Tampa Bay Times: What if Rays fund their stadium with private money like the Braves, uh, never mind

Just catching up with this Tampa Bay Times article from last Friday, which proposed a list of ways that Rays owner Stuart Sternberg could pay for building an $800 million stadium without either dipping much into his own pocket or dumping all the costs on taxpayers. As you might imagine, that doesn’t leave much else:

How about making the stadium a showcase for local food? Or using training facilities as a community wellness center? Or letting a culinary school use the ballpark’s kitchens? While we’re at it, how about a water slide?

How about a water slide! The article doesn’t actually explain how a water slide would help pay for anything, but moving on:

“You want those who use it and go there to help pay for it,” said Hillsborough County Administrator Mike Merrill, who is at the center of the Tampa-Hillsborough effort to study stadium financing options.

Getting warmer, but how exactly is “make users pay” going to work? After all, that principle has been used for everything from ticket surcharges (which mostly come out of team owners’ pockets, and so are a pretty good deal for the public) to kickbacks of taxes in a “stadium district” (which don’t and are not).

“We’re aggressively looking for private capital, private developers, to build a stadium,” [Hillsborough County Administrator Mike Merrill] said.

We’ve heard this before, too, but a private developer is only going to invest in somebody else’s stadium if they can get a cut of the stadium revenue, right? At which point Sternberg may as well just put up the money himself and repay himself with those revenue streams.

At SunTrust Park, which opened last year, the Atlanta Braves spent $400 million developing The Battery Atlanta, a multi-use destination next to the stadium with a hotel, two office buildings, 550 apartments, a theater and about 20 restaurants. Still, the public contributed $400 million toward a ballpark that cost $622 million.

Ayup. And closing libraries to help pay for it.

Tampa Mayor Bob Buckhorn recently outlined one possible scenario. The city could create what’s been loosely described as an entertainment district around the stadium. Inside the district, a surcharge on sales of food, drinks and merchandise could generate revenue that would be used to help pay off stadium construction bonds.

“Because a stadium is there,” Buckhorn said, “restaurants are going to do better, alcohol sales are going to be higher, T-shirt sales, whatever it may be. The hope is that monies generated by construction of the stadium — be it commercial, residential or retail — be used to pay some of the debt service on the stadium, so you shift the burden from the taxpayers to either tourists or to folks who are benefitting from the construction of the stadium.”

Okay, so there’s an actual idea! Not a great idea, mind you — local restaurants aren’t going to do that much better as a result of having a stadium open 81 days a year nearby, so you’re quickly going to run into problems of whether to raise the tax surcharge to pay off more of the stadium or keep it low enough so people will actually want to open more businesses nearby — but it’s something.

Variations include creating a community development district (there are lot of CDDs for suburban Hillsborough neighborhoods already) or a special district similar to what the Legislature approved this spring for the $3 billion Jeff Vinik-Cascade Investment project known as Water Street Tampa.

Those are very different models, so different that “variations” isn’t really an accurate term. CDDs are basically TIFs: Public improvements are repaid by the projected future rise in regular property tax payments, a plan that can fail in two ways — either if property values don’t actually rise that much, or if they just cannibalize development you would have gotten anyway, either on that site or elsewhere in your city. The Vinik-Cascade project is a special tax surcharge on property owners, which at least doesn’t dip into money the public would be collecting anyway, but which also presupposes a lot of property value increase just from a stadium being built nearby, which doesn’t have a great history of coming true.

“A stadium is a magnet for, arguably, development that might not otherwise occur,” Merrill said. “What you’re trying to do is assess growth, new development, within a district that benefits from a stadium.”

That’s one heck of an “arguably” there.

The problem, ultimately, is that Sternberg is trying to find ways to equitably slice up a giant piece of nothing cake: There are only two ways to pay off a stadium, and one is through the increased revenues that come in from one — which isn’t likely to pay off anything close to the full construction cost, because new stadiums are usually not good financial deals , and if it were Sternberg could finance it with something called a “bank loan” — while the other is with public subsidies. “Let’s charge all the business and property owners who’ll be riding for free on our stadium” isn’t a terrible idea — New York state is considering using it to build more subways — but given past Florida experience with baseball-related development, you might maybe want to temper your expectations a bit.

20 comments on “Tampa Bay Times: What if Rays fund their stadium with private money like the Braves, uh, never mind

  1. Regarding:
    “new stadiums are usually not good financial deals”
    which is why not a single tax dollar should ever go towards a new stadium. Let fabled ‘private enterprise’ take all the risk who of course will get all of the profit or loss.

    • Which in most cases they wouldn’t do, because it would be less “risk” than “throwing money down a hole.” Not all cases, certainly, but I can’t see a new Tampa Bay stadium throwing off nearly enough new money to pay off $800 million in costs.

      If your next question is “Why do the Rays need a new stadium if it’ll cost more to build than it’ll bring in in new revenues?”, yeah, good question.

        • Agreed. It gets a bad rap and, given what it is, yeah, you would be hard pressed to make the case that too many yards (maybe Oakland) are worse.

          But I don’t mind it. Most people who rip it seem to be folks who have never been there and are more opposed to the concept than the reality.

          (And while I have always thought the Hillsborough side made more sense, it ain’t gonna make so much more sense that it’s worth $800M. Are you freaking kidding me?)

          • That’s the key with many of these things. When did stadiums have to be perfect? I’m OK with the public paying for part of a teams first stadium, or replacing a hundred year old stadium. But it is that stadiums have to be on the forefront of architecture and technology that bothers me.

  2. “‘Let’s charge all the business and property owners who’ll be riding for free on our stadium’ isn’t a terrible idea…”

    “We’ll decide if you benefit, how much you’ll benefit and how much you should pay for that ‘benefit\'” … sounds pretty terrible to me.

    fwiw, I live in the Greater Tampa region and our CDDs are “a special tax surcharge on property owners”. Used to finance infrastructure costs attributed to development. “Okay, we figure your new home’s share is $X, so you have to pay $Y annually over the next 20 years.”

    • So the CDD charges fees on top of what would normally be paid for property taxes, not in place of them? I confess that I’ve now read a bunch of web pages on CDDs, and none of them explain this properly.

      • Well, we pay the CDD fee on top of property taxes. Because they take care of infrastructure costs that would otherwise be covered by property taxes I guess you could argue that they are sorta kinda in place of them. Essentially a way of targeting taxes at a neighborhood level.

        • Keith: Surely the cost of the infrastructure installed to support whatever development is intended on a given parcel is included in the cost of the lot (and thus in the price of the developed property on any subsequent sale).

          Are they charging you these fees for infrastructure improvements or for an amortized share of the original cost of installing the services?

          Seems like they are double billing you from what has been said here…

  3. Isn’t it odd how basically the same groups advocate for TIFF financing for new developments also decry any sort of general tax increase as a drag on the economy?

    In the same way a new baseball stadium (or arena or NFL stadium) will not generate enough new revenue streams to pay for itself, the “rising tide” argument in a TIFF or BRZ district around the stadium also will not raise enough to pay for the new stadium.

    If TIFFs actually worked they way their advocates (generally not the people paying the additional tax, btw) suggest, they could be used to fund the ballparks and the restaurants and bars.

    When is the last time you heard of a franchise owner agreeing to have the new publicly funded stadium they benefit from be part of a BRZ and pay property taxes (and surtaxes!) to support additional area development?

    How is it that these folks can argue against general tax increases on themselves while insisting on regional tax increases and surtaxes to fund their own business operations?

  4. This new breed of superstadia that are popping up all over the country seem designed to suck up as much money as possible by offering patrons every conceivable luxurious amenity within self-contained environments. How then do the developers get away with arguing that these new facilities stimulate economic growth in the surrounding neighborhoods?

  5. “How about making the stadium a showcase for local food?” One way to do a showcase for local food is to have restaurants and food trucks spead around the region and have them compete- and not tax them too much or have them undercut by billionares playthings.

  6. Doesn’t Tampa already have the Steinbrenner Center or whatever they are calling it as a stadium? I guess that doesn’t count as something that is development that “arguably” wouldn’t occur naturally but I thought that was heavily subsidized as well.

    I don’t imagine the Rays wanting to share a training facility with their division rivals….but it would make sense.

    I remember reading (on FoS) about a pizza (or something) owner in Detroit who was pissed because his taxes went up because of the Ilitch’s and his business went down. It’s like some of these politicians only have a job because they’re too stupid to be on reality tv.

  7. I had an odd dream that they redeveloped the Trop with an open wrap-around PTFE roof and moderate open-air cooling systems, and converted the left field area into a retracting stand that would have a sort of green monster for baseball, and slide out bleachers for football bowl games and soccer; the Rowdies would move in as co-tenants. Their waterfront ballpark would become a mix of public park and top-end residential and office space, while some of the space around the Trop would be developed by a city-Rays partnership, paying for the stadium works which would cost about $200m and also for Saint Pete’s share of the seed funding for a proper public-private owned transit system for the whole bay area, which would include as a minimum a fast transit link to downtown Tampa.

    I know, I know, I have crazy dreams. I also had a dream which featured both Scarlett Johansson and Field Marshal von Blücher.

  8. What has always made me laugh in Tampa is that it is NEVER considered by the local media that–given there are already two pro teams in the area, as well as a very vigorous and actively followed Florida college sports slate–MLB might not be very well suited to the Tampa area.

    The Lightning are doing OK and have a strong niche. The Bucs sell well when they do well…and sell poorly the rest of the time.

    Baseball doesn’t just need a nice stadium. It needs a wealthy client base and corporate customers that will buy a lot of tickets at high prices in a long season. I don’t think we’ve seen that in Tampa and Miami in 20 years.

    • The Rays have bounced around in the bottom third of MLB attendance, depending on how they’re doing on the field. While that’s by no means great, somebody has to be in the bottom third, by definition. There aren’t really any better empty markets out there than Tampa Bay, so unless you want to contract MLB back to 24 teams, is it so bad that the Rays and Pirates and Indians and Marlins are just never going to draw like the Yankees?

      • I agree that Tampa is no worse a market than Cleveland–however Cleveland has a 100+ year MLB tradition that it is drawing on. I don’t think if a team moved from Cleveland that MLB would say–there’s a market that we have to tap into, regardless of TV market size.

        I disagree with the general Tampa sports media take (previously expressed with the Bucs stadium), that a large, expensive stadium in Tampa will radically change the long-term fortunes of the team. There’s not much evidence that’s going to happen, even if corporate sales might slightly increase in a Tampa park. Tampa people like baseball, but they don’t seem to be willing to pay the MLB norm to watch it.

  9. I like how some mayors are now starting to challenge team owners by saying “If you want public dollars to support the construction of a new arena, then we need to share directly in the financial benefits.”

    However, what I really wish more mayors would say is “The reason sports arenas aren’t economically viable is primarily because you pay your players way too much money, and can’t generate enough revenue to pay both them and for an arena. That is an internal problem you need to deal with. Why are you asking for an external solution?”

    • You’re confusing fixed and marginal costs. Baseball teams have plenty of money to build sports stadiums with, regardless of what they’re paying players – they’re making money hand over fist, and those profits are rising even faster than salaries.

      New stadiums fail to be viable because teams wouldn’t make significantly *more* money by building them. If you’re turning a (for example) $50m a year profit and building a new stadium will cost $40m a year to pay off and bring in $20m a year in new revenue, it’s totally something you can afford – however, you’d have to be an idiot to do it, because you’d be $20m a year richer if you did nothing. Unless you can get somebody else to pay the $40m…

      • Indeed, “if you can get somebody else to pay the $40 million”. I just wonder how you get this to stop. I live in Calgary, and although so far our mayor has done a good job of dealing with the Flames ownership group, I have this bad feeling eventually they are going to agree to something similar to the heist Daryl Katz pulled in Edmonton (or be gifted a free arena to use as a result of an Olympics bid). And I feel completely powerless to do anything about it, with the exception of discussing it with people online. I am a hockey fan; however, I would be willing to see the Flames leave if it meant being a city that stands up to sports owners and says “no”.