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Baseball Stadium Proposal; A good deal? February 25, 2008

Posted by shaferfinancial in Uncategorized.
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Here in St. Petersburg, the baseball team is proposing a new stadium.

I thought I would post on this as an example of how value can be released from real estate and for those local why I support this proposal.

First off, this is not your typical get the locals to build us a sports stadium play by a “rich sport team.”  The existing stadium built in the early 1990’s sits on 86 acres of prime downtown land.  It is used aproximately 90 days a year for about 4 hours or 360 hours a year.  We have another site with a baseball stadium on it of aproximately 14 acres that is used even less (for spring baseball).  So we currently sit with about 100 acres dedicated to baseball and it generates about $1 million for the city.

The proposal is to move the stadium to the site of Al Lang which is currently a 7000 seat spring training baseball stadium that sits on 14 acres.  It will cost $450 million of which $150 million will be put up by the baseball team.  The other $300 million will be generated by the development of the 86 acre site that is now Tropicana Field.

This is really the central point of the proposal.  St. Pete has 86 acres of downtown land that generates less than $1 million in city revenue.  Proposals  for redevelopment will be mixed used commercial and residential and will dramatically increase the amount of tax money collected.  Over the likely 30 year lease the rays will sign for the proposed stadium it is likely that between $500 million and $1 billion in ADDITIONAL tax revenue will be collected.  A developer will pay at least $150 million dollars for the land.  That is a lot of value released to the city.  So here is the math; a minimum of $650 million of value released to the city in exchange for $300 million to build a new stadium.  Now this does not include any additional revenues that might be generated to businesses in the vicinity.  The bottom line is that the current stadium is built as a surburban stadium which does its job of bringing people directly off the highway to the stadium parking lot and into the stadium then back to the parking lot and home.  The new stadium design is a different model which would require folks to walk or take public transportation a short way from dispersed parking lots to the stadium.  In other cities, with this model, local businesses see a increase in their revenues from having millions of fans walk by their buisness.  So it is likely that additional sales tax revenue as well as successful businesses will materialize.

So is this proposal in the best interest of the citizens of St. Petersburg? Let me add these facts:

Minimum of $350 million in additional city revenue;

15,000 temporary construction jobs;

2,000-3,000 permanent jobs;

Additional revenue captured by local business;

Public transportation built up;

Additional commitment from Ray’s (Both $$ and time);

$1 Billion dollars in hidden value released by redevelopment of current field site; and

Continuation of a 80 year history of baseball on the Al Lang site.

These reasons give me confidence in supporting this proposal.  On top of all this we are in a recession of undetermined length with our two biggest industries suffering (tourism and real estate).   

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