The Tampa Bay Rays released their plan this week to pay for a new $450-million waterfront stadium.
The St. Petersburg Times asked four stadium experts to double-check the Rays' math. The Times presented the experts below with the same details that the Rays released Thursday at a meeting with the City Council, along with a story published by the Times about the plan.
The Times then asked the experts, who all are generally critical of taxpayer-funded sports facilities, to examine the materials and prepare an analysis to compare the Rays' plan to other stadium developments.
The Rays $450-million financing plan includes $150-million from the team, $175-million by extending city and county payments now made at Tropicana Field, $70-million from the developer purchasing the 86-acre Tropicana site, and $55-million from guaranteed parking revenues.
Mark S. Rosentraub
The public cost is NOT the advertised $175-million but $245-million, since the funding involves the sale of a public asset (Tropicana Field site).
It is not really appropriate to count that money as private investment since the funds are from the sale of a public asset given that the public sector paid for the existing stadium. So the public sector share is more appropriately estimated at $245-million, or quite a bit more than half of the cost of the project. Things could be higher depending on the accounting involving the parking but without further study it cannot be determined if there are any costs that will be supported by the public sector.
You then raise the most important question.
In a market the size of Tampa/St. Petersburg, with its existing interest levels of interest in baseball, is this an appropriate mix?
Given that Major League Baseball's revenue sharing (a portion of MLB proceeds shared by all teams) is generating more money for the ownership of the Rays than is currently paid to players, it is clear that the public sector is underwriting a substantial portion of the cost of the new ballpark creating tremendous upside potential for the owner to earn additional revenue (if player costs do not increase).
Without a commitment from the team to maintain a competitive to payroll and tr take part in related real estate investments that could generate new tax revenues for the city, the public sector should be aware that there is risk relative to the team's long-term performance and the economic performance of the area around the ballpark. The public sector's risks relative to the size of its investments in the ballpark would appear to be greater than those taken by the team and its ownership.
So the question for the community becomes, "Is it worth $245-million to ensure that MLB remains very profitable in the Tampa/St. Petersburg region without securing (a) guarantees for related private sector development which could improve tax levels while (b) hoping the owner will continue to field a competitive team beyond relying on MLB revenue sharing funds?
If the community and its leadership are content to commit that much money understanding these limitations, then this might be seen by the community as acceptable. If, however, those questions raise concerns, then there might be some further discussions and analysis required.
Victor A. Matheson
I obviously tend to be an opponent of stadium subsidies, and I strongly object to the designation of public asset sales as private financing, but I don't want to be too cynical here.
The stadium design sure looks cool, and if they really can reduce the footprint from 100 acres to 15, primarily by eliminating the fields of parking lots around the current stadium (freeing up a major area for development), then that is clearly worth something to the city. How they replace those acres of parking, however, is unclear.
Also, the claimed public-private mix is misleading — $70-million or 16 percent comes from the sale of the old Tropicana site. The boosters claim this is private financing for the stadium. When a city sells its assets in order to pay for a project, the funds raised from the sale of that project shouldn't be considered private funds.
If you go to a new car dealer and pay $20,000 for a new car and get $10,000 for your trade-in, you wouldn't claim that the dealer paid for half of your car. The public private mix is at best 45 percent private and 55 percent public.
The parking revenues shouldn't necessarily be considered private, either. The city is being asked to sell parking spaces to the Rays and then turn around and give the entire sale price for these spaces right back to the Rays.
While this proposal does serve to finance the stadium without raising other taxes, giving the Rays free city-owned parking spaces that they can use to finance the construction of their stadium is hardly private financing. Thus, the public private mix looks more like 33 percent private and 67 percent public.
Both of these revenue sources are essentially selling city-owned property to finance the stadium. This is not private financing, even if a private business buys these assets. It hardly looks like one of "the largest private payments for a new ballpark in MLB."
The Rays' financing plan is typical of reports put out by sports teams in that it's not a financing plan. Rather, it's a PR document that leaves out most of the important details. That said, there are a few interesting points here:
• If the city is going to consider this plan, it's vitally important to make sure the Rays agree to pay all cost overruns — not just those directly connected with stadium construction.
• The Rays claim that the proposal is among the most generous in all of baseball for taxpayers is extremely misleading, as it leaves out the costs of land, infrastructure, tax breaks, and other "indirect" subsidies. (The Mets' new stadium, for example, is listed as 100 percent private, but it's actually about 47 percent private, 53 percent public.)
• Counting $70-million from the sale of Tropicana Field as a "private" contribution is somewhat sketchy, given that it's owned by the city. Yes, it would be money that wouldn't have to come out of the treasury, but the city would also be losing an asset.
• The Rays promise that "putting Tropicana Field back on the tax rolls will increase tax revenue for city, county, schools, and other taxing authorities to support public services." However, that ignores one huge issue: Developing the Trop site with housing and office buildings would also add new city costs — for schools, roads, police and fire services, etc.
As a baseball fan, I'd love to see the Rays get out of their dome and into the sunshine. But without more light shed on the details of this plan, I'm not convinced it's a win for local taxpayers.
This is capitalism and any project carries risks.
However, smaller markets usually pick up a higher share of financing costs and the average public financing share for sports facilities is around 67 percent.
The public share in the Rays' proposal appears to be under 40 percent. Further, while again there are uncertainties, the release of some 85 acres for alternative development suggests a much more positive economic impact outlook than the conventional stadium project.
The point about the 85 acres is that without this proposal, the land is tied up for a long time. By the team reducing its footprint, they enable the city to generate revenue not currently generated.
I think this is a creative and balanced proposal (with some questions still to be answered, to be sure) from the Rays that stands a far better chance for actually having a pro-development impact than the vast majority of stadium proposals of the past.
Rosentraub, 58, is dean of Maxine Goodman Levin College of Urban Affairs at Cleveland State University. He has worked for several cities hoping to retain teams and build sports facilities.
Matheson, 38, has been an assistant economics professor at College of the Holy Cross since 2004 and has contributed to dozens of scholarly articles about the economics of sports.
deMause, 42, is the co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit. He also runs the Web site, www.fieldofschemes.com.
Zimbalist, 60, is a professor of economics at Smith College in Massachusetts. Zimbalist has published 18 books, including his latest, The Bottom Line: Observations and Arguments on the Sports Business.