I attended the Chamber of Commerce noon meeting today, listening to presentation by a representative from Jeff Moorad's AAA Baseball group. The topic the the proposed AAA Ballpark for Escondido.
Bottom line? It makes no financial sense whatsoever. That our city council has already authorized $375,000 for consultants is a simple waste of taxpayer money.
Please read the following commentary by the San Diego Reader's Don Bauder. It's right on the money and will be a guest commentary in next week's issue of <span style="font-weight:bold;">The Paper!
Guest Commentary
Don Bauder,
San Diego Reader
Escondido: Do Your Homework on the Portland Beavers
By Don Bauder, San Diego Reader, 9/22/10
The economic impact of a minor-league team is not sufficient to justify the relatively large public expenditure required for a minor-league stadium. That was the conclusion of Arthur T. Johnson, author of the 1995 book Minor League Baseball and Local Economic Development, from the University of Illinois Press. Politicians in Escondido, who want to build a stadium for a minor-league team, should read that book.
Johnson studied a number of minor-league teams, searching for any economic impact they might have on their communities. If new development is the goal, more is needed than building a stadium in the middle of a corn field and waiting for businesses to grow around it, wrote Johnson. Consumers must be nearby or about to move into the area. A stadium, by itself, will not attract businesses or residential development.
In fact, the same is true for a major-league team. A ballpark or football stadium or hockey/basketball arena does not attract development. Ask any independent economist one not being paid by a league, says Philip Porter, economist at the University of South Florida. Income, population, and retail sales are not affected by the presence of a minor-league team or a major-league team. Its been studied ad nauseam.
Even when economic development is part of the deal for a taxpayer subsidy, it wont work if there is no market for it. Look at the deal in East Village that the Padres wangled. They promised to build office buildings, retail establishments, hotels, and condos. They reneged on most of the promises, and the condos and hotels that were built have few people in them.
But Escondido wants to spend $50 million of taxpayer money to build a ballpark and infrastructure for the Portland Beavers, the Padres AAA affiliate, who have been pushed out of their longtime Oregon home because their stadium is being switched to soccer-only and no other place in the area wants them. A syndicate (not the Padres as a team) headed by Padres chief executive Jeff Moorad is considering buying the Beavers and moving them to Escondido. The team would play at the home of the Padres A-level affiliate, the Lake Elsinore Storm, next year while a new stadium is being built in Escondido for occupancy in 2012.
Plans arent finalized, but what seems likely is that the new 9000-seat ballpark would be on city land east of I-15 and south of Highway 78, near the Sprinter light-rail line. The Moorad group would not put money into the project and would get all ticket, concession, and naming-rights revenue.
Dick Daniels, a councilmember who is running for mayor, claims the team could draw from a market including Oceanside, Vista, San Marcos, Escondido, Temecula, Murrieta, Carlsbad, and some other North County and Southwest Riverside County locations a total market of around 700,000. Single-game tickets would be $8 to $16, says Daniels, and attendance should be 6000 to 7000 a game. The Padres, who are 30 miles away, charge $10 to $63, and there should be no cannibalization, he says. (Even though the Padres are in the running for the playoffs, attendance has been very weak this year, mainly because of parking and other logistical difficulties, high ticket and concession prices, and the recession.)
Escondido would sell redevelopment bonds to finance the project. We can make the case for blight, a requirement to qualify for redevelopment status, says Daniels. Because the Moorad group wants a commitment by December 1, citizens will not vote. This will be a political decision. There would be no way to bring it forward if it required a vote.
The City of Escondido owns 18 acres at the site, including 8 acres used for storing vehicles and the like. The overall area now has warehouses and industrial buildings. What were looking at is the potential for redeveloping we need to stir office building, a little bit of residential and retail; it would give impetus to the building of life science parks, says Daniels.
Thats total nonsense, says Porter. Minor-league teams move all the time. There is never any indication that economic variables change when a team moves in or out. Expecting development is silly.
Ed Gallo, who is running for Escondido council, opposes the expenditure. The stadium for the Lake Elsinore Storm has been a severe drain on that city, he points out. And it has not brought development: Two business have been built and opened in the Lake Elsinore ballpark area in the 16 years of the ballparks existence, says Gallo. The debt capacity for the Escondido project is $75 million, and the $50 million plus $25 million to move the equipment yard eats it up. Holy cow. Were covered, he says sarcastically. We have no idea what the financial ramifications will be, and we have no idea what the potential economic impact is projected to be.
Sam Abed, another candidate for mayor, favors the project with three conditions. He wants the Moorad group to commit to financing collateral development, or at least agree to put money into land. He also wants to see a reasonable interest rate and a cap on costs so the City will not be at risk from overruns like Lake Elsinore has been.
Obviously, Escondidos leaders should do their homework before deciding that the presence of a ballpark will enhance development. But there are other reasons to be skeptical of this proposal.
First is the idea of locating a team within the parent Padres market. Of the 30 AAA teams, only 3 are located close to big-league teams. The Pawtucket (Rhode Island) Red Sox are 36 miles from the Boston Red Sox; the Tacoma Rainiers are 34 miles from the Seattle Mariners; and the Gwinnett Braves are 25 miles from the Atlanta Braves. Two are farther: the Lehigh Valley IronPigs are 61 miles from the Philadelphia Phillies, and the Toledo Mud Hens are 53 miles from the Detroit Tigers.
Eighteen of the 30 AAA teams are not only in metro areas of above 1 million but are long distances from a major-league team. These include teams in markets that are large enough to be home to professional teams in other sports, such as Buffalo, Charlotte, Columbus (Ohio), Indianapolis, Nashville, New Orleans, Oklahoma City, Sacramento, and (you guessed it) Portland. In fact, Portland, with 2.2 million people in its metro area, has the largest market of any AAA team. And the Beavers cant make it there, even though the team has been a part of Portland since 1903.
So the Beavers may be moving to Escondido, a city of 145,000 (and a purported market of 700,000), which is located only 30 miles from a major-league team.
Escondido resident Bill Stephenson is gathering an opposition group. City leaders are not doing due diligence, are only being cheerleaders, and arent discussing it publicly, he says. The public has to have a seat at the table.
Somebody in Escondido leadership has to sober up. Ditto for Moorads group. Its chief negotiator, Steve Peace, did not return phone calls for comment
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Another thing the Council should keep in mind is that a long term lease isn't a guarantee that the team will actually remain that long. The day it's signed, it just becomes a cost of moving the team. Twenty years at four hundred grand, for example, just means it'll cost you eight million to pay off the lease. Actually, probably less, because the negotiating parties are an ownership that wants to leave and a city that doesn't want to get stuck with a stadium it can't do anything with until the lease expires.
ReplyDeleteThen, building the stadium is the beginning of a long negotiation, not the end. The Los Angeles experience with the Raiders is instructive, or San Diego's with the Chargers. The team ownership always wants some new improvement that it believes will increase its revenue, and there's always the implied threat that it'll leave if it doesn't get its way. This isn't a one night stand, it's the beginning of a long, and troubled, marriage.
The ideal use for those redevelopment funds is to continue the high-tech park idea, build a quality, hi-tech oriented campus, and subsidize rental for employers who locate their businesses here. That's the sort of thing cities have done for major sales tax producers, such as auto dealers, for years. There's no reason it can't be done with commercial property too.
Attorney Ferguson was reported by the North County Times to be Chairman of the Citizens Advisory Committee for the Escondido General Plan Update, representing the ballpark investors and representing the owners of the swap meet property. This seems like a conflict of interest.
ReplyDeleteI too was at the Chamber meeting. The problem with other development ideas, Mr. Davis, is that there are no investors willing to put up $20 million to jumpstart the project, as Mr. Moorad and his group are willing to do for Escondido. Are there any investors for a 'high tech park'? None that I've ever heard of. And how can anyone predict that Jeff Moorad is like Al Davis or Alex Spanos? Triple A Ball is not the NFL, so those examples aren't apropos. Since when in the last 50 years has a baseball owner threatened to move a team to a different City? Recall the Padres didn't threaten to leave town, they just built a better park in the same town which ended up revitalizing the team and the downtown area of San Diego within 6 years. And by the way, what was a key catalyst for growth in Mission Valley? You guessed it - San Diego Stadium built in 1966. Let's give this unique opportunity for our City a chance- don't prejudge. Let the consultants do their homework. If it makes sense we should do it.
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