By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
Back in ancient times (August, actually), County Judge Robert Eckels made an offer to Astros owner Drayton McLane: the county would build McLane a $250 million ballpark, as long as McLane contributed $100 million of the total. The proposal, Eckels said at the time, was fiscally responsible and reflected a proper balance between public and private funding similar to deals that had been struck for new stadium projects in Phoenix, Milwaukee, Detroit, San Francisco and other cities. "It is not a giveaway to a private sports franchise," he said, "nor will economic conditions permit it to be."
Eckels' line of thinking paralleled that of the now-forgotten Houston/Harris County Sports Facility Public Advisory Committee, which in its final report this May argued that the local sports franchises "must contribute to funding new facilities in a way that: 1) is competitive with similar arrangements in other cities and 2) reflects the value that franchises receive in utilizing a new facility." Or, as one committee member vowed at the time of McLane's threats to sell the team to a northern Virginia buyer if he didn't get everything he wanted from a new facility, "We're going to call Drayton's bluff."
But in a high-stakes poker game, you don't have to show your hand if everyone else folds. And as the recent letter of intent signed by the city, county, McLane and Enron's Ken Lay indicates, no one was prepared to see if the Astros really could find a new home in northern Virginia. In fact, the deal as it currently stands is one of the best ever cut for a franchise owner -- in any sport.
Start with McLane's supposed contribution of $37 million toward the grand total. According to the agreement, McLane would make annual payments of $3.3 million to the county, which are presumed to cover his share. In other cities, such payments are usually known as "rent." And $3.3 million is cheap rent at that -- the Texas Rangers, for example, pay the city of Arlington as much as $5.5 million a year in rent and ticket surcharges.
That payment might be in line if the city or county shared a percentage of the concessions, advertising, parking, luxury box sales or other stadium revenues. The Colorado Rockies split ticket sales with the city of Denver. The Cleveland Indians get most (though not all) ticket and luxury box revenues from the new Jacobs Field and a portion of the proceeds from vending, advertising and concessions. Last year the Balti-more Orioles paid the state of Maryland admissions taxes, rent and a percentage of ticket sales totaling about $5 million, as well as half the advertising and concessions revenue and all the parking money.
But in the new downtown Houston ballpark, Drayton McLane will get to keep every penny paid out of patrons' pockets.
Not only that, but the agreement gives McLane the right to sell the naming rights to the new facility, even though he won't own one brick or a seat in the place. Such naming rights brought in $30 million for Denver's Coors Field. To attach its name to the new stadium in Milwaukee that hasn't opened yet, the Miller Brewing Co. paid $40 million. Assuming McLane can peddle naming rights for what the Brewers commanded in Milwaukee, he can bank the money from the sponsorship and practically pay his rent off the interest from it.
The deal also throws $15.5 million at McLane to buy out the sweetheart lease on the Astrodome he inherited when he bought the team from John McMullen. His annual Astrodome rent of almost $1 million will be forgiven for the three years that it takes to build the new ballpark. And as a bonus, Harris County will cover $1.5 million in improvements to the Dome that, until now, the county has insisted was McLane's to bear. The total package in Astrodome abatements is worth almost $20 million.
As for Eckels' previously stated insistence that McLane, not the county, be responsible for any cost overruns on the stadium project, that condition, too, was negotiable. Nowhere in the letter of intent are overruns mentioned. In announcing the agreement, the various parties said that the contractor for the project -- and not McLane or the county -- will be responsible for overruns.
Eckels spokeswoman Sally Lehr said this method of shifting responsibility to the builder is being tried successfully in Milwaukee and Seattle. But there is some evidence to indicate otherwise. In Milwaukee, where the cost of the park was legislatively limited to $250 million, a recent architect's estimate of $313 million had the city scrambling to shave features from the design to meet the goal. And it's not clear that Milwaukee can meet the legislative mandate and still please Brewers owner Bud Selig. While the original design called for a totally enclosed, heated and air-conditioned park to maximize attendance during Milwaukee's cold spring and hot summer months, the latest proposal is based on more of an open-air concept, though still with a retractable roof.
In Seattle, meanwhile, a King County Council oversight committee has expressed concern about cost overruns on its proposed park for the Mariners that the county, not the contractor, would apparently be stuck with if the budget was exceeded.
Budget-busting seems to be the rule, not the exception, on new stadiums. The Gateway project in Cleveland, of which Jacobs Field is a part, ran up $28 million in cost overruns. The new ballpark in Phoenix blew $65 million past its budget to a total of $343 million, and Arizona Diamondbacks owner Jerry Colangelo must pay for the difference.
Lehr noted that the letter of intent is but a preliminary document, and that the terms of the agreement are subject to change. It seems unlikely, however, that McLane would be willing to back away from publicly announced terms at this point.
No wonder McLane was willing to miss those absolute deadlines he'd said were so important and commit the Astros to remain in Houston for another 30 years. Figuring at least some mild boost in attendance from a new park, he'll be able to compete with the major-market teams and spend freely on high-priced talent to keep the team competitive well into the next century. No sweat.