Stuart SternbergIt is no secret that the Tampa Bay Rays want out of their contract with the city of St. Petersburg that binds them to playing at Tropicana Field until 2027. But one secret that was revealed is that the Rays don’t want to pay the city anything to break the de facto lease, according to Chris O’Donnell and Michael Sasso of the Tampa Tribune.

“Talks between the Tampa Bay Rays and city officials about the team’s lease at Tropicana Field have stalled, largely because team officials say they won’t pay the city any compensation if the Rays leave the stadium before the contract expires in 2027, according to two City Council members…That hardline stance was the Rays’ response to a city offer allowing the team to move to a new stadium if it agrees to pay an undisclosed amount for every year remaining on its lease and to pay for demolition costs of the Trop and any outstanding debt on the stadium, said City Council Member Bill Dudley.”

AMOK, AMOK, AMOK!

But wait, there are a couple of things going on here:

1) Bud Selig and Major League Baseball are now officially involved in the stadium negotiations and that means a more hard-line stance.

2) This sounds horrible and in some respects it is. But make no mistake, this is just a negotiating tactic.  By offering nothing, Major League Baseball is just saying, “we hate your offer” and are going to offer the other extreme. No good negotiation starts with the best offer. Both sides start at the extremes and you hope they can find a common ground in the middle.

3) Bud Selig is willing to accept the role of the villain. This is great for the Rays. If the negotiations were just between the Rays and St. Pete, the fans and residents would take sides and it would be even uglier. Now the Rays’ ugly demands are being credited to Selig and the league’s office in New York. This was clear last week when Mayor Bill Foster blamed Major League Baseball for the stalled negotiations and not the Rays.

4) But keep in mind that Selig works for the owners. And the owners are tired of giving money to the Rays in the form of revenue sharing when it looks like there is little hope that the current situation will improve. Recently, Stuart Sternberg met with local business leaders and told them that the only thing keeping the team afloat is revenue sharing. Of course, what the other owners really don’t want is the perception that the Rays are profiting off of revenue sharing. And according to Nick Cardo of the Boston Globe, the only reason the Rays were able to trade for David DeJesus was because the team was “under budget” this year. Profit and loss is not that simple with the Rays, who work on multi-year budgets. But it sounds bad and looks bad for other owners.

What’s next?

It has long been accepted that the Rays would have to offer the city something. And I have long argued that it was going to take something more than cash. It is going to take something more creative in which the Rays worked with either the state or the city of Tampa to offer St. Pete something tangible for the residents of St. Pete (e.g. something similar to the discussion around giving St. Pete a stake in Tampa’s cruise industry, something that turned out to be impossible).

Eventually, Major League Baseball is going to have to offer St. Pete something. The city gains nothing by letting the Rays walk without compensation, even if it is just across the bay. So St. Pete will hold out and will take their firm contract to court if needed.

On the other hand, MLB has little with which to threaten St. Pete. What city is stepping up and making a big play for a baseball franchise? The most common city that fans bring up is Charlotte. But that is not happening after they just built a triple-A stadium with public money.

Until MLB comes up with a legit threat, this is a weak stance by the Rays and MLB. But make no mistake, if a legit threat does step up, it will be real. Unlike other teams that have threatened to move and did not, the other owners don’t like this market.

But in the meantime, don’t fret too much about the idea that the Rays want out without paying.

 
 

11 Comments

  1. Mike says:

    As I understand it, the city pays a lot of money towards maintenance of the Trop which are not even close to being covered by the amounts the Rays pay under the Use Agreement. I am fairly sure that all of the money the Rays pay under the Use Agreement (coming from naming rights, ticket sales, concessions, etc.) go into accounts to pay for stadium repairs and improvements, and the city has also needed to make contributions to these accounts to pay for the necessary expenses over the years. If the Rays are saying that the city can keep the money in these accounts, approximately $2.6 million in April just in the Capital Account, and then walk away from the lease after 2015 when the bonds have been paid off, then that is a perfectly reasonable offer. If the Rays leave after the bonds have been paid off (and they can’t get a new stadium built in time to move earlier) the city will very likely save money by having the Rays leave. The city will claim that it is losing money based on the intangible value associated with having a professional sports team, but good luck proving how much these intangibles are worth in court. As a result, the city is likely to obtain squat from the Rays in a lawsuit seeking damages for breach of the Use Agreement. Foster can keep dreaming about enforcing the specific performance provision in the use agreement to force the team to stay for the entire term, but I really can’t see a court, even in Pinellas County, entering such an order as it would be contrary to well established law. I think the only court that has ever entered a similar order is in Minnesota, and that order was only on a temporary basis, not a permanent injunction. There is simply no way a court could order anyone to perform a contract for the next 10 years or how ever long is remaining on the agreement.

  2. Gus says:

    Sad to say, but all of you criticizing the St. Pete mayor as being short-sighted don’t realize that Tampa-Hillsborough don’t have enough public $ to do anything here. I fear this is the nose under the tent that lets the Rays leave Florida.

    If the other owners are grumpy about revenue sharing, then they should pledge revenue sharing $ to finance the construction of a new Rays stadium ($50M a year for the next 10 years would get you a pretty good ballpark). In 10 years, the Rays are cut off from the revenue share and have to survive on their own. Many of the faults of the Trop are because MLB yanked this area around so much in the expansion process, the stadium got built on spec and was dated before it opened.

    NFL is doing something similar in Santa Clara for 49ers and I think helping in Minnesota. (MLB will probably never do it, but that is what the area should demand).

  3. s says:

    Cork,
    Please answer a few questions with your best educated guess.

    1. how many teams do you think receive revenue sharing close to the amount of the Rays? who do you think they are? my guesses, SD,Oak,Mia,Pitt,Mil, and maybe KC.

    2. do you think that the marlins still receive a large share?

    3. what attendance would make stu and MLB happy? 30K?

    4 do you believe that 5 years into a new stadium, the Rays will be able to draw a 30K? or be out of the bottom 10 in the league in attendance?

    Like i’ve said in the past, the revenue sharing(welfare) system in MLB ISN’T going away, if so, then the league will be reduced to 20 teams. Without it(both big and little contributions), there’s probably a dozen teams that won’t turn a profit. THE BIGGEST FACTOR IS THAT THE RAYS KNOW HOW TO WIN AND BUILD A TEAM OFF OF WELFARE PAYMENTS, AND THE OTHER TEAMS DON’T. if we were at the bottom of the AL EAST then we wouldn’t be having any of these “vaporization” discussions.

    • Beth says:

      I agree, the other teams don’t seem nearly as upset when teams take revenue sharing money and lose.

      But as for payments to the city: wouldn’t the lease agreement spell out penalties for breaking the lease? This seems like the sort of issue that should have been negotiated upfront.

      • Cork Gaines says:

        That’s why the “lease” is considered the most air-tight in sports. And the biggest issue is that it is not a lease at all. It is a “use-agreement.” So instead of the Rays being a “tenant” with certain rights, they are more like a business partner for the city. And from what I understand that can potentially make the penalties even greater for the Rays. Instead of just being forced to pay the money lost from the Rays no longer paying the proper share to the city (e.g. Rays pay city a percentage of every ticket sold), the city could potentially argue that the loss of the Rays hurts the city in other ways beyond the baseball field. The penalties if this ever went to court could be huge.

        • Gus says:

          The “use” agreement distinction is important because the remedy for the City is “specific performance” — 81 games a year — not the lost revenue. That is why Foster talks about the investment his City (and his County) have made in the stadium and honoring that. This is just year 16 of a 30 year commitment.

          My more recent feelings (emphasized by Friedman and Silverman putting down roots on Snell Isle) is that the Rays know they have the best thing going at the Trop — they are in the sweet spot revenue-wise; no-risk profit every year AND very competitive. They could goose attendance 300K-400K by just pricing weekeday games more aggressively, committing to the Trop as the “home” for the indefinite future and not bad mouthing their own product. But the MLB pressure makes them go through this charade and the use agreement charges them more for each body that goes through the door, disincentivicing them to drive the gate.

          If the City and the Rays were negotiating in good faith, every fan after the first 1M would be no further cost to the Rays. But they seem way beyond that now.

        • Bob says:

          Just a guess, but I suspect the lease states “unless the MLB franchise ceases to exist.” MLB holds the atomic bomb, red button to end the lease – they can end the franchise. Stu then gets a check from MLB based on his contract with them, and life goes on. Selig will make that threat in order to get to an acceptable buyout on the lease.

    • Christopher says:

      Call me crazy, but in a faster & more tech world, I just don’t see baseball surviving in its current form in 50 years, much less 30. How many kids under 25 are really, truly into baseball? Ironic that the Rays are on the cutting edge so much…that they may be on the cutting edge of baseball being obsolete (i.e., Tampa builds a beautiful new stadium…& STILL can’t get 20,000 people to come).

  4. mp645 says:

    Stadiums stadiums..
    .
    1) The MN Twins have been around for over 50 years. The MN folks have built 3 stadiums for them. The present stadium is outdoors and that cost them many games because of MN April snowstorms, not to mention other weather calamaties. Except for 1987 and 1991 they have been losers. They never fill stadiums.

    2) San Diego built a lovely stadium about 2004 and the Padres are losers and probably get revenue sharing because it is a small share area.

    3) Miami got a $575 million dollar stadium and they are losers and they have lost in attendance in the past two years.

    New stadiums do not guarentee $$ or attenance increases or getting to the playoffs.

    The history of how badly St Pete wanted an MLB team is legandary. Tampa has the lion’s share of the tourist dollar, the Bucs, cruise ships, other pro and semi pro sports and ST Pete has the Rays. Why shut St Pete out?

    It is fair that MLB should have small market teams but not treat them as second clas teams. NYY, B Sox, NYM, LAA, LAD shoudn’t be the only teams in baseball. That brings us back about 100 years in thinking.

    The Rays don’ have 20 million folks within a small radius to draw from and never will. This could be said for about 1/2 of the MLB teams.

    Keep the small market teams alive….

  5. Joe says:

    “Accept the role as the villain”…to me in this ordeal, there is no distinction?! And from the commentary, is there really a difference between Selig and the Rays? No way.

  6. It reminds me of someone who buys a house next to an airport on the cheap and then demands that they shut it down because it’s too noisy and dangerous.

    If the Ray’s owners wanted a big market team, they should have bought the Dodgers.

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