As Stadium Mania Bites, Pawtucket Red Sox Take Flight: Joe Mysak
(Bloomberg) -- To all those municipalities experiencing stadium mania, either because you want to land a team or, especially, because you want to keep one, I have two words for you: Brooklyn Dodgers.
The team moved after the 1957 season to Los Angeles, and it took Brooklyn decades to recover, as has been well documented in any number of histories and memoirs. There was nothing inevitable about the move. It was entirely preventable.
Now add the Minor League’s Pawtucket Red Sox to the roster of lost teams. Sure, they’re no Brooklyn Dodgers, but they’re important to their eponymous hometown. And they’ve signed a letter of intent to move from Pawtucket, Rhode Island to Worcester, Massachusetts. The move was entirely preventable, and, as so often is the case, there’s a municipal bond angle to this story.
Put simply, if Rhode Island hadn’t been burned in the Curt Schilling 38 Studios collapse, where the state lent its moral obligation to bonds that lured the former Red Sox star’s video-game company to the state, and then wound up having to pay them after the company went bust, then maybe it would have been a little more liberal in its own financing package for the team.
Columnist Dan Shaughnessy put it pretty well earlier this week when he wrote in the pages of the Boston Globe: "It’s impossible to prove, but I will go to the grave convinced that Curt Schilling’s final gift to New England baseball was his role in driving the Pawtucket Red Sox out of Rhode Island and into the bosom of Worcester.”
He continued, "Schill’s $75 million handout from Rhode Island for his 38 Studios venture (it went belly-up two years later) created debt, triggered lawsuits, and poisoned Rhode Island officials against any taxpayer assistance when the PawSox came calling.” He concluded: "A half-century of Rhode Island hardball history down the tubes.”
Of course the key question any politician has to ask when a team owner shows up with a gun and a mask is: Is this city or town better off without the team? I think we all know the answer for Pawtucket. For want of a few million bucks, the PawSox were lost.
The next chapter in this story will also feature the municipal market, as Worcester borrows $100 million to build a fancy stadium and environs for their new triple-A team. That’s a little less than it cost to build Oriole Park in Camden Yards almost three decades ago.
It’s easy to be critical of stadiums as economic development projects. The key to success, maybe, seems to be creating entire neighborhoods, rather than just a stadium surrounded by clear-cut acres of parking lots.
And of course you never want the bonds to be secured by attendance, no more than you do the bonds sold to build convention centers to be backed by rentals. No, if you hope to pay off the bonds and avoid a generation of I-told-you-sos, you need annual payments from the team and a big diversion of sales taxes and hotel fees and whatever else you can throw at those bonds.
Then, of course, you risk critics saying how your city would be so much better off if you didn’t have to spend all that tax money on paying for the stadium. That’s called buyer’s remorse, and I wonder if Worcester will have it someday.
(Joe Mysak is a municipal market columnist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.)
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