster and the hope that the Portland City Council would implode on itself and not be able to pass a funding resolution. To be fair, when it comes to dealing with Portland City Council, that’s not a completely misguided strategy. However, the Council managed to pass the funding resolution 8-4.
Now there will be a race to the finish line to finalize all the funding. The State of Oregon has said an agreement must be in place by December for it to put together a bond sale to fund its contribution.
This leaves Dundon and the NBA in a sticky situation. Just last month, NBA commissioner Adam Silver bemoaned that negotiations between the team and the city have “gone off track.” Now, just a month later, the team has a gift horse of money sitting there, awaiting a few signatures. From the start, Dundon said he would contribute nothing to the renovations and that everything must come from the city. The NBA wants to see as much funding as possible come from public sources. While the proposal to fund the Moda Center may not be as much of a taxpayer ripoff as some arena deals around the country, for the NBA and the team owners it’s a screaming good deal. The last time an NBA team seriously threatened to leave its market was the Sacramento Kings in 2014; the final deal to keep the team in Sacramento saw taxpayers end up picking up roughly half the $477 million cost to build an arena.
In Portland, they will be picking up every cent, not counting cost overruns. If the NBA allows Dundon to kill this deal, no city will have any incentive to deal with any NBA owner ever again. What’s the point of negotiating when you say yes to everything an owner wants, only to lose the team in the end still? That would be bad for business, and making your team bad for business is one of the few things the league would be willing to step in on.
The Trail Blazers asked for their money, and the taxpayers gave it to them in exchange for a few pennies back. Dundon may be able to extract a few more concessions from Portland before the deal is finalized, but he won’t find a better deal anywhere else in the country.
The Trail Blazers got what they wanted. Now it’s time for them to sign on the dotted line.
