Sunday, December 30, 2012

Maybe the Rays Won't Get Rich in 2017?

I've long contended the impatience in the Rays' campaign for a new stadium - even though they have a place to play until 2027 - stems from an impending windfall in 2017 from renegotiated television revenues that will make it harder for the team to cry poor.

In fact, since I first pointed it out, the Dodgers, Astros, and Padres were among clubs that increased -make that multiplied - their annual television revenues by enormous amounts.  But after the Indians sold their TV rights for $235 million with annual revenues climbing from $30 million to a modest $40 million, Maury Brown from the Biz of Baseball writes a cautionary tale of how MLB teams may have hit a "glass ceiling" when it comes to ballooning rights fees:
When put up against some of the other deals that have been reached, this one looks more like the “pre-boom” media rights sale we had been seeing. It also shows that you don’t paint media rights deals with the same brush...with some exceptions, sports TV deals are likely topping out.
There is a cumulative effect going on which render the explosion of media rights fees unsustainable. When you throw in the massive colligate conference sports network deals cropping up, the NFL’s massive rights deals, and regional agreements such as the Lakers with Time Warner Cable, it begins to add up. Where does the money to pay for these lucrative media rights deals come from? Subscribers. And, when you get subscription fees going through the roof, the carriers of the content, and ultimately, consumers begin to make noise.
"Don’t expect too many more of these massive deals to be reached," Brown continued, suggusting teams rush to get media deals done soon before "the window of opportunity closes."  But for the Rays, that would mean foregoing serious stadium leverage as soon as a new media rights deal was renegotiated.

Brown's theory leaves the Rays with a difficult long-term decision: spend the next couple of seasons accelerating the negotiations for new TV revenue or spend the next couple of seasons accelerating their negotiations for new stadium revenue.

The franchise can also hope Brown is just wrong.  But even if the Rays have to "settle" for a deal like the Indians' (the Cleveland TV market is very similar to Tampa Bay's), $40 million/year is significantly higher than the team's current television+radio revenues, last known to be only $13.4 million/year

Wednesday, December 26, 2012

Brilliant Baseball Stadium Idea: Build in Blighted Ybor

Must be hard to fill the pages of the Tampa Tribune the day after Christmas.

This morning, freelance writer George Meyer penned an op-ed that made the case for a new Rays stadium in Palmetto Beach - the blighted area of East Tampa/Ybor City. 

The first warning sign that the column should be taken not just with a grain, but a whole spoonful of salt, is that Meyer discloses he's been buying up Palmetto Beach rentals for 12 years and would stand to profit if a new stadium were built in the middle of the blight.

The second warning sign comes when he contends a site "fewer than five minutes from downtown Tampa" would solve the team's attendance problems.  Of course, one of the knocks on Tropicana Field, a mere two minutes from Downtown St. Pete, is that it's too far from the city's core to provide any real impact.

Then, there's the fact that Meyer obviously didn't learn any lessons from the Trop.  Poor St. Pete residents were displaced from their blighted (but historic) neighborhood amid promises of better jobs and new development.  But those promises went unfulfilled and there's still a lot of bitterness on St. Pete's Southside.

Meyer also doesn't seem to be paying attention to what's going on in Miami, where one of the many excuses for the disappointing first season at Marlins Park is its location in terrible neighborhood.

As for Meyer's "at least land is cheap in Palmetto Beach" argument, remember that land will be cheap just about anywhere in Tampa Bay.  But this has never been about finding land for a new's been about finding funding.

Meyer claims that the ingress/egress in Ybor would be great.  But it's great right now at Tropicana Field too.  And if you think people hate crossing west on the Howard Frankland Bridge at rush hour, you should try going anywhere near "Dysfunction Junction," a.k.a. the I-275/I-4 interchange.

To be perfectly honest, workers leaving the region's corporate hub, Westshore, could get to downtown St. Pete faster than they could get to Ybor many nights.

Now, before we dismiss Meyer's op-ed as just another hair-brained chapter in the Stadium Saga (he even seems to confuse high-speed rail and light rail), he manages to make two good points:
  1. Without new transit options, the Rays may never succeed at the turnstiles.  I've suggested in the past that the team could piggyback a transit referendum since their success relies on Tampa Bay breaking its dependence on driving everywhere.  But so far, nobody is talking about a half-billion dollar stadium and billion-dollar rail project in the same sentence.
  2. The value of Downtown Tampa land seems to be surging right now and it may not need invigorating from a baseball stadium.  Sure, it would be nice to walk out the door from your skyscraper apartment to a game, but the lack of baseball (and hockey this season, for what it's worth) doesn't seem to be stopping young adults from flocking to the city's new high-rises.

Tuesday, December 25, 2012

Merry Christmas, Tropicana Field!

Merry Christmas to Tropicana Field, which got a nice little gift in today's Tampa Bay Times: new poll numbers that indicate fans might actually be OK with the Rays' current stadium arrangement.
A recent Tampa Bay Times, Bay News 9 and AM 820 News Tampa Bay telephone survey of 521 Pinellas and Hillsborough residents showed that the single most popular stadium option is simply to keep the team playing at Tropicana Field.

Even among Hillsborough residents, the Trop remains the favored site.

Much of this sentiment stems from fear that public money would have to underwrite any new stadium. Survey respondents opposed that idea 50 percent to 41 percent — even if their own taxes were unaffected.
The results are similar to previous Times polls that show Pinellas residents don't really want a new stadium while Hillsborough residents would love to have one closer to long as they didn't have to pay for it.

Tampa Mayor - and downtown stadium advocate - Bob Buckhorn told the paper that the poll doesn't reflect what's best for the team or the region.

Certainly, he's got a point that taxpayers seldom support tax increases.  But I don't know what evidence Buckhorn cites for his comment that the Rays' "business model doesn't work" since the only news we've seen on the team's bottom line indicates increasing profits.

Either way, the Rays haven't been able to move the needle much in terms of community support for a new stadium.  But then again, it may not be necessary if they can line up the right elected officials to support the cause.

Friday, December 21, 2012

Biz of Baseball: Rays Got at Least $27M in Revenue Sharing in 2012

While MLB hasn't publicized how much individual teams received from revenue-sharing last year, the Biz of Baseball reports today the Tampa Bay Rays likely received
According to a source with direct knowledge of the figure, the amount of revenue-sharing that funneled from the haves to the have-nots in MLB this year was approx. $400 million. While the money is not distributed evenly across the clubs, if the 15 lowest revenue-makers were given an equal portion it would equal approx. $27 million per each of those clubs.

The amount of revenue-sharing in Major League Baseball should stymie any talk that clubs can’t—at the very least—be able to compete selectively in the free agency space from time to time. It also affords club opportunity to wrap up talent on their rosters to avoid them leaving once they hit free agency. While it’s clear that the amount of revenue-sharing they received this year is not enough to cover the entire amount, the Rays likely covered a lot of the annual salary increase needed to ink Evan Longoria to his $100 million extension with revenue-sharing proceeds. That’s the purpose of revenue-sharing.

Finally, there's this to consider. With the skyrocketing growth of regional sports network revenues, plus the continued robust nature of baseball as an entertainment option, it seems that in the very near future we'll see revenue-sharing in MLB surpass a half-a-billion dollars. With it, let's hope clubs are using the gifted money from their large revenue-making brethren wisely.
It's worth pointing out again that revenue sharing isn't the product of teams with new stadiums subsidizing teams without them;  it's the product of MLB letting large-market teams spend extravagantly on free agents.

Stadium Hot Stove Odds & Ends

Any news is good news to new stadium proponents in Tampa Bay, so when Pinellas Commissioner Ken Welch tweeted that a meeting had been set up with the Rays, joy broke out in Mudville.

It was later reported the meeting will take place Jan. 29 in an attempt to bring the team, the county, and the City of St. Pete all to the same table for some meaningful discussions.

Meanwhile, Rays president Matt Silverman closed on a $1.5 million mansion in Northeast St. Pete earlier this month.  Don't try to read between the lines of this one - one of the league's top executives simply spotted a good investment, much like he's been doing on the field for years.

And finally, check out this read from Grantland, where Marlins fans continue to rail against ownership, even on a team Facebook post about a charity toy giveaway: "They had promised Xbox games for the kids. But Loria traded the games to Toronto for some hula hoops and old candy."

Monday, December 17, 2012

Soccer Stadium Built on Charity Tax Loophole?

It took a few days, but details of how investors plan to build a $700 million soccer complex in Tampa without government dollars trickled out this weekend....and it turns out, there may be government dollars indirectly involved, after all.

A front-page story in the Tampa Tribune indicates the group would like to take advantage of a tax loophole - designed for charities and other non-profits - to finance part of a new stadium complex:
A program known only to the IRS, tax lawyers and charitable foundations allows charities to steer money to for-profit businesses as long as the ventures further the charity's public purpose.

Under the system, called a program-related investment, the project's backers would pool together money from wealthy individuals and charitable foundations and use it to pay for the sports complex's huge capital costs, said Everidge, whose Orlando-based firm, PRI Partners, is helping VisionPro raise money.
Ironically, the Tampa Bay Times published a front-page story the same day on the very same loophole, even though it focused on apartment-builders and not stadium-builders:
Now, under a new Florida law that was supposed to help charities, a handful of these wealthy developers are getting another lucrative benefit. They have found a way to move dozens of apartment complexes off the property tax rolls, saving themselves as much as $115 million in taxes a year but reducing revenues for already hard-hit schools and local governments in a way no one expected.

Pinellas, Pasco, Hillsborough and Hernando counties could lose a total of nearly $18 million annually.

The developers say the tax breaks will leave them with more money to maintain the apartments and keep rents affordable well into the future. But there is nothing to stop them from pocketing their tax savings as profit.

"I'm okay with people getting rich, but I think this is unseemly,'' said Cathy Jackson, executive director of the Homeless Services Network of Central Florida.

In 2011, the Legislature passed a law designed to give Habitat for Humanity and other nonprofit organizations a tax break so they could build apartments for the needy. Savvy for-profit developers realized that by forming their own nonprofit organizations they could qualify for the same tax breaks, saving themselves huge bills on each complex.

"It's all entirely legal,'' said Wellington Meffert, general counsel of the Florida Housing Finance Corp., which administers affordable housing programs in the state. "But what it will do is take a fair amount of taxable property off the tax rolls.''
Just as apartment-builders can take advantage of the inadvertant incentives, stadium developers could as well.  That's not to say it would be a bad deal for the region, but it doesn't appear to be totally "free of government money."

This idea also appears to open the door to legally launder pass money through charities to claim deductions and tax-free exemptions, but that's just speculation from this non-accountant.

Friday, December 14, 2012

Columnist: Eliminate Sports Welfare

Next time you have a long time and want to get angry over how many tax dollars go toward private sports teams and stadiums, read Patrick Hruby's piece, "let's eliminate sports welfare":
Perhaps you’ve heard the news: America is barreling toward a self-induced “fiscal cliff” of federal tax hikes and spending cuts, largely because Democrats and Republicans can’t agree on how to make the nation’s budget moderately less unbalanced. On one side, President Obama wants to raise money by increasing taxes on the wealthiest Americans; on the other, House Speaker John Boehner wants to reduce costs by slashing social welfare programs. Both men and their respective parties seem stuck at an ideological impasse -- think who’s better, Barry Sanders or Emmitt Smith? only with the world economy at stake -- and yet each camp is ignoring an obvious way out.
Well, maybe not a way out. But definitely a way forward. An easy, overdue fix to the nation’s fiscal woes. A course of action rock-ribbed liberals and hardcore conservatives can agree on. A policy shift that would not only save cash, but also act as a trust-building, goodwill-generating building block toward larger, harder and more essential partisan compromise.
Ready? Here goes.

Eliminate Sports Welfare.
Read more here.

Wednesday, December 12, 2012

More Bad News for ARod: His Investments are Crumbling (Literally)

One of the 15 apartment complexes owned by a company founded by Alex Rodriguez is plagued by rats, roaches, and rotting wood, according to residents.

Tampa's Newport Riverside complex has numerous apparent code violations, from fire hazards to rotting staircases. Residents say courtyard lights have gone months without fixing, while holes in walls and windows often do the same.

Read more - and see photos - here.

Tuesday, December 11, 2012

Bucs Further Reduce Season Ticket Prices

With attendance languishing near the bottom of the league, the Bucs have announced plans to further reduce the price of some season tickets next year.  It's the fifth straight year without increases, according to a press release:
 On Tuesday, the Tampa Bay Buccaneers announced their 2013 season pass pricing, featuring lower prices for 35% of seats and marking the fifth straight year without price increases. Season passes again begin as low as $30 per game for adults and $15 for children, meaning a family of four can attend a game for just $90.

“Nothing beats the live experience of Raymond James Stadium on Sundays, and our number one goal is to provide an affordable, enjoyable, and safe gameday experience for the entire family,” said Buccaneers Co-Chairman Ed Glazer.

Season pass members will continue to realize substantial savings and benefits. In most instances, individual tickets cost 20% more than season passes. Additionally, season pass members receive flexible payment options, as well as discounted parking, concessions and merchandise.

For more information on 2013 season passes or to speak with a Buccaneers account representative, please contact the ticket office at 866-582-BUCS (2827) or check out the Raymond James Stadium Virtual Venue on for 3D views of available seating options. Current season pass members should expect to be contacted by their dedicated member relations associate in the coming weeks.

Rays, MLB Finances in the News

A day after the Rays traded James Shields and his $10.25 million salary to the Royals (in a deal that may have been more about the Rays' glut of pitching than the salary), a Marc Topkin column indicated the team may not be able to afford David Price either in the future:
Price, 27, has said repeatedly he would love to stay, and agent Bo McKinnis has said that while "it becomes increasingly difficult" at this stage of Price's career, "it's not too late."

But, McKinnis also suggested, it's going to take quite some creativity. And lots of money.

Price, McKinnis noted, is driven to be the best in everything from pitching to golf to video games to Twitter.

"So in a similar sense," McKinnis said, "he wants to have the best contract in baseball, however that may be defined. He expects to be the best in everything that he does. So hopefully we're able to make that marriage between the Rays and that best contract. But we also recognize the economics of the game may not allow that."
It isn't out of the question for the Rays to retain their franchise ace if they determined it was a wise use of money.  They're due a huge financial windfall in 2017, and according to the Biz of Baseball, every MLB team is due a huge influx of dough as early as next season:
We can probably expect player salaries to continue to balloon over the next decade as free agent deals catch up to these increaseing revenues.

So if small- and medium-market teams like the Rays were smart, they'd re-sign all their stars now to longterm deals (a la Evan Longoria) to take advantage of 2013 prices, because the big-market spenders could turn the free agent wars upside down again by 2016.

Friday, December 7, 2012

Carillon Proposal Taken Off the Table?

The developer who pitched a new Rays stadium in St. Pete's Carillon/Gateway area is running out of patience, according to Stephen Nohlgren with the Tampa Bay Times:
"It has been an intense year,'' St. Petersburg developer Darryl LeClair said recently. "I am going to tell our team, 'Enjoy the holiday season. Relax. And next year we are going to start aggressively pursuing other options for the Carillon holdings.'''

LeClair and his companies control about 17 acres in the mixed-use park, which houses several national or regional headquarters, residential units and a Hilton hotel.

Development possibilities include more offices, apartments, retail space and another hotel, LeClair said. All were included in the stadium proposal, jam-packed around the field, even sharing walls with the stadium.

"To the degree we can pursue opportunities that will preserve the stadium footprint, we will,'' LeClair said. But at some "crossover point'' a few years down the road, he said, further development with impinge on the footprint, "and we will be forced to make a decision that will lead to Carillon taking itself out of consideration'' as a stadium site.
Most importantly, a Carillon stadium never had a chance unless St. Petersburg Mayor Bill Foster or Tampa Bay Rays owner Stuart Sternberg changed their strategic positions, which neither has.

Sternberg still refuses to negotiate on any Pinellas site unless he can explore options in Hillsborough as well. Foster still uses the Trop contract to forbid any cross-bay dalliances.
"What we have done is totally prevented Mr. LeClair or anybody else from educating the Rays, selling, convincing or advocating why a site on this side of the bay is the perfect place,'' Gerdes said. "Mr. LeClair undertook, on his own, a pretty expensive proposition and it is just sitting there? Come on.''
We all saw this writing on the wall, but just as Jeff Vinik ended his pursuit of the Channelside Bay Plaza in Tampa, a developer is never really out of the prospecting game until there's actually a building sitting on his land.

Tuesday, December 4, 2012

Henderson: Stadium Project About More Than Soccer

A new Tampa-area soccer stadium (with accompanying soccer academy & sports medicine center) is an awesome thought...even if it doesn't happen to be practical, writes Joe Henderson of the Tampa Tribune:
I admit this all seems incredible. By my crude math, the estimated cost of this venture is about $700 million. That's about the price for a new Rays stadium, and no one is embracing the fantasy the Rays will pay for all that by themselves.

The cost is just one of many questions that don't have answers just yet, at least none we are privy to. That's why the left side of my brain – the side that governs logic – is whispering, "listen to me … remain skeptical."

That's not a problem.

But this is the season of hope, and I like big-thinkers with bigger wallets. Heaven knows we could use more of both around here. Something like this could be a catalyst to attract the upscale, high-tech jobs Buckhorn and others want so desperately.

So, soccer stadium? That's interesting enough.

If what we're hearing is remotely true, though, that's just a piece of a larger concept that could be a game-changer for a city that needs all the help it can get.

Deadspin on America's Stadiums: "A $!*!@&% of Taxpayer Money"

Nice graphics and summary from Deadspin on what they call "$#!&@& of taxpayer money" for stadiums in America:
The map below is an attempt to answer those questions visually. It charts the construction of 186 NFL, MLB, NBA, and NHL stadiums from 1909-2012, which covers pretty much all of them. The size of the stadium icon is proportional to the total cost (inflation-adjusted to 2012 dollars), and the color is proportional to the method of financing, with 100 percent private showing up in red, 100 percent public in blue, and a range of purple in between. Major renovations are included as well, and stadiums are faded out when they lose their professional team.

Sunday, December 2, 2012

Could the Rays Share Ownership with the Community?

An interesting op-ed will appear in tomorrow's Tampa Bay Times suggesting "shared ownership" as a possible way to bridge the huge financial gap in Tampa Bay's stadium saga.  Richard Meyer from USF's College of Business writes that municipalities - or fans - would contribute toward a stadium by buying a portion of the team:
There are two alternatives. One is to make a new stadium contingent on granting this ownership directly to the community. Another, maybe better, is for the Rays to sell shares in small amounts to many individual investors in the community. A lot of people would probably jump at the chance to own a piece of their ball club.

All of these proceeds would be used to defray the cost of a new ballpark. With the increase in franchise value, the Rays might also be able to borrow an additional $150 million to contribute to the financing package. That still leaves at least $280 million to be borne by local government, but it is a lot less than what is currently on the table.
It's an interesting concept since Meyer contends shared ownership would boost fandom and prevent the team from slashing payroll.  But the biggest problems standing in the way of the proposal are a few suspect assumptions Meyer makes about the Stadium Saga:
  • The Rays would draw 27,000/yr in a new stadium because that's what "smaller" MLB cities are averaging.  Attendance in Tampa Bay should climb as kids who were born into Rays Country get older.  But to expect 27k/yr in Florida - when Marlins Park barely drew that in its first year and the TV experience is getting better - may be unreasonable. 
  • If the stadium enhances the value of the franchise by $100+ million, the team might be willing to share some of that increase with the community as an ownership position. A new stadium has everything to do with increasing the franchise's profits, so giving away a piece of the team would defeat the purpose of a new stadium in the first place.  Unless, of course, the team didn't have to put ANY money into a new stadium.
  • With the increase in franchise value, the Rays might be able to borrow an additional $150 million to contribute to the financing package. The Rays could borrow more than $150 million right now if they wanted to....they just don't want to.  Spending $300 million of their own money on a stadium would be a terrible business mistake....just ask the Columbus Blue Jackets.
  • MLB would allow the Rays to share some of their financials with citizen investors.  The league's financials are among the most guarded documents in America.  And, despite calls from local leaders and newspapers, the Rays have yet to show any indication they'll substantiate any of their financial concerns with hard evidence.  It might be hard for the team to sell shares to a public entitity without releasing secret documents.
Meyer makes a lot of good points and probably sells his idea short by assuming a new stadium would only increase the franchise's value by $100 million. The Rays were willing to dedicate $150 million to a new park in 2008, so it's fair to assume a stadium would increase the franchise' value by $150-$200 million.  But it's probably still not enough for the Rays to finance a stadium itself...or sell off stakes in the team.