Back in the grim fall of 2020, when the sports press didn’t have a lot of sports to write about and there was a U.S. federal election looming, ESPN turned its attention to the political power of the billionaire class that owns most of the big-league teams. Its reporting – and this may not surprise you – found that the owners tended to favour Republican candidates who would keep their taxes low and limit regulation.
Over the past few months, though, many of those same owners have demonstrated that they are evidently big fans of both taxes and government involvement in at least one specific area of their business: arena and stadium construction. Which is to say they’re happy to take government financing for their privately owned venues.
Across the United States, there’s a building boom unfolding, and in almost every case taxpayers are either helping to foot the bill or being threatened with the loss of their beloved team if they decline to pony up.
In the past two weeks alone, the company that owns the Washington Capitals and Washington Wizards secured US$500-million in local funding toward renovations of Capital One Arena after eyeing a move to Virginia; NBC Chicago reported that the White Sox chairman had met with local leaders to ask for at least US$1-billion for a new stadium; and the owners of Kansas City’s MLB club and NFL club said they would look at all options, including relocating the teams, if voters didn’t approve a sales tax that would have raised US$2-billion for stadium projects. (The tax was defeated in a referendum last week, but few believe the clubs are finished angling for public money.)
Which may be why Mark Shapiro, the president and CEO of the Toronto Blue Jays, couldn’t help but boast a little during a media preview last week, in which he unveiled the second phase of the club’s much-hyped $400-million renovation of the Rogers Centre.
“Every single one of our competitors throughout Major League Baseball would have been supported with a public-private partnership. This undertaking was completely privately financed,” he said, praising Rogers Communications Inc., the club’s owner (and his bosses), for their support.
A couple of hours later, I sat down with Shapiro in his office to discuss the strategy behind the club’s financial decisions. Given his comments about other MLB organizations and the gush of money flowing from U.S. taxpayers to sports teams, I was curious to know why the Jays didn’t at least try to pursue that path.
Shapiro seemed almost taken aback by the question. “No one here even thought that was an option, or a possibility,” he replied. “It wasn’t something we felt was appropriate. There’s no precedent for it.”
That’s not entirely true, I responded: The stadium itself was built with hundreds of millions in public funds. I was about to add that it was ultimately sold to Rogers for 4 per cent of the $570-million cost, but Shapiro interjected. “That was 35 years ago,” he said. “There’s not a modern precedent for it. It was not even a discussion.”
Shapiro and I had first met last April, just before the club unveiled the first phase of the renovations, and he’d walked me through some of the math behind the project. I was curious about the numbers in part because the club was known to be exploring the idea of building a replacement stadium. How could a renovation – which last year was pegged at a little over $300-million before cost overruns pushed it closer to $400-million – make sense?
He ticked off some of the revenue categories in which he expected improvements. “Ticket prices, sponsorships, F&B [food and beverage] – all the different areas that could be impacted,” he replied. “There’s a sophisticated [business] model, and it’s safe to say … it’ll get paid back long before we have to think about a new ballpark.” He figured a new stadium might be at least 10 or 15 years away; he expected the investment to be earned back in about half that time.
This time around, Shapiro dismissed my questions about when the money might be paid back. “We don’t have to pay it back. It’s paid.”
“The way you’re thinking about the money is not at all the way they think about money,” he continued, referring to Rogers. “At the time they allocate capital, we’re one of a lot of major projects for them, like wireless infrastructure.
“Something had to be done with this building. Either you have to tear it down and build a new building – you’re talking billions of dollars – or you’re just going to handle it like a team like Oakland handled it maybe, and just kind of patch it as you go.”
(The last major renovation of the government-owned Oakland Coliseum was in the mid-1990s; the A’s are now expecting to move to Las Vegas in 2028, where their new stadium will be supported by US$380-million in public funds.)
“But you’ve got to decide. Those are the two ranges, right? Completely new building – two-to-three billion – or just doing maintenance and upkeep. Or something in between.”
So, yes, the renovations have extended the lifespan of the Rogers Centre and renewed it as an entertainment destination. They’ve also created a nicer clubhouse and training centre for the players. But Shapiro is focused on how he expects the improvements to drive additional revenue – something in the range of $20-million to $30-million, he figures – which will be used, he said, to “offset the deficit spending we’ve been doing on the player-payroll budget.”
Meaning?
“We’ve been losing a lot of money,” he said flatly. “The largest expense is always player payroll. It’ll offset some of those losses.”
At least for a while. Soon enough, Shapiro will have to think about other things, such as the elements the club wasn’t able to take care of in this round of renos. He mentions family friendly sections, a refresher of the 100-level concession stands, the luxury suites, maybe some tribute to the team’s history.
None of which will forestall the biggest question. “The next step is to kind of pull back, evaluate, think about alternatives, determine whether continuing with renovating this building is the right way to go, or whether to consider a new stadium here or a new stadium somewhere else. Those questions have to be considered.” He paused. “Not for a couple of years.”