Tuesday, March 28, 2017

What's a New Stadium Really Worth to Rays?

Of all the fallout included in Sunday's post, "New Non-News on Rays' Stadium Location Search...and What Comes Next," the one piece of writing I couldn't quite cram in came at the bottom of John Romano's column.

He gets around to the real issue in the Stadium Saga, how the heck are the Rays going to afford a new stadium without taxpayers making it rain millions on them?

It's a well-covered issue on this blog, including a 2012 post that ironically came after a John Romano column proclaiming the Rays "are as good as gone."  I asked, "how many more fans are needed to warrant the investment (in a new ballpark)":
Thirty-thousand?  That would bump the Rays up to 15th out of 30 teams and would mean an extra 870,000 fans a year.  But 30,000/game seems unsustainable given the fact that the Marlins only drew 27,400 in their first season and playoff teams like Cincinnati and Baltimore only drew 28,978 and 26,610, respectively, this year despite their modern stadiums.

Twenty-five thousand?  That would bump the Rays up to 24th in the league in attendance and mean 465,000 more fans a year.  But there's a big question if the Marlins could draw that many next year or if the Rays - by moving from a county with 900,000 residents to a county with 1.1 million residents could either.

Twenty-three thousand?  Is it worth $500-600 million for 303,000 fans a year?  If the ticket average is $25, that's $7.5 million a year for the Rays.  Add parking and concessions and maybe it's $15 million a year for the Rays.  Might just be cheaper for Pinellas and Hillsborough Counties to hand the team an annual tax credit.
Romano's 2017 take on the same issue questions how much revenue the team would need to make a real investment in a new ballpark:
For the Rays, this has always been a mathematics question. If they can boost their revenues $15 million a year in a downtown Tampa location, then they would invest a certain amount in construction. If a new stadium on the Trop site only boosts their revenues $5 million a year, then one might assume their investment would not be as high.

The difference at the Trop site is there is an abundance of property that does not have to be purchased, and the Rays currently hold the development rights through their stadium use agreement.

Those rights could go a long way toward deferring the team's costs, and they would allow the Rays to be partners in whatever development goes up around the stadium.

This doesn't mean a site in downtown Tampa won't suddenly become available at a better asking price, but the odds seem a lot less likely than a week ago.

What's now clear is that St. Pete is still a viable location, and that Hillsborough voices are less optimistic than in the past. All of which makes the Trop site seem a lot more attractive today.
Of course, readers of this blog knew Pinellas always had viable locations, since its got the most available tax money. And, if we are to learn anything from Atlanta, it's that MLB teams don't care quite as much about ballpark location if they can make a bundle of profit on real estate and ancillary development.

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  1. Its obvious the Rays are going to need investors to bridge the gap, though in the mean while, while one investor in Vinik drags his feet in Channelside, the Rays seem to be enjoying their cheap pay to play in St.Pete, but is it helping them save up for the future???

    1. Investors only invest when there's ROI. The Rays don't need investors, since they don't lack capital for a new park. They need donors (like taxpayers) because there won't be enough new profit to pay off investors.

      Meanwhile, Vinik's not dragging his feet. He's executing a plan (which has never included baseball).

    2. You have a basic misunderstanding of how ballparks get financed, Dufala. Read this blog post again.

    3. Sorry, but you are far behind the times, get it, behind the Times...

    4. the Times: " regardless of location would include public money, a significant investment by the Rays — and money from another private source tied to adjacent development."

    5. Yup. A mysterious private source who obviously doesn't care about ROI of his/her money. Since there likely wouldn't be much without immense public money covering the bulk of the deal.

  2. or this way


  3. If the Rays build a new ballpark, its co-investor will be MLB. But it is very likely that that new ballpark won't be in Tampa Bay.

  4. The investor is a combination of city and county tax revenues, and it has always been pretty clear there was only one county this could happen in. Our fans want two things from the Rays other teams don't have to do: build their own ballpark, and spend more than the revenue the team brings in. Rays will probably end up paying a share, and it will be more than most or all of the other teams in the league.

  5. The alleged reason for the need for a new stadium is so that the Rays bring in more revenue so they can increase player payroll so that they can become competitive. Simple math - a $600 million stadium costs $33 million per year for 30 years at 3.5% interest. So why would anyone spend $33 million per year to increase revenues by the extremely optimistic figure of just $20 million per year? Taxpayers, where ever they live, need to distance themselves from this nonsensical proposition as quickly as possible.