Turns out I’m not the only one critical of the deal that the city of Boston cut to give the Red Sox perpetual rights to Yawkey Way in exchange for $7.34 million in payments over the next ten years: The advisory Boston Finance Commission has called on Mayor Thomas Menino to delay a vote on the plan, saying it will “shackle generations of Bostonians to an agreement that over time will prove to be financially irresponsible” and that the city should be negotiating to get a chunk of future revenues from concessions on the site.
The Boston Globe article on this revealed that the Boston Redevelopment Authority at least had some rationale behind its numbers: Since retail space in the neighborhood goes for $60 a square foot, and the Sox would only use Yawkey Way about one-third of the days in a year, the BRA settled on a price of $20 per square foot per year. And since annual rents are usually about 7 percent of land value, and Yawkey Way is 17,000 square feet, that came to a purchase price of just under $4.9 million. Add in air rights over Lansdowne Street (where the Green Monster seats were built) for another $2.5 million, and the total price tag came to $7.4 million.
This leaves out a couple of important factors: First off, Boston isn’t actually getting $7.4 million in present value — it’s getting $7.4 million over the next ten years, which is worth somewhat less than that. Additionally, one could argue that Yawkey Way should be valued at more than surrounding retail properties because it’s a unique location — it’s not like if the Red Sox didn’t like the price being charged they could just go and rent 17,000 feet of local storefronts 81 days a year in which to hold a giant open-air concessions concourse. (Though I suppose the opposite argument is true to some degree as well: If they weren’t renting to the Red Sox, the city wouldn’t have many other bidders to use the street — though it does have value as, you know, a public street, plus it’d be interesting to see what, say, a coalition of independent sausage truck vendors might have bid for the site.
Anyway, Mayor Menino has signaled that he’s going to ignore the Finance Commission and let the Yawkey Way easement proceed. But it’s a reminder that, even if the deal is better than the original one — which was crazy low because, according to the Globe, a real estate consulting firm based the Sox’ rent on “lease rates for pushcarts in shopping malls” — there’s still reason to believe that Boston may well be leaving money on the table in order to keep the Sox happy.