April 26, 2010
Rays Stadium Numbers: Do They Add Up?
For those of you who read the Tampa Tribune religiously — and who doesn't? — you no doubt saw the long piece yesterday running down everything that's wrong with Tropicana Field. Among the complaints: The luxury boxes have obstructed views of flyballs, the catwalks get in the way (whether of flyballs or of watching them, the author doesn't seem clear), and the food concessionnaire is crappy — which may be the first suggestion that a team should build a new stadium just to get out of a concessions contract since Tim Naehring declared Fenway Park to be obsolete for its lack of chef's salads.
But the more interesting tidbit is one that's almost brushed over in the article: Citing unnamed "experts," the Trib claims that "without the amenities and attractions found at modern ballparks, the Tampa Bay Rays are missing out on a potential $40 million in additional revenue.
If true, that would be a nice chunk of change. Since the annual cost of paying off a new stadium has previously been estimated at around $30 million, it'd mean the Rays could actually pay for a new stadium themselves without any public money at all. Yes, it'd be a lot to go through just to get a net profit amounting to less than it would cost just to re-sign Carl Crawford, but a profit is a profit — and asking the public for $10 million or so a year is likely to be much more attainable than an entire $30 million.
The question, then, is: Is it true? The Trib, as noted, doesn't give a source for its figures, but let's look at the numbers to see if they make sense. According to Forbes, the Rays brought in about $156 million in revenue last year (and, not incidentally, turned an estimated $15.7 million profit). To add $40 million a year would essentially mean turning them into the St. Louis Cardinals ($195 million in revenue). The Rays may be one of the top two teams in baseball right now, but I don't think anyone thinks that they can get a Cardinals level of rabid fandom going, even if they had a new home out in the Florida sunshine.
There's one important caveat, though, on the Forbes figures (leaving aside whether they're believable at all): They're after revenue sharing, which the Cardinals pay into, and the Rays currently draw from. Normally, increasing revenues by $40 million would mean you'd lose about a third to revenue-sharing "taxes." (Depending on where you fell in the revenue spectrum; the formula is mind-numbingly complex.) Thanks to the Yankees loophole, however, the Cardinals can deduct their $16 million annual cost of their stadium bonds before paying revenue sharing. Some quick math shows that the Cardinals are likely bringing in around $50 million more than the Rays in order to end up with $40 million more net.
So let's be conservative and say that bringing in an extra $40 million a year in gross revenue would be the equivalent of just reaching the next revenue rung down from the Cardinals — say, the one occupied by the Nats ($184 million), Rockies ($183 million), or Rangers ( $180 million). Is that feasible? Maybe — Tampa Bay is a smaller media market than D.C. or Dallas, but not that much smaller, and it's actually larger than Denver. Though it also has 13% unemployment, which isn't really a great sign for prospective fan spending.
To sum up: If everything broke right, a new Rays stadium might bring in enough money for the team to turn a profit — barely. The only way for the Rays to get a windfall, then, would be to have the public pay for it — and even then (since they'd lose their stadium deduction), about a third of the new revenue would get siphoned off by MLB revenue sharing. So taxpayers are effectively being asked to foot the bill for $30 million in annual stadium subsidies, so that the Rays can get maybe $20-30 million more a year in net revenues.
In even simpler words: The Rays wouldn't make money on the stadium. They'd make money on the subsidy. That's about the clearest picture you could ask for of what's driving the push for new baseball stadiums.