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Keeping the Rays in Tampa Bay: Why time is running short

Twenty-four years ago, St. Petersburg's City Council took a creative leap of faith that has paid off handsomely. They built a major-league baseball stadium with no team in sight, and now the Tampa Bay Rays represent a potent community asset.

The team lures tourists, gives us pleasure and reinforces our common bonds. After a decade of woeful performance, the Rays even win most of their games, led by ownership that seems fan-friendly and capable.

That does not mean St. Petersburg has to keep them in town.

Like any asset, the Rays could be converted into cash, and plenty of it.

Freeing the Rays to move to either Tampa or another city within the next six or seven years could net St. Petersburg hundreds of millions of dollars.

But time is already running short for cutting the best deal for the city, for Rays fans and the region.

We are not in the bottom of the second here, just settling in with our first dog and beer. Though the contract on Tropicana Field runs through 2027, these are actually the late innings, and our starter is tiring.

St. Petersburg officials should once again make a bold move.

Engage the Rays and move purposely toward a new stadium.

If a Pinellas stadium doesn't seem likely, invite Hillsborough authorities to join the discussion.

Or at the very least, cut the best financial deal for letting the Rays go.

Without a decision soon, options narrow for the entire region.

Here's why:

To keep the Rays over the long haul, taxpayers have no choice but to once again open their wallets and build a new stadium. The Tampa Bay market — physically and psychologically divided by a bay and a bridge — has laid an egg in the eyes of Major League Baseball. Tropicana Field's ability to generate cash pales compared to modern stadiums, which typically get corporations and sponsors drooling, put more fans in the seats and boost prices.

The Rays' lead owner, Stuart Sternberg, says he doesn't want to move the team, and maybe he won't. Fashioning a winning franchise seems to engage him, but the down-and-dirty travails of a divorce would be way less appealing. Absent a stadium, maybe he will just sell out and let another owner slash the payroll, pack the bags and wait for the most advantageous offer.

Sternberg and his whiz-kid underlings have favorably impressed baseball's moguls and could be candidates to buy the next available team in a rosier locale — just as Major League Baseball bought and moved the Expos, while allowing Montreal owner Jeffrey Loria to buy the Florida Marlins.

No matter who makes the move, the revenue-producing potential of a new stadium cannot be ignored. Don't build one and the Rays will move. It's only a question of who moves them and when.

Relying on 2027 and the contract language won't cut it. If St. Petersburg officials want to keep the team within the city or the region, they need an earlier target date for opening a new stadium — more like 2022 or 2020.

The Rays are like young baseball stars approaching free agency. By spurning renewal offers during the last few years of their contracts, they can swim in the lucrative waters of competitive bidding.

If all St. Petersburg holds out is a stadium that might open five years before the end of the current contract, it makes economic sense for the team to withdraw from any stadium talks and wait for the day they can sell to the highest bidder.

Next, consider how long it will take to get Trop II out of the ground. The team, St. Petersburg, Pinellas County and the Legislature must negotiate a site and financing package. If the Pinellas Gateway seems the logical choice, traffic and environmental studies could force significant delay. Major road improvements could adds millions of dollars to the cost.

If St. Petersburg eventually decides to let Tampa and Hillsborough take a crack at the Rays, imagine the complexities of hammering out those negotiations.

In the best of worlds, with few glitches, a new stadium would take six or seven years to complete. Nine or 10 years is more likely.

The math is daunting: A 10-year project that needs to be completed by 2022 must start in 2012. A nine-year project that needs to be completed by 2020 must start by 2011.

Meanwhile, other cities will come a-wooing.

The mix will probably include the usual suspects of Portland, Charlotte, Indianapolis and San Antonio. But give it a few years and Mexico City, Monterrey or San Juan could add salsa to the mix. In purely economic terms, northern New Jersey would be a bonanza if baseball could find a way to mollify the Yankees and Mets.

Though downtown Tampa could offer the trendy urban locale that baseball owners covet, Tampa and Hillsborough County have committed gobs of tax money for Raymond James Stadium, the St. Pete Times Forum and Steinbrenner Field.

And as long as St. Petersburg officials threaten to sue anyone who talks to the Rays, Hillsborough interests may have less chance than a Portland or a Charlotte to land the team. After all, cities outside the Tampa Bay area need not worry about jeopardizing regional cooperation on matters like water, job creation and transportation.

But make no mistake. If St. Petersburg makes no substantial move toward a stadium within a few years, other cities will smell blood in the water. A sweetheart deal with strong corporate support could provide the Rays the wherewithal to buy their way out of the Trop a decade early.

For St. Petersburg to spurn buyout offers to the bitter end would be financial folly. Imagine 2028 rolling around with no team, no buyout money and a cavernous Senior Fest venue on 16th Street.

Given these dynamics, St. Petersburg Mayor Bill Foster and the City Council face a crossroads when the economy improves.

Do they begin an earnest search for a stadium location and financing?

Do they shift gears and try to squeeze the most out of letting the Rays leave?

Or do they get really creative and ease the Rays toward Tampa while still reaping a financial windfall?

The allure of keeping baseball in St. Petersburg for another 30 or 40 years is obvious.

But imagine, too, how the city could benefit from say, a $150 million buyout, $60 million from selling the Trop's 86 acres, $80 million in savings from not building a new stadium, $100 million from bonding out new tax revenue from a developed Trop?

How about another world-class museum? How about a dedicated practice and performance hall for the Florida Orchestra or the snazziest Pier imaginable? How about all those goodies, plus $100 million to spare?

Either keeping the Rays or letting them go represents great benefit.

Sadly, both choices have relatively short shelf lives. The charts that accompany this article show how quickly St. Petersburg's options narrow if city officials simply do nothing.

Neither a project that points beyond 2022, nor years of uncertainty, makes economic sense for a team that is expected to contribute at least $150 million toward construction.

Without quick and substantial progress, some other city will offer the Rays more corporate support and more economic certainty. The team's focus will shift from "how do we stay?" to "how soon can we go?"

St. Petersburg could stick fast to its current posture of forbidding the team from even talking to other cities, but that hard line falters pretty quickly.

If the Rays are, in fact, going to leave St. Petersburg, it behooves the city to invite new suitors into the game. Competitive bidding would improve the team's chances of getting a sweetheart deal, part of which could be passed along to St. Petersburg as a buyout price.

If St. Petersburg chose a more regional approach, it could let the Rays negotiate exclusively with Hillsborough authorities for, say, five years while still forbidding talks with other cities.

St. Petersburg might demand a higher buyout from cities outside the region than from Hillsborough. That might keep the team within the region so fans from both sides of the bay could still attend games, tourists could still fill up hotels and community pride could still to swell when the Rays do well.

No matter what course the city ultimately takes, each successive year without concrete progress drains St. Petersburg of legal and financial leverage. It damages the entire region's chances for baseball.

Keep the Rays. Or let them seek other pastures.

Just don't take too long to decide.

Contact Stephen Nohlgren at nohlgren@sptimes.com.

Rays' likely contribution to new stadium when financing package arranged

The going rate for team contributions to midsize market stadiums is now about $150 million. That's what the Rays offered toward their waterfront proposal. But this contribution may vanish from the negotiating table soon. Even if vigorous planning were to begin next year, a final financing package could easily take until 2014 to 2015 to arrange, followed by at least a year for a referendum and three years for construction. If several years pass with no movement toward a stadium, it's safe to assume the Rays would lose enthusiasm for committing any money to St. Petersburg and will wait for another city to make a better offer.

Buyout price

As soon as the Rays lose enthusiasm for St. Petersburg, $150 million becomes a good starting point to buy their way out of the Trop contract. It's what they would have to contribute to a new stadium anyway. A suitor city and any of its corporate citizens could grease the deal by underwriting some, or all, of the buyout price. No matter who pays, the offer would drop steadily to zero by 2027.

City's likely net gain for letting Rays leave

Developers bid $60 million to buy the Trop site two years ago before the economy collapsed. When it improves, a similar deal is foreseeable. Huge, vacant urban plots of land are rare. By putting developed Trop acreage back on tax rolls, St. Petersburg should gain something like $7 million a year. If bonded out, that supports $90 million to $100 million in new spending. Not building a new stadium saves another $80 million to $90 million. Add in $150 million from a buyout and the city could net about $400 million by letting the Rays go. The Pinellas County School Board would also reap millions of dollars by putting developed Trop acreage back on tax rolls. Gains to St. Petersburg diminish along with the buyout price.

Payoff amount on main Trop bonds

The primary bonds that built the Trop could be paid off today for about $50 million, which drops to $0 in 2017. A minor debt to the state extends through 2027. Citizens dislike the idea of financing a new stadium while debt remains on the old one. The Rays would also have to pay off bonds before leaving St. Petersburg, making 2017 an important milestone.

Rays' legal risk from breaking Trop contract

A judge could forbid the Rays from leaving St. Petersburg before the contract expires in 2027, but a settlement is likelier and the thorniest issue would be quantifying contract language that says baseball brings "diverse'' benefits to the city. One concrete estimate of a team's value to a community is the cost of building a new stadium to keep them. Miami-Dade taxpayers recently put up $480 million for a 35-year lease with the Marlins. By that yardstick, baseball's value in 2010, with 17 years left on the Trop contract, would be about $235 million, dropping to $140 million by 2017. While primary bonds would be paid off in 2017, the Rays could also be responsible for secondary Trop bonds — worth about $13 million by then. On the other hand, St. Petersburg also would gain the equivalent of about $150 million by developing the Trop and putting it back on tax rolls. Considering both the city's losses and gains would expose the Rays to substantial legal liability if they broke the contract today, but dramatically less by 2017.

Stadium milestones

November 1982: St. Petersburg City Council offers Gas Plant as site for multipurpose stadium. Four years later, city and county float bonds for construction.

November 1986: Stadium construction begins.

March 1990: Florida Suncoast Dome opens at cost of $138 million.

July-August 1993: Tampa Bay Lightning agree to play in stadium, renamed the Thunderdome, for two years.

March 1995: Tampa Bay awarded a Major League Baseball franchise, to play in the dome.

October 1996: Thunderdome renamed Tropicana Field. Ground broken on 15-month, $63 million stadium renovation.

March 1998: First MLB game at the Trop. Rays lose 11-6 in front of 45,369 fans.

January 2004: Group headed by Stuart Sternberg buys into team. Original managing general partner Vince Naimoli still runs it.

November 2005: Sternberg group buys out Naimoli, takes over management.

April 2006: First season opens under Sternberg with $10 million in renovations.

November 2007: Rays announce proposal for new 34,000-seat stadium at site of Al Lang Field on St. Petersburg's waterfront, say they will help finance it.

June 2008: In the face of fierce public opposition and skeptical City Council, Rays withdraw waterfront proposal. Mayor Rick Baker asks Florida Progress executive Jeff Lyash to form a citizens' committee to study baseball's future.

October 2008: Rays win American League championship to enter their first World Series, which they lose to Philadelphia.

January 2010: ABC Coalition issues final report saying that Rays should get new, retractable-roof stadium, close to the Tampa Bay area's demographic center, or area will lose team.

Keeping the Rays in Tampa Bay: Why time is running short 04/02/10 [Last modified: Friday, April 2, 2010 9:24pm]

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