Tuesday, November 4, 2014

REPORT: Sternberg, Rays Met with Montreal

I know nothing of the credibility of Montreal newspaper La Presse, but they have a story out today claiming the Rays did, indeed, meet with Montreal businessmen twice last spring.

The following is directly copied from Google's French-to-English translator:
A first meeting was held in New York with the Rays principal owner Stuart Sternberg, according to our information . A second meeting was also held last spring with senior management Rays to present the study commissioned by the Board of Trade of Metropolitan Montreal on the sustainability of the return of major league baseball in Montreal. Montreal business people have also been in contact with a dozen teams in baseball, with the aim to explain the seriousness of their approach and their study.

According to our information , the Rays were clear in their trade with Montreal representatives: they want to do everything possible to ensure the future of the team in the long run in the Tampa Bay area . In this regard, two issues will be crucial over the next two years negotiating a future contract with the local TV ( the current contract ends after the season 2016) and the construction of a new stadium, preferably near the center -town Tampa Bay. The Rays did not intend to seriously look at another option without having tried everything in both cases.
According to La Presse has learned, the group of a dozen business people in Montreal, headed by the Board of Trade of Metropolitan Montreal, would have no difficulty in finding short-term investors who inject up to 200 million to become minority shareholders of a team ( ex .: 33 % share of an estimated 600 million team). According to this formula favored by the group, a current owner would move the team and remain the majority shareholder. Montreal business people then would have a large but minority in the team. This scenario is related to the construction of a stadium in the city center to be financed mainly by public funds (the study of Ernst & Young evoked 66% of public funds and 33% of fund owners of the team).

The dozen business people interested in the Montreal Expos return favors the scenario where a small number of them (between two and four investors) would be common to about 200 million (ex.: three investors 75 million each for a total of 225 000 000 ) . They immediately want to drop a too complex shareholding structure as that of the former Partnership Expos . Some members of the group are open to the idea of ​​creating a second group of local shareholders who hold only a small share in the ownership of the team. But it would be the first group of local shareholders that invest substantially all of the amount required and who would play the role of the local minority shareholder.

In the scenario of an expansion or full redemption of a team, the group of people of Montreal business is less optimistic can raise the necessary funds (between 500 and 650 million , according to various estimates), at least for the moment.

Over the coming months, overseen by the Board of Trade of Metropolitan Montreal group will update the study of the accounting firm Ernst & Young on the sustainability of the return of a team of major baseball in Montreal . The aim is to update the study in time for the two preseason games that will play the Toronto Blue Jays at Olympic Stadium in Montreal at the end of March. The announcement of the two games Toronto Cincinnati will be confirmed today during a press conference at the Bell Centre .

Last December, the Ernst & Young study concluded that the project valued at 1.025 billion (525 million for the purchase of a team, $500 million for a stadium downtown ) was profitable provided that public funds finance two thirds of the construction of the stage ( 335 000 000 500 ). However, the data on which the study is based are more than one year. Some things have changed since then, including the value of local TV rights, which continue to be renegotiated upwards in several cities in baseball.
Interesting read, but it seems to indicate there is $200 million available to buy a minority share of the team. That does NOT mean there is any money available for a stadium.

Stay tuned.


  1. Lots of momentum for Montreal right now. Another 2 game Exhibition series announced for April. The Montreal Baseball Project preparing the present their plan to MLB, along with Cro working on Brick and Seat Purchase programs. Still a long ways away, and the Rays still have a lease and big TV revenue coming. I hope the Expos come back, but I'd hate for it to be at the expense of the Rays.

  2. La Presse is a legit Montreal paper. Its not some tabloid rag. So if this story was reported there, it has legs.

    Noah, I tried to warn you about Montreal. You seemed to think that the only way that happened was if Sternberg sold the team. In all seriousness, I think if St. Pete holds onto that lease, the Rays are gone. Because the Rays will pay to break that money to move to Montreal, but I don't think they will to move to Tampa. It would be way to tough to get public funding for a stadium in Tampa if that happened.

    The bad thing (for TB area) now is Montreal has positioned itself such that if the Rays were let out of their lease right now with no penalty, I think it would be even money on where the Rays end up: Tampa or Montreal.

    Just as important as watching Montreal attendance for those exhibition games, you need to monitor the Rays season ticket renewal rate. After a losing season, losing their GM and manager, it will be key to see how much attendance drops. At approximately 17k last year, if it ends up like 14k, its going to hint at future market viability problems.

    1. That has always been my concern for the Rays, is that if they don't draw well during a period of unprecedented success, what happens after a season or two in the basement? Sustained winning has been the formula for other teams to improve their attendance, like recently in Pittsburgh, but it just didn't pan out that way at the Trop. Surely there's more to it than the stadium and location?

      The thing is, if Sternberg is willing to move the team, suddenly that 1 Billion quote that Cro's sustainability report quoted is drastically reduced, and more money can be put towards a new stadium.

    2. I was complimenting your line of thinking, David, although I think your 'warnings' about Montreal are alarmist.

      The Rays are stuck in the Trop because they ultimately cant/don't want to pay out the "damages" clause in the contract. That all changes if the city amends the deal, however....which has been what the Rays have been angling to do for years.

      Relocating a franchise is very costly. The costs would have to come down significantly for the Rays to consider it...and Montreal would have to pony up hundreds of millions of dollars more (on top of what's already been mentioned) to make it remotely a consideration.

      For now, MTL is nothing more than a boogeyman.

  3. MTL may be the boogeyman, but it seems to me to be a race between Tampa and Montreal to pledge 200+ million to a new stadium. If in 2 years time there is no movement and the Montreal business owners have lobbied the gov't of Montreal and Quebec to earmark that 200 million, then the Rays are Montreal bound. And to be honest, I think its much more likely to see progress towards that 200 million from Montreal, than Tampa.

    Nothing is imminent, but positive traction is better than no traction.

    I do think the Rays not paying the "damages" of breaking the Trop agreement has more to do with setting up public funding for their next stadium, than being worried about paying what would likely be ~20-30 mill in the long run. I think everything has been posturing to get the court of public opinion on their side, to get them out of their St. Pete lease without ticking off any fans and getting the public behind a partially public funded stadium in Tampa.

    I know you typically post about how its not worth spending public funds on stadiums, and while I agree in principle, really its worth whatever the next guy is willing to spend on it. If Tampa doesn't surely some city will. Right now that's looking like Montreal. To be honest I'm rooting for Montreal to get a team at some point. Beautiful city and further adds to the international appeal of the game.