Category: Worcester Red Sox

The Great Worcester Andy Zimbalist Throwdown was so involved that I ended up writing a whole article about it elsewhere, but it ultimately came down to: Zimbalist, the former stadium subsidy skeptic who had started giving testimony-for-hire on both sides of the issue, insisted that Worcester would recoup its expense on a Red Sox Triple-A stadium via taxes generated by new housing that would spring up around it; and pretty much every other economist said it doesn’t usually work that way. “There’s a list a mile long of cities where it hasn’t worked. And there’s a really short list where it has,” said University of San Francisco economist Nola Agha at the time. “Is this development guaranteed? Is it going to happen regardless of if there’s a stock market crash or interest rates go up?”

So how’s that going, you ask, in the three-plus years since the Worcester stadium opened? Welp:

Following news that tax revenues for the independent Polar Park financing account fell short last fiscal year, with the account owing the city general fund $792,000, city councilors had harsh words Tuesday for a developer who appears to be falling short on his obligations to the ballpark district…

“They’ve gotten away with a lot and they’ve put us as a city in a pretty bad position at this point,” District 2 City Councilor Candy Mero-Carlson said.

The city’s stadium fund is supposed to collect property taxes, sales taxes, and building permit fees from development around the stadium, and use it to repay the city’s $146 million in stadium bonds. (It was supposed to be $106 million at the time Zimbalist endorsed the plan, but overruns happen.) But development has lagged as the result of rising inflation — which was largely thanks to Joe Biden’s sanctions on Russia and Bill Clinton’s deregulation of financial derivatives, if you’re keeping score — to the point where developers are now turning down the offer of tax breaks so they can walk away from properties entirely.

The good news, if Worcester city manager Eric Batista is to be believed, is that “we remain confident that the DIF will return significant funds to the municipality’s coffers as new development occurs and certain tax agreements expire.” The bad news is: Even that wouldn’t necessarily help ensure that Worcester taxpayers don’t lose their shirts on this deal. If some of the new housing construction that eventually arrives would have happened with or without the stadium; or if it cannibalizes housing construction that might have gone elsewhere in the city if not for the stadium; or if the cost of building schools for all those new residents adds more to the city expense budget than the new taxes add to receipts, then this could still be a money pit even if all the buildings around the stadium are eventually built, just like other TIF districts elsewhere.

The question now: Will the Worcester Telegram issue a retraction for the anonymous chamber-of-commerce-penned op-ed it ran last year (without fact-checking) claiming that Worcester will be different, because reasons? Your guess is as good as mine, and you can probably guess what my guess is.

A few weeks back, a reader sent over the results of an open records request they’d filed with the city of Worcester into how much the city government had paid Smith College economist and stadium-subsidy-critic-turned-sometime-stadium-subsidy-cheerleader Andy Zimbalist in 2017 an 2018 to consult on its campaign to build a new stadium to lure the Pawtucket Red Sox to Worcester. The total: More than $80,000, paid out at Zimbalist’s “substantially reduced” rate of $225 an hour.

After taking a moment to reassess my career choices, I decided to file my own open records request for emails between Zimbalist and the man who hired him for the project, Worcester city manager Edward Augustus, to see exactly what he did for that money. The first batch of emails arrived in my inbox last week, and here are some of the highlights:

• That $225 an hour “reduced rate” was apparently reduced indeed: Zimbalist repeatedly refers to his “standard consulting rate” of “$850 an hour,” including one email where he says he doesn’t need to be present for a negotiating session with the team owners, because “I have another consulting gig that I am doing and can expand my hours (at $850/hr).” Definitely nice work if you can get it.
• Zimbalist started off, at least, trying to help Worcester drive a hard bargain on its stadium deal. On January 17, 2018, for example, he wrote to Worcester chief development officer Michael Traynor that “I find the team’s response to be discouraging,” noting that PawSox officials made questionable economic assumptions, didn’t want to share any naming rights revenue or pay ticket taxes, “continue the upward push on stadium cost, AND THEY KEEP THE TEAM CONTRIBUTION AT $30 MILLION.” His conclusion: “I’m not sure what the next step is, but I think we have a lot of lifting to do.” And on March 23, he wrote to city officials warning that building a bunch of new retail storefronts around the new stadium could “cannibalize business from other parts of the city” — something he later acknowledged publicly when I spoke to him that September, though he dismissed the likely actual amount of cannibalization as unknowable.
• Between spring and summer, something clearly changed about the task at hand: By June, Zimbalist is focused on finding ways to sell more stadium bonds to raise additional city cash; by August, he’s responding “Bravo!” to a final agreement that saw the city put in more than $100 million in tax money while the team owners supplied just $36 million, not much more than the $30 million he’d decried in all-caps just seven months earlier. While it’s not clear from the emails what caused this shift — there are a ton of redacted emails from around this time, as the city’s hired-gun lawyer Jeffrey Mullan was getting cc’ed regularly, allowing the city to withhold those records by claiming attorney-client privilege — we can read at least one giant tea leaf: That June, the state of Rhode Island approved $38 million in subsidies for a new stadium to keep the team in Pawtucket. There’s no firm evidence in the emails whether this shifted Worcester officials into get-a-deal-done-now-now-now mode, but the timing is certainly interesting, to say the least.
• By August, as media coverage critical of the deal started appearing — Zimbalist and his city bosses specifically discussed a Worcester Telegram article that month that found no other sports economists who agreed with Zimbalist that this was a good deal for Worcester, as well as my Deadspin piece that followed soon after — Worcester CFO Thomas Zidelis asked Traynor to “loop Andy in on” media queries to make sure everyone is “singing from the same hymnal.” Zimbalist replied by offering to write an op-ed for the Worcester Telegram defending the stadium project, which was published just four days later. Interestingly, the op-ed included a disclosure statement that “I consulted for the city” on the project while his bio noted that he “was a consultant to the city manager for Worcester’s stadium proposal,” implying that he was no longer on the city’s books — though he was paid $11,883.01 for his work for the city for the month of August when he wrote the column, and city officials read over and helped revise it, two things that Telegram readers really should have been made aware of.

So, no guns that are smoking too badly, though that bit about writing an op-ed about a stadium deal without revealing that you were on the payroll of the city government that just signed the deal isn’t great. Mostly it’s interesting as a somewhat-redacted-fly-on-the-wall look at the inner workings of a stadium deal, and how quickly trying to hold the line and cut the best deal possible can turn into self-congratulatory celebrations of just getting a deal done, even if it’s no better than the one that looked crappy a few months earlier. I’ve been promised more emails that may or may not shed more light on the whole affair; I’ll report back once those arrive.

In the meantime, let’s enjoy this news from just yesterday about how delayed construction around the new Worcester ballpark has meant that the city doesn’t have the $2 million a year in new tax revenues it needs to siphon off to pay down stadium bonds, so it covered the gap by selling off public property instead. Bravo!

UPDATE: Just heard back from Zimbalist about his writing the op-ed while still working for Worcester city government: “here’s what I remember. one, I did not share my op ed w/ city officials for approval. two, the worcester telegram was aware of my consulting. three, my role was to get the best bargain for the city in the negotiations.”

I then pointed out that he had written to city officials before submitting his op-ed in August 2018: “I rec’d comments from [city lawyer] Jeff [Mullan] and [assistant city development officer] Steve [Rolle]. I assume that the rest of you are fine with my draft.” Zimbalist’s response to me: “i probably sent them a draft to make sure that I had my numbers right and did not misrepresent the negotiations or did not say anything that was confidential. I did not seek their approval of the editorial stance of the piece.”

Email records show that city manager Ed Augustus replied to Zimbalist’s 2018 email: “I think we can go as is with this Op Ed piece, we can also look at other ways to get the message out with other audiences in mind.”

Still waiting to hear back from the Telegram, will update further if I do.

One of the pitfalls of the modern internet age with its Meta Insights and Google Analytics is that once you know exactly how many people are reading each story, it’s really tempting to steer news coverage away from what’s actually news toward what will draw the most eyeballs. I can tell you, for example, that any story about the Chicago Bears is going to about boast at least double the number of readers as one about minor-league baseball — whether just mentioning the Bears in a headline and the opening paragraph does the trick, we’re about to find out.

Anyway, this is a story about minor-league baseball, but 1) it’s about the Worcester Red Sox stadium that is costing a minor-league record $150 million while the housing that was supposed to pay for it is scaled back and the whole thing looks like a giant shipping container and is poorly designed in its details, and 2) it features a math error worthy of Spinal Tap and NASA, so you’ll want to read this. No, don’t go wandering off to check NFL scores of teams like the Bears and Bills and (what other teams get a lot of clicks, oh right) Cowboys, stay right here, you won’t be sorry.

The story begins in an article in the Worcester Telegram about why Polar Park isn’t hosting any of the concerts the city had planned for it (if you can’t get around the paywall, Worcester Sucks and I Love It writer Bill Shaner has helpfully tweeted screenshots):

According to “Ballpark Project Fast Facts,” a document posted to the city’s website in summer 2018 that has since been removed, Polar Park “will” host “at least” 125 events per year, including 68 baseball games, “large-scale” events/concerts, road races, collegiate/high school sporting events, fireworks and other community events.

With the second season of the WooSox now finished, there has yet to be a single “large-scale” concert at the park, as originally promised…

“Polar Park replicated Fenway Park to some degree. And in Fenway Park, the only way to get to the center of the park is through a rolled-up doorway at center field that you can drive a vehicle into but, unfortunately, that is only 12 feet high, and large trucks that carry concert production are always 13 feet high or so,” [Worcester Tercentennial Celebration Committee technical consultant Jon] Rosbrook said. “So, consequently, at Fenway Park, all the big equipment stays outside on Lansdowne Street and is either lifted by crane over the Green Monster onto the field, or small pieces can be put onto smaller trucks that can be pulled through that doorway and then unloaded closer to the stage.”

There are other problems with hosting concerts at the ballpark — for one thing, because so much of its 9,508-seat capacity is on the outfield berm, which would be behind the stage, and limited fire exits for seating on the field, concerts there could only hold about 6,000, which is less than most major concert acts would want. But it’s the door mismeasurement thing that is hilarious, because apparently nobody bothered to check this during design and construction, and now it’s built in to a major part of the stadium structure:

And also because Edward Augustus Jr., who as city manager took charge of building this thing, is now downplaying the door issue as something that can easily be fixed, by, I’m not sure, maybe bending the fabric of space-time?

“I heard about the issue about the height thing. I definitely heard about that. Anything can be fixed or resolved. So I can’t imagine that’s a permanent problem. Something needs to be adjusted there. It should be adjusted,” Augustus said.

No, anything can’t be fixed! That’s the Second Law of Thermodynamics!

Anyway, not being able to hold dozens of concerts a year at the WooSox’ park is probably not that huge a deal given that no minor-league parks actually host dozens of concerts a year, but it is a reminder that promises of future events that a stadium will bring should be taken with an enormous grain of salt. And that’s about it, unless … sorry, are you feeling bait-and-switched by all those Bears mentions? Would you feel better if this post had something about the Bears, even if it was trivial, like Freedom of Information Act requests turning up exactly when in 2021 the Bears and Arlington Heights officials first started discussing moving the Bears to the suburbs? Nope, sorry, nothing here about that, this just isn’t that kind of article, go elsewhere for SEO tricks designed to lure you in with mentions of the Bears, Chicago, and the Chicago Bears. Oh, and Soldier Field, that too.

Back when Worcester was approving its $70 million subsidy (which eventually rose to more than $150 million) for a new minor-league baseball stadium to lure the Pawtucket Red Sox to town, and the city’s economist-for-hire Andy Zimbalist argued that it was worth the cost because of all the housing development that would come with it, I spoke with a couple other economists who’ve studied the impact of sports development projects to see what they thought of this line of thinking. What they said at the time:

“It really does depend,” says [University of San Francisco economist Nola] Agha. “There’s a list a mile long of cities where it hasn’t worked. And there’s a really short list where it has.” Her question for Worcester echoes that raised over a decade ago in Brooklyn: “Is this development guaranteed? Is it going to happen regardless of if there’s a stock market crash or interest rates go up?”

[College of the Holy Cross economist Victor] Matheson is less concerned about whether the tax revenues will roll in, saying Worcester is, like many urban areas since the recolonization of cities by young professionals, booming: “I don’t think this is going to be an El Paso, where they promised all this development and it still hasn’t come.”

Interest rates haven’t gone up, though they may soon, and gentrification hasn’t stopped being a thing. But the promised Worcester development is already starting to be scaled back: The Cove, a mixed-used housing project that was originally supposed to include 318 apartments, has been cut back to 173; and a planned pair of hotels totaling 262 rooms have been sliced in half to a single 125-room hotel. The hotel developer, Madison Properties, blamed the hotel world being “a lot different today” thanks to the pandemic, while a Cove developer blamed the high price of steel.

Worcester officials say they still expect the new developments to provide enough taxes to pay off the stadium costs — which is not the same thing as providing enough taxes to provide a net positive return for the city, given that residential taxes are normally supposed to pay for things like schools for the new kids who move into the new housing — but if it doesn’t, Matheson worries that the tax increment financing district may have to be expanded to cover more of the surrounding area, after already being expanded once in 2020 after ballpark construction costs went up when it unexpectedly turned out hills exist. This is the template for what subsidy expert Greg LeRoy once referred to as TIFs “eating the lunch of the general fund,” as the district where taxes are siphoned off to pay for development gets larger and larger, leaving less to pay for normal city operations.

Or, it could turn out that the development eventually happens more or less as originally projected, and then the only question is whether Worcester spent $150 million on a baseball stadium in order to get a bunch of housing that someone would have eventually built anyway, because the eastern Massachusetts housing market is so crazy hot. So many ways this Worcester Red Sox stadium glass can be half-empty, you need a scorecard to keep track!