|
|
|
|
 |
| ||
|
Scores Schedules Standings Statistics Transactions Injuries: AL | NL Players Weekly Lineup Message Board Minor Leagues MLB Stat Search MLB en espaņol Clubhouses | ||
| Sport Sections | ||
|
| ||
| Wednesday, November 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New park too costly for Sox? ESPN.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In the movie "Field of Dreams," a mysterious voice told the Iowa farmer, "If you build it, he will come." Today in Boston, that very same voice can be heard, whispering, "If you build it, will it help you compete?"
The theory is that a new stadium will generate more revenue for the Red Sox, allowing more money for player salaries and thus a better team. In practice, a new ballpark might bring so much debt that the increased revenue goes to paying off the debt and not to salaries at all.
In fact, before a new park can be built, the Red Sox must line up creditors to give them a loan for their portion of the project. However, as the total cost of the project rises, the Red Sox' share also rises. Ultimately, the team is responsible for any cost overruns, as well.
2. Creditors will then finance a loan to the team. Fleet Bank has said the project is not workable but Salomon Smith Barney has indicated it is possible. 3. When the Red Sox have financial backing, they will then approach the city council to approve the building of the new park. The city council agrees to their $212 million portion of the project and ground is broken on the new Fenway. 4. Fans can sit back and wait -- until at least 2006 before they are sitting in the comfy confines of a new Boston baseball ballpark. And once that new ballpark is built, the wins will follow, right? Not necessarily. Let's review the situation. A new stadium would cost approximately $665 million. Harrington's first proposal in May of 1999 tabbed the Red Sox' payment at $352 million. With 5,000 more club seats and 95 luxury boxes at a price (approximately $200,000 a suite per season) second only to the Yankees in all of baseball, the Red Sox, by drawing a healthy 40,000 fans per game, could expect to pay off debts and actually earn anywhere from $15 million to $17 million more per year in revenue. That additional revenue could then be poured back into player salaries. "In theory, if (the Red Sox) are playing in an existing park with 34,000 fans with limited club seats and luxury boxes, Nomar Garciaparra can only have so much impact," said Andrew Zimbalist, professor of economics at Smith College. "But if the Red Sox have 45,000 seats in a new park with more club seats and luxury boxes and can generate more revenue, not only will they have a better chance of keeping him by offering him a higher salary, but it would help the Red Sox offer more competitive salaries in the free-agent market." So what's the problem? Well, that $352 million is likely somewhere closer to $375 million now. Factor in an average cost overrun in building the park of 20 percent and voilà that additional revenue might be needed to pay off an even more substantial debt load. Detroit's Comerica Park reportedly started as a $260 million project and ended up costing $361 million (a 39 percent overrun) and Seattle's Safeco Field started at $200 million and went up to $513 million. That's why creditors gave the Red Sox a low-enough rating for Harrington to throw his hands up in submission, as the majority ownership stake in a new stadium could now approach $200 million. "Under the current agreement, as I understand them, the Red Sox are liable for cost overruns, and if that compels additional borrowing, a more vanilla stadium proposal or partnering agreements that compromise anticipated revenue streams, the new ballpark may well make the Red Sox less financially competitive," wrote Robert Baade, economics professor at Lake Forest College in his soon-to-be-released study on the financial future of the Red Sox with a new stadium. Baade's work was helped along by the folks at the fan-based group, Save Fenway Park. In September, the group invited architects from around the country to construct renovated and preserved versions of the park that would likely generate significantly less revenue than would a new stadium but would come with much less risk. Net revenue is really the key figure. The Red Sox could spend more money and make more revenue, but they could also spend less and still earn more revenue than they are earning now. Despite the limited revenue streams brought in by Fenway Park, the Red Sox have still ranked among the top 10 teams in revenue over the past decade. Although the team plays in the smallest park in the majors by about 5,000 seats, it broke the team attendance record in 2000, while charging the highest average ticket price in the league. That price of $28.33 is over $2 more than at Yankee Stadium, according to Team Marketing Report. So, after Tuesday's announcement of a $3 average ticket increase at Wrigley Field next year, there is little indication that the Red Sox have maxed out their revenue in terms of raising ticket prices even more. It is true that Fenway is lacking in concession outlets, but that is counteracted by the highest soda and beer prices among all professional sports stadiums. And, like Wrigley Field, they have the Fenway Park factor on their side, where -- win or lose -- the fans come to see a game at an oldie but a goodie. Although Harrington has talked about a revenue decline triggering a lower payroll, the Red Sox began the 2000 season at seventh in the league in payroll and added high-priced veterans such as Dante Bichette, Rolando Arrojo and Rico Brogna. There also is not a direct correlation between generating more revenue and becoming more competitive. Spending is relative and the Yankees might choose to spend a greater percentage of their revenues in any given year. And more spending doesn't necessarily mean more winning. The Dodgers, Orioles and Diamondbacks all began the 2000 the season in the top five in payroll but failed to make the playoffs. "Given the quality of front-office management, greater revenue potential increases the value of good players to the team, and therefore leads the team to try to acquire better players," said Roger Noll, professor of economics at Stanford University. "But whether they succeed depends on the quality of their judgments about players and managers. Some, like the 1990s Dodgers, can spend until they are blue in the face and still end up mediocre because their front-office management is not very good. Others, like Oakland and Montreal, can produce teams that are competitive on budgets that are a third or less the budget of the Dodgers." Dean Bonham, president of The Bonham Group -- a Denver-based sports consultancy firm -- believes the team's stadium plan as it relates to the ability to compete might be flawed. "It is an extraordinary risk in Major League Baseball today to privately finance a stadium and expect, with debt service, that you could put a winning product on the field to compete with the New Yorks and Los Angeleses of the world," Bonham said. A new ballpark could still be years away with the team ownership in limbo. And ultimately, the longer it takes to build a new park, the more expensive it gets. Darren Rovell covers the business of sports for ESPN.com. He can be reached at darren.rovell@espn.com. |  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||