Author: Neil deMause

No, Juan Soto’s contract won’t raise Mets ticket prices (though Juan Soto’s bat might)

access_time personNeil deMause

Ever since news broke of Juan Soto’s record-breaking $765 million, 15-year contract with the New York Mets, I’ve been fielding messages from fellow Mets fans that come down to “WOOOO SOTO!” and “Great, now ticket prices are going to be completely unaffordable.” To which I’ve answered 1) yep, Soto is the best young hitter of his generation and 2) yes maybe, but not because of the size of the Soto’s contract, I wrote a whole book chapter about this!

The book in question was Baseball Between the Numbers, which Baseball Prospectus published in 2006 and which I contributed three chapters to. One of those was titled “Do High Salaries Lead to High Ticket Prices?”, and the answer was a mostly unqualified “no”:

When costs of doing business go up, they can affect prices — witness, for example, debates in recent years over the impact of high oil prices on food and other goods that must be shipped by truck or plane. But it’s not always that simple. Let’s say, for example, you’re building an automobile. If the price of steering wheels goes up, you might rationally boost car prices to compensate, figuring that you’d rather have a bigger profit margin on fewer sales than sell more cars but make less money on each one.

Steering wheels, though, are a marginal cost: If you sell fewer cars, you have to buy fewer steering wheels to put in them. Player salaries, on the other hand, are a fixed cost: If you sell only ten thousand tickets for Tuesday night’s game, that doesn’t mean you can employ fewer outfielders. The price point you select for your tickets, then, shouldn’t change: If you’re already charging the price that will bring in the most money, then raising ticket prices in response to increased player costs would be foolish. Conversely, if you think you can get away with charging more for tickets, you’d be foolish not to do so, regardless of what you’re paying your players.

And that’s not just a theoretical economic construct. Look at actual average ticket prices (in inflation-adjusted dollars) during the leap in salaries in the wake of the introduction of baseball free agency in 1976, and you can see that there was no obvious correlation:

What changed in the early ’90s that ticket prices started rising along with team payroll? As I wrote at the time, one huge factor was the wave of new stadiums that opened at the time:

In the stadium mania that followed in the wake of SkyDome and its brethren, team execs discovered that fans would pay unprecedented prices to gawk at the new retractable roofs and sample the garlic fries. … Eight of the top-ten single-season price hikes—and ten of the top twelve, and eleven of the top fourteen — came when a team was moving into new digs.

The one qualification here is that ticket prices do rise when teams get better, since it’s hard to get away with charging top dollar to watch a team in last place. And, obviously, Juan Soto should make the Mets better, because of the aforementioned “best young hitter of his generation” thing. So Mets prices should go up some in the coming years if Soto helps make the Mets an annual contender, just as they already rose some for the 2025 season riding on the high of the Mets’ unexpected run to the National League Championship Series.

But, importantly, this has nothing to do with the size Soto’s contract. If Soto had lost his mind and given in to his love for lemon ices and signed for half that amount — or if some inexpensive Mets rookie unexpectedly turned out to be a Soto-level star — you can bet anything that team owner Steve Cohen would still raise ticket prices just as much, on the basis of the fact that his team was still good and popular, even if he had managed it without digging as deep into his own pocket. And, conversely, if Soto falls victim to a wild boar and doesn’t produce as hoped, Cohen won’t be able to hike prices by much, no matter how much in payroll he’s on the hook for.

The problem of soaring sports ticket prices, as I noted in the BP book, isn’t with greedy owners trying to cover their costs — greedy owners will charge as much as possible under any circumstance — but with broader changes in the sports world, starting with stadiums that are increasingly geared toward attracting fans who are willing to pay extra for a luxury experience. (The only demographic segment to attend more games in the 1990s than the ’80s was households earning more than $50,000 a year — that’s about $120,000 in today’s dollars.) And, in addition to the stadium boom, there have been economic changes since the 1980s that have created a much larger sports fan base for whom price is no object:

“Certainly people in the upper half of the income distribution the last twenty years have done quite well,” said [sports economist Allen] Sanderson. “Those in the lower ranks have not, but those are not the ones that are going to sporting events.”

Massive economic inequality is still in force, and it’s still helping to create that market where during winning times, team execs can raise ticket prices through the roof without worrying about running out of fans who can afford them. (The same goes for, say, Taylor Swift tickets.) And that would be the case even if Juan Soto and other players were playing for six-digit salaries instead of eight-digit ones. And the windfall profits from those new stadiums packed with luxury suites and clubs are making it possible for team owners to offer record-breaking salaries. It may be less satisfying to blame Reagan-era SEC rules about stock buybacks than greedy athletes, but the numbers don’t lie: Baseball isn’t broken, our economic structure is.

 

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Rays owner, Pinellas County prepare to haggle over $1B stadium deal, but what’s on the table?

access_time personNeil deMause

On Thursday, as the St. Petersburg city council hearing on approving $287.5 million in Tampa Bay Rays stadium bonds toward a total $1 billion public subsidy was still underway, I asked this:

It's very clear at this point that the St. Pete council intends to vote 4-3 to approve city bonds for a Rays stadium. The big question: Then what? Will Stu Sternberg demand more money to fill the budget gap he's claiming? Will the county demand more money to flip one of its four opposed members?

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:55:04.676Z

On Saturday, the Tampa Bay Times provided some preliminary answers:

Representatives from the Rays and from St. Petersburg Mayor Ken Welch’s administration have met with commissioners this week to seek their votes. It’s still unclear whether the Rays remain on board. … Welch said Thursday that “significant issues” remain regarding the Rays’ stadium obligations, though the private sector could fill the funding gap.

Could it, though? Presumably any private investor would want some kind of tangible return on their investment — economic activity doesn’t feed the balance sheet — so that would have to be either something Rays owner Stu Sternberg would have to give up (naming rights, pouring rights, suites, etc.) that he could otherwise cash in on and pocket the money from, or something the city would have to give up. Unless this whole cost overrun claim is a dodge by Sternberg to counter demands from county commissioners for a better deal so they can end up compromising right where both sides started, in which case the Rays owner might be happy enough to find private money for it so long as he gets to keep his initial $1 billion.

As for what Pinellas County commissioners might compromise on:

[Commissioner Vince Nowicki] said he wants the deal renegotiated with more convention and meeting space, revenue sharing by the team and payouts each time land from the Gas Plant is sold.

That’s a fair modest ask, though “revenue sharing” could add up to a significant amount, depending on the details. But of course Nowicki is only one county commissioner, and Sternberg only needs to sway one of the four “no” votes to get his stadium bonds; anyone else likely to come cheaper?

“I don’t feel any pressure to approve something that I said was a bad idea the entire time,” [Commissioner Chris Latvala] texted the Times.

Nothing much to work with there. Who’s next?

[Commissioner Dave Eggers] said he was meeting with Rays officials this week with an “open mind,” [but] he said hewas not “overly optimistic.” [Chris] Scherer, a stadium deal skeptic who also is new to the board, has said he could be a swing vote. Neither Scherer nor Eggers could be reached for comment.

I could be wrong — I only know these four commissioners from what I saw of them at one webcast hearing — but after watching a whole lot of stadium haggling over the years, this feels like one that is going to be settled not on the basis of whether a $1 billion public stadium price tag is bad policy, but on how much in sweeteners the swingiest of the swing votes is willing to settle for at the negotiating table. That isn’t necessarily terrible — if the whole kerfuffle of the last two months ends up getting a smidge more for the public, it’s better than nothing. And ensuring that the Rays stay in town isn’t worthless, even if it’s probably close to worthless, especially considering Sternberg’s lack of other cities offering him a similar deal.

Still, if it turns out that Pinellas County residents voted in a commission majority opposed to handing over a pile of money to a local sports billionaire when the area is reeling from a devastating hurricane, all to end up handing over a slightly smaller pile of money and calling that victory, that’s not great, exactly. The county commission majority has the opportunity to play hardball and demand a significantly reworked deal, or even to scrap this plan entirely and tell Sternberg to go back to the drawing board. So far they’re playing it close to the vest what if anything they’ll settle for, but given that a one-vote majority is only as strong as its weakest member, it’s probably not worth getting your hopes too high.

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Jaguars owner invites city officials who gave him $775m in tax money to megayacht party, ethics aide says this is fine

access_time personNeil deMause

Jacksonville Jaguars owner Shad Khan held a holiday party on his megayacht last week, and invited Mayor Donna Deegan and members of the city council that in June approved $775 million in public funding for renovations to Khan’s team’s stadium. But no worries, this totally ethical, or at least within existing city ethics rules, according to, uhhhh, one of the mayor’s aides:

Carla Miller, who is a special adviser to Deegan and previously spent years as the city’s ethics director, said the per-person cost of the party stayed within the legal limit of what an elected official could accept by attending it.

“In this case, it was totally allowable,” Miller said.

Florida state law and city ordinances, it turns out, limit the value of any gift from a business that lobbies the city to $100, and attendees were allowed to bring a +1, so that capped the value per person at $50. Miller said a Jaguars representative — who surely would have no reason to fudge this just to evade illegal lobbying charges — assured her that the total value of the finger foods and alcoholic beverages served came to less than $50 per person, so all was copacetic.

It’s worth noting, though, that this ignores the 400-foot elephant in the room, which is the yacht itself. When you go to a party on a superyacht, you don’t go for the canapes, you go to hang out on a superyacht, but Florida ethics law doesn’t seem to factor that into the $100 limit. (One councilmember, Matt Carlucci, told the Florida Times-Union that he agreed the “optics weren’t the greatest” but that “if I turned it down, my wife would have been very disappointed.”) If the party had been held at a stadium suite during a game, say, presumably the Jags would have to factor in the value of tickets to the game; instead, Khan gets to use his $360 million boat as an ethics-free investment in schmoozing.

This is important not just because of abstract ethical lines, but because we have seen time and again how important informal social pressure is in encouraging local electeds to approve stadium subsidies even when their constituents are opposed, because everyone in the local growth coalition that shows up at these parties agrees that the business of local government is subsidizing local business. That makes the true value of an event like this invaluable to Khan, even if he didn’t attend himself (he sent his team president, Mark Lamping, instead) and only served domestic beer.

Another councilmember, Rahman Johnson, described the megayacht party as “an elegant, understated affair,” and the Jaguars and Khan as “a corporation and an individual who has contributed more to the betterment of downtown Jacksonville than anyone in our city’s history.” You can’t buy goodwill like that — or rather, you can, so long as you keep the food and drinks tab under $50 a pop.

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Friday roundup: Rays stadium back from dead, A’s Vegas stadium shambles forward

access_time personNeil deMause

In case you missed the live recap of yesterday’s St. Petersburg city council meeting, the council approved selling $287.5 million in bonds for a new stadium for the Tampa Bay Rays, reversing their vote of two weeks ago to hold off on the move. What happened is pretty straightforward: The two councilmembers who’d flipped to “no” votes two weeks ago flipped back to “yes” — while their stated excuse was that they were content that team execs were no longer calling the deal entirely dead, presumably it was more the recognition that this was likely now or never, as starting in January there would be two new anti-stadium-funding members of the council, and they didn’t want to be accused of dawdling too long like the Pinellas County Commission.

So what happens now? The county commission still has its slim 4-3 majority against selling its $312.5 million in stadium bonds unless Rays owner Stu Sternberg renegotiates the deal; at the same time, Sternberg and his top aides are insisting that they need the pot sweetened to cover the costs of the bond sale having been delayed, even though the original deal said it didn’t need to happen until next April. Historically, this usually leads to some serious haggling between team officials and whichever commission member they think they can flip — the only question is which one would be willing to flip for the cheapest price, and whether “okay, we won’t ask the county to pay for the cost overruns that we’re suddenly claiming exist” would count as a concession. (Okay, there’s also the question of when and if the St. Pete council will sign off on repairing the Tropicana Field roof so the Rays would have somewhere to play in 2026 and 2027, as they didn’t vote on that yesterday, but even if that’s delayed a bit, the team could presumably extend its stay at Tampa’s Steinbrenner Field into early 2026 without too much trouble.)

Or the county commission could decide to hold the line at its December 17 meeting and delay the bond sale again, or even reject it altogether, at which point, understates Mayor Ken Welch, “that sets us on a different path.” We’ll find out a week from Tuesday, but right now, the odds of Sternberg getting his $1 billion public subsidy deal or something close to it look a lot higher than they did a couple of days ago.

But enough about the Rays, already — other stuff happened this week, let’s get to it:

  • The Las Vegas Stadium Authority Board gave its final signoff to an Athletics stadium in Las Vegas after team owner John Fisher submitted a letter vowing that “members of my family and I are committing to contribute up to $1,100,000,000” to the project. The Associated Press called this clearing “the last major hurdle” for a Vegas stadium, which isn’t really true: The Clark County Commission still needs to hold its own vote, something A’s exec Sandy Dean said the team was in early stages of talks for; and, of course, Fisher still needs to actually figure out where to get that $1.1 billion — he claims he’s still looking for new private investors, but those seem unlikely to materialize at this late date, so he may need to decide on whether it’s worth committing a large chunk of his family’s wealth to building a very expensive stadium in what would be easily MLB’s smallest market. If he does, and if the county signs off, construction could start as early as next spring with a stadium opening in 2028, but those are still fairly major hurdles.
  • The Cleveland Browns hired a real estate consulting firm, as one does, to determine the economic impact of building a new stadium in Brook Park, and announced that the county would see an added five squillion dollars in annual economic impact (give or take a squillion). Cuyahoga County Executive Chris Ronayne responded with a statement that “economic impact studies commissioned by organizations with a vested interest often present overly optimistic projections that do not reflect the financial realities faced by local governments and taxpayers” and that “we’re going to have to throw a flag on the play.” (And we were so close to getting out of this without any football metaphors!) Still, this allows the media to portray this as “Browns study says five squillion dollars, city claims only three squillion, truth must lie somewhere in the middle,” which is why real estate consulting firms get paid the big bucks.
  • A city council vote on the proposed Philadelphia 76ers arena is expected by December 19, and Chinatown groups made a last-ditch effort to demand that the team owners increase their community benefits agreement from $50 million to $300 million. (Sports economist Geoff Propheter says this would be close to what Sixers owner Josh Harris would be saving in property tax breaks, at least.) Developers said at a hearing Tuesday that $300 million would be too much, but were open to a smaller increase; with the council seemingly set on approving the deal, we look to have entered the haggling over the price phase.
  • NYC F.C. held a groundbreaking for their new Queens stadium, now to be called Etihad Park after a brief but memorable spell being depicted as Naming Rights Sponsor Stadium. The city’s Independent Budget Office recently issued its long-awaited report on the cost of city tax breaks for the stadium, and determined that team owners Sheikh Mansour bin Zayed Al Nahyan and the New York Yankees will save $538 million via the site being exempted from property taxes, though it also notes that it could have saved all but $74 million of that money through other city tax breaks anyway. So, yay?
  • Washington Commanders owner Josh Harris (yes, same Josh Harris) and NFL commissioner Roger Goodell went to D.C. this week to lobby Congress to hand over the RFK Stadium site to the district for a potential NFL stadium, and Maryland’s two senators responded that they would demand that one of D.C.’s two Air National Guard squadrons be transferred to Maryland in exchange. This is officially peak haggling over the price, I think we’re done here, have a good weekend and see you on Monday!
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Liveblog: St. Pete council calls a do-over on its Rays stadium bond vote (UPDATE: Bonds are approved)

access_time personNeil deMause

The St. Petersburg city council is set to start its meeting at 1:30 pm today, and the best guess is that councilmembers are planning to approve the city’s $287.5 million in Tampa Bay Rays stadium bonds, figuring 1) this way they can get the approval done before new anti-stadium-deal councilmembers take office in January, and 2) if Rays execs don’t hash out a better deal that includes either more team money or promises to play temporarily in Pinellas County or both, the county will likely reject it anyway. So, kick the can into the county’s court, mixed-metaphorically.

But that’s only a guess! Tune in on BlueSky for running updates, or refresh this page for only slightly delayed updates. And/or watch below yourself!

In case you missed the beginning, it was just the announcement of the starting lineups.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T18:32:09.980Z

Hanewicz (a steady no vote) leads things off by saying it's not fair to hold such a major vote with hardly any notice for the public to be able to testify. Council goes 4-3 in favor of holding the Rays stadium bond re-vote anyway — got a feeling we're going to see a whole lot of 4-3 votes today.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T18:40:42.019Z

And the first public speaker says adding the Rays stadium bonds last-minute violates the rule that the council agenda has to be published a week in advance! Clearly somebody is trying to set up any council decision today to be called back by VAR.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T18:44:42.588Z

More public comments (assorted): "Now we're a major league city!" "Get this project underway!" "That's 86 acres that could be used as reparations to the Black community!" "It's like paying for a wedding when the Rays won't even say they want to get married!"

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T18:52:54.578Z

"We don't want to run businesses out of the community until they say they want to go!" "If the Rays and Hines truly believed this development was a winner, they would pay for it themselves!" "Thousands of new jobs!" "Albert Whitted Airport was damaged!" (Yes, there are other agenda items today.)

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T19:00:19.694Z

(For anyone new to public hearings: The public testimony almost never matters, since typically everyone on the council knows how they're voting going in. But it lets the little people feel like they're being listened to, that's nice, isn't it, because they have a hell of a time.)

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T19:03:16.065Z

First five (non-Rays) agenda items are up, good time to go to the bathroom or make yourself a quick sandwich.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T19:05:00.202Z

Haven't forgotten about you, the St. Pete council is still talking about seawalls. Couple more agenda items to go before we get to the Rays.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T20:22:38.022Z

And finally the Rays stadium bond item is up! Mayor Welch has even showed up for this, clearly something is afoot.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:33:27.033Z

Welch says "there is consensus" on the deal and the best thing to do is to move forward with the Rays bond sale. And now it's on to more public comment!

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:34:41.660Z

Public comments, round 2: "When your partner is out, don't borrow the money!" "I said I was a proud member of the concessions team for the Rays, but we all just got our termination letters today!" (She still spoke in favor of a stadium: "It takes wealthy people to contribute to our communities!")

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:40:17.356Z

Lightning round: "Visionary, world-class city!" "Bad partners!" Okay, that's all the members of the public who were able to show up on short notice on a Thursday afternoon and wait around for three hours, time for the councilmembers to debate!

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:46:00.209Z

Gina Driscoll, who reportedly added the stadium bonds to today's meeting agenda, says the deal is the deal; now it's just about deciding on whether to sell the bonds. Two weeks ago was a "moment of uncertainty," she says, but now "I feel pretty satisfied" that the Rays "are still in, and so am I."

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:48:15.188Z

Hanewicz: "Well, the Rays aren't here. We are about to approve — because I can count the votes — hundreds of millions of dollars, and they don't show up."

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:50:20.247Z

Hanewicz asks city administrator Rob Gerdes how much of a funding gap the Rays owners now face. He says he doesn't know.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:52:31.315Z

It's very clear at this point that the St. Pete council intends to vote 4-3 to approve city bonds for a Rays stadium. The big question: Then what? Will Stu Sternberg demand more money to fill the budget gap he's claiming? Will the county demand more money to flip one of its four opposed members?

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:55:04.676Z

John Muhammad: "The fear we would be somewhere like this is the reason I did not support that contract in the first place." He asks Gerdes again what the Rays mean that they "can't do this alone." Gerdes: "They're looking for ways to fill that gap" and, uh, private partners maybe? That always works!

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T21:58:39.982Z

Gabbard says she's voting yes, she wanted to vote yes last time: "Quite frankly, I think we're calling their bluff by doing so. … It'll be up to the Rays to go find other funding."

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T22:05:14.736Z

The "yes" votes are clearly trying to position this as "We need to just give them the $1B we promised them and not one penny more and dare them to come up with the rest," which is … a choice.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T22:06:08.717Z

Richie Floyd is a no, as expected: "This is not how I believe economic development should take place."

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T22:07:49.895Z

Deborah Figgs-Sanders says now that Rays execs no longer say the stadium is dead, she's ready to vote for it. It definitely feels like she and Driscoll were reacting to Silverman and Auld's letter by delaying the last vote, and now are placated there's still room to keep the original deal in play.

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T22:13:18.160Z

And the vote is 4-3 in favor of selling the city Rays bonds, as expected. The below still stands: Now wth happens? bsky.app/profile/fiel…

— Field of Schemes (@fieldofschemes.bsky.social) 2024-12-05T22:14:38.921Z

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St. Pete council sets re-vote today on Rays stadium bonds, but why?

access_time personNeil deMause

Yesterday afternoon I opened up WordPress and started a post that began like this:

And this just in:

The St. Petersburg City Council has scheduled a vote Thursday on whether to approve bonds to finance the city’s contribution toward a new $1.3 billion Tampa Bay Rays stadium and Historic Gas Plant District even as the team has said the project as proposed is no longer viable.

Council members received notice Wednesday morning that the item has been added to their agenda for the following day.

…and then pretty much stopped there. When the St. Pete council voted two weeks ago to put the Tampa Bay Rays stadium bonds — and any repairs to the roof of the team’s current stadium — on hold, it gave itself until January 7 to re-vote. So by deciding to hold a vote with more than a month to go until that deadline, it sure seemed like either two of the five councilmembers who voted against the bond sale were preparing to switch their vote, or the council as a whole was preparing to put a fork in this deal entirely. But with no indication on the council agenda of who had added the stadium bonds item or why, the tea leaves were especially thin.

The best summary came from DRaysBay, which didn’t know what was up either, but added a bit of helpful context, including that the city’s $287.5 million in stadium bonds would be paid off out of revenues that can be spent on anything the city wants, whereas the county is set to use $312.5 million in tourist tax dollars that are legally required to go toward things that promote tourism. (Sorta kinda, anyway — there are some exceptions.) It’s also worth noting that the council did not set a re-vote on repairing the Tropicana Field roof, which would imply … it’s anybody’s guess, really.

Vince Nowicki, one of the two new Pinellas County commissioners opposed to the stadium deal that was given preliminary approval in July, speculated that the city was “trying to strong-arm the county [by] saying, ‘Hey, you know we’ve done our part. Do your part,’” and suggested that Mayor Ken Welch is rolling the dice on a re-vote before two new anti-stadium councilmembers take office in January. Nowicki also said he met yesterday with “the president of the Rays” — he didn’t indicate which president — and had a “really great conversation” about how to “get to a better deal and a fair deal for the residents,” but added that he’s still a “no” vote until Rays owner Stuart Sternberg agrees to put more of his own money into the deal.

Looks like we’ll find out together what it all means, starting at 1:30 pm ET today. You can follow along on the St. Pete city YouTube channel (also embedded below), or check the Field of Schemes BlueSky account for live commentary.

UPDATE 9:08 am ET: The anti-stadium-subsidy group Home Runs Matter (formerly No Home Run) says it believes councilmember Gina Driscoll added the agenda item. Driscoll was a swing vote who voted yes to the stadium plan in July, then led the charge to delay the bond vote last month, saying, “I think we all need more time. We can save this deal.” Make of this what you will.

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Inside why Cleveland keeps having to throw good stadium money after bad

access_time personNeil deMause

One day after the Cleveland city council approved an additional $20 million in Cavaliers arena spending and Guardians stadium spending because the team’s leases say the public has to pay for it and the public repair fund had run dry, the Cuyahoga County council followed suit last night, approving $17.35 million in county money to buy the Cavs new elevators and a broadcast control room and buy the Guardians new HVAC units and repairs to a “subroof,” whatever that is:

Cuyahoga County will borrow $14.5 million to help Gateway Economic Development Corp. pay the repair bills at Rocket Mortgage FieldHouse and Progressive Field.

On top of that, the county is giving $2.85 million in General Fund dollars to Gateway, the nonprofit that owns the ballpark and arena and oversees repairs.

Those with advanced degrees in how money works will recognize that “borrowing $14.5 million” is not actually a way of explaining how one plans to pay for something, but it fills Gateway’s budget hole for the moment. Future generations of county officials will get to figure out how to pay it off, though one got a head start by explaining that really, at least paying for constant upgrades is better than build a whole new stadium, amirite?

County Council Member Dale Miller, in a committee hearing on the proposal in November, argued that spending on repairs was preferable to building new stadiums.

“The key to our continuing to be a big-league sports town is that we maintain facilities in good condition, so that we don’t have to replace facilities every 25 years or so,” he said. “I know they’re doing that in some other cities, but we don’t have that kind of resources here.”

(Ed. note: Cuyahoga County is currently considering whether to replace a Browns stadium that is exactly 25 years old.)

Yesterday I wondered aloud why Cleveland and Cuyahoga County are paying for constant upgrades, and today I have a partial answer to that: Former Gateway chair Ken Silliman kindly provided copies of the Guardians and Cavs leases, and it turns out they each have slightly different definitions of what the public is on the hook for:

This, needless to say, raises a lot of questions, some of which Silliman was able to shed some light on:

How come Gateway pays for all routine maintenance, capital repairs, and major capital repairs for the Guardians, but only major capital repairs for the Cavs? Both teams, Silliman explains, were on the hook for maintenance and minor repairs as of 2021. That was when the city and county approved spending $17 million a year on stadium upgrades in exchange for Guardians owners Larry and Paul Dolan extending their team’s lease through 2036; as Silliman puts it, “the Guardians were successful in assigning ALL ballpark capital repairs to Gateway as a byproduct of the lease extension.” So a blank check got considerably blanker, in exchange for the Guardians owners agreeing to stay put for an extra 13 years.

Why does anything over $500,000 count as a major capital repair? Doesn’t this 1) incentivize the Cavs to bundle repair items into bigger projects, in hopes of making them the public’s responsibility, and 2) mean that as inflation kicks in over time, more and more repair items would be expected to fall under “major capital repairs”? The $500,000 threshold dates back to the teams’ 2004 leases, and Silliman says he doesn’t know how that distinction between major and minor repairs was decided on. He says the team cheating by piling up small repair projects hasn’t been an issue — Gateway’s engineering consultant has to approve expenses — but inflation absolutely is.

Silliman also forwarded a memo he wrote last fall to the Gateway board in which he said:

This “elephant in the room” is the unprecedented post-pandemic two year spike in construction cost inflation which unfortunately coincided with Gateway’s obligations to fund two of its costliest capital repairs (Cavaliers’ vertical transportation/video production room and Guardians’ lower and upper bowl seat replacements). This perfect storm of events is a major contributor to Gateway’s present cash needs.

That’s potentially good news in that the post-pandemic inflation spike is now over. However, construction costs continue to rise, and sin tax revenues continue to fall, and that $500,000 threshold for which Cavs expenses the public is on the hook for is going to be a lower and lower hurdle, so, it’s not all that good news.

Finally, the leases say the teams can sue Gateway for damages if they don’t get their repair money on time. However, if Gateway runs out of money — which it would if the city and county stopped giving it more cash — it doesn’t appear that the Guardians and Cavs owners can sue the city and county, so it’s within the governments’ power to shut off the money spigot and dare the teams to break their leases and try to find better ones elsewhere, if they wanted.

Tl;dr: Cleveland and Cuyahoga taxpayers aren’t on the hook for all upgrades to the Cavs arena and Guardians stadium, but they are responsible for paying for an unlimited amount of a limited number of items. (Think of it like different infinities.) The city officials who first set this up back in 2004 are mostly no longer around, though the ones in 2021 who took on “ALL ballpark capital repairs” for the Guardians should be getting questioned about that, early and often.

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Cleveland okays taking money from minority business program to give to Cavs, Guardians

access_time personNeil deMause

The Cleveland city council voted 13-3 last night to provide $20 million in extra funding to the Gateway Economic Development Corporation for upgrades to the Guardians stadium and Cavaliers arena. Council president Blaine Griffin said that the cash will come from projects “in which we have already borrowed and do not need the money this year” — and if your ears perked up at that “this year,” you’re not alone. The money, which will be used for such things as upgrading elevators and broadcast equipment, replacing seats, and upgrading HVAC and video systems, will come from three sources:

  • $5 million in federal American Rescue Plan Act funding that was slated for a minority business program but not allocated yet.
  • $10 million from other bond proceeds that was intended for other projects that the council didn’t specify.
  • $5 million from Cleveland’s general fund, which one would think the city could have found something to spend it on.

The new spending is needed because the city of Cleveland and Cuyahoga County agreed in 2017 to give Cavs owner Dan Gilbert $70 million for arena upgrades and in 2021 to give Guardians owners Larry and Paul Dolan $285 million for stadium upgrades, both in exchange for lease extensions. While the money is coming from a ton of different sources, one slice is from the extension of cigarette and alcohol taxes (aka “sin taxes”) that were used to build the venues in the first place, and sin tax revenues are falling while construction costs are rising, resulting in a budget gap for Gateway that the city and county are left to fill.

Going by news coverage, it’s been unclear for some time now what exactly the team leases require the public to pay for — I’m digging around for the exact language and will report back here once I’ve located it. Crain’s Cleveland Business previously reported that if Gateway runs out of money and stops paying for required upgrades, however those are defined, “the teams could stop paying the $2 million in annual rent to Gateway or sue the city for breach of contract,” according to Gateway’s lawyer. (Again, it would help to see the actual lease language.) Griffin called the added $20 million in city spending approved last night “responsible” in order to avoid “having to pony up for expensive litigation” and ending up “with a stadium and trying to figure out an end user,” implying that the teams could leave if Gateway defaulted — though given the current Oakland A’s and Tampa Bay Rays situations, “leave for where?” is a worthy question.

The Cuyahoga County Council is set to vote today on more than $17 million of new spending of its own on Guardians and Cavs capital expenses. And this isn’t likely to be the end of it: There’s another ask for another $30 million in potential Gateway spending around the corner, and unless construction costs come down (ha!) or Clevelanders start smoking more, likely more budget gaps to fill beyond that.

City councilmember Jenny Spencer, one of the three “no” votes last night, put it this way at the council’s previous meeting last week:

“From the residents’ perspective, it always seems that when it comes to stadium funding, money just comes like a magic rabbit out of a hat. It just appears magically. Magically, we have $20 million in general funds available. But when it comes to other things the residents need, we don’t have the money.”

To which Griffin replied:

“Somehow, several years ago, this city made a commitment that they wanted teams as part of the economic engine in the central business district. There are some legal obligations that this city has with this lease.”

That “somehow” is doing a lot of work, huh? Griffin has been on the council since 2017, so presumably he knows at least a little something about how this sausage got made; instead, he’s staying focused on how Cleveland taxpayers will have to choke it down.

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Fisher needs to find another $250m in Vegas stadium money in his other pants

access_time personNeil deMause

The Las Vegas Stadium Authority is set to meet Thursday to discuss Athletics owner John Fisher’s latest paperwork about how he plans to pay for a Las Vegas stadium (spoilers: he probably still won’t explain it), and the big news is that the projected price tag has gone up from $1.5 billion to $1.75 billion, meaning Fisher will need to scrounge up another $250 million from somewhere:

The stadium’s projected $1.5 billion price tag has risen to $1.75 billion because of inflation and the addition of 70,000 square feet of ballpark features. New elements added during the stadium’s design phase include more clubs and suites, upgraded general admission spaces and player amenities. The A’s Las Vegas ballpark will be the first in Major League Baseball to offer under-seat cooling.

“The increase in the budget is due to combination of adding a variety of features to the ballpark along with general increases in construction costs,” A’s executive Sandy Dean told the Review-Journal. “The design process is iterative, and has been allowing us to add elements to the ballpark intended to make this a premier facility for Major League Baseball.”

Uhhh, under-seat a/c ducts have been part of the plan at least since March, so why is that adding $250 million to the cost now? More clubs and suites is nice, I guess, though they’d have to generate around $20 million in extra revenue per year to be worth an added quarter-billion in costs. And while inflation in the construction field is still an issue, a 17% hike in just nine months would be pretty remarkable.

In any case, thanks to the one good thing the Nevada legislature did while approving stadium subsidies in June 2023 — making all cost overruns the responsibility of the team — Fisher is now set to be on the hook for $1.37 billion in construction costs. He’ll get about $220 million of that back via property tax breaks and a ticket tax exemption, but that’s still a hefty price to pay for what would be MLB’s stadium in what the league’s smallest media market. We’ll maybe find out more on Thursday, well, probably not, but one can always hope!

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Rays to county: We won’t formally declare death of stadium deal, you first

access_time personNeil deMause

Previously on Rays: The Roof: “Congratulations on your shiny new $1 billion stadium subsidy!” Hurricane: Look what I can do! ROAR! “Hmmmm, maybe selling stadium bonds is not such a good look right now. Also, the team might play in the next county over, what’s with that?” “Not selling bonds, eh? Well, maybe we’ll just move!” “Really not selling bonds now.” “This deal is dead!” “Dead like you’re backing out of it and returning the cheap public land we agreed to give you?” “(silence)” “We know you can hear us even though you have your eyes shut and your fingers in your ears! What’s your answer?”

CUT TO: Tampa Bay Rays team president Matt Silverman, trying again with the whole letter-writing thing to see if he can get the tone right this time. No, Silverman writes, his co-president Brian Auld “did not waver from our commitment to the new ballpark project,” not even when Auld said “our agreement effectively died” when two new county commission members opposed to the stadium deal were elected before the bonds were sold. In fact, it’s Pinellas County, not the Rays, that “falls short” by not immediately approving the stadium bonds, writes Silverman, because team execs had previously made clear that they wanted bonds sold before the elections, even if they didn’t put that in writing “as a technical matter.” So the shoe’s on the other foot now, see?

There are many, many questions about this letter, especially coming after Silverman and Auld’s previous letter: For one thing, how did a multi-billion-dollar stadium project suddenly go from a slam dunk to unviable just because the bonds weren’t sold five months ahead of the deadline the team itself agreed on for doing so? (The previous Silverman/Auld letter said that even pushing back the bond sale by a month would result in “significantly higher” costs, but didn’t attempt to put a number on it.) The latest Silverman letter seems to imply that really he’s mad that Pinellas County commissioners stalled on approving the bonds — apparently because key commission members were cranky about Rays owner Stu Sternberg not prioritizing their county as the team’s temporary home while its hurricane-damaged roof was being repaired — long enough that the elections tipped the balance from 5-2 in favor to 4-3 against. If so, that’s got to be frustrating, especially if Tampa Bay Times columnist John Romano is correct that no one in the Rays front office saw it coming; but, you know, you still gotta stick the landing, and Silverman and Auld have only themselves to blame there — though they now say they obeyed the letter of their agreement by considering (and rejecting) temporary sites in Pinellas before settling on a stadium across the bay in Tampa, maybe that wasn’t the best way to win friends and influence people with a key commission cote coming up.

And yet, they are blaming the county, because at this point that’s the only thing left to fight over: Nuh-uh, I’m not the one pulling out of the deal, you are! This is a matter of both public posturing and legal maneuvering, since handing over the current stadium property for a bargain price was part of the stadium deal, but stays in place even if the stadium deal is canceled, but only if it’s the county or city canceling it. (If Sternberg backs out, he has to give back the land.) So we have a standoff, at least until some actual deadlines are reached — the county has another vote scheduled for December 17 and the city for January 9, but there doesn’t look to be anything stopping either government body from kicking the can back to the team at that point rather than give up and let Sternberg have his cheap land.

The latest Rays letter went over better with commission chair Kathleen Peters, at least, who replied: “Despite the Rays’ lack of political prowess of late [ed. note: ouch], I’ve always been optimistic about this project because of the great economic impact it could bring to our county. … I look forward to continued discussion with my colleagues about how this stadium can do just that.” That certainly sounds like she’s down for trying to convince one of the four county commissioners opposed to moving ahead with the stadium deal to change their vote; as for Silverman, he said the Rays “continue to wait for decisions and actions” by the city and county, so they’re not closing the door on anything either. NEXT WEEK ON RAYS: THE ROOF: How many development subsidies for their district will it take to flip one stadium vote?

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