Rays financing powerpoint

Thought many of you might like to see the Rays' powerpoint presentation that team officals made to the City Council on Thursday. Well, here it is, courtesy of the city. (The Rays gave members of the media a shortened version on Thursday).

A two-page explanation is available at the Rays' stadium site, www.majorleaguedowntown.com

Why MLB says a new stadium matters

Food for thought: The Florida Marlins signed the cornerstone of their organization, shortstop Hanley Ramirez, to a new long term deal Saturday. The site for the announcement, the future location of the Marlins new ballpark.

You can read the full article here, but here's a couple of paragraphs I thought might apply to the Rays' stadium debate here in St. Petersburg:

• "Today we're taking not one, but two giant steps forward," Marlins owner Jeffrey Loria said. "The first is that by standing here on this very site we reaffirmed the vision of our city and county leaders to guarantee Major League Baseball stays here in South Florida ... and we have one of the greatest young players ever to wear a Marlins uniform."
• "I think [the stadium] is definitely a big part of it," Marlins general manager Larry Beinfest said. "We've had a lot of good young players here. Whether it's Derrek Lee or Dontrelle Willis, several players were probably worthy of multiyear consideration. But there wasn't a stadium on the horizon. Now there is."
• The ballpark, plans for which are still being finalized, is expected to substantially increase revenue for a franchise with a history of poor attendance and tight budgets.

So you know, there was no referendum on the Marlins stadium deal. It is, however, being challenged in court.

Finances are in; what a day

So we learned a lot yesterday. Or did we. The Tampa Bay released their plan to pay for a $450-million waterfront stadium. You can read our story here.

And here's some questions and answers related to the plan:

Does the Rays’ financing plan cover all of the stadium costs?
The Rays say yes, including improving and moving Bayshore Drive.

Who would pay for any cost overruns at the new stadium?
The Rays, but only if they oversee construction.

Would the Rays pay rent at a new stadium?
Lease terms have not been discussed. The team pays rent at Tropicana Field based on the number of tickets sold. The Rays said Thursday they expect a lease agreement for a new ballpark would include similar or better terms for the city.

What parking spaces do the Rays want to buy?
The team would pay the city upfront for 2,500 off-street parking spaces downtown that are now unused on game nights. The Rays would then sell those spaces to season ticket holders. Specific lots might include those at The Pier and in city parking garages downtown.

Would the Rays own those spaces?
No. They would simply purchase the ability to park in those spots on game nights. They then would resell those parking spaces to fans.

Does that cover the $55-million cost the team has attached to parking revenue?
No. The Rays say they will still need to find $20-million more. One possibility, they said, is a $1 per car surcharge for game-day parking.

What’s the city’s risk?
$75-million for construction. That risk, the Rays say, would be offset by taxes generated by redeveloping the Tropicana Field site.

What’s the county’s risk?
$100-million for construction. The Rays say that money also would be offset by the site’s redevelopment.

The city must have a referendum on the plan, but does the county?
No. The city’s referendum would deal with moving the stadium to the waterfront. It is not needed to approve the financing plan.

What is needed to approve the financing plan?
The Pinellas County Commission and City Council have to approve it. Pinellas County Commissioner Ken Welch attended Thursday’s presentation. The Rays said they want to meet with the commission as soon as next week.

So what's next? For the city, it's pouring over the numbers in more detail. For the Times, we're reaching out to four of the leading sports ecomonists or stadium experts to rate the financing plan. We should have that in the newspaper tomorrow. We're asking the experts, Andrew Zimbalist, Victor Matheson, Mark Rosentraub abd Neil deMause to rate the financing plan based off of the poll question a couple posts down.

We're planning to publish the online results along with a couple of good comments in Saturday's paper as well. If you have something worth saying about the financing plan (and can keep it to a few sentences) please post that here. It'd be even better if you were willing to attach your name and where you're from to your post.

I'll be back with last week's poll results in a bit. I know we more than 1,000 votes this week!

Rays financing plan: Extend Tropicana Field payments

ST. PETERSBURG — The Tampa Bay Rays' plan to finance a $450-million waterfront ballpark will ask local taxpayers to extend the loan payments tied to Tropicana Field to construct a new stadium at Al Lang Field.

Click here to read today's story.

Waiting on the financing plan

Just so you know, we should have something for you on the financing plan starting at 3 p.m. Please check back then.

Rays financing press conference moved

Just in from One Tropicana Drive:

"Due to a scheduling conflict at Tropicana Field, the Tampa Bay Rays will present the preliminary financing plan for the proposed waterfront ballpark at the St. Petersburg City Council Meeting at City Hall tomorrow at 3 p.m.

"The team had originally planned to present the plan at noon on Thursday.  The Pinellas County Commissioners have been invited to attend. Rays officials will be available for media interviews following the presentation."

This means the press conference will no longer be a press conference. Rays officials will be making the financial pitch directly to the City Counci at the beginning of its meeting. Apparently, the council had a morning work session and would not have been able to make the Rays' press conference.

This also means the presentation will be broadcast on the city's TV network, WSPF, or Bright House Channel 615. We'll also have live coverage at www.tampabay.com starting at 3 p.m.

Waiting on the $$$$; looking for something to do

If you're like me, and do little else other than think about a new $450-million waterfront ballpark, the news that the Rays are finally going to release their financing plan Thursday feels like an early Christmas gift.

We'll see how much detail the Rays are going to present, how many local elected leaders come to Tropicana Field to hear the pitchm, and just how well or poorly the plan is received.

But while we wait, I wanted to let everyone know that a group called the African-American Voters Research and Education Committee is hosting a forum on the Rays plan at 7 p.m. Wednesday night. The forum is at the Enoch Davis Center, 1111 18th Avenue S, in St. Petersburg, and is open to the public.

Most of the big local politicos have been invited to attend, as has Rays senior vp Michael Kalt.

If you haven't yet, take time to vote in this week's poll question about Tropicana Field. We're sitting at 975 votes so far.

Five-day financing crash course. Day 5: The fine print

Day 5: The fine print.
The final installment in a five-day examination of the finances surrounding a new stadium, this section addresses the finer financial points related to the Rays stadium proposal. For previous coverage, see here.

Background: The Tampa Bay Rays have an ironclad lease to play at Tropicana Field until 2027. The team has said it is not demanding a new stadium, but that it cannot be successful longterm in the dome.

Potential problem: Could the Rays break the lease if voters, or the city, rejects their proposal for a new ballpark?

Analysis: The short answer is yes, but not without cost. The Rays' lease with the city includes a provision for breaking the lease. In order to break the lease, the Rays would first be required to pay any remaining debt on Tropicana Field.

In 2009, that would require a $69-million pay out. By 2012, the outstanding debt would have dropped to less than $40-million. In either case, it's a lot of money, but certainly less than the $150-million the Rays are prepared to put into a new stadium.

The expense may be more palatable if another city was willing to pay for more of the costs to build a new stadium.

But that's not the only cost the Rays may face.

According to the lease, payment of outstanding debt is only one element of the damages the city should receive. In fact, the lease says that neither the city, nor the Rays "has an adequate remedy at law for breach of this agreement."

Though the lease protects the city in some respects, it doesn't in others.

The city has lost $26.7-million operating Tropicana Field 1990. The losses likely will continue as long as the Rays keep playing in the dome. More than 95 percent of the city's operating costs at Tropicana Field are contained to two items: traffic management outside the stadium and property insurance for the dome.

Each year, the city spends about $400,000 managing traffic outside the dome. The city agrees to pay for those costs as part of the lease. The city also has been paying nearly $2-million a year to insure Tropicana Field.

Those costs are not offset by the revenues the city receives from the dome.

For discussion: What should be more important for the city and county: capping potential liability or maximizing the greatest potential return?

Five-day financing crash course. Day 4: The public's share

Day 4: The public share
The fourth in a five-day examination of the finances surrounding a new stadium, this section addresses the costs the Rays’ are asking government to bear. For previous coverage, see here.

Background: It appears that the Tampa Bay Rays will ask the city and county government for $300-million, on top of 12 acres of waterfront property, to construct a new ballpark?

Potential problem: Where is that money going to come from?

Analysis: This remains the biggest unknown of the $450-million stadium plan. City Council members have asked for details by May 16, while the Rays have publicly promised answers before June 5.

In the interim, all we can do is dissect the public statement so far made by the team.

In its documents, the Rays say that “No existing taxes will be diverted to fund the ballpark, and no new taxes will be imposed.”

Originally, most people assumed the Rays would seek the city and county property taxes generated by the Tropicana Field redevelopment. And that they may ask for some of the sales taxes generated by the Tropicana redevelopment.

But the Rays said last month that they would not seek property taxes for the stadium project, and that the team would ask the city and county to roughly split the public contribution.

So what’s left?

First, the county. Currently Pinellas County is contributing $5-million a year toward Tropicana Field construction debt from a 1 percent hotel bed tax. Extending the 1 percent bed tax appears to be the Rays’ most likely target, since the tax cannot be used to fund general county services.

Extending the tax would require the approval of the Pinellas County Commission. But it’s not that simple. The county cannot increase the hotel tax further, meaning that funds would not be available until 2016 if bed tax funds continue to pay off the Tropicana Field debt.

The Rays say their financing plan will address the remaining Tropicana Field debt.

The city meanwhile, is contributing a little more than $5-million toward Tropicana Field construction debt – mainly from the state sales tax revenues that are allocated to St. Petersburg. Again, extending those contributions to the new stadium could be a likely target.

But there could be other possibilities. A Rays’ preliminary financial analysis – which was shared with the city before stadium negotiations went public – said the team could tap several different sources: from potential parking revenues to federal tax credits to county and state transportation funding to city and county workforce housing incentives for the Tropicana redevelopment, to simply refinancing the existing Tropicana debt.

The city and the Rays broke off all financing discussions after the stadium project went public. And the document clearly is outdated. (In one place it says new state funding was “anticipated,” when the team now has abandoned that potential revenue stream. The document also includes money generated by a hotel that was originally contemplated for the southwest corner of the Al Lang site, but never became part of the project.) But the one-page analysis does provide some hint of what the Rays are thinking.

Read the document, along with the notes from a city official, here.

For discussion: If the bed tax is used, do you consider that a burden on local taxpayers?

Coming tomorrow: The finer points.

Five-day financing crash course. Day 3: Tropicana redevelopment

Day 3: Redevelopment of Tropicana Field
The third in a five-day examination of the finances surrounding a new stadium, this section addresses the potential redevelopment of Tropicana Field. For previous coverage, see here.

Background: The Tampa Bay Rays have not yet made the details of their financial proposal available, but the team has made one point clear: The tax benefits generated by the redevelopment of Tropicana Field will cover, or more than cover, the share the team is asking of St. Petersburg government.

Potential problem: What if the redevelopment does not meet developer’s projections?

Analysis: The city has just started negotiating with two developers on possible development agreements to redevelop Tropicana Field. Both developers, Archstone-Madison and Hines, have attached tax and revenue projections to their projects.

Archstone-Madison says its project will generate $11.2-million a year in new city revenues. Hines measures its economic impact in broader terms, but says new yearly tax revenues to the city, county and school district would top $24.5-million annually.

That’s on top of how much the developers are willing to pay for the 86-acre site (Archstone-Madison is offering $65-million; Hines is offering $50-million), but does not include potential environmental clean-up costs.

City officials says they will seek financial guarantees to ensure the amount of development proposed by Archstone-Madison and Hines actually happens within a certain time frame.

During the open RFP process, the city asked both Archstone-Madison and Hines what guarantees developers might provide. Here’s how they responded:

• Archstone-Madison –- “As part of a Development Agreement that the City and Developer will negotiate and execute as soon as possible after selection of Developer to develop the site, outside dates will be established for Developer to achieve in relation to plan approvals and start of construction. If developer does not achieve these Outside Dates, then the agreement terminates. In addition, there will be certain expenditure thresholds the Developer must guarantee as evidence of its commitment to the project. These include:
  
  Guaranty through Closing. Developer will incur and shall have paid in full not less than $3 million in Site and Developer Costs through Closing.
  
  Guaranty through to Construction Start. Developer will incur and shall have paid in full not less than $10 million in Site and Developer Costs to allow commencement of construction.
  
  Guaranty of Construction Commencement. Developer will guarantee construction by a certain Outside date or the City can terminate the agreement and receive all of Developer’s plans to date.
  
  Guaranty of Construction Commencement. Prior to commencement of construction of each phase, Developer shall execute a guaranty for the lien free Completion of all Improvements, in a form reasonably acceptable to the City.

• Hines -– “Each portion of this project will be established on a stand-alone basis, and Hines will approach the bidding and award of construction contracts in a manner to minimize the risk for Hines and the City. For each portion of the project undertaken by Hines, we will bid work to general contractors to achieve a Guaranteed Maximum Price contract for the construction of each program element defined under the master plan…Hines will require Payment and Performance Bonds from our general contractors, thus ensuring timely and budget certainty with respect to the construction costs.
  
  “With respect to the proposed acquisition structure of the Tropicana Field site from the City of St. Petersburg, Hines would negotiate with the City to establish a mutually agreeable take down schedule and criteria that includes provisions for mutually acceptable take down time frames after which control of the remaining land parcels not yet acquired by Hines would revert back to the City of St. Petersburg.”

In both cases, developers basically have articulated that if we don’t build, you get to keep the money we gave you and you get the land back. It’s unclear if either Hines or Archstone-Madison would be willing to go further.

Of note, the City Council has asked city officials to negotiate potential agreements that minimize further risk to the city. They inserted this clause into the negotiating document:

• Whereas, it is the intent of the City Council that the Final Disposition Agreement for the redevelopment of Tropicana Field ensures that the City incurs no financial risk in excess of guaranteed revenues generated by the Agreement; that the selected developer provide a financial guarantee to insure the development project will be completed within a defined time frame state in the Agreement; and, that the City does not become liable for unforeseen or underestimated costs.

The city hopes to have negotiated terms in place with both developers by June 5. The council would then be asked to pick a possible winner, contingent on the outcome of a November referendum (if one occurs).

For discussion: Who should be on the hook if the development doesn’t succeed? The developer? The Rays? The city?

Coming tomorrow: The public's share.

Five-day financing crash course. Day 2: What the team's paying for

Day 2: What the team’s paying for
The second in a five-day examination of the finances surrounding a new stadium, this section addresses the financial offer the Rays are making to build a new stadium. For previous coverage, see here.

Background: The Tampa Bay Rays plan to commit $150-million toward the construction of a $450-million waterfront stadium. Initially, the Rays said they would make roughly $10-million a year lease payments to the city, that when bonded, would generate the cash up front. Now the Rays say they will make the upfront commitment themselves.

Potential problem: What are the Rays actually contributing? If the money is “rent,” aren’t we just further subsidizing the team for a new stadium?

Analysis: To understand the terms of a new deal, it’s important to know the terms at Tropicana Field.

Currently, the Rays rent is tied to ticket sales at Tropicana Field. The city receives $0.63 for each ticket sold (the dollar figure escalates each year based on the average increase of ticket prices across Major League Baseball; in theory it would decrease if baseball ticket prices decreased as well). The first $250,000 generated by that agreement is returned to a capital reserve account for Tropicana Field capital repairs.

The next $100,000 is technically considered the Rays’ rent for tax purposes.

Everything over $350,000 is paid to the city to reimburse city expenditures.

Based on last year’s attendance, the city will receive about $874,000 this year – or $624,000 excluding the capital reserve funds.

The city also receives a small portion of the naming rights deal with Tropicana. In 2008, the city estimates it will receive about $358,000, with $250,000 again redirected to the capital reserve fund.

Prior to this year, the city also received $1.02 for each car that parked in a Tropicana Field lot. The money was to offset costs related to an air conditioning replacement, and was paid in 2006 and 2007, even when the Rays did not charge for parking.

Using that framework, the Rays’ current rent payments to the city total about $750,000 (not including the money redirected to the capital fund). The city’s costs related to Tropicana Field this year are roughly $2.5-million.

Rays’ response: Though the Rays initially said their $150-million contribution would constitute rent payments, team officials say now that does not mean they won’t contribute money to the city in other ways. Also, the Rays said they may be willing to take on more of the city costs than contemplated in the team’s original lease.

For discussion: What’s a fair rent for the Rays? Is it the approximately $750,000 the team pays now? Should it be tied to ticket sales? Value of the franchise? $15,000 a win?

Coming tomorrow: The redevelopment of Tropicana Field.

Financial mag talks about Rays stadium plan

Anyone read Total Securitization magazine? I didn't think so. Well, anyway, in its April 21 issue the authors have a short story on the Tampa Bay Rays' stadium proposal. Here's the article in its entirety:

• Major League Baseball's Tampa Bay Rays may securitize revenue streams as part of the financing for the team's new stadium in St. Petersburg, Fla. Michael Kalt, senior v.p. for development and business affairs, said the team is in the initial stages of structuring a financing package for the stadium and that lenders will likely push the team to securitize revenues.
  
  "We haven't gone far enough to determine what we will or will not be securitizing," said Kalt. He added that an outline of the financing package will hopefully be completed in the next four to six weeks. The total cost to build the stadium is $450 million.
  
  The new stadium, so-far unnamed, still needs to be approved by voters in St. Petersburg. The Rays currently play at Tropicana Field, a domed stadium with seating for 43,772 and about 8,000 parking spots.

So, my first question is, what does securitize mean? Investopedia says securitize is "the process of pooling a group of financial assets together to create a new security, which is then marketed and sold to investors. The value and cash flows of the new security is based off of the underlying value and cash flows of the assets used in the securitization process. Companies will securitize illiquid assets into liquid assets in order to increase their overall liquidity and generate immediate proceeds from their assets."

I'm still not sure what that means, but I'm guessing the Rays are thinking about taking out a big loan to pay for their $150-million share of the overall $450-million construction cost. Anyone get a different read on the article?

Five-day financing crash course. Day 1: Tropicana Field debt

Introduction: Over the next five days, we'll analyze the known details surrounding the Tampa Bay Rays'  plan to build a $450-million waterfront stadium. The analysis is not intended to be all-inclusive. In fact, it cannot be. The Rays have not released a detailed financing plan. So our work is based on the history of the Tropicana Field site, and the public statement so far made by the Rays.

Day 1: Existing Tropicana Field debt
The first in a five-day examination of the finances surrounding a new stadium, this section addresses the debt remaining on Tropicana Field.

Background: Tropicana Field is a multi-purpose dome built by the city of St. Petersburg that opened in 1990. Since 1998, the Tampa Bay Rays Major League Baseball franchise has made the facility their home. The Rays have a lease to play in the facility until 2027.

Though the construction of the dome was originally pegged at $85-million, the actual cost to the city of St. Petersburg and Pinellas County to build and operate the dome so far has been $233.4-million. Additionally, the state has contributed $2-million a year since 1995.

Potential Problem: Why would you build a new stadium, if you are still paying for the old one?

Analysis: There are currently four loans, or bonds, still outstanding related to Tropicana Field.

1. Professional sports facility sales tax refunding revenue bond. Issued in 1995, this $27.185-million bond is covered by a $2-million-a-year, 30-year state subsidy. The debt is scheduled to be paid off in October 2025. State payments are expected to continue whether or not Tropicana Field is torn down.
2. First Florida Tropicana renovation bonds. Issued in 1996, this $22.81-million bond helped pay for renovations to Tropicana Field for baseball. It is covered by the city using funds other than property taxes. The city owes $1.1-million, which is scheduled to be paid off in 2009 - three years before a new stadium would open.
3. First Florida Governmental refinancing bonds. A 2001 refinancing of several bonds issued in 1996 and 1997. The city pays off these bonds through non-property tax dollars. The city currently owes $20.572-million. The last payment is scheduled for 2016.
4. Excise tax secured revenue bonds. The largest amount of debt remaining on Tropicana Field, which is paid off through the city's portion of the state sales tax, state money redirected to the city and a 1 percent Pinellas County hotel bed tax. Currently, the city and the county still owe $67.95-million. The last payment is scheduled for 2015.

Of the four bonds, two are less relevant to the Rays' discussion. The "professional sports facility" bond (1) is a pass-thru from the state. No local money is required, and city and team officials say the debt will continue to be paid regardless of what happens to Tropicana Field. And the "first Florida Tropicana renovation" bond (2) will be fully repaid before the Tropicana Field is demolished, according to the Rays plan.

What's also of note is that the situation in 2012 - when the Rays plan to close Tropicana Field - will be different than the situation in 2008.  In 2012, more of the city and county portion of the debt will be repaid.

Depending on how you count the debt payments, the city and county will still owe $35.8-million-to-$46.70-million on Tropicana Field when play would begin in a new stadium.

Rays' Response: The Rays say their financing plan will the remaining Tropicana Field debt, which in 2009 would stand at around $69-million. One option may be to use the money created by the sale of Tropicana Field. Currently Archstone-Madison is bidding $65-million for the site. Depending on how their payments are scheduled (if they are selected) the city likely will be able to use that money, plus interest, to pay off the Tropicana debt.

For discussion: Would a plan that addresses the outstanding debt make you more likely to support a new stadium? Or, is the cost too great in any scenario?

Coming tomorrow: What the team says its paying for.

Starting Monday: 5-day financing crash course

Hope everyone has a good weekend. We're up to 331 votes in our informal poll. Let's try to get a 1,000.

I wanted to let folks know that next week we're going to have five days of posts detailing the finances surrounding the Rays proposal. Hopefully, it'll be an easy guide to what money is at play in this deal.

On Monday, we'll start with a briefing on the debt remaining on Tropicana Field. Until then ...

Forbes says Rays made $29.7-million last year; team officials dispute report

The Tampa Bay Rays are one of Major League Baseball's least valuable franchises, but the team still made a nearly $30-million profit last year, according to a recent Forbes examination of the finances of Major League Baseball's 30 teams.

In fact, according to Forbes, only four teams made more money than the Rays -- the Washington Nationals, New York Mets, Chicago White Sox, and Florida Marlins.

On the flip side, Forbes pegs the value of the Rays franchise at $290-million -- up eight percent from last year, but still 29th in Major League Baseball.

This news came out a couple of weeks back, but since we didn't have a blog then, we didn't have a place to post it. The Rays, and all of Major League Baseball, say the Forbes rankings are inaccurate, because they fail to account for some of the team's debt payments and other expenses.

Rays officials say they have actually lost between $20-million and $30-million since 2005, and are expecting to lose money again this season. You can see the full Forbes analysis here.

(We asked the Rays if they would be willing to open their books for our examination; they have so far declined).