Monday, June 18, 2018
News Roundup

St. Petersburg: Letting the Tampa Bay Rays explore Hillsborough stadium sites could weaken city's legal position

ST. PETERSBURG — More than parochialism and pride is at stake as Mayor Bill Foster and the City Council ponder their soon-to-come communication with the Tampa Bay Rays about possible new stadium locations.

The team's recent request to explore sites in Hillsborough County has a potential downside: It could weaken the city's legal position if the Rays try to leave town without permission, several lawyers said last week.

That worry — how the city would fare in a knock-down court fight — has colored council discussions for years. Now, a proposed stadium in the Carillon Business Park has returned it to the front burner.

The Rays responded to the private stadium pitch by saying the team would gladly explore it, but only if the city formally allows them to check out sites across the bay as well.

Foster, who expects to run his counteroffer by City Council this week, said protecting the city's court options is a high priority.

"I want to be part of finding a St. Pete solution,'' Foster said. "In no way am I going to create a condition that weakens the city's (legal) position.''

Professor James W. Fox, who teaches contracts at Stetson University College of Law, has studied the agreement that binds the Rays to Tropicana Field through 2027. He agrees that letting the team talk to Tampa interests might weaken a key provision of the contract.

On the other hand, Fox said, focusing solely on potential court action in the future could torpedo tangible opportunities to compromise now.

City officials are excited about Carillon, a mixed use development in the Gateway area of the city. But first they must figure out how to entice the Rays to take it seriously. Even if that fails, the city might extract significant compensation for a move across the bay.

"The more aggressively defensive the city is, the more litigation oriented they are,'' Fox said, "they could weaken their negotiating position to get a more advantageous settlement.''

Council member Charles Gerdes said that very juggling act is his main concern: How to balance contractual strength with negotiating possibilities.

The Rays say the Trop will not support baseball and have refused to consider new Pinellas sites unless they can also examine Hillsborough possibilities. Foster says no way.

"A bright line appears to have been drawn and that's the problem,'' Gerdes said. "How do you move forward if there is a bright line.''

Gerdes is an attorney who specializes in business and real estate law. In typical landlord/tenant disputes, he said, renters can usually leave by paying all the rent owed. That way, the landlord does not lose money.

The Rays don't pay rent and the city's slice of ticket revenue and naming rights usually are eaten up by insurance costs and police overtime. If the team left early, the city's main quantifiable damages would involve the Trop's construction bonds. They drop off dramatically after 2015, but several million dollars would remain through 2027. The Rays would probably have to pay them off, Gerdes said.

But what makes the Trop contract unusual is not about dollars and cents.

Original Rays owner Vince Naimoli agreed that baseball brings "unique and diverse" benefits to the city — jobs, business prospects, tax revenues, pride and an improved quality of life.

Losing those benefits would cause "irreparable harm'' that "is not readily calculable," Naimoli agreed, so the city has the right to seek an injunction to prevent the Rays from moving.

Even if a judge refuses an injunction, the city can ask for huge monetary compensation for losing those intangible benefits.

How legal arguments might play out is uncertain, Gerdes said. A judge could do anything. But letting Rays explore Hillsborough, with no changes to the contract, could definitely weaken the city's chances.

"The concept of irreparable harm is very subjective,'' he said. "If you invite the very consequences you are complaining about,'' by letting the Rays look elsewhere, "perhaps you have waived your complaint.''

Gerdes does think the city could minimize risk by revising contract language to make it clear that letting the Rays look in Hillsborough does not waive future claims to irreparable harm. He favors doing such a rewrite, then charging the Rays a price for the new arrangement — $1 million or $2 million a year.

Once the Rays look deeply at drive times, accessibility and infrastructure, Gerdes said, St. Petersburg should compete well.

"I don't think the city should be so defensive,'' Gerdes said. Also, having the two sides finally talking is "a moment we shouldn't lose.

"I don't want to see another nine months of doing nothing.''

Council member Jeff Danner also favored charging the Rays for the right to look in Hillsborough.

Council member James Kennedy, who also is an attorney, disagreed.

"The legal theory behind an injunction and irreparable harm is that monetary damages are insufficient compensation,'' Kennedy said.

"Once you start negotiating the concept of price, even if one person puts it at $100 million and the other puts it at 10 bucks,'' a claim of irreparable harm "is difficult to uphold,'' he said.

In interviews last week, other council members said they opposed the Rays' request. The team should look at Carillon seriously and exclusively, they said, without a guarantee that they will be allowed to look elsewhere.

"I want to see more conversations about Carillon," said Leslie Curran, who has often clashed with Foster on stadium issues. "That is the first step."

Karl Nurse said CityScape, the development company behind Carillon, "has hundreds of thousands of dollars and thousands of hours of research in this thing. We know we can look at this site. It has enough detail in it. If it doesn't work, we can come back and address other sites later.''

Council members Steve Kornell and Bill Dudley expressed similar views.

Fox, the law professor, noted that Minneapolis secured a one-year injunction in 1992 when Major League Baseball tried to eliminate the Minnesota Twins franchise. The injunction was granted in part because the contract explicitly foresaw such a possibility.

Only one year remained on the Twins' lease, which made that injunction less onerous on the team than if St. Petersburg tried to keep the Rays in town for several years, Fox said.

Still, the contractual language about "unique benefits," "irreparable harm'' and injunctive relief would benefit St. Petersburg if the stadium standoff ever sank into nasty litigation. And letting the Rays talk to Hillsborough could weaken that position.

But as with other contractual disputes, Fox said, "a mind set of always preparing for litigation often means you are not as open to the creative benefits of settlement.''

And in this case, the Rays' leverage increases with every passing year.

"There is an opportunity risk'' for the city, Fox said. "If they are hoping for some damage payment, the longer they go down in this contract, the less the damage amount is going to be.''

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