St. Pete may have traded Rays “don’t talk about moving” guarantee for a ticket fee it’ll never collect

Yesterday I noted that St. Petersburg Mayor Rick Kriseman had unexpectedly granted Tampa Bay Rays owner Stuart Sternberg the right to negotiate with Tampa about a new stadium, several months after declining to declare Sternberg in violation of his use agreement with St. Pete when he openly discussed the possibility of playing home games in Montreal. Since it’s been widely reported that the Rays’ agreement forbids even mentioning the idea of a move until 2027, I noted that this seemed like a big concession for Kriseman to grant in exchange for nothing, but Rays stadium reporter extraordinaire Noah Pransky set me straight:

This seemed wrong to me, so after some back and forth with Pransky on Twitter, I checked out the use agreement itself, which says:

That’s pretty cut and dried: During the term of the agreement (i.e., through 2027), the club can’t engage in any negotiations to play home games anywhere other than the Trop. It says nothing about allowing negotiations now to move the team in 2028 or later. (Section 2.04 doesn’t either, before you ask.)

Except! There have been a series of amendments to the use agreement, some before the Rays even moved in in 1998. And one of those, the Second Amendment signed on May 18, 1995, says this:

You’ll notice that this just inserts the clause “to be played during Term.” Which effectively created a loophole: Rays execs can talk to other cities about moving there, but they must limit their talks to being about a move after 2027.

What did St. Pete get in exchange for this 24-year-old concession? The only obvious item in the Second Amendment that was a concession to the city is an increase in the city’s fee for tickets sold over 3.3 million per year, from 25 cents per ticket to 50 cents per ticket. Which amounts to a value of, let’s see, absolutely nothing because the Rays have never come close to drawing 3.3 million fans, and in fact since the seating at the Trop was reduced in 2007, couldn’t draw 3.3 million fans now even if they sold out the entire season.

In other words, unless there was something else going on around that 1995 negotiating table other than the changes we can see in the resulting amendment, St. Petersburg is now stuck with eight years of Sternberg being able to talk all he wants about hightailing it out of town in 2028, all because somebody back then thought it would be nice to collect some extra cash from tickets that will never, ever be sold. (Or, more likely, then-Rays owner Vince Naimoli noticed that he’d signed an extra-restrictive no-relocation-talks clause, and asked the city nicely to revise it, and the city said, Sure, give us some worthless trinket in exchange.) That’s probably not the worst example of someone getting fleeced by the Rays, but it’s still not great.

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23 comments on “St. Pete may have traded Rays “don’t talk about moving” guarantee for a ticket fee it’ll never collect

  1. St. Pete wants to develop the land the Rays are on. They want to move forward soon. They want the Rays to let them know their plans. They don’t want a team on the land who is going to move in 9 years, possibly to a new city. If Bronfman get Basin Peel to fly (hard to say, they have the same issues as Oakland with its ballpark, getting neighborhood buy in, etc) Rays will move to Montreal. Mayor Castor better get on her horse to get a Tampa deal soon but last I heard they don’t have votes in the Hillsbourgh council.

    I truely believe when the Oakland ballpark deal is done, MLB will expand without the Rays being solved

    1. I agree with you about the land under the Dome and St Pete. One important part of this is the Rays also have developmental rights. If the Rays cannot find a suitable place in Tampa, maybe the deal will will be the Rays selling those rights back to the City for cash and the right to move out of the area before 2028? As far as Oakland is concerned, the word you are forgetting is IF as in IF the Oakland ballpark gets done. Although I will agree the A’s are closer then the Rays to a new stadium, it is not close to being a sure thing.
      In the cases of BOTH St Pete & Oakland we are talking about developmental rights of their teams current stadiums, and will the land be used for Affordable Housing, a Market Rate project or both?

      1. I will never stop hammering the point that the A’s can already build a stadium in Oakland — at the Coliseum site. The entitlements are in place and have been for some time. They are, rightly or wrongly, trying to exhaust their other and more preferred options before resorting to that though.

          1. The planning department, specific zoning, and infrastructure alteration approvals are already in place.

    2. Agreed. If MLB decides to keep the current divisional layout after expanding to 32 teams, it won’t matter where the Rays play as they’ll still be considered part of the AL East. Even if baseball were to radically reorganize the league around geography and dispense with the AL and NL, the Rays would be covered if they were in Tampa Bay or Montreal.

    3. Bronfman (Groupe de Montréal) with Devimco presented last week, in front of the OPCM (Montreal public consultation), their vision for the land of 2.3 km2 at Bridge-Bonaventure (known as Peel Basin). This process will result in a series of recommendations (by the OPCM on how the land should be used (by the end of 2019 or beginning of 2020).

      Ultimately, the City of Montreal can purchase a big part of the land (all the lots owned by the Government of Canada, the Canada Land Company) if they decide that it’s in the best interest of the city to take control if it.

      Keep in mind that an additional REM station (the new electric train) will probably be next of those lands in order to maximize the value of the lands (special property tax funding directly the REM, a $6B+ project for Phase 1) and increase the number of people using the REM (all financed by CDPQ, the organization that manage all the investments for the pension funds of the province).

      It’s in the best interest of the city and the governments (Canada and Quebec) to use those lands for major real estate developments considering their strategic location, just 15 min. walk from downtown Montreal and next to the Old Port.

      The Bronfman/Devimco project worth between $2B-$3B including the open air stadium of ~32 000 seats.

      We should have a very good idea of the overall project in the next few quarters.

        1. @GDub, there are examples where baseball stadium are at the hearth of major developments.

          Several papers, analysis and articles discussed this approach. They are all in french but Google Translate is your friend!

          Baseball: un maire, un stade, un fantasme?

          Les équipements de sport professionnel pour redynamiser des secteurs centraux – Page 32

          Expos 2.0 : Bronfman et son groupe sont prêts, mais à quoi?

          Oublions un peu le stade de baseball et voyons ce qu’il y aura autour

          1. Learning French is my friend!

            There’s not a lot new in the interpretation of these articles, which makes development basically a dependent variable solely of baseball stadium construction.

            In general, there is a fashion change favoring (when one can afford it) “downtown living” with access to restaurants and transit and downtown positioning for especially tech-oriented businesses. This has occurred in places with and without baseball teams (take Austin, TX–as one example).

            San Francisco is a complete urban outlier for a number of reasons. Washington DC is one of the hottest real estate markets in the country–with people moving to neighborhoods that are nowhere near the baseball stadium. Ballpark Village is well documented for its failed promises–and St. Louis is hardly a thriving city by any measure. None of the other cities show much more–and lots of older stadiums don’t seem to be promoting growth.

            Basically it all comes down to: if you are a city that is growing and becoming more prosperous, a baseball stadium probably won’t hurt. but won’t really change things much. If your city is on the decline and getting smaller, a baseball stadium won’t help and might reduce a city’s fiscal flexibility.

            Montreal is already a fantastic place to see. Losing the Expos didn’t make it worse or poorer. Getting them back won’t make it better or richer.

  2. The Rays aren’t moving to Montreal.

    What’s really amazing is that there are two teams basically there for the taking, no real interest in keeping them, and a giant collective yawn across the country about luring them.

    Are these conditions for non-MLS expansion?

  3. I don’t know much about the local Montreal fan sporting interest, but why don’t they pursue a NBA expansion team instead of MLB? Basketball has more international appeal than baseball, and Toronto showed a Canadian NBA team can be successful. NBA currently has 30 teams, and Seattle is waiting for the next round of expansion. Add Montreal and Seattle, and be done at 32 (like NFL and NHL).

    1. @Samuel Y, the NBA project is still moving on in Montreal. This is a long shot but at least, the Bell Center is already there, just a matter to have a team (expansion or relocation).

      Here is one of the latest update in french. Michael Fortier is the one managing this initiative.

  4. It is not clear to me how any landlord (or party to any contract) could restrict one or more of it’s contractual partners/tenants from seeking alternative arrangements to take effect after the existing contract has expired. This would be a version of the reserve clause (or form-C contract for you long time hockey fans…) for business partners rather than athletes.

    Barring any city/county held sole options, the Rays have always been free to make other arrangements for their first post contractual obligation season.

    The May 1995 amendment (at least as excerpted here) seems more like a clarification of terms than a legitimate change to the agreement.

  5. With all the smoke over the past few weeks, I’m beginning to think that it’s do or die time for the A’s and the Rays.

    I believe there are legitimate alternatives (Portland, Montreal) and there are semi-legit backup alternatives (Charlotte, Nashville, Vegas, Raleigh, Vancouver, etc.), with the desired end state being 32 viable franchises. These groups aren’t going to sit around and wait until 2027, and the other owners aren’t going to wait that long either for their expansion fees.

    1. To clarify, I don’t think Vegas is a legit backup but I felt obligated to list them since they’re in the news.

    2. “I’m beginning to think its do or die time for the A’s and Rays”.

      So, mission accomplished for Manfred and co then. Creating the illusion of emergency is really their core job description.

      There are likely a couple of ‘new’ markets that aren’t significantly worse than any existing market MLB is in. But I don’t believe there are any top 15 markets they could expand to (unless they go back to three NY teams). What the owners will have to decide is whether $1bn expansion fees (split 30 ways: $32-34m each, depending on whether the next two franchises come in one at a time or together…) is worth splitting the annual pooled TV, merch and digital media fees 32 ways rather than 30. On rough numbers, that means each owner takes $4-5m less every year (ignoring any net growth down to the two new teams… which they cannot be sure isn’t new revenue that would have happened with 30 teams anyway) in exchange for a one time payment of approx $33m.

      Does selling what amounts to a 10% annuity make sense to MLB franchise owners?

      1. @John Bladen, not sure you consider that 2 more teams will generate TV shared revenues for all existing 30 teams. By example, MTL will contribute significantly to this pool of revenues considering TSN/RDS (Bell Media) needs prime sports content and will pay a lot of money to get the TV rights.

        Also, John McHale Jr confirmed few years ago that the french content generated by the games broadcasts (TV and radio) will help MLB to expand MLB.TV in Europe and Africa on the long term. This is more shared revenues that will be distributed to the teams that are almost non-existant today.

        Continental US baseball market is kind of saturated and the only way to growth is to focus on new markets.

        1. Only 34% of local TV and radio money is shared with other teams. Even if that comes to, say, $30m a year split across 30 teams (assuming that new teams in Montreal and Portland wouldn’t cut into TV deals for the Jays and Mariners, which is probably overly optimistic), that’s still not going to make a significant dent in the figures John used above.

          1. I doubt that Rogers (Sportsnet) will be affected by a MTL team in Canada. The fact is that even the TV rights of the Jays may increase if MTL is in the same division considering the existing rivalry between the two cities (Leafs, TFC, Argonauts).

            It will be a Win-Win deal across Canada for sure.

            However, I do understand that the incremental revenues for two additional teams may be limited for the existing MLB owners.

            On another note, if a MTL team is re-using the Expos brand, don’t under estimate the impact of all derived products. Without a team, the Expos brand is among the best seller MLB brands for the past decade.

          2. Who gets merchandising fees currently from the sale of Expos gear? Did MLB retain ownership of the logos, or sell it along with the Nats?

          3. My understanding is that all Expos branding is own by the MLB, not the Nationals. So all 30 teams benefits 100% from those rights.

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