Archive for Gwinnett Braves
Mr. Todd Cline
Gwinnett Daily Post
P.O. Box 603
Lawrenceville, GA 30046-0603
Dear Mr. Cline,
In your weekend editorial G-Braves hit a homer with Coolray Field (February 20), you praised the naming rights deal for the County’s minor-league baseball stadium.
At a time when the economy is pitching shutouts, the G-Braves came up with a big hit in the form of a sponsor to purchase naming rights for the stadium. …
Chairman Charles Bannister said “we’re in good shape” financially with the stadium, but this week’s announcement will only help ensure that. Plus, it’s a neat name, a nice double play for the team and the county.
The season doesn’t start until April 8 at Coolray Field, but both entities can already chalk up a victory.
When the financial plans were first presented to the public, the County claimed that a naming rights deal would cover $500,000 per year of the annual debt service. This deal, if correctly reported by County officials, will give the County an average of $265,000 annually for its first 17 years of operation (recall that the first year netted no naming rights payment).
This amount is about half of what County officials claimed they would be receiving from naming rights. How can you fail to report this detail and then declare this deal to be a victory? Would your sports editor declare the season a victory if the Braves won only half the games they planned to win? Would your circulation manager declare victory if only half of paid subscribers received their papers?
Update: The Gwinnett Daily Post published the letter.
After going a year without a naming rights deal in place, which forced the county to turn over the job of finding the rights to the Braves, it was announced yesterday that the Gwinnett Braves’ stadium will be known at Coolray Field for the next 16 years. Exact financial details were not released, but even if County officials are to be believed, the deal supposedly nets the County $4.5 million over the life of the deal.
If we just do a simple breakdown of the dollars by year ($4.5 million/16 years) that comes to $281,000 per year. And if we break out out by 17 years—because we need to count the lack of revenue captured in the first year—the County has reached a deal to generate an average of $265,000 per year. How does this stack up with their initial revenue projections?
“This will represent about $4.5 million to the county over the length of the deal,” Gwinnett Convention and Visitor Bureau executive director Preston Williams said. “It falls in pretty closely to the financial model we were working on for the stadium. This is a significant deal and a good one in tough economic times like these.”
Pretty close? The County anticipated $500,000 in annual revenue from a naming rights deal. How can getting half of what you expected get be considered pretty close?
And then government officials once again roll out the canard that the stadium is somehow in the black because a car rental tax is generating revenue for the stadium (not to mention the GCVB kick-in that is funded by revenue from Gwinnett Arena which was funded by a hotel tax).
The county was able to cover the lack of naming rights revenue during the stadium’s first season because of higher than anticipated revenue from a 3 percent tax on rental vehicles that was passed to help pay for construction.
“We’re in good shape,” Bannister said. “Financially, it is working out just fine and I’m excited about the future.”
You see, if you take the revenue from a totally unrelated item and apply it to the stadium, it’s breaking even. Unbelievable. By this rationale, every government project has a balanced budget. It’s so good to see those hard-nosed fiscal conservatives on the Gwinnett Board of Commissioners demonstrating responsible financial management.
Yesterday, I received a call from a reporter working on a story regarding the economic impact of a minor league baseball team. These calls have become rather routine, but yesterday’s call was a bit more interesting.
The reporter, Louis Llovio, was checking into a claim made by Richmond Flying Squirrels executives that the team would generate as much as $40 million a year in economic impact to the community. I’m accustomed to exaggerated claims of non-existent benefits, but $40 million is outrageous. To put this in perspective, that’s more than double the $15 million that Gwinnett County officials claimed the Gwinnett Braves would generate, and I’ve been quite clear about that number being a farce.
Here is my response.
“That is so laughable I don’t know what to do,” he said of the prediction of $40 million in annual economic impact.
Bradbury said economic-impact studies are based on faulty assumptions.
Those projections “assume people are spending money they wouldn’t otherwise be spending” on movies, dinner or other forms of entertainment, he said.
“What the fans are doing is relocating money from other entertainment” to the baseball team, he said.
That means the money is already in the local economy and would have stayed there regardless of a sports team.
He also said that most minor-league players don’t live in the area and their salaries are relatively low, so they don’t pump much into a local economy.
No sweat. Almost as if it came from a can, time to say good-byes and move on. But, I couldn’t hang up without asking how the executives justified this estimate, and I heard the following.
That figure, he said, is based on a Minor League Baseball formula that takes the amount of revenue generated by the organization and multiplies it by five.
At which point I literally bent over double laughing. Count gross spending as net new spending and multiply it by five! I asked for clarification, “Did you say ‘five?’” No wonder. $8 million is ridiculous enough without a multiplier of five. I’ve seen a lot of PR studies that use multipliers greater than one (for which there is no empirical justification) and most are less than two—even Gwinnett used 1.7—but five? Wow! As the kids would say, ROTFLMAO.
If the Flying Squirrels are angling for a new publicly-funded stadium, such claims aren’t going to build much trust with the public. They wouldn’t stand for it with the Braves, and I don’t expect them to start now.
Commission Chairman Charles Bannister said the budget will provide for maintaining and bolstering core services but will maintain cuts in other departments imposed earlier this year.
The budget includes $974 million in operating funds and $349 million in capital funds.
Revenues are expected to increase by $72.8 million, primarily due to the county’s move last week to increase its portion of the property tax rate by 21 percent. Because billing for the tax increase — about $160 for the owner of a $200,000 house — will not occur until March, the county will receive revenue from the 2009 tax hike in 2010….
Capital improvements — buildings, land purchases and renovation — will take the biggest hits next year. Special purpose sales tax expenditures will be cut in half from $384 million in 2009 to $181 million in 2010.
County officials have said they want to delay new construction projects during the economic downturn, especially those projects that require staffing. Salaries and other operating costs are classified as operating expenses and cannot be paid through sales tax dollars.
The Gwinnett County Elections Office has issued applications to recall three county commissioners. The move comes one week after the five-member board voted 4-1 to increase the property tax rate by almost 21 percent.
Recall applications were filed for Commission Chairman Charles Bannister, District 1 Commissioner Shirley Lasseter and District 3 Commissioner Mike Beaudreau. Commissioners Kevin Kenerly and Bert Nasuti, who both voted in favor of the tax hike, are not seeking reelection in 2010. Beaudreau was the commission’s lone dissenter on the vote.
There’s nothing like a high-profile example of things going wrong in a predictable manner. From WSJ:
Now, four years after that decision gave Susette Kelo’s land to private developers for a project including a hotel and offices intended to enhance Pfizer Inc.’s nearby corporate facility, the pharmaceutical giant has announced it will close its research and development headquarters in New London, Connecticut.
The aftermath of Kelo is the latest example of the futility of using eminent domain as corporate welfare. While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other “desirable” elements. Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.
That’s especially galling because the five Supreme Court Justices cited the development plan as a major factor in rationalizing their Kelo decision. Justice Anthony Kennedy called the plan “comprehensive,” while Justice John Paul Stevens insisted that “The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue.” So much for that.
The lesson learned? Let the private market handle economic development, because it’s much better at doing so than the government. What we see in sports stadiums applies to other projects as well.
Thanks to Craig Calcaterra (via Facebook) for the pointer.
The Gwinnett Stadium continues to “pay for itself from day one” as promised. How about a $168,000 shortfall?
Patrick Fox writing in the AJC.
The county, which had predicted $200,000 in revenue from parking proceeds this year, received a check for $9,188 to cover parking from May-September. The Braves had paid the county $22,342 for parking in April, the first month of the Gwinnett Braves season.
Wow, what a shocker. Fox ends the story with “More to come,” so check back at the AJC link for more updates.
Berry College economist Frank Stephenson has a nice Op-Ed on Rome’s bid to keep the NAIA football championship in Rome, Georgia.
Although there are other tourism benefits beyond lodging revenues (e.g., dining revenues), it’s hard to imagine that these effects from hosting the NAIA Championship are large when the lodging benefits are apparently miniscule. Spending more than $3 million on Astroturf and other renovations in pursuit of economic benefits from hosting the football would be a dubious proposition in the best of times. Doing so now, with many families struggling and local unemployment exceeding 11 percent, is unconscionable.
It turns out that you don’t have to meet owner demands for a new stadium to host a minor-league baseball team.
The sign outside The Diamond still proclaims “Home of the Richmond Braves,” but Richmond and its 24-year-old stadium will have a new professional baseball team beginning next spring.
After months of delays, the long-anticipated relocation of the Class AA Connecticut Defenders was announced yesterday by regional and team officials who gathered at The Diamond in front of a banner that read, “Play Ball!”
“We’re here to say baseball is back,” Richmond Mayor Dwight C. Jones said.
Richmond has been without pro baseball since the Class AAA Richmond Braves moved to a new $64 million stadium in Gwinnett County, Ga., after the 2008 season.
The Atlanta Braves severed their 43-year relationship with Richmond after growing frustrated by the outdated condition of The Diamond and the lack of progress on a long-term stadium plan.
Though there’s still no plan or even a timetable to get one, owners of the Defenders franchise said they’re ecstatic to come to Richmond and plan to spend at least $1.5 million to upgrade The Diamond by opening day in April.
Gwinnett County District Attorney Danny Porter on Monday requested a special grand jury to investigate questionable land purchases by the county’s Board of Commissioners, he announced Monday….
Each land deal involved politically connected developers who had ties to county commissioners who pushed for the purchases, which were at inflated prices and based on questionable appraisals.
Funny, almost exactly one year ago, I was told by an AJC reporter (no longer with the paper) that a potential conflict of interest relating to the Gwinnett Stadium site wasn’t newsworthy. Details here and here.
Addendum: Oh, and the Gwinnett Daily Post doesn’t even mention the story. Nice work.
The title of Patrick Fox’s article in today’s AJC exactly describes what happened.
The deadline has passed for Gwinnett County to garner the lion’s share of money from the sale of naming rights for the Gwinnett Braves Stadium in Lawrenceville.
The county had until midnight Monday to secure a deal, which would have given it all the proceeds above the first $350,000. Terms of the contract now call for the Atlanta Braves to receive the first $350,000, the county to receive the second $350,000, and for both to split anything above that level.
It also calls for the Braves to take over shopping the stadium to a corporate sponsor.
This essentially kills the County’s pie-in-the-sky expectation of garnering $500K per year—about 20% of the annual debt service on the stadium bonds—from naming rights. I predicted this would happen almost as soon as the deal was announced; yet, the County blames the economy instead of its obviously unrealistic projections.
“I believe the Convention and Visitors Bureau did everything they could to market it,” said County Administrator Jock Connell. “It’s just unfortunate that we find ourselves in the midst of one of the worst economies that anyone can remember — not an environment conducive to naming rights deals.”
I guess it’s a good time to remind readers that Jock Connell said that the stadium would pay for itself from day one. The economy certainly isn’t helping, but the initial revenue expectations were outrageous for a booming economy.
But don’t worry, the County still has the ability to pay for the stadium with…taxes.
“The good news is that, based on the current performance, our rental car tax has been outperforming what we forecasted, and so we have made all our debt service payments … without the naming rights revenue.”
So, it’s “good news” that Gwinnett residents with car trouble are paying more than anticipated for the stadium?
My proposed name for the stadium: Nasuti’s Folly.