Monday, December 15, 2014

Rays to Montreal? Fat Chance (Pt. III)

FLASHBACK Oct. '13: Rays to Montreal? Fat Chance
FLASHBACK Mar. '14: Rays to Montreal? Fat Chance (Pt. II)

It's time again to revisit a popular topic!  Except, this week, it's TSN sports legal analyst Eric Macramalla doing the dirty work, writing, "Forget it Montreal, the Tampa Bay Rays aren’t moving anytime soon."   One of his main reasons (as I've written about before): the Rays have a use agreement, not a lease.

An excerpt:
The reason the Rays aren’t moving ties into their deal with the city. The Rays never signed a traditional lease. Rather, it signed a “Use Agreement”, which prevents the team from moving out of Tropicana Field and calls for potentially catastrophic monetary damages should the Rays abandon the stadium before its deal is up in 2027. This is in stark contrast to a traditional lease, where a tenant owes the landlord what’s left on that lease after breaking it.
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So that takes us back to the city suing for money – and lots of it – should the Rays fail to honor its agreement. It’s not clear what that amount would be, but the ask is likely to be exorbitant. The city could argue that it should be paid in excess of $100 to $200 million as compensation for the loss of the team and the intangibles that come with an MLB team in a city. Some of these are outlined in the Use Agreement, and include things like the “creation of new jobs, local employment opportunities, increased business prospects, direct and indirect tax revenues, enhancement of the community’s image and promotional opportunities, and an improvement in life and local pride of the citizenry”.
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The city did its homework when it drafted the Use Agreement.
The attorney who negotiated that deal back in the 90s? John Wolfe, who remains St. Pete's top attorney.
(This month's) very limited negotiated settlement was Rays owner Stuart Sternberg’s only viable play. He simply had few options since he couldn’t pick up and leave without the threat of a major lawsuit.
This touches upon my most recent post, which details how little leverage the Rays have until St. Pete council agrees to let them look elsewhere.  Macramalla continues:
One more thing – major league baseball historically doesn’t abandon stadiums where the team is the anchor tenant. It sends a terrible message to cities that MLB teams don’t honor leases.

So for those fans hoping to see the Rays in Montreal in the near future, stop hoping. However, should the Rays fail to make progress on a new stadium by about 2021, they could at that point start negotiating with a city like Montreal to build a new stadium for the 2028 season. The Rays would then let the city know they intend to move in a few years with the hope of buying the city out in exchange for an early exit.

For Expos fans, expansion is more likely to land the city a team in the near future. MLB, however, hasn’t expressed an interest in adding teams at this time.

With enhanced revenue sharing, substantial revenue from media deals, a deep history of baseball in Montreal going back to 1897 and a city that is the 15th largest metropolitan city in North America, it seems inevitable that Montreal will get a team. The numbers line up in an MLB economic landscape that has dramatically changed since 2004. The issue, though, is when. And that doesn’t seem to be anytime soon.

11 comments:

  1. Just think about the damages to St. Pete if the Rays left. They'd be left in the exact same boat they were in when the Rays signed the agreement in the first place. This article is preposterous. While I agree nothing is going to happen in the short term. But by 2022, I'd be surprised to see the Rays playing in the Trop, if there isn't construction on a partially publicly funded stadium in Tampa.

    To think anything is on the table other than St. Pete recouping infrastructure enhancement costs as part of this use agreement is laughable. If St. Pete tax payers think they can get the Rays to compensate them, for building a stadium on their own that the league advised against, 7 years before they got a team, they've got another thing coming.

    Besides the next stadium deal the Rays can hopefully arrange in Tampa. Tampa Bay needs to show its support of the team. MLB can't be happy watching a very competitive (sometimes playoff bound team) finish last or 2nd last in standings. It is really shining a glaring light at the viability of the market. Now that the Rays are looking at a downturn, it is hugely important that they don't bleed to many fans. A significant attendance dip, will only accelerate the teams departure.

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  2. Here is the interview with Eric Macramalla on this article that explain in details his POV and understanding.

    http://www.tsn.ca/radio/macramalla-rays-lease-situation-doesn-t-help-montreal-1.157252

    This is a messy situation for the Rays but also for the Tampa Bay region. I can't see a Win-Win situation over there.

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  3. These contract provisions on the use agreement are brilliant:
    *****
    Some of these are outlined in the Use Agreement, and include things like the “creation of new jobs, local employment opportunities, increased business prospects, direct and indirect tax revenues, enhancement of the community’s image and promotional opportunities, and an improvement in life and local pride of the citizenry”.
    ****
    If the Rays leave St.Pete and the city sues for damages, the Rays would have to argue that all those "intangibles" (most of which are actually exaggerated economic multiplier effects) are, in fact, exaggerated, Sadly, I'd still expect cities to fall for the economic multipliers hocus pocus, even with an MLB team admitting this in a court record.

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  4. Today's developments will throw another move threat city in the mix - Havana. MLB has lusted after that market for decades and it will become another threat chip for Sternberg.
    May not happen tomorrow but it will happen.

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  5. Yep St. Pete is a joke

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  6. St. Pete city council just killed baseball's future in Tampa-St. Pete. Say hello to your Montreal Expos 2nd edition. SMH

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  7. The same Eric Macramalla who wrote the article above about how the Rays were unlikely to move, wrote ANOTHER article last night after the St Pete City Council vote about how they are more likely to move now more than ever:
    http://www.forbes.com/sites/ericmacramalla/2014/12/18/shocking-stadium-defeat-for-tampa-bay-rays-casts-more-doubt-on-already-uncertain-future/

    Taken from the article:
    "...the Rays are unlikely to wait until 2027 to explore relocation. Unless it has a local deal in place within the next five to seven years, expect the Rays to begin negotiating with a city like Montreal to build a new stadium for the 2028 season. The Rays would then let the city know they intend to move in a few years with the hope of buying the city out in exchange for an early exit ahead of 2027. At that point, it’s more likely the city would accept the deal thereby allowing the Rays to bolt in advance of 2027."

    So much for "Fat Chance" in regards to Montreal.

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    Replies
    1. Good news - Tampa Bay still has "a few years," as Macramalla admitted, to keep negotiating with the team.

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    2. Time to move on folks, The Rays are better off in Montreal. Noah, I challenge you to take an honest survey from baseball people from all over MLB. Ask them one question...would you prefer baseball to remain in Tampa Bay or re-locate to Montreal? I await your results....

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    3. Answer: Whomever builds the more lucrative stadium subsidy package!

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  8. Eric Macramalla is a lawyer and I'm pretty sure he never read the Use Agreement. Because, if he did, it should have point out that the site development clause is a big element of such contract and this is what the Rays will use to negotiate a move elsewhere. There are probably more economical impact over the next 25-30 years to develop the 85 acres site than what Rays with an empty stadium are bringing to the table.

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