Baseball math is intense. It’s called Sabermetrics, or the specialized analysis of baseball through objective evidence. It painstakingly collects every minor tidbit of information, weighs each statistic against all known variables and computes a prediction; it even addresses margin of error.
It would be great if the City of St. Paul took this approach to analyzing it's current downtown stadium proposal.
It’s designed as system of due diligence. Running the numbers, running them again, and predicting the future outlook against all known variables.
St. Paul is in the process of building a new $66 million stadium for an independent professional baseball team with a known $29 million construction shortfall.
Ballpark Construction Capital Cost Breakdown:
|Environmental Remediation [add't]||$8.8 million|
|Local / Utility Improvements [add't]||$3.3 million|
Upfront Capital Cost Breakdown (by Municipality / Private Entity):
|State of Minnesota|
|Economic Development Grant||$2,000,000|
|City of St. Paul|
|Capital Improvement Budget||$1,500,000||* Redirected from local infrastructure|
|Neighborhood Funding (STAR)||$1,500,000||* Redirected from local neighborhoods|
|Public Works Budget||$1,500,000||* Redirected from Public Works|
|Riverfront TIF Fund (Redirected)||$1,500,000||* Redirected from Riverfront TIF Area|
|Sale of Previous Stadium||$3,000,000||* Sale to Port Authority (PPP)
* Spending $700k to demolish old stadium
|Total||$9,000,000||* Agreed to provide $17 million|
|*($8 million shortfall)|
|St. Paul Saints Organization|
|Total Monies Available||$37,500,000||
* $66.6m Total Cost with
The St. Paul Saints have promised a $10 million contribution: $1.5 million will be paid upfront for stadium development, while the other $8.5 million will be paid in rent over the next 25 years; approximately $340,000 per year (or around $6,800 rent per game). The St. Paul Saints won’t own the stadium, so the $6,800 per game contribution is more akin to a rent. In the financing scheme, the baseball team has the advantage as they are able to spread their contribution (and financial risk) over 25 years while accuring no debt [more here].
When looking to mitigate risk and maximize public return on investment, finding long-term, sustainable funding sources for infrastructure is essential. In this case, St. Paul has a funding shortfall of $8 million from it’s promised $17 million. Where the remainder of funds is coming from is currently unknown. If a city isn’t able to cover upfront capital costs, how confident are you that they will be able to afford on-going, long-term maintenance costs of the infrastructure without pulling resources from other city essentials?
A question that reaches beyond scrutinizing numbers: why would you break ground on a stadium site in 5 days without a clear understanding of how to address an $8 million funding shortfall? (The $8 million municipal shortfall still doesn’t include the additional $8.8 million in unfunded environmental cleanup liabilities).
Running quasi-sabermetrics on the game-to-game operations doesn’t yield great returns either. The Saints currently average an attendance of approximately 4,911 per game (current capacity = 6,069). Let’s give them the benefit of the doubt that they can add an average of 1,000 additional people into the seats per game in the new stadium.
(5,911 people x $10 ticket) x 48 home games = $2.83 million ticket sales per year
These aren’t new ticket sales, so the $2.8 million is deceiving. Under the assumption of an additional 1,000 fans per game, the number reveal much fewer ticket sales.
(1,000 people x $10 ticket) x 48 home games = $480,000 new ticket sales per year
$480,000 of additional revenue will be generated per year; most of which will go to the St. Paul Saints. Even considering sales tax, this is not an economic windfall considering the City will be effectively paying $680,000 per year (amortized over 25 years) for what amounts to a 16 percent increase in ticket sales revenue. For St. Paul to make up its end of the financing bargain, they would need to immediately impose a $1.13 tax per ticket sold over the next 25 years, not accounting for debt service payments.
Let’s see how the numbers work:
|Revenue Generated [Beer]|
|MN Liquor Excise Tax Per Gallon||$.08 per gallon||* 8 pints per gallon ($.01 per beer)|
|MN Sales Tax||.09 percent||* Percentage is rounded up|
|Cost of Beer||$4.00||* Estimated average beer price|
Per pint of beer, the tax revenue works out to be approximately $.36 cents. Now, let’s assume each $1,000 additional fan buys 1 beer; that’s $360 in new revenue generated from alcohol sales per game. Over the course of 50 games, this generates around $18,000 in new revenue. Yet, when you examine the long-term liabilities of stadium financing and costs, does this number even move the dial?
You run the numbers. Do they add up?
Baseball, and sports for that matter, play an integral role in our lives. I coach baseball, play in numerous Rec Leagues and have friends who write ridiculously detailed (and occasionally insightful) pieces for major online publications covering everything (for example; Power Ranking Every Minnesota Vikings Team of the Past Decade). Sports are an important element of society, but that doesn’t mean we shouldn bend over backwards to accommodate if we’re not in a position to afford it.
Of all the stadium deals out there, St. Paul isn't the worst. There are bigger fish to fry. The stadium is tucked into a part of downtown unlikely to see development and it will add a social element to downtown that can't be rivaled at the current stadium. It's not a bad design either. I just wish I was writing this under circumstances where the financing was under control.