County to D-Backs: If you’re going to be that way, maybe we’ll just sell your damn stadium

I learned long ago never to be surprised by anything that happens in the stadium world, but this is just bizarre:

The Maricopa County Board of Supervisors is contemplating selling Chase Field in downtown Phoenix to private, out-of-state investors, and will meet Wednesday to vote on initiating negotiations.

The starting point for the proposed deal, made public Tuesday, is a $60 million sales price. It would include keeping the Arizona Diamondbacks at the stadium through 2028 — the remainder of the team’s contract with the county — and potentially longer. A draft contract showed the county would retain a handful of perks like a stadium suite and premium parking, despite no longer owning the building.

Okay, let’s walk this back. Maricopa County, you may recall, is in the middle of a big-as fight over whether the public will pay for at least $187 million in improvements to the Diamondbacks‘ 18-year-old stadium, as the team owners want, or the team will pay for them if it wants them, as the county’s study that identified the wishlist spells out. Now, it appears, the county is preparing to wash its hands of the whole place and sell it to a shadowy investment group called Stadium Real Estate Partners II LLC, which has ties to investment banker Sorina Givelichian and Fannie Mae board chair Egbert Perry.

Givelichian and Perry don’t sound certifiably insane, so it’s hard to say why on earth they’d want to take on the stadium, since it’s unlikely they’d earn back even a $60 million investment, especially if the Diamondbacks make trouble with their lease, which they’re already doing. The investors issued a letter saying they hoped to create “a sports and entertainment district surrounding the facility [that] would further complement and enhance the downtown area and increase tax revenues within such sports and entertainment district,” which is a lot of nice verbiage but doesn’t exactly explain where the district would go or how big it would be — it’s a pretty tight squeeze around the ballpark, so does this mean them buying adjacent parcels or what? (The buyers’ letter of intent says the purchase would include stadium parking areas, but the page that’s supposed to show a map of the parcels is blank.) And does that “increase tax revenues” line presage a request for TIF tax kickbacks, or is it just a way to sweeten the pot for county board members voting on this?
It’s all extremely weird, and almost feels like a gambit by the county — keep threatening to sue us and we’ll just go ahead and sell your stadium — except then what’s in it for Givelichian and Perry? I really hope there’s more info after today’s county board meeting, because so far this doesn’t make a whole lot of sense.


17 comments on “County to D-Backs: If you’re going to be that way, maybe we’ll just sell your damn stadium

  1. My corollary to the “stadiums are a great investment” line often spouted by the pro-subsidy types has always been, “then the private investors should be trampling over each other to get a piece of that action.” Seems like this could (could!) be a great test of that scenario, personally speaking.

    • Exactly. It will also be interesting to see if the private stadium operator/owner is able to negotiate more effectively with the tenant…

  2. Neil: The “entertainment district” in question is probably the Legends Entertainment District, which really is just an assortment of god-awful billboards on buildings surrounding both Chase Field and the also-inadequate Talking Stick Resort Arena. There were plans for something more lively along Jackson Street (a street adjacent to these two stadia) but those were merely speculative before the 2008 recession. EJ

  3. One of the things I think cities/counties/states should do if they are bound and determined to keep subsidizing highly profitable sports businesses is create privately run agencies to manage the facilities.

    The agency hires it’s own CEO/Business manager, sets it’s own budgets and negotiates it’s own deals with tenants/sponsors/partners. It holds responsibility for it’s own performance.

    When quasi public agencies are created to perform this function (and then staffed with the halfwit cousins of the elected officials, generally at the helm), they tend to fail. If the agency is a privately run business it operates just as any commercial landlord does. If the agency/commercial real estate is managed badly, the person(s) responsible are replaced with more effective managers.

    I would still prefer that public funds stay out of private industry (it skews the marketplace generally, in the stadium game for entertainment options specifically), but if they continue to do so at least put the public interest on the same footing as the private… not in the hands of incompetent politicians and their near-unemployable cousins/appointees.

  4. Pardon my language but maybe their strategy is to be such a bad set of landlords that they force the Diamondbacks to buy the stadium from them at $100 mil.

      • Hi Neil,
        Per https://law.marquette.edu/assets/sports-law/pdf/MLB.15.pdf
        Stadium: Chase Field
        Date Built: 1998
        Facility Cost ($/Mil): $354
        Percentage of Stadium Publicly Financed: 75%
        Facility Financing: The Maricopa County Stadium District provided $238 million for the
        construction through a 0.25% increase in county sales tax from April 1995 to November 1997. In
        addition, the Stadium District issued $15 million in bonds that are being paid off with stadiumgenerated
        revenue. The remainder was paid through private financing, including a naming-rights
        deal worth $66 million over thirty years and the Diamondbacks’ investment of $85 million. In
        2007, the Maricopa County Stadium District paid off the remaining balance of $15 million on its
        portion of Chase Field. The payment erased the final debt for the stadium nineteen years earlier
        than expected

        • That’s just who paid for it, not who owns it. Also, the Marquette database is notoriously unreliable — draws a lot from public media sources, so the percentages are largely crap.

          • Hi Neil,
            How about http://www.ballparksofbaseball.com/ballparks/chase-field/ which shows:
            -Public Financing: 71%: .25% sales tax increase, $15 million bonds
            -Private Financing: 29%: Diamondbacks
            Is this good information or also crap?

          • All those are just up-front costs, so they’re garbage.

            However, Judith Grant Long has 76%, so at least the public figures are in the right ballpark:

            http://web.archive.org/web/20061012080214/http://policy.rutgers.edu/faculty/long/DataSeriesMLB1of3.pdf

  5. I wonder how often stadiums become such a headache that governments just want to get rid of them completely?
    I know in Canada the Ontario government sold SkyDome (now Rogers Centre, where the Toronto Blue Jays play) in the early-1990s because they didn’t want to deal with it anymore.
    The province was in a recession and the government that led the charge to build the stadium with public money was voted out. The new government commissioned a study that showed the only way to make money on the stadium was if there were like 500 days a year and SkyDome had an event on each of them. They decided to pay off the debt (I think it was close to $500-million in 1994 money) and take the hit to get rid of the headache since costs/debt had overrun by like 400% and they’d lose more money in the long run with eventual necessary repairs.
    I wonder if it’s better for governments trapped in a situation like Maricopa County to just ditch the stadium completely, admit they screwed up by investing in it, take the loss in money and have someone else deal with.

    • Each case will be different, but in general there are merits to adopting the “sunk costs” argument… namely that the money already invested should be considered irretrievably lost and not form any part of the justification/decision on further investment.

      • The one thing I’d be afraid of is after building the stadium, admitting the sunk cost and getting out while they can, the next government will build an even better and more expensive stadium. They could simply blame the previous government for wasting money, getting out before it was profitable and they’d handle it differently… That being written, I guess cities are already doing that. Hooray!

  6. The contract confirmed their worst fears.
    The D-Backs? They cried in their beers.
    Their opt out scheme failed.
    That upgrade boat’s sailed.
    They’re locked in for thirteen more years!

  7. Regardless of where this goes, give the county credit for not only asking such basic questions (is it a good idea to be in the ballpark business and how much can we get to get out) but hopefully causing officials elsewhere to start asking them, too. We’re in a bad spot when fundamental common sense is revolutionary, but it’s a start.

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