By CP Staff
By Olivia LaVecchia
By Chris Parker
By Jesse Marx
By John Baichtal
By Olivia LaVecchia
By Jesse Marx
By Olivia LaVecchia
In Milwaukee, the situation is even more egregious. On paper, owner Bud Selig will contribute $90 million toward the proposed $250 million retractable-roof stadium scheduled to open in County Stadium's parking lot in 1999. But $40 million of Selig's contribution will come from stadium "naming rights" purchased by a local corporation. (In Arizona, such rights fetched $55 million from Bank One; General Motors has expressed interest in Detroit.) The rest of Selig's share will come from a $50 million loan given him by the state economic development authority. But Selig's prospective loan payments will be offset by another $4 million annual public subsidy to keep the stadium "maintained," even though most owners who have a stadium built for them then pay operating costs out of profits. In the end, it appears that Selig will never have to fork out a penny for his "private contribution."
What's more, legislators also gave Bud a plum unheard of even in the cozy world of stadium subsidies. The Brewers will get credit for 36 percent ownership of a stadium in which they have no cash investment, allowing team owners to depreciate $29 million against windfall profits over the next 30 years. Since the bulk of those taxes would have been paid to the federal treasury, you and I will help subsidize Bud.
According to a study by Milwaukee magazine, Wisconsin taxpayers will pay $688 million over 30 years for the ballpark; the Brewers' payments (counting interest) will amount to $157 million. In Cleveland, which used taxes and a lottery to finance Jacobs Field, the public will pay $500 million for the ballpark and infrastructure; the Indians, $168 million.
Here in Minnesota, the Pohlads--whose net worth has been estimated by Forbes at $845 million--are slightly more flush than Selig, whose only substantial investment is the Brewers. But Jim Pohlad hints that his family's contribution will resemble the more savory aspects of the Selig model. The poker-faced Pohlad carries himself with all the aplomb of an accountant--his chosen profession--but is comfortable mixing it up with a reporter. Early in our interview, he turned the tables by asking me how much his family should pay for a new stadium. When I responded, "All of it," he emitted what, for an accountant, qualified as a guffaw.
But a privately financed stadium is not preposterous. Legislators and owners in two communities have stared down owners, who have then offered to finance their own stadiums. San Francisco Bay Area voters turned down four successive stadium subsidies; finally, last December, Giants owner Peter Magowan announced he would spend $240 million on his own waterfront ballpark. And in Boston, Massachusetts legislators avoided tar and feathers last year by refusing to subsidize a successor to its 84-year-old icon, Fenway Park. This winter, Red Sox owners declared they would pay for a $200 million ballpark themselves. But then the Red Sox--profitable, debt-free, and venerated--cannot play the relocation card. States like Wisconsin, which lost the Braves in 1966, have capitulated to public subsidies. Minnesota is almost sure to follow suit. The question is how much, and how it will be funded.
"Well," I said to Pohlad, "If you won't pay for the whole thing, then $150 million." That earned a firm and serious headshake No. A figure of $100 million produced a cagey pause. "It won't be that much," Pohlad finally said, but his manner was much easier. The official figure will probably be close to that.
Quickly, though, Pohlad added that the private money "could come from many sources"--luxury box payments, pricey mezzanine seating, naming rights, and other revenues produced by the new stadium. Bill Lester, executive director of the Metrodome, says asking after revenue streams misses the point. "Who cares where the money comes from?" he says. "The important thing is how low we can get the public subsidy."
It's an attitude shared by many public officials. But one might ask why taxpayers need to involve owners at all if they throw nothing real into the deal. After all, the private gains are monstrous: The Atlanta Braves, who stand to pay a mere $23 million for a new baseball stadium funded largely by the Olympics, will watch their franchise value double from $122 million to $226 million, according to SportsValue, a newsletter published by New York-based Financial World. Although Braves officials called the study "meaningless," SportsValue detailed its calculations based on a lease deal in which the team will receive 100 percent of the revenue from luxury suites--by itself nearly $6 million a year--plus all stadium advertising monies, 92 percent of parking revenue, and additional millions produced by 5,372 club seats. Such estimates may be speculative, but the relationship between a new ballpark and a club's value is real: In 1993, the year after Camden Yards opened, the Baltimore Orioles sold for $173 million--after fetching just $70 million four years earlier.
In February 1994, Carl Pohlad made headlines when he told a WCCO-AM audience, "You can buy [the team] for $70 million." Let's say the public did. Despite bullish predictions that a retractable-roof stadium can be built for $250 million--at present, Arizona's $327 million project is the only one beyond the drawing-board stage--let's be fiscally safe and plan a roofless stadium costing $300 million. Throw in $70 million to buy the Twins, and the taxpayer is out $370 million, but owns an asset worth as much as $150-$170 million. The total public indebtedness would be around $200 million; taxpayers would also capture annual profits, and those naming rights, from new First Bank Field.