December 16, 2004
I'm sure everybody has seen this, but it looks like the Expos move to Washington is in serious jeopardy. Apparently the now famous D.C. city council woman Linda Cropp refused to vote in favor of stadium financing unless the deal included private funding paying for half the actual stadium construction costs. According to Jim Caple, former Twins beat writer for the Pioneer Press:
Cropp's amendment to the stadium-financing bill is a modest and sensible one, requiring that half the actual construction costs of the ballpark be privately funded. Take away the estimated site acquisition and infrastructure costs and that's about $140 million -- a lot of money, sure, but only about one-quarter of what the overall package may wind up costing. It's a reasonable amount when you consider the city is still on the hook for finding a probable $450 million more.
$140 million. That's it, and it does sound reasonable. Read more of Caple's column for some good arguments in favor of this development. Truthfully I can't believe MLB is even fretting about this, but as Caple says it probably means MLB owners will make less money from this deal.
I would be lying if I said this didn't make me a little happy to see D.C. having this trouble. 10 years of stadium wars in Minnesota will make a person a little jaded. I seriously hope, though, that this demonstrates to Pohlad and the Twins organization that it is time to put some serious money on the table to get a stadium deal done here. I've said this before, but the $160 million requirement from Pohlad from the Ventura/Sausen plan of a couple of years ago would be a great starting place and would probably push a deal over the top in the state legislature.
Take a look at this quote from Pohlad in Charley Walters column yesterday:
"We've been losing about $15 million a year the last four years," Pohlad said. "And that's something you have to write a check for; you don't get any tax benefits for it. So you say, 'why should we pay a guy all that money?' Our guys now have to be smart enough to pick up new, up-coming talent."
Let me get this straight, Pohlad is willing to write a check for a $15 million dollar loss every year, but he is unwilling to write a $15 million check to help pay off stadium debt? I think you could easily make the argument that $15 million for a stadium would be a much better investment and one with far better returns. I guess my point is that with a new stadium the Twins would be more profitable. At least that is what they tell us. In fact, I would wager that they would be far more profitable. Instead of losing money they could easily make enough money to make up for Pohlad's $15 million loss and pay off the debt service for the stadium costs.
I spelled out yesterday a very basic model of Twins stadium funding. Right now the TIF contribution from the state would be about $110 million, maybe a little more with inflation. Add a $120 million upfront contribution from Pohlad and you get a total of $230 million. That leaves $270 million left on a $500 million stadium. If Pohlad payed off this $270 million in yearly installments at 6% interest, it would be about $19 million a year. Am I missing something here? Of course, $19 million year is more than the $15 he is paying now, but he would have his new stadium and most likely some new revenue streams.
If the D.C. plan falls through, and Sviggum's prediction for successful stadium legislation doesn't come to pass, it looks like contraction could become an option again. It looks like the owners could make a lot of money by killing even just one team. I am of the opinion that Pohlad doesn't want to go down this route again, but a lot can change in two years when the current CBA expires. Until then, I will keep grasping at straws and desperately hope that someone can figure this all out.
Posted by snackeru at December 16, 2004 8:39 AM | Stadiums
"Apparently the now famous D.C. city council woman Linda Cropp refused to vote in favor of stadium financing unless the deal included the owners of the new team paying for half the actual stadium construction costs."
Not sure how accurate that is - I've seen reports that Cropp has also stated that she might have $100 million in private money already lined up from a DC parking company. Of course, this money would probably be contingent on the parking company actually getting, oh, the profits from parking at the stadium, which means the team won't be getting it, which means MLB won't like it.
King Kaufman at Salon also does a little back-of-the-napkin figuring and comes to the conclusion that the concession made by the players union as part of the resolution of the last CBA might well be the best part of that deal for MLB, since it makes a lot more economic sense for the owners to just contract two clubs than find a buyer for the wandering Nextpos without the lure of a free ballpark thrown in. And with the union having bargained away their right to contest contraction, along with the MSFC no longer being able to use the Twins' lease as leverage, I think we might well be staring back down the barrel of the contraction shotgun after the 2005 season, especially if some other AL Central team finally knocks the Twins off the top of the mountain.
Posted by: David Wintheiser at December 16, 2004 5:30 PM
Thanks Dave. Actually my post is full of all sorts of inaccuracies. You're right, Cropp just wants 1/2 the money to come from private sources, not necessarily the owner(s). Also my calculations are a little off in terms of what the payments would be on a $270 million 30 year loan at 6% interest. The payments would be closer to $19 million per year. At 5% interest the yearly payment would be close to $17 million.
However, you are definitely right that contraction is again a real threat. We can't be sure that Pohlad would again offer up the Twins (why not the Marlins?) but you know that the Twins are going to milk this possibility for all they can when the time is right.
Thanks for your comment.
Posted by: Shane at December 16, 2004 5:52 PM
It seems that the situation is now resolved, and the Expos will be the neo-Nats after all.
Posted by: Kurtis at December 22, 2004 12:16 PM