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Business Observer Friday, Aug. 14, 2009 9 years ago

Baseball Bonanza

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Spring training baseball contracts come in all shapes and sizes as demonstrated by the sharp, creative differences between the Baltimore Orioles and Boston Red Sox local contracts.
by: Jay Brady Government Editor

Spring training baseball contracts come in all shapes and sizes as demonstrated by the sharp, creative differences between the Baltimore Orioles and Boston Red Sox local contracts.


Who won in the grandly expensive game of spring training musical chairs? It's hard to tell.

Spring training negotiations in Lee and Sarasota counties went into extra innings. Both counties finally got their teams — the Red Sox remained in Lee and Baltimore's Orioles are flocking to Sarasota from Fort Lauderdale. But both are paying a dear price for the privilege.

The debate over who got the best deal and whether it was a wise investment of public dollars will continue to play out over the ensuing decades.

Lee County's top objective was to keep the Red Sox. They accomplished that. Their secondary objective was to woo the Baltimore Orioles to take over the City of Palms Park near downtown Fort Myers — the site the Red Sox will be vacating after 2011. They failed at that.

Sarasota County's objective was to keep the Cincinnati Reds. They failed as the Reds signed on with Goodyear, Ariz. Their next objective was to find a replacement, which they tentatively succeeded in with the Orioles. On July 22, Sarasota approved a memorandum of understanding with the Orioles.

It's not a final contract, but it is very close unless some legal challenges disable it.

(This puts a little egg on the prophetic face of Lee County Commission Chairman Ray Judah, a self-confessed baseball junkie, who predicted last February: “I'm 99.999% sure we're going to bring the Baltimore Orioles here.”)

In contracts, the devil is always in the details. So the Review closely examined these teams' contracts, along with the Minnesota Twins', also in Lee County, and found widely different approaches, surprising provisions, expensive taxpayer commitments and no clear winner.

It was an expensive battle that did not change much, but cost a lot.

Bet is placed
The key to these being deemed successful is that the tourists will flock to Fort Myers and Sarasota in droves.

A new economic impact study of spring training claims out-of-state attendees who indicated “attending spring training” was their primary trip purpose accounted for 76% of total spending of $752.3 million for the 2009 Florida spring training season. Another 11.3% of the total spending came from fans living in the state, but traveling from another county to see a game.

Lee County placed an $80 million bet, backed by a 1% bed tax, that the Red Sox were worth it. The Sox drew 117,832 fans this spring for 15 home games. Those attendance figures put them near the top of the rung for Grapefruit
League fan support, though they weren't even the top draw in Lee County. Their South County neighbors, the Twins, drew 122,555 for 17 games.

Sarasota County was used by Boston as a bargaining chip while flirting with moving to Sarasota last year. The county put up $23.7 million, the primary source being $20.7 million of tourist tax dollars from a half-cent tourist tax as part of a $31.2 million offer. Another $3 million comes from non-property tax sources in expectation of 430 jobs and $49.3 million in total local area expenditures.

And with budget woes conflicting with stadium maintenance costs, the city of Sarasota decided that handing over its stadium property to the county for a $1 was a wise move even when it meant paying for possible cleanup costs for the old dump site.

But the deal with the Orioles nearly unraveled when $7.5 million from the state nearly slipped through the locals fingers. The city and county had to plead for the state to transfer the grant to the county. Had the county not been made eligible for the state funds, it would have been a deal killer.

Devilish details
Beyond the $56.3 million difference in upfront spending between Lee and Sarasota counties, the two deals are vastly different.

The Sox get an HOK-designed 9,999 seat ballpark (plus 800 berm spaces) complete with a “Green Monster,” the iconic 37-foot green wall that looms over left field at Boston's Fenway Park. And the Orioles get a renovated Ed Smith Stadium with up to 7,500 seats and berm/boardwalk seating for another 2,000, a vast improvement over much maligned Fort Lauderdale Stadium.

The O's also must spend money, along with the county, upgrading Twin Lakes Park practice facility for the Oriole's minor league team. A unique part of the agreement calls for a Cal Ripken Youth Baseball Academy and youth tournaments to be established there, but it's a bit iffy — the agreement says it's all “dependent on raising the necessary funds....”

Perhaps not so uncertain if you're willing to take the most dependable player in baseball history (record 2,632 consecutive games played), hall of famer, and former Oriole Cal Ripken, at his word. In a Baltimore Sun story published just after the deal was approved, Ripken says, “'I am thrilled that ... Ripken Baseball will be a part of the facility in Sarasota.'”

One big difference is that the Red Sox will pay Lee County $16.2 million in rent over 30-years and pay another $3 million a year into a capital improvements fund matched by the county. The Orioles pay only $1 for 30 years, but the Orioles contribute more to the capital fund, $5,375,000 over the term, and have operations and maintenance responsibility except for civic events. The county estimates the current cost to operate and maintain the 89 acres of combined facilities is $1.25 million to $1.5 million per year.

Except for any Red Sox non-baseball events and game day activities (concessions, ticketing, parking, etc.), Lee County handles operations and maintenance which could easily exceed $2 million a year. The county's net cost to operate the 80-acre Hammond Stadium complex, the spring home of the Twins, is $1.8 million, according to Sports Business Journal.

The Red Sox will also own 20 acres of commercial space, and the Orioles also appear to have commercial development in mind. Their deal allows them to seek to develop parcels north of 12th Street and apply for a rezoning, if needed, to permit commercial activity.

Creative provisions
Other sections of the Orioles and Red Sox contracts might be considered creative.

The Orioles offered a promotional package tying in the Baltimore/Washington D.C. area with the Mid-Atlantic Sports Network covering seven states that they co-own with the Washington Nationals. Judah says the package would have been worth $2.5 million to Lee County.

The Orioles and Sarasota County went to great lengths to ensure that “historical” non-profit civic events would be assured continued use. The agreement calls for 21 days for civic events plus eight other days for unspecified county or city related events. The deal allows Circus Sarasota use of the parking field north of 12th Street in January and February, plus other high school sports and up to three days for the Sarasota Blues Festival.

Naming rights and re-branding Ed Smith Stadium are part of the Orioles deal — not without controversy. The O's may rename the stadium as long as they keep two plaques: one honoring the stadium's namesake, and another honoring Red Ermisch, the longtime city parks director.

Another bone of contention for some is comp'd tickets for government and tourism officials. Lee County gets a nice little package for spring and regular season games. The Orioles provide 10 prime seats only for spring games and other events, with preferred parking.

But Lee officials get 50 tickets (location at Red Sox discretion) plus the “County Suite” and parking passes. There will be trips to Boston too for Lee County boosters, who are entitled to a “VIP event” at Fenway with food and beverage service for 15. The Twins must have a bigger private suite at Minneapolis' Metrodome — VIPs get 16 tickets with food and beverage service.

And get this: the Twins deal with Lee County puts the county on the hook to provide the Twins with a new stadium because they did for the Sox. A county consultant involved in both teams' deals says the Twins appear content to stay at Hammond Stadium.

'It ain't over 'til it's over'
Despite all the wrangling, negotiations and final deal making, it may be wise to heed the wisdom of former New York Yankees' catcher Yogi Berra's most famous quote: “It ain't over 'til it's over.”

In Lee County, only 108 of the 126 acres are usable due to stormwater requirements and a conservation area making it difficult or impossible for the county to construct all that they had planned, such as a 50,000 square foot clubhouse or 4,000 parking spaces.

A new concept plan shows four lakes and a large conservation area surrounding two parking areas, the stadium site and five commercial areas closer to Daniels Parkway. The Red Sox plan to purchase the 20 commercial acres, leaving 106 in county hands.

The Orioles deal could be encumbered by a lawsuit claiming violations related to the shift of the state grant money from the city to the county. The plaintiffs, Citizens for Sunshine, are represented by Sarasota attorney Andrea Mogensen, who obtained a settlement this year in a Sunshine Law case against the city of Venice.

On top of that, the memorandum of understanding anticipates potential problems with the city of Fort Lauderdale, the Orioles' stadium landlord. A “Miscellaneous” subsection states that if the city “... asserts a claim against the County arising out of the execution of this agreement, the Orioles agree to reimburse the County ... as a direct result of such claim ....”

So, while negotiations went into extra innings, there may be a few more to play proving once again it's usually wise to listen to Yogi — at least when it comes to baseball.

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