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Minor League Stadium Needs Big-Time Subsidy

The scene is a minor-league baseball stadium somewhere in the Inland Empire. The broadcasters are Ralph and Jim, a pair of middle-aged sportscasters, who are calling a Class-A game for local radio listeners. Ralph: "That's Rickie Newton up to bat for the Hurley-Burleys, and… he swings and misses! Strike one. " Jim: "Rickie spent his sophomore year in college at UC Riverside, where he compiled a .207 batting average." Crack. Ralph: "Ground ball down the first base line! Newton makes a beeline to first base, but the first baseman, Loren Winkle, number 32, is way ahead of him." Jim: "As you know, Ralph, the Hurley-Burleys are confident that they can take control of Baja Altarumba's new baseball stadium." Ralph: "That's Howie Flamm, number 51, putting on the batter's helmet. But going back to the baseball stadium: Why would the City of Alta Bajarumba let the local baseball club take control of the city-owned stadium, Jim? There's a lot of public money in that stadium. And coming back to the game, it's a foul ball for Flamm! When you talk to this young man, by the way, he will tell you that he is absolutely, 100% certain he's going back to the majors next year." Jim: "Well, it takes an extra heaping of self-confidence to win at either sports or real estate. I almost said hootz-pah, like my personal friend Rabbi Jack Sherman over at Temple Gush Emet likes to say." Crack. Jim: "It's a long drive to right field, but George Plumm, right fielder for the Speedballs, snags the pill. But getting back to the Hurley-Burleys and their stadium, Ralph, what makes a minor-league baseball team so confident it can take on the management of a big piece of city-owned real estate?" Ralph: "Jim, I think the Hurleys feel strongly encouraged by the example set by the Lake Elsinore Storm, which has just talked the local City Council into a pretty strong deal. Here's Joey Castro, number 27, loosening up before he steps into the batter's cage." Jim: "Why did Lake Elsinore decide to lease the stadium to the ball team, Ralphie-boy? Sounds a tad out of the ordinary." Ralph: "Well, the city is spending a total of $2.8 million to maintain the stadium, and that's a hell of a lot of money for a city of 38,000 people to shell out, especially one that has an annual budget of only $43 million. According to the local sports pages, the city has been losing $500,000 a year on the ballpark. Lake Elsinore needs to stop the bleeding as fast as possible." (After a pause, he goes back to the game.) "And he's out, and the Speedballs are back in the dugout." Jim: "So, what do you think of that there deal between the Storm, and Lake El-Storm-Some-More?" Ralph: "Well, I'm not an expert in the economics of running stadiums, Jim, but take a look at some of these numbers: The Storm gets to lease the stadium for 10 years, but apparently does not need to pay rent for the privilege. And knowing the ball club may not have the wherewithal, as my divorce lawyer likes to say, to maintain the stadium from Day One, the city will continue to pay $400,000 over a period of four years to help keep things running. Plus, the city will continue to pay $300,000 every year in maintenance costs for the full 10-year period. Did I mention that Lake Elsinore already pays $2 million a year in debt service on the bonds that the city floated in 1994 to build the 6,000-seat stadium?" Jim: "Whoa! Back up there, Ralphie-boy! What do all those numbers mean?" Ralph: "Yes, well, I guess it's an improvement for the city. In the first four years the city will be paying, on average, $2.4 million a year, which is better than the $2.8 million it's paying now, but nothing to crow about. In the last six years of the lease agreement, the city will be paying $2.3 million. So I figure the city will save at least $4.6 million in 10 years. That's worth something." (A pause.) Jim (sounding peevish): "Well, if Lake Elsinore is losing so much money on the stadium, then why doesn't the city find some private operator to run the park for them? At the top of the eighth inning, it's 8-7, Speedballs." Ralph, "Well, that's the rub, Jimbo. One operator signed a 15-year agreement with the city, just to walk away from it. The city attempted to sell the stadium two years ago, but that fell through. So when it comes to finding someone to take that stadium off its hands, you could say that Lake Elsinore has got a mule kicking in its stall." Jim: "Well, isn't a deal between the Storm and Lake Elsinore good news? Everybody's happy at last. As for that ballgame, here's Pedro Newman, who appears to be coming out of a little bit of a batting slump … and he takes strike one." Ralph: "Yes, they've staunched the bleeding, but the City of Lake Elsinore doesn't have much to show at the end of day. The team gets to keep all the money from concessions, even the money from naming rights. The city has little ability to recover what little upside may be in the offing. For the stadium to actually make money, the Storm will need to book some concerts or meetings into the stadium. Is that something a minor league ball club knows how to do?" (Both are silent) Jim: "At the bottom of the ninth, the Hurley-Burleys are looking challenged, down 10 to 7. Maybe it's just not their day. Hope this doesn't hurt their stadium deal!" Ralph "You know what they say, Jimbo: It's only a game."
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