Posted by John Vrooman on Wednesday, December 12, 2018 in Major League Baseball.

Interview with Tampa Bay Times. Stadium deals in MLB and NFL.pdf

I wondered if you would be willing to give some perspective on the collapse of the Rays deal. The questions I have are:

Does this look like a play by the Rays to get a better deal?

Yes. These moves/threats are all part of the classic sports venue extortion game that has played itself out over the last two decades in all professional sports. The Rays MLB franchise was actually born as the third leg alternative in a series of MLB venue extortion triangles of the 1990’s.

Does MLB have a history of driving a hard bargain and threatening to pull out to get a better deal?

Yes almost all public/private stadium funding shares are the end result of a negotiation process that is often aggressive and ultimately self-serving as a messy divorce. This particularly true after the venue revolution of the 1990’s that began with the realization of the private revenue potential of Oriole Park at Camden Yards.

The distinguishing factor is that the relocation threats of MLB clubs are not necessarily credible. This is because MLB clubs threaten to move but rarely if ever, do relocate outside of their larger metropolitan home areas.

By comparison NFL clubs relocation extortion threat carries a 50-50 chance of being executed. This is because NFL revenue sharing renders the home market size less relevant than MLB where market specific revenues still matter. In the NFL, location doesn’t matter as much as playing in a shiny new publicly funded venue.

The relocation threat of the Rays outside of Tampa-St. Pete is not credible, because there are no superior alternatives. From the Rays perspective they are probably seeking revenue certainty which is critical in the sports business, and they are frustrated with the gridlock in the give and take politics of local government. In the bargaining process they are playing Tampa v. St. Pete.

Isn’t the LA Angels planning to pay for their own stadium?

I have not seen an Angels proposal for a completely private stadium.

What is the normal public/private partnership split for new professional sports stadia?

From the social welfare perspective the optimal public/private share of MLB stadium funding would be in the 25/75 range. Even then, the public share of 25 percent should be funded by the incremental taxes on new revenue surrounding the stadium currently being discussed in Tampa.

In an ideal world the TIFs (tax increment finance) should be used on infrastructure to connect the stadium to the local economic grid and the team should be on the hook for the remaining 75 percent. (MLB parks have slightly higher revenue spread effects on the local region than NFL stadiums and justify slightly more public spending for private business.)

The two-decade history of stadium finance unfortunately shows that the public/private ratio has been inverted at 75/25. The obvious compromise would of course be the 50/50 split that the Rays are apparently balking at for the proposed $900 million ballpark (with a $450 million private share) in Ybor City. This is on par with the Braves’ Cobb County 60/40 deal in Atlanta and much better for the public than the Marlins 75/25 boondoggle deal in Miami. (see attachment).

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