County to D-Backs: Most of $187m in upgrade demands is items team agreed to pay for

Maricopa County responded to the Arizona Diamondbacks owners’ demands for at least $187 million in improvements to Chase Field plus maybe additional tax subsidies with a letter of their own this week, which you can read in its entirety here. The key bit, though, is this:

Screen Shot 2016-04-12 at 3.17.25 PMTranslated, this means: Okay, you keep saying our 2013 study of possible repairs/improvements to Chase Field lists $187 million in needed work. But $55 million of that is your own operations and maintenance expenses, and another $90 million is wish-list stuff that is explicitly excluded from the county’s obligations. So, WTF?

I also asked a county representative about that “Non-Obsolescence Fund” that the Diamondbacks can draw on if they agree to extend their lease: Right now it has a whopping $460,000 in it, so that’s not really worth worrying about.

To my knowledge, D-Backs execs haven’t yet responded to this letter — but then, they wouldn’t need to, if their concern is less legal niceties than trying to drum up an urgency to fix their stadium situation out of thin air. Whether Maricopa County stadium officials see this as a crisis or not, the media certainly does, which means elected officials are likely to as well, and that can be enough to set the ball rolling on hundreds of millions of dollars shifting pockets. A contract may be a contract, but when you’re seen as a 700-pound gorilla, you don’t need to sweat the fine print.

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.

Diamondbacks owners to taxpayers: Give us blank check to upgrade 18-year-old stadium, or we’ll sue to move

Hold onto your hats: The owners of the Arizona Diamondbacks have issued an ultimatum to their Maricopa County landlords, saying unless taxpayers agree to upgrade or replace 18-year-old Chase Field, they could move the team out of town.

We are not prepared, nor are we willing (or obligated), to expend $187 million, or any monies, to solve the deficiencies the District acknowledges exist.

So there is not misunderstanding, we would very much like to remain in downtown Phoenix. However, if the District makes that impossible, the principals of the Diamondbacks will look elsewhere.

Now, there’s one small problem with the D-backs threatening to bolt Phoenix: They have a lease that requires them to stay put through 2028, and prohibits them from even talking to other cities until 2024, a la the old Tampa Bay Rays lease. To get around that, the team owners repeatedly cite the need to maintain a “state-of-the-art facility,” something they say the county is failing to do by not spending that $187 million for upgrades to such things as lighting, improved luxury suites and scoreboards, and enhanced video surveillance. The problem with that is that the county doesn’t appear to have actually put a state-of-the-art clause into the Diamondbacks’ lease — something team officials try to get around by listing all eleven times that the county mentioned a “state-of-the-art facility” in its annual financial reports:

Screen Shot 2016-03-25 at 7.21.18 AMWe’d already heard hints that the Arizona Diamondbacks execs might be seeking upgrades last month, when team CEO Derrick Hall declared Chase Field to be “too big” for the ideal modern baseball stadium. (Translation: Fans won’t run out and buy high-priced tickets ahead of time because they know there will always be plenty available.) The new letter significantly ups the ante, though, declaring that even $187 million in needed upgrades wouldn’t be enough:

Even if the District had been able to identify adequate financial resources to fund the $187 million anticipated maintenance and repair costs, it would make no economic sense to make that investment in what would then be a 30-year-old facility. This should not rule out the possibility of retrofitting Chase Field if it is determined to be the best option. However, the $187 million would cover only basic maintenance and repair costs. It would do very little to upgrade the stadium to a “state-of-the-art facility” — it would mere enable an aging building to remain open.

The letter also includes much whining that team owners spent all this money on this stadium that their team plays in and they get all the revenues from, and this is the thanks they get? Oh, and that “if permission is not granted [for the team to move if it decides upgrading Chase Field isn’t feasibly], we will ask the Court for all appropriate relief.”

In short, then, this is a shot across the county’s bow: We know we have a lease, but we think you should pay untold hundreds of millions of dollars to upgrade it or maybe replace it, or else we’ll move, and if you won’t let us move, we’ll sue you. It’s the mother of all nastygrams, and like all such missives, it’s meant less to spell out legal niceties than to intimidate the recipient into talking about ways to make the issue go away. If the public discourse around the Diamondbacks’ stadium demands shifts in coming weeks from “Wait, didn’t we just build them one?” to “How much does the public have to spend to keep the team owners happy?” then you’ll know it has done its job.

Diamondbacks CEO: Our 18-year-old stadium is too big for these kids today

Whoever had the Arizona Diamondbacks in the “Which MLB team will follow the Atlanta Braves as the first to seek to replace their not-yet-20-year-old stadium?” pool, you’re a winner! Maybe:

“There has been a lot of speculation over the years and that is because our building is too big,” Arizona Diamondbacks CEO Derrick Hall said, on the “Doug and Wolf Show” on Arizona Sports 98.7. “I mean, to have nearly 50,000 capacity for this market is too much and at the time, I understand why we built it that way. Coors Field had just opened, it was that large and filled up each game. It is hard to believe we will be the fourth-oldest facility in the league.”

KSAZ-TV’s interpretation of this is “We wanna new stadium!” which may be overstating it — Hall has been hinting at wanting renovations to Chase Field for a few months now, and ripping out some seats and replacing them with clubs or ferris wheels or delicious nougat would certainly qualify, especially since the Diamondbacks haven’t drawn anywhere close to capacity in recent memory. But with the Suns and Coyotes looking at getting a new arena or two, the Diamondbacks owners would be foolish not to at least have their own “me too” plans in the works, so you never know. Let’s just hope that whatever happens, nobody gets shot over it this time.

D-Backs want county to sell stadium to city so they can get lease breaks

Just when I thought there was nothing new under the sun in the stadium game, there comes this: The Arizona Diamondbacks are trying to boost their profits by getting their landlord, Maricopa County, to sell their stadium to the city of Phoenix.

How would that help the D-Backs’ bottom line? Well, the team would no longer have to pay $4 million a year in rent and maintenance expenses to the county; instead, they would “pay Phoenix rent, the amount of which has not been determined,” in the words of the Arizona Republic. But the team owners also want more control over how to spend a capital improvement fund currently controlled by the county, and more control over non-baseball events at Chase Field — plus, possibly, to reduce seating in order to create more seat scarcity at the 48,000-seat stadiumand allow the team to charge higher ticket prices, something that’s drawn the ire of former Phoenix mayor Skip Rimsza, who charges that this would violate promises that the D-Backs would keep some seats inexpensive when they got $238 million in tax money to help pay for construction.

The Republic also chimed in with its own thoughts on the seat-scarcity issue:

The Diamondbacks have boasted about keeping tickets affordable. The team’s $15.74 average ticket price this season ranked second-lowest among major-league teams…

But those low ticket prices also hinder the team’s ability to spend money on players. The Diamondbacks have one of the lowest payrolls in baseball.

Arrrrrrrrrrrrrrrrrrrrrrrrgh.

First off, let’s dispense with the notion that sports teams operate by throwing all the money they make into a huge bucket, and then spending it all until it’s gone. Most team owners are fabulously wealthy, and have the cash reserves to spend an extra $10 million on an outfielder if they think it’ll help the team — and more important, help sell tickets.

And that’s the key point: When behaving economically rationally (the usual caveats about rational sports owners apply, obviously), owners will spend money on players when they think it’ll help produce enough in profits to pay for the added cost. And while more expensive tickets certainly help (it’s tough to pay for a big free-agent signing one $5 ticket at a time), fewer seats hurt, because it’s tougher to recapture your investment by selling tons of tickets once you’ve built a pennant-winner. (You can raise prices even more once the team is good, obviously, but you can do that whether your stadium holds 40,000 or 48,000.)

So what’s driving the D-Backs to cut payroll? Nothing — in fact, the team added nearly $20 million in payroll over the last winter. They’re certainly not spending like the Yankees and Red Sox, but they’re not going to unless they can convince Maricopa County to sell their stadium to the city of New York, not Phoenix.

In any event, this looks like the very early stages of negotiations — in fact, if I’m reading between the lines correctly, it was Rimsza who broke the news after learning of the talks. Why the Diamondbacks would need to orchestrate a transfer of ownership just to get some lease concessions — or, for that matter, why the city would be more willing to give up some rent payments and control over the stadium than the county would — isn’t exactly clear at the moment. But if nothing else, this is probably the first sign that with a now 14-year-old stadium, the D-Backs are preparing to get back on line for more public aid, now that the initial excitement of getting the last round has worn out.

Selig, D-Backs endorse Cubs stadium TIF

Baseball commissioner Bud Selig has officially come out against an Arizona-wide ticket tax scheme to help fund a Chicago Cubs spring-training stadium. In doing so, Selig joins every other team in Arizona, who would rather not be helping to foot the bill for their rival’s new home, no matter how many Cubs fans boost the gate at their spring games thanks to the team’s presence in Arizona rather than Florida.

Selig says he’d rather see a tax-increment financing scheme. The Arizona Diamondbacks agree, which should be no surprise given that a TIF was their idea in the first place; however, team president Derrick Hall hedged a bit, saying, “We would be open to [a TIF], but believe the legislators are not in favor of it. … We are just seeking other solutions so as to not tax fans who attend any and all spring games.” In other words: We don’t care who you tax, Arizona legislature, so long as it ain’t us.

Cactus League teams balk at helping fund Cubs stadium

The city council of Mesa, Arizona, agreed last month to put a vote on the November ballot on building a new $84 million spring-training home for the Chicago Cubs, who otherwise were threatening to move to Florida. This isn’t that unusual: Baseball teams move their spring facilities all the time, which makes for lots of opportunities to set up bidding wars for stadium subsidies.

Where it gets interesting is in how Mesa has proposed to fund this one: Partly with a rental-car surcharge, but partly with a leaguewide ticket tax on Cactus League games, on the argument that since the Cubs are the league’s biggest draw, the other teams in the league should chip in to keep them around. (Most economists will tell you that ticket taxes generally come out of team owner pockets, as they’re prevented from raising prices as high as they would otherwise.) The rest of the league, unsurprisingly, is not too thrilled, and several teams are openly opposing a ticket tax to help the Cubs — including Jerry Reinsdorf, owner of the rival Chicago White Sox, who play in Glendale.

Mesa Mayor Scott Smith replied: “Is this the same Jerry Reinsdorf that skipped out on Pima County taxpayers who had spent tens of millions of dollars to provide him with a taxpayer-funded stadium, to come to Glendale, where Maricopa County taxpayers provided him a Taj Mahal spring-training facility?” Noting that Reinsdorf also has a publicly subsidized stadium in Chicago — one that he got by threatening to move to Florida — Smith added, “The irony is delicious.”

The Arizona Diamondbacks are opposed to the Mesa deal as well, and baseball blogger Brandon Larrabee can’t help but note that they’re “an interesting addition to the Arizona anti-tax crowd, given that their own stadium tax was so controversial it got a Maricopa County Supervisor shot.” By a crazy guy, admittedly, but if you want to take it as a cautionary tale, be my guest.