Thursday, March 3, 2016

Rays Stadium News You Didn't Really Miss

Not every Stadium Saga headline is worth dedicating a full blogpost if you slept through the last week or so, here's what you missed*:
  • "Business of Pro Sports" Panel - Stu Sternberg, Bryan Glazer, and Jeff Vinik addressed a wide range of topics Monday night, including their shared belief that public spending on pro stadiums provided great ROI...despite what those damned economists think.
  • Sternberg's $28M investment in the Trop - The Rays' owner also said he sank $28M into Trop renovations in the last decade. Whether that's a lot or a little depends on whom you ask. 
  • Sternberg on Corporate Support - Appearing at Spring Training, Sternberg said the Rays would be seeking to build a new stadium wherever corporate support would be greatest, because the region's businesses basically haven't carried their load in buying ticket packages.  As Field of Schemes' Neil deMause put it, "it’s Sternberg who wants the new stadium so he can make more money — if businesses don’t want to support the team regardless, then maybe the stadium isn’t the problem? Just a thought."
  • St. Pete Launches "Baseball Forever" - Mayor Kriseman joins many of the region's corporate leaders to rally business interests around the team, and to start preparing a new Trop site stadium proposal.  Going to be a hard sell to both the Rays and the St. Pete taxpayers asked to pay for a second stadium.
  • Rays Book Cuba Flight - As DRaysBay's Daniel Russell writes, the Rays' visit to Havana may even more interesting to the team's on-the-field future than it is for off-the-field reasons. I'd add that anytime the Rays draw 45,000 fans to an exhibition game, it's going to make for some interesting headlines, tweets, and speculations about their long-term futures.
* "missed" is a very relative term

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  1. It's interesting to see that the Rays are now publicly talking about corporate support (or lack of).

    This situation is not new and while lots of marketing efforts were addressing the fan base directly over the last decade (that may explain why Rays Senior Vice President and Chief Sales Officer Mark Fernandez has resigned his post last year), having such terrible corporate support is a completely different problem to solve.

    Does that means that if the number of corporate tickets sold do not improve significantly, the new stadium project is jeopardized?

  2. PART 1 OF 2
    Regarding a couple of the comments that Jeff Vinik made at the ‘Business of Pro Sports Panel’…

    Jeff stated:
    “If we lose baseball, I can’t recruit a company,” he said. “He’ll say you couldn’t even keep baseball.”

    I wonder what the folks in Austin, TX say when they hear: ‘You can’t even attract a single major league professional franchise team. No wonder your job market sucks so bad that you are just first in the country.’

    Jeff also stated:
    “The fact of the matter is if you look at the financial models, if you want to privately finance 100 percent a new ballpark or arena, the economics are not going to work,” he said. “You can’t finance the whole thing privately and then run the business. It’s just not financially feasible.”

    What financial models is Jeff looking at? If one can’t finance an entire business privately, then why should that business even exist? During my brief 44 year career I worked for a telecommunications company, and several software companies – none of which received public welfare for the financing of their factories or office space, or anything else. Of course, the companies I worked for did not have a discernible percentage of their employees making multiple millions of dollars per year. Why should any professional sports teams receive public welfare? Let’s look at some of the specifics for each of the four major sports leagues – NFL, NBA, MLB, and NHL.

    1. NFL
    It is incredibly ridiculous for any city to be giving a dime of taxpayer money to NFL billionaire owners to fund new stadiums, or to upgrade existing stadiums. Each NFL team received $226 million in revenue sharing for the year 2014 – see . Even the poorest performing NFL franchises generate at least $50 million per year in local revenues. With the salary cap at $143 million, even the least talented of the greedy NFL owners make many millions of dollars every year. The yearly cost to build a $1 billion stadium at 30 year/4% terms is just $57.3 million. And guess what, if the owners were paying for 100% of the cost of new stadiums, they would cost a lot less than a $1 billion. The owners can easily afford to build a new stadium, if indeed, they deem one is needed.

    2. NBA
    It is absolutely obscene that the Milwaukee Bucks are now getting tax dollars and tax exemptions for their new arena. No NBA team should get one dime of public subsidy. A new 9-year NBA TV network contract goes into effect beginning with the 2016-2017 season which increases per team yearly revenues from $31 million per year to $89 million per year - an increase of $58 million per year. See . To build a $500 million arena costs just $28.6 million per year at 30 years/4%.

    1. You make a good point about financing your own business.....but I'll say this about Austin - it's not exactly viewed as an economic/population hub....more like a niche economic engine, a la NC's research triangle.

  3. PART 2 OF 2 (comment continued)
    3. MLB
    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! If any team did open their books, we would have learned such things as:
    • When Phil Wrigley owned the Chicago Cubs, right before the end of the fiscal year, he would have his accountants determine how much profit there was, and then make it all disappear by paying out bonuses to his high level employees.
    • George Steinbrenner was very clever in redirecting Yankee revenues to buy hotels.

    Nobody, except the teams and/or MLB baseball should pay for new stadiums!
    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% went to players’ salaries, even with the many ridiculously stupid long-term contracts that are negotiated.

    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 $34.4 million per year assuming 4%/30 year terms.

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

    MLB may need to tweak its business model to do more revenue sharing and owners can certainly do a better job of negotiating future long term contracts with players, if they feel a ‘profit squeeze’.

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

    4. NHL
    The NHL teams pays 50% of its revenue to players. The NHL salary cap is currently around $70 million which implies league wide revenue of about $4.2 billion - $140 million per team. Granted, the NHL USA and Canadian network TV deals (about $21 million per team per year not including NHL Center Ice or NHL.TV) are not nearly as lucrative as those of the NFL (about $210 million per team per year or the NBA - $89 million per team per year). With a $70 million salary cap that works out to an average player salary of about $3.2 million per year – quite lucrative for the players – and compares very favorably with MLB’s $4.25 million average when you factor in that there are 162 regular season MLB games, and only 82 for the NHL. Maybe NHL players are being paid too much, or maybe TV revenues are being sold too cheaply?

    As with the NBA, a new arena costing $500 million would require $28.6 million per year at 30 years/4%. Revenue sharing beyond the TV contracts is not very generous - 6% of gross revenue is subtracted from the teams with greater revenue and given to teams with less revenue. So there is room to do more revenue sharing in the NHL, if needed. So, same conclusion – no public money needed to build new NHL hockey arenas.

    Bottom line – All four of the major sports leagues are incredibly profitable and pay their players extremely well - if the players are overpaid, it is because of the incredible amount of public funding of stadia and arenas that has taken place to date. The gravy train needs to stop now! If owners need to tweak the business model to maintain, improve, or build a new arena, then do so. It’s time to stop looking for a handout from us weary taxpayers.

  4. Re: MLB....