Monday, November 19, 2012

Chamber of Commerce Study: New Stadium Will Require Real Tax Committment

Addressing a long-ignored aspect of the Rays' Stadium Saga I first started complaining about in 2010, two local chambers of commerce released their joint report on how a new stadium could be financed...and what sacrifices the community may have to make.

The long-awaited report from the Greater Tampa and St. Petersburg-Area chambers indicated Hillsborough County may have more bonding capacity available for a stadium than previously believed.  However, Pinellas County's revenue streams have fewer political strings attached.

The "Baseball Stadium Financing Caucus" focused only on stadium financing.  It avoided talking about sticky issues like locations and the legal issues surrounding the team's current contract with St. Petersburg.

While the Tampa chamber is supporting the Rays' and Hillsborough County's push for a regional stadium conversation, the St. Pete chamber is supporting Mayor Bill Foster's effort to keep the Rays in Pinellas County.

If a new stadium were built in Tampa/Hillsborough County, the caucus concluded the best ways to reach the near-$400 million that may be needed would be mechanisms, including: (estimated 33-year impact in parenthesis)
  • Using tax-increment financing (TIF) associated with Tampa's Downtown Community Redevelopment Area (CRA).  Increased property tax collections downtown, which must be used for capital projects, would be directed to pay down stadium debt. ($105-$115 million)
  • Re-direct a portion of the Community Investment Tax (CIT) from local road & infrastructure improvements to a new stadium.  The local sales tax, of which a portion funds Raymond James Stadium, expires in 2026 and would have to be extended. ($70-$80 million)
  • A new 5% surcharge on auto rentals, which would hit tourists more than local residents.  ($140-$150 million)
  • A new 6th-cent added to the tourist/bed tax.  Hillsborough County isn't considered a "high-tourist" county, so state law prohibits it from charging tourists 6% tax on hotel stays.  However, the chamber indicated legislators could be convinced to change the law. ($35-$45 million)
If a new stadium were built in St. Pete/Pinellas County, the caucus concluded the best ways to reach the near-$400 million that may be needed would be mechanisms, including: (estimated 33-year impact in parenthesis)
  • Existing revenue streams already paying for Tropicana Field.  Most Trop bonds will be paid off by 2015, so leaders can either stop collecting the taxes, re-direct the collections to other city & county needs, or re-direct them to a new stadium. ($115-$148 million)
  • Re-direct a portion of the "Penny for Pinellas" local improvement tax to a new stadium. The tax sunsets after 2020, so its bonding capacity would be modest at best without another extension. ($35-$40 million)
  • A new 6th-cent added to the tourist/bed tax.  Pinellas County, like Hillsborough, isn't considered a "high-tourist" county, so lawmakers would have to change state statutes for Pinellas to increase the tax on hotel stays from 5% to 6%. ($50-$60 million)
  • Re-directing a large portion of St. Petersburg's share of state sales tax toward a new stadium.  The city currently receives $12.2 million/year from the state, and much of it could be leveraged into new stadium bonds. ($165-$175 million)
While the timing of the announcement could have been be better - a recent firesale of talent by the Miami Marlins has cast public subsidies of stadiums in a negative light - the group is hoping its ideas can break the stadium stalemate the Rays and the region have been locked in for the last few years.

"We applaud the joint effort of the Tampa and St. Petersburg Chambers in identifying potential funding sources for our next ballpark," said Rays President Matthew Silverman in a statement released Monday afternoon.  "Regional cooperation like this is sorely needed as we all move forward and work together to secure the future of Major League Baseball in Tampa Bay."

Tampa Mayor Bob Buckhorn called it a "great first step," and said he was happy the caucus didn't delve into the location debate.

The caucus also did not mention anything about creating a regional stadium authority with taxing power - a concept previously mentioned as one way to get multiple Tampa Bay counties to share in a stadium burden.

GRAY AREASThe Tampa chamber's Chuck Sykes, delivering the joint presentation, acknowledged ticket prices would likely jump at a new stadium, as would prices on stadium parking, concessions, and souvenirs to help pay the team's estimated $150 million contribution.  There was no indication of whether a new ballpark would draw more fans than increased prices would keep away.

Sykes also stipulated, "you have to be a winning team" to get a big attendance bounce with a new stadium.  The comment may have been referencing the Marlins, who drew just 27,400 fans per game this year, the lowest mark for a new ballpark in decades.  While the Rays have posted five straight winning records, no on-field performance is guaranteed.

The presentation, which included no new sales taxes, was aimed at a "best-case scenario" in many instances.  The caucus assumed a price tag of $500 million for the stadium, even though Sykes admitted it could cost a lot more: a parking garage could cost $150 million and some experts have estimated restitution to St. Petersburg for breaking the current contract could cost $100 milllion.

A number of the proposed funding mechanisms are also dependent on lawmakers re-writing state statutes - a scenario Buckhorn was skeptical about, given the conservative anti-tax feelings in Tallahassee.

"WE DON'T HAVE A LOT OF TIME"Sykes stressed the need for St. Petersburg and the Rays to advance the discussion soon since Tropicana Field bonds will be paid off in a few years and those revenue streams will be repurposed by the local municipalities.

"We don't have a lot of time," Sykes said.  "Almost 60% of the (Tropicana Field) debt is going to be paid off by 2016.  A number of the sources can be used for general funds...and in this environment, when the economy is tight (and) nobody wants to increase taxes, that's something to us that we need to move quickly.  Because when that debt is paid off, it's not going to sit there. It's going to be claimed."

Sykes also said hearing rumors of contraction in MLB circles tells him Tampa Bay had better start acting on a new stadium.

"Please," he said, "don't look at that lease and think that you've got time, we really need to get going."

Buckhorn agreed, calling a stadium opportunity in Tampa one that could pay off exponentially for the city and county.

Following the presentation, I pointed out Forbes estimated the Rays were one of the most profitable teams in baseball and asked Sykes if he had seen any evidence the team was struggling financially.

"I saw financials that were leaked out to the public, and that was all I saw," Sykes said, referring to 2008 financial reports the Rays have never confirmed were accurate.  "The key question, though," Sykes added, "was is those financials could support $150 million in debt."

Sykes, who had cooperation with the Rays for part of the report, called the financials "valid," but said the team never opened up its books to either chamber of commerce.

I also asked if the caucus took into account soaring television revenues Major League Baseball and it's teams are now receiving.

"It got us excited when we heard about the (billion-dollar) contract the Texas Rangers signed," Sykes said.  "Every major-league team we came in contact with, though, said, 'don't make the mistake to think that that exists for a mid-market-level team.'"

However, Forbes recently reported the San Diego Padres quadrupled their annual television revenues from $12 million to $50 million.  And the league recently doubled it's national television revenue to $1.5 billion - payments that are split evenly among the 30 teams, according to the Biz of Baseball.

"Compared to what we saw in 2008," Sykes said of local TV revenues, "I'm sure (the Rays have) opportunities to improve that, but I think what holds true is still that the 'main lever' that still ticket sales.

Sykes estimated ticket sales account for 35% of the Rays' revenue and the team "will get a new media contract with or without a stadium."


  1. Let private enterprise fund a stadium not taxpayers. The same folks pushing rail boondoggles want a taxpayer funded stadium that subsidizes the owners. Income taxes going up, payroll taxes going up and Obamacare taxes about to hit with higher healthcare costs - taxpayers don't' want to pay for a stadium too - let the private sector go get their own venture capital, take the risk and "build" it themselves. Just look at the mess with the Marlins and the new stadium in Miami...

  2. So, was there any one on the board who *ISN'T* a moron?

    This Sykes guy wants to rush rush rush - spend all that future money because the MLB is going to contract any day now! It's hard to believe these dolts can get their shoes on the right foot in the morning.

    Did they ask to see ANY of the Ray's finances?
    Do they have ANY proof to back up these alarmist claims?
    Did they have anyone there (other than you Noah) to refute all the lofty nonsense that these new stadiums supposedly bring?

    Every time I read about one of these stupid community leader groupthink meetings, i feel like it's time to fire up the grassroots protest machine and get mobilized to shoot down the coming attempted theft from the public.

  3. I do wonder why it looks like the chambers of commerce pushed on public-funding via taxes rather than looking for ways to raise private funds. Relying on public funding for what will be a privately-owned structure for a specialized purpose (baseball) seems a waste.

    Oh, and for the anonymous guy up at the first post: I believe the bay area needs some form of light rail transit. We're one of the largest metros in the nation WITHOUT one, and we've got way too much g-dd-mn car traffic around here. Anything to connect our major points of business/activity - beaches to stadiums to airports to theme parks to colleges to downtowns - would help.

  4. It's an investment toward Tampa's future. A new ball park in Tampa sprouts more business owners, brings more people from outside of town that come to spend more money, more millionaires living around town spending money and volunteering, with the park hosting other events, concerts, and an All-Star game, AND all which will bring more tax revenue then spent on a new ball park! Also, let's not forget the aspect of having a place for our community to come together to cheer on our world class athletes while with our families on warm summer evenings for generations to come...

  5. Beazy - nice of you to regurgitate all the tired old arguments for handing out hundreds of millions of public dollars to enrich a small private group.

    The economic impact of stadiums is GROSSLY overstated. There hasn't been a single independent study showing this to be true. If you want real proof, go look at all the "sprouting" business and infrastructure around the current stadium, or Raymond James or any number of other stadiums.

    Second of all, you're incorrectly in assuming that if we dont lavish a new stadium on the Rays, people won't go out and spend their money. I suggest that's as far from the truth as possible. Lower taxes means more people have money to spend when in town. And if you're spending $150 to park, see the game and get a crappy slice of pizza, it's pretty unlikely you're going to stroll out of the park and look to spend more money. Instead you're going to head home after they shake the money out of you.

    Please wake up and research all your tired talking points.

  6. Paul- LOL, it's "nice of you to regurgitate all the tired old arguments", BUT if you don't like your taxes invested for a better future, small towns like Brooksville, or maybe Bartow might suit you better. The Tampa Bay Rays isn't a "small" business. They employ hundreds of wealthy people, including bringing 1000's of other taxed jobs with'em. Plus, I'm sorry you don't understand the economic impact a professional sports team has in a community. Why? Well, let's just say Tampa wouldn't of hosted a couple of small events like Super Bowls, and Republican NC. Also, ask other people outside of Tampa (like in Foxboro, San Fran, LA, Denver, etc.) if it "sprouts" other businesses around the stadiums, though being a degressive, you might not like there answer, not including the spike in real estate values around Channelside. OR let's just say "there's a reason why city's fight to have a Pro team play there"(like how St. Pete and Tampa is)...
    "Second of all", I'm not saying the people of Tampa wouldn't spend there money anyways, though I, like most, know that the attraction of people from Orlando, Pasco, Hernando, Ocala, Lakeland, etc. wouldn't spend there money in Tampa if there wasn't a Major League game to come to town to see. And, most people go games for less then $50, and those that spend over $150, usually has more money to spend...
    Regardless, it's not your taxes, it's luxury taxes, that will either be used to pave a couple roads in SE Hillsborough co. OR be used as an investment for generations to come, though it's doesn't matter to you, because you'll be living in Inverness by then...

    1. Again - apparently you have a tough time with facts and real concrete figures that disprove all your sloppy talking points. There's no (as in ZERO) proof from any non-MLB-enacted study that would hold up any of your empty talking points.

      There's no economic boom in any area that accompanies the construction of a stadium. The truth is about as far from that as you can possibly get. With numerous new stadiums, there's usually a public seizure of property, followed by the negative ramifications of long-term construction, then having drunken fans stomping through your neighborhood intermittently. These stadiums try to sell/feed fans for every last dollar, so it's unlikely they're going to go out and spend more money in the local neighborhood. And I seriously doubt anyone is clamoring to live and commute out of an area like this.

      Nor is there some huge hiring spree that accompanies a team settling into town. There's a very small front office staff and out of state players/owners who aren't the huge lucrative taxbase you're predicting. Unless you think hotdog vendors, and parking attendants are getting 6-figure salaries. Besides all of which - the HUGE tax-breaks the stadiums receive makes any minor bump in tax revenue irrelevant.

      All you're doing is swallowing the same BS that every team tries to dangle in front of fans to get tons of public financing at the cost of public services for the rest of the county. The owners make tons of noise and threats to leave, but there's precious few cities who could support a $500+ million dollar project. Maybe you should look at the poor performance and negative impact of recent new stadiums like Barlay Center, the Nationals park, or the Miami stadium boondoggle. All that money and now nothing left to show for it but a lousy minor-league team. Better yet - look at the wonderful NHL stadium in Channelside. How much "economic impact" do you get when a cartel of greedy owners shut down the whole season?

      Compared to the pennies those venues make for non-league events (which I'm sure owners get a taste of), it's a poor, facile argument for wasting more of our public money.

  7. LOL, I, like most others, are happy NOT to be like or think like you. And, I, like most, would disagree with most of argument. Do you really think St. Pete and Tampa is putting up a fight to house a professional sports franchise to LOSE money? LOL, of course you do. Though no one is ever going change a degressive's glass-half-empty's mind, let me at least leave you with some literature...

    **From the port of a bay area to the port of a bay area --->

    Bottom line is regardless of spending money to house a sports team, OR not see the value in waiting a decade or so to recoup that same money, having Major League's Tampa Bay Rays play over 80 games a year, mainly during our long hot summer days, along with enjoying world class entertainment with over 30k of your neighbors, PRICELESS...

  8. I may have missed this but, Why not include a Casino along with a new stadium in Pinellas County. Tax payers would then not be strapped with he additional taxes to build this facility. It would bring more people to the area and be used when the teams are not in town. It would also create jobs that would last year round.

    1. Resort-style casinos aren't legal right now in Florida, but that may change in the next few years. Regardless, there may be as much resistance to monster gambling institutions in parts of Florida as there is to taxpayer-funded stadiums.

  9. Hard Rock casino's in our neighboring county seems to be doing well ... resistance is political ... if Hillsbourgh County can have a casino Pinellas should have that option too ... a casinomight pay for the funding of the new stadium and jobs without taxpayer money ...

    1. Hard Rock is on Native American land and gambling requires state approval. You're right about the political hurdles, but it will be much-debated in the next few years.