D-Backs CEO: Give us rent breaks and other goodies, and maybe we’ll consider staying till 2027

Arizona Diamondbacks CEO Derrick Hall issued a new set of demands yesterday in the team’s attempt to break its stadium lease, and they are simultaneously convoluted and pretty clear in their intent to fund Chase Field improvements and/or replacement with somebody else’s money:

  • The Diamondbacks would get a “significantly” reduced rent from the $4 million a year it currently pays to Maricopa County, plus take over booking all non-baseball events at Chase Field (and keep the revenues from those).
  • In exchange, the team would take over responsibility for projected “repairs and enhancements” at the stadium, which Hall has estimated at $187 million, though it’s not like he’s provided an itemized receipt.
  • The county would hand over the stadium to the city of Phoenix, which unlike the county stadium district has the power to raise taxes and sell bonds to either renovate or replace the 18-year-old stadium.

The rent-for-upgrades swap is clearly meant to be a way of distracting attention from team ownership’s demands: Oh, we don’t really want public money, in fact we’ll relieve you of this $187 million obligation we decided you had in exchange for us not giving you rent payments and a share of non-baseball revenues, like we promised when taxpayers built this thing for us in the first place. The county-to-city shift, though, is potentially even more dangerous, since it raises the specter of more subsidy demands to come, probably as the D-backs’ 30-year lease draws to a close in 2027. (Hall did not suggest that he’d agree to a lease extension in exchange for these concessions, because why would he?)

As I detailed at Vice Sports last week, the Diamondbacks’ lease doesn’t actually have a state-of-the-art clause requiring the county to provide upgrades or let them walk — the closest it comes is a clause that the county must provide any capital repairs necessary “so that [the stadium] is safe and can readily be made available for the playing of Home Games,” which probably wouldn’t require $187 million. This latest missive from Hall makes it all the more likely that the team’s nastygram to the county is less legal missive than, you know what, let me just quote myself:

For most team owners, though, the point of state-of-the-art clauses isn’t even so much about legal language as it is about shifting the debate around replacing nearly new stadiums from “What the hell are you talking about?” to “I suppose we’ll need to address it sooner or later.” Looked at that way, the Diamondbacks’ letter makes a lot more sense: though the team owners included the requisite threat of legal action (“If permission is not granted [for the team to move if it decides upgrading Chase Field isn’t feasible], we will ask the Court for all appropriate relief”), the real goal was to start the conversation about replacing Chase Field at public expense, to ensure there would be no danger of having to play in a stadium that’s past its Carrousel age.

“What can the government do about the crisis that the Diamondbacks are stuck in an 18-year-old stadium?” is now a thing that the public and media are expected to debate like it’s sane. Be afraid, be very afraid, for there are a hell of a lot of other stadiums that were built in that late-’90s sweet spot, and it’s not just the D-Backs and Cleveland Cavaliers owners who are going to be sniffing around for ways to ways to get back on line at the trough.


16 comments on “D-Backs CEO: Give us rent breaks and other goodies, and maybe we’ll consider staying till 2027

  1. The other way to look at it is that entertainment entities need to be kept attractive and modern, otherwise the customer will flee to something else. (I’m only partially referring to players’ wives.) A modern MLB stadium isn’t really “ready to host home games” if the bathroom and concession lines are long because a lot of people no longer tolerate that at sporting events. ::coughNeilatNewMeadowlandsStadiumcough::

  2. Just when one would think billionaire professional sport franchise owners wouldn’t come up with more convoluted ways to extract public dollars a new one pops up and delivers the goods. I honestly think they hire people to research the latest in taxpayer giveaways and see if they could top it. This reeks of the Pacer deal but in reverse: relieve us of paying rent, allow us to keep all revenues related to the building, and maybe (emphasis on maybe because you know they’ll never do it) we’ll make the capital improvements necessary to make Chase Field a viable entertainment option. At least the Pacers went for the throat in the beginning, realized it was easy to slice, and continued to feed like the vampires they are.

    I wish as a small business owner I could go to a municipality and have them subsidize my losses. There would be no need for me to get business loans to saddle my company with long-term operational debt. I wouldn’t have to put up any collateral in the form of my accounts receivables or personal property. I could just sit back and collect the cash. Oh well, I’m not wealthy enough.

  3. If Derrick Hall needs to save $4 million per year, why does he not simply ask Zack Greinke to take a $4 million per year pay cut for the next 6 years? Of course it would be tough for Zack to live on $30 million per year vs $34 million per year, but couldn’t he tighten his belt a little bit?

  4. But, Ben Miller, what about Wrigley, Fenway, and Dodger Stadium? Or the various old college football stadiums? How about creating a sense of history? Especially as they rely on the tax payers to fund the latest bells and whistles.

  5. This story is wrong. Why is it your intent to mislead your readers to make your beliefs appear to be true? Why dont you report the $187M in repairs came from the COUNTY, a study they authorized, not the D-Backs? The D-Backs had NO input into the county study.

    The county OWNS the building and like every other landlord is responsible for the capital improvements. Since the items cited as needed came from the COUNTY, why wouldnt they be responsible to them?

    The county has next to no events. They dont utilize the building enough. For the record. the D-Backs hold a fan fare every years. Draws 10k to 20K people. The D-Backs pay rent to the county to use the building. The proceeds all go to Diamondback Charities.

    I believe giving up $4M in rent for the next 12 years is a fair return for $187M in things the landlord says are needed. Stop your nonsense and in realty complete BS and misinformation.

  6. Here’s the document that the $187m figure comes from:

    https://app.box.com/s/gfj1iymozuymyvy4c5f5xb4fua32ygmz/1/7155404297/59001370125/1

    It’s a hideously large Excel spreadsheet best viewed on a monitor the size of a small scoreboard, but if you scroll around enough you’ll see that it’s less a list of needed repairs than a list of anything that might ever need replacing, and a price tag attached. (The “Notes from Diamondbacks” column, in fact, notes that a lot of the items the team itself doesn’t think will be necessary.) And a large share of the costs would be the responsibility of the team anyway under the current lease, so for the team to take those on is a savings to the county of bupkis.

    James, if you think giving up $4m a year in rent plus any non-baseball revenues (they may not be much, but they’re non-zero) is worth getting out from under the listed repair costs, by all means, show your math.

  7. I was at that town hall meeting yesterday and went prepared to hear utter and complete B.S. The reality was much closer to what James Jerome described. In hindsight I should have factored in that Maricopa County is as inept and incompetent as any political entity in the country — including the City of Glendale and the Coyotes fiasco. I have little doubt that over time it will be revealed the County is the bad actor here and likely fired a calculated first shot on the belief the knee jerk public reaction would be to deem the D’bax just another greedy, overreaching sports franchise.

  8. Again, would love to hear details, not just innuendo. Are you saying that Maricopa is so inept that they actually put themselves on the hook for $187 million in upgrades despite the D-Backs not having an upgrades clause in their lease?

  9. Not sure I’d agree that fans won’t put up with long lines for concessions. Attended the home opener in Boston and my colleague stood in line for well over an inning for a beer. This echoes experiences at nearly every east coast park when the crowd is bigger than 30k.

    The concern about concessions could be more easily dealt with by waiter service to the seat, as premium seats have. Of course, this would mean employing humans, which might cost money.

  10. Is there any sign that Chase Field has inadequate concessions and restrooms (people eat and pee more than in 1998?), or are we just off on a tangent here?

  11. Landlords aren’t responsible for upgrades. They are responsible for what is agreed upon in the contract. This is especially true with commercial leases. Usually with commercial leases, the build out is by the tenant or negotiated by the tenant as a credit.

  12. Maricopa County may or may not be an incompetent landlord, but if so, that’s just another argument against public-owned sports facilities. But the Diamondbacks certainly weren’t willing to build and own the place, were they? Nor do they wish to own it now – they just want control. They obviously think they can make more $$$ controlling the non-baseball revenue than it will cost them in maintenance, or they wouldn’t be asking for it. And they get a $4 million headstart by getting out of their rent obligation.

    As for the supposed $187 million: that number would quickly dwindle to a much more reasonable figure once it is the team, not the county, that is on the hook. The likely result would be minimal upkeep and no improvements in the last few years of the lease. At which time the Diamondbacks will cry that they need another stadium because this one’s a dump.

    The only useful lesson from Phoenix and Glendale is: be smart like the sports teams, and avoid owning stadiums/arenas.

  13. Guys, I’m not advocating the use of public monies for stadiums or to subsidize professional sports, just trying to delve into the facts of this particular situation. The County commissioned the report that estimated the cost of work at the stadium through the term of the lease at $187 million, and it was the County that told the Diamondbacks that the County would not be able to fund its share of that cost. I agree this is a great example of why public entities shouldn’t own stadiums, but that’s not the point. If I rent a house and the owner tells me he can’t afford to fix the leaking roof, but I agree to take care of it then it’s reasonable for me to ask for a rent reduction. The Stadium District is in over its head and the Diamondbacks and City of Phoenix are giving it a way out — except what the District really wants is to keep the benefit of its bargain (revenue for non baseball events) while shedding its financial obligation for repairs/capital improvements. I still submit that once everything plays out we will learn that Diamondbacks aren’t’ the bad guys here.

  14. “The County commissioned the report that estimated the cost of work at the stadium through the term of the lease at $187 million, and it was the County that told the Diamondbacks that the County would not be able to fund its share of that cost.”

    If that were true, sure. But go look at the document I linked to above — not everything in it is a necessary cost of maintaining the stadium, and not everything in it is something that the lease requires the county to pay for. This is fundamentally about the Diamondbacks grabbing a three-year-old list of possible punch list items, and saying, “This would cost $187 million! Where’s our $187 million?”

    Though actually it’s worse than that, because the Diamondbacks’ letter says they should be allowed to break their lease if the stadium isn’t kept “state-of-the-art,” which the team owners say *can’t* be done even for $187 million. Their demand, initially at least, is “give us a blank check for anything we might like or we’ll sue you to let us leave.”

    If I had to guess, this will end up with the county agreeing to pay a higher share of the future upgrade costs (say, $100 million), and the Diamondbacks not extending their lease at all, and everybody will go through this all over again in a few years’ time.

  15. FYI, Maricopa County sent a long letter to the D-Backs yesterday spelling out how only $35 million of the 2013 list is a county responsibility, and the rest falls under either team operating costs or upgrades for things like suites and scoreboard that are the team’s responsibility (though they can tap into a separate stadium fund if they want, in exchange for extending their lease).

    I’ll upload the letter shortly, and post an update by tomorrow morning once I’ve had a chance to read through it more thoroughly.

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