MLB and the Rays. All About the Money
A Major League Baseball team withholding paying rent? Where have we heard this before? Oh yes, George M. Steinbrenner III didn’t pay his rent to New York City about a decade ago because of whatever reason George had. It was during the time when George decided that the rebuilt Yankee Stadium wasn’t his cup of tea anymore and that he needed a new Yankee Stadium somewhere and New York’s mayor at the time, Rudy Giuliani really wanted George to move his business from the Bronx to Manhattan’s west side.
Giuliani, whose perceived perception is one of a tough guy not taking stuff, never did push Steinbrenner on the rent issue. Rudy was a Yankees fan after all and was in awe of George Steinbrenner.
Eventually George got his new baseball stadium-mall complete with all the revenue generating gadgets that all the other boys were getting in cities across the United States.
Tampa Bay Rays’ ownership wants the same toys and gadgets that the other boys have that they don’t have at the St. Petersburg domed stadium. The solution is to get out of the dome and into a stadium that has club seats, luxury boxes and plenty of room for concession areas, restaurants and a huge video board in Tampa.
It has been suggested by the St. Petersburg city council that Tampa Bay Rays ownership won’t give the city any money to break the lease at the domed baseball stadium in the city that Major League Baseball Commissioner Peter Ueberroth told area officials not to build in the late 1980s. The stadium was built and the market was used and abused by a number of Major League Baseball owners who played the leverage game with their local governments. The threat game. The owner had an open market — Tampa or St. Petersburg — and by golly if the local government in Chicago and Illinois (Jerry Reinsdorf and his Chicago White Sox) didn’t jump high enough to build a new stadium, then that owner was going to move to the Tampa Bay area.
Ueberroth was unimpressed with the St. Petersburg market and the idea of the domed stadium in the city. Ueberroth also suggested teams only sign 20 year lease agreements with cities to use a local municipally built stadium.
In 2013, that locally funded dome and the length of the lease have caused Major League Baseball many concerns. The Rays ownership led by Stu Sternberg apparently was willing to negotiate some sort of exit deal with city officials that would allow the franchise to move to a new stadium somewhere. The city wanted compensation to let Sternberg out of the lease that was signed by the team’s original owner Vincent Naimoli after Major League Baseball finally granted the area an expansion franchise in 1995. Naimoli, ignoring the Ueberroth Doctrine (Major League Baseball disposed of Ueberroth as the business’s commissioner soon after his 20-year-doctrine was announced) inked a 30 year deal which married the franchise to St. Petersburg between 1998 and 2007.
The lease exit strategy has apparently hit a roadblock. St. Petersburg officials claim Major League Baseball Commissioner Bud Selig won’t allow Sternberg to proceed with the buyout negotiations. St. Petersburg officials are looking for a financial package that includes a stipend or a rent payment through 2027 and have Rays’ ownership to pay for demolition costs of the building and also take care of any outstanding debt on the stadium.
MLB probably doesn’t want to court on this matter. Selig himself, as a former investor in the Milwaukee Braves, knows firsthand what judges think of Major League Baseball. Milwaukee went to court in 1965 and forced the Braves franchise to finish out the 1965 season in Milwaukee and then the franchise moved to Atlanta. Baseball does not fare well in the judicial system as Selig could attest.
Tampa Bay was a “hot” baseball market for leverage but not necessarily one that owners really wanted.
Reinsdorf’s White Sox stayed in Chicago. There were flirtations with George W. Bush when he was the managing general partner of the Texas Rangers when that franchise was looking for a new ballpark in the Dallas-Fort Worth metroplex. There was the Minnesota Twins fling (a franchise that was slated to go to Greensboro, North Carolina at one point in the late 1990s until a stadium referendum lose ended that wanderlust in North Carolina). The San Francisco Giants franchise ownership kicked the tires in the market as did the Seattle Mariners franchise owners. The 1989/1990 baseball expansion committee studied the market carefully but went with Miami and Denver as 1993 expansion cities instead.
Major League Baseball was sued by Frank Morsani, a local Tampa businessman, who charged the company with reneging on a deal to give Morsani an expansion franchise in Tampa shortly after Morsani was told Tampa would not be given an expansion franchise in late 1990. Morsani filed the suit in 1992. The two sides reached a settlement of the suit in 2003, long after Naimoli got the MLB expansion franchise in 1995.
Morsani bought 42 percent of the Minnesota Twins franchise in 1984. MLB didn’t like that and instead told Morsani to back off and that he would be given an expansion franchise. He also tried to buy the Texas Rangers and move the franchise to the Tampa market. That never happened.
The only reason the Tampa Bay market ended up with a Major League Baseball team had more to do with the Phoenix market than Tampa Bay.
The NBA’s Phoenix Suns’ owner Jerry Colangelo spearheaded the Phoenix baseball stadium drive. He wanted a Major League Baseball team and went back to Phoenix-area politicians to make his pitch. They listened.
In 1994, the Maricopa County Board of Supervisors (despite huge budget deficits and cutbacks in the funding of services) said yes to Colangelo and gave the go ahead for a quarter-cent increase in the county sales tax to pay for a part of the stadium’s cost. There was a string attached, the approval had to come by March 31, 1995 which meant Major League Baseball had to either relocate a team to Phoenix (unlikely as there was nowhere to play in Phoenix) or expand. MLB awarded Phoenix and St. Petersburg teams beginning in 1998 when the Phoenix stadium would be completed.
The Maricopa sales tax hike was a problem.
Maricopa County residents were not allowed to vote on the issue of funding a baseball stadium with general sales tax revenue. In August 1997, Maricopa County Supervisor Mary Rose Wilcox was shot by Larry Naman after leaving a county board meeting. The shooter testified in court that Wilcox’s support for the tax justified the attack. In May 1998, Naman was found guilty of attempted first-degree murder.
Colangelo had his stadium whether Maricopa County residents liked it or not. Colangelo’s stadium was supposed to have cost $279 million but the ballpark actually price tag was over $350 million and Colangelo’s group had to make up the difference. Colangelo’s group paid $130 million for the expansion team, there was the cost overruns and a high payroll and throw in the fact that Major League Baseball didn’t give the Phoenix-based Arizona Diamondbacks and Tampa Bay full revenue sharing between 1998 and 2002, and that nearly caused the team to declare bankruptcy by 2004.
It seems that the Diamondbacks financial problems have been fixed but the Rays ownership gets money from Major League Baseball through revenue sharing and that seems to be a sore spot among Major League Baseball owners.
The exit negotiations will go on.
Ideally, the franchise ownership would like to end up in Tampa. Will the franchise leave the market? Probably not, at least not in the foreseeable future. One potential court case involving Major League Baseball and the city of San Jose could impact the future movement though of the franchise. San Jose is suing Major League Baseball because the business, the city alleges, will not allow the Oakland A’s owner Lewis Wolff to bring his team into the city.
San Jose filed the lawsuit on June 18 contending that MLB’s refusal to allow Wolff to move his business to San Jose is a violation of the Sherman Antitrust Act. Major League Baseball said it has an antitrust exemption thanks to a 1922 Supreme Court of the United States ruling that baseball was a game and not an interstate business in a case involving the Baltimore Terrapins ownership of the Federal League. The Terrapins franchise was not paid off by American and National League owners to go away after the demise of the Federal League in 1915 unlike most of the Federal League owners who got a payment or were able to get ownership of either a National League or American League team. The Baltimore owners sued to get go away money. They never got it but Major League Baseball was the big winner in the judicial system.
Major League Baseball got an antitrust exemption which means the business does not have to operate under normal United States business laws and can act as a monopoly. MLB wants the San Jose lawsuit dismissed.
If the San Jose suit proceeds and MLB is found in violation of antitrust laws (and this could take years to decide) that could give Sternberg other options including the New York City area –where three teams once resided, the Yankees, the New York Giants and the Brooklyn Dodgers—- or some other open baseball territory.
It seemingly has been decided however that St. Petersburg isn’t where Major League Baseball wants to be. What hasn’t been decided though is how long it will take before St. Petersburg says goodbye to the Rays baseball franchise at the Dome. That still may take years before a final solution is determined.
Evan Weiner can be reached at firstname.lastname@example.org. His e-book, “The Business and Politics of Sports, Second Edition” is available at Amazon.com and his e-books, America’s Passion: How a Coal Miner’s Game Became the NFL in the 20th Century, (https://itunes.apple.com/us/book/americas-passion-how-coal/id595575002?mt=11), From Peach Baskets to Dance Halls and the Not-so-Stern NBA (https://itunes.apple.com/us/book/from-peach-baskets-to-dance/id636914196?mt=11) and the reissue of the 2005 book, The Business and Politics of Sports (http://www.barnesandnoble.com/w/business-and-politics-of-sports-evan-weiner/1101715508?ean=2940044505094) are available at www.smashwords.com , iTunes, nook, versent books, kobo, Sony reader and Diesel and in India, flipkart.
Tags: MLB - Tampa Bay Rays