Stadium Project Approval a Tough Sell

Jim Tervo’s chore seemed simple enough. As Detroit’s assistant mayor for economic development, all he had to do was negotiate a deal with the Detroit Tigers to build a baseball stadium to replace 84-year-old Tiger Stadium.

“I started telling people what I was doing and they smirked a little bit,” Tervo said. “They said, ‘Oh, Charlie tried that three years ago, and Rick tried that two years ago, and Shirley tried that last year.’ Everyone told me I was going to spend a year on it and all I would end up with was a file cabinet full of paper.”

Tervo was yet another cog in Detroit’s 15-year grind, one that is being replayed across the country. Cities trying to lure or keep teams must weigh their declining budgets against the team owners’ desires. Often the wish list is topped by a state-of-the-art facility, preferably paid for by the city, with a generous lease attached, as a way to remain financially competitive.

It took only seven months for Tervo to get a deal Detroit could live with. City and Tiger officials announced that a $235-million baseball-only facility will be built in the downtown area.

A similar attempt in Anaheim to bring city officials together with a team owner--in this case, the Walt Disney Co.--collapsed Wednesday when Disney walked away from negotiations to renovate Anaheim Stadium.

Finding a way to renovate the stadium was a condition of Disney’s purchase of the Angels. The talks’ apparent failure shows how delicate a balancing act teams and cities face trying to fund projects without overburdening local residents.

“Taxpayers are not going to pay for a facility where the profits are just going to wind up in the pockets of individual owners,” said Portland official Art Alexander, whose city’s Rose Garden basketball arena was paid for mostly by the Trail Blazers’ owner, Paul Allen, a computer software billionaire.

“The general attitude is: Yes, we like professional sports, but we’re not going to put a tax burden on ourselves to facilitate us having a pro sports team,” Alexander said.

Tervo and the Tigers came to an agreement after downsizing everything, from the original plan to the number of people involved in the negotiations. The plan went from 80 acres to 25 acres. Meetings went from nearly 20 people to three--Tervo, Tiger President and Chief Executive Officer John McHale and Doug Rothwell, a representative of the governor.

It became a partnership between the team and the city. While Michigan and Detroit officials made financial commitments, the bulk of the construction costs will be covered by Tiger owner Michael Ilitch.

“Everyone has to participate,” Tervo said. “The team can’t expect a free ride.”

That’s a hard perception to sell to owners.

Nashville gave the Oilers a $292-million deal to relocate from Houston beginning next season. Included in the package is a 65,000-seat stadium, which will be financed by the city. Officials claim they will not raise taxes to pay for it--although they will create a 3% water tax to help cover the cost. City officials say they will also utilize existing funds, bonds, some stadium revenues and personal seat licenses.

But the deal has met some resistance from taxpayers, who collected 43,000 signatures in an effort to force a referendum.

The anger of Nashville residents may be a backlash from the recent mega-deals given to professional teams.

When St. Louis officials lavished riches on the Rams last year, they were the first to use personal seat licenses--which is buying the right to buy a season ticket--to raise about $60 million for the team.

St. Louis also paid for the stadium construction ($260 million) and a practice facility ($12 million to $15 million) and gave the Rams a lease that gives them all revenue from concessions. Oakland and Baltimore also gave cash and other inducements to lure the Raiders and Cleveland Browns.

But some cities have refused to play that game. In what might be the first signs of a backlash to the recent city-hoping and stadium blackmail, these city officials created situations where owners, not taxpayers and fans, are the principal financial backers for new facilities.

Portland’s Rose Garden, the new home of the Trail Blazers, was built for about $262 million. Of that, the city was responsible for only $34.5 million in infrastructure costs--which will be paid back from the facility’s revenue. The rest was covered by the team’s owner.

In Buffalo, the Sabres will be responsible for 70% of the construction costs for the Crossroads Arena, with the city and state covering the other 30%. Disney and Anaheim had a similar 70-30 split, but could not agree on details.

In San Francisco, the Giants have come up with private financing, using personal seat-license money, sponsorship and money from concession and advertising rights, to pay for their long-desired baseball-only stadium. The only money they expect from the city will be $10 million from the team’s property taxes. They have asked that to be reinvested in the stadium’s area, according to John Yee, the team’s chief financial officer.

Voters in San Francisco have rejected funding proposals three times. San Jose residents also voted down a proposal. This time voters must approve only a proposal to amend the 40-foot building limit along the waterfront site selected for the stadium.

“Those [tax proposals] are tough sells to cities because of the declining federal and state support,” said Jack Bair, coordinator of the Ballpark Project, the group campaigning for San Francisco’s new stadium. “Cities are scrambling to make ends meet. The part of the project that was the most difficult was how to finance the ballpark in such a way that it wouldn’t involve taxes from the city.”

In Detroit, neither the state nor the city will raise taxes. The state will provide a $55-million grant, from existing taxes on reservation casinos, for land acquisition. The city will give $35 million from existing redevelopment funds for construction and annual operating costs. It’s Ilitch who will dig deep, contributing $145 million.

“We had a new mayor and a new team president, so we could take a fresh look at the situation,” Tervo said. “The Tigers realized they needed to make a large contribution. We took a realistic approach and downsized the whole project.”

Denver, on the other hand, may be up-sizing. City officials are working with both Comsat Entertainment Group, which owns the Denver Nuggets and the Colorado Avalanche, and the Denver Broncos on new facility projects. Neither is expected to burden residents with new taxes.

Comsat Entertainment Group has said it will finance the entire 18,000-seat hockey/basketball arena, estimated to cost $132 million. All it needs is a site for the arena.

Bronco President Bob Hampe said the team would put up 25% for a proposed domed stadium, estimated to cost $260 million. The rest would come from the extension of a 0.1% sales tax that was voted in to pay off the Rockies’ Coors Field. The tax was to run through 2011. It was revised to 2000, when the stadium is expected to be paid off. Voters would have to approve the extension.

If it’s OK with voters, then it’s fine with city officials. They will, though, want something in return.

“When one of our teams comes to us for something, we ask them to extend their lease,” City Attorney Daniel Muse said. “The Broncos wanted luxury suites in 1987. We built them and extended the lease. We have the [Broncos] under contract for another 23 years. We always extend the lease.”

Whether those leases are worth the paper they are printed on is a question lately. Seahawk owner Ken Behring is attempting to break his Kingdome lease--which has 10 years left--with the city of Seattle so he can move his team to Southern California.