Sunday, January 17, 2016

Why MLB Needs to Stop Taking Tampa Bay for Granted

After my countless pleas for Tampa Bay leaders to at least ask the important question about stadium financing, Tampa Tribune columnist - and former sportswriter - Joe Henderson steps up and writes, "MLB benefits from a new Rays stadium, so it should help pay for it":
(The Rays) can dream all they want about what a fancy urban stadium would mean to growth and development, but it won’t matter unless they can figure out how to pay for it. I know where they need to start, though. Major League Baseball needs to pony up.

Don’t laugh.

A few days ago, the National Football League announced the St. Louis Rams can move to Los Angeles. As part of that deal, the league pledged $100 million for the franchises in San Diego and Oakland to find solutions to the stadium problems in those cities.

Why wouldn’t baseball want to do the same here?
The Rays will have to pay a big part of the bill, too, but even that won’t be enough to cover the whole cost. If the landing spot is Tampa, I’m guessing city and county leaders will cast a longing eye toward tourist taxes and rental car surcharges as a major funding source.

A stadium will have to be everything Tropicana Field is not. Fans will demand a retractable roof, air-conditioning and all the other do-dads that are a staple of modern stadiums. No sense building something unless it is done right.

The problem is, doing it right is enormously expensive — probably $600 million, minimum.
I've recently written that we shouldn't assume a new stadium will cost $600+ million; a fixed-roof option with a translucent roof (roof technology has come a long way in recent years) would be a much-more economical option, possibly in the $450 million range.

That might make a stadium possible with $200 million from the Rays; $150 million from MLB; and $100 million from tax coffers.  Of course, neither the Rays nor MLB will want to spend that much, and Hillsborough County doesn't have a spare $100 million without drawing from general property tax revenues (via CRA/TIF districts).

But it's worth pointing out  MLB is richer than it's ever been before and they're able to pay players more than they ever have before.  This is largely in part to the fact that local taxpayers are paying more of their expenses than ever before.

And, as I wrote in 2011, the Rays' Stadium Saga is MLB's Problem, not Tampa Bay's:
With $7B in revenue last year, there's plenty of profit in MLB to go around. And although revenue sharing is considered by some a crutch and a problem, it's neither; revenue sharing is a symptom of the league allowing teams to spend dollars proportional to their cities' size (because its more profitable that way).

As much as the Steinbrenners and Lucchino/Werner/Henry clans may want revenue sharing reduced, it will remain an important part of the MLB business model as long as salaries continue to grow (which they will). But since the big clubs profit more if the smaller clubs profit more, a stadium in Tampa Bay is so important to everyone in the league.

A good point is raised by Maury Brown of The Biz of Baseball, who says
MLB owners already padded their pockets on the backs of Tampa Bay:
St. Pete built the then-Florida Suncoast Dome in 1986 to try and bring MLB to the market. When it was completed in 1990, it, and Tampa Bay-St. Pete became a lever to get new stadiums around the league built. Whether it was the White Sox, Giants, or Mariners, all used relocation to the new Dome as a way to get shiny ballparks built.
The stadium debate isn't about the Rays - it's about the profits of all 30 MLB clubs. If simply building a new stadium was the instant fix some people suggest, MLB would step in to help close the $200 million funding gap Tampa Bay faces in building a $500-$600 million stadium. But it's not. Unfortunately, the stadium debate is much like the national debt debate and there's no instant fix.

The problem in Tampa Bay isn't just about the fans or the market - it's about MLB. It allowed its business expenses to skyrocket, and now it wants you to help fix it.

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  1. Why would MLB want to sink money in the Tampa area knowing that it will NOT increase attendance?

    1. And that's the key. This would be an unprecedented move for MLB. Regardless of who they did this for initially, they'd be opening the door to doing it whenever a team wanted to upgrade. And of all the markets to do it for, why would they do it for a market that has not demonstrated any long term interest in the team, regardless of record.

  2. It's not all about attendance. It's primarily TV revenue and the Tampa market is in the top 12. The location of the current stadium is not centralized to draw from the population. In the correct location, there will be an increase in stadium attendance.

    1. There is absolutely zero evidence to believe this

    2. Because MLB is not only about butts in seats. Television contracts are getting bigger and bigger and the Rays do very well with television ratings.

    3. You are right, attendance may still suffer, but I personally believe it well go up. With that being said, the money is in the television revenue.

    4. Because MLB is not only about butts in seats. Television contracts are getting bigger and bigger and the Rays do very well with television ratings.

    5. Very true. The Rays have great ratings. Sadly, their contract provides them with a much lower percentage than teams that have recently signed new deals. They were supposed to be getting a new contract within the next year or so, but now Stu says it isn't happening. Their current deal continues on with no end in sight. So the ratings can be great and maybe even get better, but the money the Rays are actually getting is far below market value.

  3. New stadium revenues come from higher ticket costs generally. And higher ticket costs are easier based on the demand generated by new excitement about a new park.

    A new park in St. Pete would draw more fans than the Trop; but a new park in Tampa would generate more excitement, and thus more fans AND higher ticket prices.

    However, over 10yrs, I don't expect significant changes in attendance anywhere in Tampa Bay....and it won't matter when TV revenues outpace gate receipts.

    1. tell that to the Marlins!

    2. How can you suggest that there wouldn't be a significant change in attendance if the stadium was centrally located in Tampa? I understand that any points I am about to make can be easily responded with the same banter that I am replying to your post with. But come on. The I-4 corridor, and 75 south of Tampa, are growing populations (especially I-4) and over time, those populations will trump Pinellas' populations.

      BTW. I was the guy who asked if you would use your Powerball winnings to build a Rays stadium.

  4. Joe Henderson is getting closer and closer to the right answer for funding of a new Rays' stadium. He now views it as a three component project - Rays, MLB, and taxpayers. When he gets it down to just two components, where the taxpayers are eliminated, he will have achieved 'perfect pitch'.

    Regarding tourist taxes and rental car surcharges, a much better use for them is investing in the citizens of our community, where because of the high degree of tourism, there is a disproportionate number of low paying jobs. How about, for example we take that tax revenue to fund scholarships for hospitality workers so more of them can move up the economic food chain and actually be able to afford to buy tickets to attend games in the new stadium?

    MLB and the Rays can easily afford to pay $600 million or so for a new stadium in Tampa Bay.

    Per in 2001 total MLB revenues were $3.58 billion ($4.79 billion in 2014 dollars) and 56% of those revenues went to players’ salaries.

    In 2014, total MLB revenues were $7.86 billion and just 38% (see ) went to players’ salaries, even with the many ridiculously stupid long-term contracts that are negotiated, and you can now add the contracts of David Price, Zack Greinke, Jeff Samardzija, Jordan Zimmerman, and Chris Davis to the list. And note that four of these new entries to the list are pitchers, who play, at most, once every 5 games!

    So revenues (in 2014 dollars) after deducting for player salaries were $2.1 billion in 2001 and $4.9 billion in 2014. That is an increase of $2.8 billion which averages out to $93 million per team. To build a $600 million stadium costs just $34 million per year assuming 4%/30 year terms.

    What have MLB and MLB owners done with all this extra money? Keep in mind that their slice of this ever growing pie will continue to get bigger in the coming years?

    During the Bud STEALig era (1992-2015), 21 new MLB stadiums were built, 20 of which received substantial public funding. Not only did 20 MLB clubs get lots of public money, not even one of them opened their books to show why they needed public money!

    For taxpayers to pony up even a dime for a new stadium for any team is obscene. That is like providing publicly funded college scholarships for Warren Buffet’s and Bill Gates’ kids.

    1. @Scott - why not just MLB to "own" all the MLB clubs and have them pay for all the stadiums and player salaries. And every 20 year when a new stadium is needed they can then move the clubs to other cities that want a team still. The only metrics for a move would be attendance and TV revenue. Both must be high to continue in said city. This way, it'll be fair. No support = no team.

    2. @AnonymousJanuary 18, 2016 at 8:49 AM
      Sounds good to me. As long as the taxpayers are not on the hook and no contractual obligations are being violated, what is not to love about your proposal?

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  6. Another Tampa site bites the dust...

    So, with St Pete already being ruled out, it looks like the number of sites in Tampa are also being ruled out.... Say hello to Bassin Peel soon....

    1. This site is no less likely than it was years ago. Expensive, but desirable.

      The mistake fans in Tampa Bay have been making is believing sportstalk hosts who lead you to believe Tampa has any money at all for ANY of the possible stadium locations. It'll cost a lot of tax dollars, no matter where in Tampa you choose for a location.

    2. So, St Pete is not ideal as the recent articles show and Tampa itself has choices that are very expensive, not ideal and they have NO money for stadium....

  7. Unfortunately for Montreal, a baseball team won't appear for another 50 years.