Thursday, April 30, 2015

Why the Relocation of the Rays/Orioles Series May Hurt Both Team's Attendance Numbers

The Rays and Orioles will make the best of a bad situation this weekend by playing the O's three home games at Tropicana Field, a move necessitated by the unrest in Baltimore.

Fans can buy general admission tickets to the games in St. Pete for just $15, but with poor notice and so many other sporting events going on this week (Kentucky Derby, NFL Draft, Lightning Playoffs), I'm not sure any of the games will crack the 10,000 fan mark.

From what I understand, the games will count toward the Orioles' attendance numbers, which already dropped from 33,288 per game (9th in MLB) to 29,960 per game (15th in MLB) after their record-breaking fan-less matinee on Wednesday. 

But aside from the impending impact on the O's May numbers, the relocated series could also impact the Rays' official attendance over the next few months.

UPDATE: TBO's Roger Mooney reports the attendance will count toward the Rays' home average attendance numbers, which will certainly suffer from the short-notice relocation.
UPDATE 2: The Rays say player stats will count as Rays home stats, but Mooney was wrong on the attendance; the gate stats will - in fact - count as an Orioles home game.  You can see the numbers reflected in the most recent MLB attendance standings, where the Orioles slumped to 19th.

Because many individuals/families only attend a few Rays games each year, there's a good chance a game this weekend could be the only trip many fans make to The Trop for several more months.  That could limit the Rays' official attendance numbers even more.

Even if the Trop sold out this weekend, the Orioles get to keep profits from the gate (although I'm not sure about concessions, parking, etc).

Of course, these are just minor footnotes to a series relocation necessitated by unexpected national events.  But hey, at least St. Petersburg will get three bonus games to capture some of that MLB economic impact!

UPDATE 3: Mooney also reports the Orioles will have to stay in Tampa because of the short notice; Stu Sternberg said the team is happy to spread the love!

Thursday, April 23, 2015

Are Fans Tiring of Stadium Saga? You Bet They Are!

We've seen a lot of talk lately about the Rays' poor start at the box office and the possibilities of Stadium Saga fatigue.  Well, prepare to see a lot more, because as I first wrote in 2010, declining attendance numbers are all but a forgone conclusion as the team's frustrating campaign for a new stadium drags on.

Just ask the Expos, whose attendance dropped to 4,000 fans many nights when MLB indicated it was done with the market.

At 18,000+ fans per night, the Rays are a long way from those Montreal lows.  And its ownership group has done less complaining about the stadium as it has done in previous years.

But what I wrote five years ago still rings true:
From my vantage point, it seems that the Rays have created a self-fulfilling prophecy.

In continuing to point out problems with the Trop, the Rays (perhaps inadvertently) are building - and reinforcing - the stadium's negative image.

Why else would so many people dislike the Trop but have trouble explaining why? It's like politics. The more the issue is discussed on talk radio and on the evening news, the more people will believe it. Perception is reality.
And, in a separate post from 2009, I also predicted the team would "re-affirm its commitment to stay in the area, but it won't be shy about its need for a new park."  The post also included:
It will be right about that time a high-ranking team executive (Stuart Sternberg? Matthew Silverman? Stadium Czar Michael Kalt?) will take a trip to Charlotte.  Or Portland.  Or some other MLB-starved city.  A trip like that would normally go under-the-radar, but a well-placed call to someone like Peter Gammons or Rob Neyer will drop the tip that the Rays are exploring other communities.
By the way, great minds must think alike, since Gary Shelton wrote last week, "You know how it will work. Stu Sternberg will show up at an exhibition game in Montreal. There is no funny business, he’ll say. He just wanted to see a ballgame. Then a team official will be seen in Charlotte. Or Las Vegas. Or somewhere."

The Rays are continuing down the path they set out on in 2010 when Sternberg gave the region an ultimatum and essentially demanded St. Petersburg amend its contract.  He created a self-fulfilling prophecy, and the only real change in the Stadium Saga since then has been in the attendance numbers.

Tuesday, April 21, 2015

Rays First Pitch Count: Tampa Mayor 4, St. Pete Mayors 1

Tampa Mayor Bob Buckhorn will throw out the Rays' first pitch Thursday night against the Red Sox...the fourth time he's been invited for the honor at the Trop in his four years in office.

For those of you keeping score at home, that's three more than the mayors of St. Pete have thrown in the past five years (Foster: 0; Kriseman: 1), even though the Trop is located in St. Pete.

Kriseman will probably add to his total later this year, but the news should be enough to reignite the Tampa "flirting" rumors and light up the sportstalk airwaves for a couple of days.

Monday, April 20, 2015

Why Pro Teams (in Other Cities Too) Need Your Money to Rip Out Seats

My last stadium report for WTSP, “Why pro teams need your money to rip out seats,” focused on how pro sports teams – including many in Florida – have sought tax dollars for renovation projects that drop stadium capacities. It’s often not in taxpayers’ best interests, but of course, elected leaders keep choosing to support the project anyway.

At least Floridians can take heart that it’s happening in other places too.

Field of Schemes reports how the Cleveland Indians have yanked out 7,000 seats thanks to tax subsidies…and the result is pretty ugly.

For what it’s worth, the Rays spent a few million of their own dollars last year to retrofit the Trop and remove a few thousand seats. It created the 360 concourse experience…which I wrote at the time, may increase alcohol sales enough on its own to justify the construction.

Saturday, April 11, 2015

Pro Teams Want Your Tax Money So They Can Rip Out Seats (and Charge You More)

For all the talk by professional sports teams about drawing more fans to new ballparks, keeping their facilities "relevant," and "improving the fan experience," a comprehensive analysis by 10 Investigates reveals most new revenue from taxpayer-funded stadium construction projects comes not from increased attendance, but from increased ticket costs.

That means taxpayers are spending money on new sports facilities so team owners – often billionaires – can charge them more than ever before to attend the games. 

And even though taxpayers often foot the majority of stadium construction costs, the private teams and leagues keep most of the revenues, while often reducing the number of seats available. Fewer fans at a game can mean fewer jobs at the stadium as well as less economic impact in the areas surrounding the stadium.

In January, 10 Investigates showed how lawmakers keep opening state coffers wider and wider for professional sports teams and leagues, even though state economists suggest there’s little return on investment. Other findings included how pro teams often build or renovate their stadiums anyway, even when they don’t get “necessary” tax dollars, and how campaign contributions often go hand-in-hand with assistance from powerful politicians.

ALSO SEE: Gov. Rick Scott mum – again – on stadium spending

Even the applications from four pro organizations currently looking for tens of millions of dollars in tax money indicate questionable return on investment to Floridians.
The Miami Dolphins, seeking $90 million from state taxpayers over the next 30 years, acknowledge they draw fans from all over the world to major events like the Super Bowl, BCS Championship, and Orange Bowl. But they’re seeking the money as part of a renovation project that would remove 10,000 seats.

Their application indicates the team would help make up for the lower attendance with a 10% hike in ticket prices, plus “significant price increases in areas with new clubs.”

The application for Daytona International Speedway (DIS) suggested similar price hikes. Although the track didn’t specify exactly what it would be using tax dollars for, it was also seeking $90 million over 30 years toward its “Daytona Rising” renovation project that “reimagined the American Icon.” The project dropped the track’s capacity from 147,000 to 101,000.
But even with fewer fans, the track told the state it will generate more revenue. Those “increases” came largely from inflation and an estimated hike of nearly 10% in ticket prices from 2015 to 2016.

Florida’s controversial new stadium subsidy law requires applicants to prove return on investment to taxpayers, but specific exemptions were written in for the Dolphins and Daytona International Speedway, neither of which needs to show any increase in tax revenue.

READ: Daytona's application
READ: City of Orlando/MLS application
READ: City of Jacksonville/Jaguars' application
READ: Dolphins' application

The Tampa Bay Rays currently benefit from $2 million per year in state funds that help pay for Tropicana Field, but the team could apply for another $3 million per year if it were to build a new Florida stadium.

The team could potentially benefit from moving closer to the population centers of Hillsborough County, and Rays President Brian Auld recently told The Economist Club of Tampa the move – plus the presumable buzz of a new park - might eventually mean 5,000 more fans per night, which would mean $15-20 million in new revenue. But he didn’t talk about the even greater gain to be had by raising ticket, concession, and parking prices on the 17,000 fans already attending games.

When the Miami Marlins opened their new taxpayer-subsidized ballpark in 2012, average ticket prices climbed 56%. They have receded a bit with demand, but still sit 52% higher than they were in 2011, the team’s final year at its old home, Sun Life Stadium, even though 2014 attendance was only up 13% from 2011.

According to the Team Marketing Report Fan Cost Index, other costs associated with attending a Marlins game climbed with the new ballpark too. The price of beer, hot dogs, parking, programs, and ballcaps all climbed significantly after Marlins Park opened. Most of the new revenues were retained by the team, helping its overall value, as estimated by Forbes, nearly double since 2011 to $650 million.

The Fan Cost Index lists the Rays as baseball’s third-most affordable experience, largely due to the availability of free parking and low-price tickets – two benefits Rays fans may not get to enjoy as much at a new ballpark.

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Friday, April 10, 2015

More Great Advice for Politicians Thinking About Building a Stadium

Yesterday, I posted this important advice for elected officials who may one day even think about cutting a deal with a pro team.

Today, even more from the National Conference of State Legislators. Not exactly the first place you'd turn for good articles on sports business, but the deputy editor of Politifact wrote a fiscal paper designed for state lawmakers to make wiser choices on stadium subsidies.

His 10 tips are really, really smart.  Here's a few excerpts:

1. Ensure the project will attract out-of-towners.

If this goal isn’t achieved, studies show, new projects will simply divert existing entertainment money from restaurants, movie theaters and the like to the stadium, rather than increasing overall economic activity.

4. Choose the neighborhood carefully.

Where geography is concerned, “downtown stadiums are almost always winners, even when home to terrible teams,” says Arthur C. Nelson, director of the Metropolitan Research Center at the University of Utah. “The farther away from downtown you get, the greater the likelihood of local economic failure, even if the team does well,” he says.

5. Locate projects near mass transit.

Building a facility that will encourage event-goers to use close-by mass transit will maximize the positive impact for the surrounding neighborhood. With a sure ride home, sports fans will more likely stick around the area after the game.

6. Be wary of one-sided economic projections.

Supporters of stadium projects—including teams, business groups and government officials—often hire consultants to produce reports that estimate a project’s long-term economic impact. These typically include estimates of the direct impact of the stadium (jobs in construction and stadium operations), as well as the induced impact (money spent by visitors at the stadium or in the vicinity) and the indirect impact (money spent by stadium employees and local businesspeople as a result of new business drummed up by the stadium).

Typically, these reports offer projections that are hard to prove and easy to skew toward the rosiest of outlooks. This, combined with the propensity for stadium projects to experience cost overruns, suggests that it’s always worth taking consultants’ projections with a big grain of salt.

As the saying goes, cautions Allen Sanderson, a University of Chicago economist, “Never ask a barber if you need a haircut.”

7. Insist on keeping the parking revenues.

“You cannot let teams keep the parking revenue from the lots around the stadium,” says Murphy, who is now with the Urban Land Institute. When teams are allowed to keep it, “surface lots become the highest and best use of the land.”

8. Drive a hard bargain.

The key to a successful project “is keeping the public’s share of the cost to a minimum,” says University of South Florida economist Philip Porter. That requires hard bargaining and refusing to approve a deal until the team has some significant skin in the game.
And avoid getting sucked into bidding wars at all costs, warns Pakko of the University of Arkansas-Little Rock. They rarely produce any winners. “Sports franchises have monopoly power,” he says. “There are a limited number of teams, so cities are asked to bid against one another, whether or not having a local team is economically viable.”
And, as a bonus, University of Chicago economist Don Coursey included a list of questions for journalists (or elected officials) covering economic development projects!
  • Why does this project require public funds?
  • Why can’t it be completed using private funds?
  • Who will construct the project? Who will operate the project? Will these groups of professionals, laborers and managers come from the local population? Will the majority of their earnings stay within the local economy?
  • What assumptions are you making about the spectrum of users of your project?
  • How much revenue will be new injections into the economy, as opposed to simple, zero-sum movements of money within the economy?
  • How much of a primary draw will your project generate? If the project is just one of the many things that people might use or visit within a region, how are you accounting for this in your measurement of visitor revenue for your project?
  • How much economic activity will the project promote indirectly? Who computed the “multiplier”—the amount of additional projected economic activity from every dollar spent directly on the project in question?
  • Why is your project the best use of public funds? How does the impact of your study compare to alternative uses of the same funds?
  • How do you expect the economy to be affected if the project is not funded and built?
  • How will you address whether the project has met the community’s and your goals? Have funds been set aside to support a subsequent analysis of its actual impact?
Now, if we could only get elected officials to pay attention to articles like this...

Thursday, April 9, 2015

"Consider printing this out and smacking a public official upside the head with it."

Neil deMause said it best when he said Aaron Gordon's Vice Sports story on lopsided stadium deals was "worth a read" and worth smacking government officials "upside the head" with.  A few excerpts:
This week, the Bengals are installing a new scoreboard; it costs $10 million and Hamilton County taxpayers are picking up three-quarters of its cost. Why would the county agree to give the Bengals even more money? It's because of the cherry on top of the sweetest stadium deal ever made: the state-of-the-art clause.

According to the Bengals' lease, if 14 NFL stadiums have something, then taxpayers must buy the Bengals that thing. It's like if your parents were contractually obligated to buy you a new iPhone if all your friends got one, every year for 30 years, but if you were a billionaire and your parents were barely breaking even. Good deal for you, bad for your parents.
There are so many problems with these clauses that it's hard to know where to begin. One of the first problems is how to rank stadia by state-of-the-art-ness. According to the Rams' lease, such things are measured by at least 15 different components: "everything from luxury boxes to club seats, lighting, scoreboards... regular stadium seating, concession areas, common areas (such as concourses or restrooms), electronic and telecommunications equipment," as well as locker and training rooms, and the field itself.
Because of the vagaries of such matters, the Rams have tremendous leverage in negotiations. In his book Field of Schemes, deMause estimates that, if the city wanted to keep the Rams, the city's Convention and Visitors Commission would have to put aside $36 million every year to keep the Edward Jones Dome a "first-tier" facility.

There is no good reason for any public official to entertain such a clause, much less grant it. Teams have state-of-the-art clauses because of two factors: they had the gall to ask for one, and the politicians had the stupidity to give it to them. In 2010, Demause conducted an interview with Jim Nagourney, a now-retired sports facility manager and consultant who was part of the Rams stadium negotiation. The way deMause tells it, "[the Rams] were just throwing stuff in there and they were amazed when St. Louis actually went for it."

The only appealing aspect of state-of-the-art clauses to politicians is that they probably won't have to deal with it. Even a decade later, most local governments will experience significant turnover. A state-of-the-art clause helps get the deal done without ever costing the current government anything. It's somebody else's problem, by design. Of course, as Hamilton County and dozens of other municipalities have learned, this is true of publicly financed stadium deals in general.

Tuesday, April 7, 2015

Rays Stadium Headlines Still Getting You to Click

After a disappointing Rays season-opening loss in front of a full house, the Trib's Steven Giradi wrote, "On Opening Day, no one’s thinking about stadiums and politics."

No one...except his Trib counterpart Chris O'Donnell, who wrote how the Rays' fortunes could change next offseason with St. Pete city council elections.  And, get this: one of the new frontrunners, Ed Montanari, isn't any more likely to think $2M/yr for terminating the city's deal with the Rays is a good deal as his predecessors!

ALSO READ: Rays could influence elections if they want

But no one else was thinking about stadiums and politics...except Bright House Sports' Rock Riley, who wrote about Stu Sternberg's promise never to move the team as long as he owned the franchise.

And the Times' Matt Baker, who wrote about Sternberg's desire to avoid stadium discussions for the next six months.  And the Times' Claire McNeill, who wrote about opening day questions on- and off-the-field.

And finally, the Team Marketing Report, which again ranked the Rays as one of the most affordable baseball experiences out there (28th out of 30 teams), largely thanks to low average ticket prices and the ability to park for free.  Although the beer prices are higher than average!?!

Monday, April 6, 2015

Oh, Florida

Maybe Stu Sternberg Will Negotiate Stadium Saga During the Season

This just doesn't seem to be a smart move from a business that's anxious to move a stalemate forward:
Matt Baker writes:
“We are not doing this during the season,” Sternberg said before the Rays hosted the Orioles on opening day in Tropicana Field. “The one thing that I’ve found to ring correct and true was that you focus on baseball during the year, and that’s what we’re doing.”

Sternberg said he remains committed to keeping the Rays in Tampa Bay for the next 50-100 years. He said his door is always open and that he’s willing to look at any documents or proposals put in front of him. But the team “won’t be putting any work” into the stadium issue.

Last week, the council voted to hold a workshop “as quickly as possible” into the stadium issue and whether the Rays could look for a new stadium in Pinellas and Hillsborough counties.

“If it happens, great,” Sternberg said. “If it didn’t happen in December, and it didn’t happen in January, and it didn’t happen in February, and it didn’t happen in March, and here we are in April. There’s always hope.”

Sternberg called the Rays’ payroll – about $70 million – “beyond uncomfortable” and said it would put the franchise in the red financially. He said the Rays could boost the payroll from the bottom of the majors if its attendance rose accordingly.
The refusal to talk stadium stuff during the season isn't surprising; but as I wrote last week, the Rays have "an office full of smart folks who can certainly deal with their off-the-field business while Matt Silverman, Kevin Cash, and others do the on-field work."

It's also worth pointing out Sternberg said he wouldn't "re-re-renegotiate" if St. Pete's council rejected his December deal.  I said it wasn't believablecouncil rejected the deal;  and sure enough, the Rays re-re-renegotiated.

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