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November 08, 2011
Red Sox earning $5m a year windfall on city handover of Fenway streets
The Boston Globe ran a long article yesterday by some Northeastern University journalism students (sadly, now behind the Globe's subscription paywall) that investigated a fascinating topic: How much has being granted control over the streets around Fenway Park on game days been worth to the Red Sox. Their answer: oodles.
Over the last nine years, the Boston Red Sox have increased their revenue by an estimated $45 million through the use of two streets that city officials handed over for a relative pittance: an average of $186,000 a year in lease fees.
Every home game, the Red Sox close off Yawkey Way, where thousands of fans congregate and, over time, spend millions at concessions before heading into the park.
Around the corner, the team has turned the air rights over Lansdowne Street into 269 expensive seats and 100 standing-room spots atop the Green Monster.
The leasing agreement, whose details have never been publicly reported, has been a bonanza for the Red Sox, because the city set the lease fees without taking into account how much money the team could make from use of the properties.
If the city had demanded a portion of the revenues, as is common in commercial ventures, the team would have paid the city millions more over the first nine years of the 11-year lease, according to industry estimates and an examination of city records.
For the math-phobic, $45 million over nine years amounts to $5 million a year in new revenues for the team from expanding out into the surrounding streets — which were declared "blighted" in 2002 by the Boston Redevelopment Authority and turned over to the Sox — for which the city is only collecting $186,000 a year in rent. The good news: According to the Globe report, the Sox' ten-year lease on the streets expires in 2013, and BRA director Peter Meade is currently seeking to renegotiate the deal to get the city a cut of the added revenues.
Still, it's yet another sign of the hidden subsidies that Judith Grant Long has noted add an average 40 percent to the public price tag of stadium projects. Something for Rahm Emanuel to keep in mind the next time Chicago Cubs owner Tom Ricketts asks if he can set up a game-day shopping mall on Sheffield Avenue.