September 13, 2006

Additional Charges May Apply

The New Wave in Stadium Subsidies?

by Neil deMause

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The latest incarnation of Busch Stadium (#3, if you're scoring at home) opened this spring, and it's been a reasonable success as these things go: at a shade under 43,000 fans a game, the Cards have filled 90 percent of capacity, though they're actually selling slightly fewer tickets than last year. They're higher-priced ducats, though, so presumably Bill DeWitt and company are feeling good about being able to repay the $16 million a year they took on in agreeing to shoulder the bulk of construction costs for their team's new home.

But for the public that fronted the other third of the stadium money, this stadium, as the phrase goes, was to be more than just a stadium. Part of the draw that led Missouri legislators to approve public money for the project (St. Louis residents actually tried to vote down the funds, but were ruled to have waited until after play had resumed to file their appeal) was the Ballpark Village that the Cards promised to build on the site of the former Busch Stadium: shops, restaurants, condos, all the trimmings that are, according to legend, supposed to suddenly bloom once a stadium is installed, boosting your city's tax base, and revitalizing your dusty downtown.

As the Cards' website exults:

Construction of the New Ballpark will lead to the emergence of a fresh urban neighborhood--Ballpark Village--whose vitality will be drawn from the adjacent presence of major league baseball. In turn, Ballpark Village will enrich the game-day experience for millions of Cardinals fans and set-in-motion the fulfillment of downtown's potential for millions more. ... The Cardinals will be responsible for completing the ballpark and the entire ballpark village development including parking; residential units; office space; street level commercial and retail space; a baseball museum; and a major entertainment attraction such as a world-class aquarium.

Well, not exactly. As reported in Tuesday's St. Louis Post-Dispatch, it turns out that the Cards are now balking at moving ahead with the Ballpark Village unless they're granted sales-tax and property-tax breaks that could be worth upwards of $100 million.

Not that anyone should be surprised by this. Baseball teams have a long tradition of going back to the public till for more money once the shovels are in the ground--my personal favorite being the Seattle Mariners' ultimately unsuccessful claim that while they'd agreed to cover "cost overruns," Safeco Field's soaring price tag was due to "unanticipated capital expenditures," which were, of course, completely different.

The new Busch, though, was supposed to break the old soak-the-taxpayers mold. Aside from the Giants' Name-of-California-Phone-Company-Here Park, it was the first baseball stadium since Dodger Stadium in 1962 to be more than half paid for with private funds. Future baseball historians will likely look back on Busch III as the first stadium of the Revenue-Sharing Deduction Era: Once MLB started allowing teams to recoup 40 percent of their stadium costs through reduced revenue-sharing, Cards execs suddenly dropped their insistence that the public pay for the bulk of stadium construction, to be followed soon thereafter by the Yankees and Mets.

Great, right? Except that, as we've seen, stadium subsidy demands haven't gone away--they've just shifted to items that are off the revenue-sharing books. For the Yankees, it was free land, and getting rid of the four-percent-of-ticket-sales rent payments they would have had to make to the city under their pre-2002-CBA stadium plan. For the Cards, it was such items as a $45 million loan from the county, which can be "repaid" after 30 years by simply turning over title to the stadium, leading the late Doug Pappas to observe at the time, "Given the likely value of a 30-year-old stadium whose sole tenant will almost certainly be demanding a new facility, I hope those legislators aren't expecting a check... ." Hidden subsidies like these are just as much a subsidy as a pile of stadium cash, but with two big benefits to team owners: since they're harder to understand, they're less likely to push voters' outrage buttons; and they go entirely to boost your team's bottom line, while any money you spend can be devoted to categories that get that 40-cents-on-the-dollar revenue-sharing discount.

Which is why word of the Cardinals' latest tax-break demands should be such worrisome news not just to Missourians, but to baseball fans all over. Ballpark villages are part of the stadium proposals currently being floated for the A's (in Fremont) and the Marlins (in Hialeah). If the "industry standard" becomes that not only the stadium but the condos beyond the outfield wall should be eligible for hundreds of millions in tax breaks, it's going to be Katy, bar the treasury door.

I suppose one can hope that legislators will read the fine print before signing onto more of these deals, and make sure that teams actually commit to the entire project before any public money--tax breaks or otherwise-- is handed over. In baseball, there's always hope.

Neil deMause is an author of Baseball Prospectus. 
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