Field of learning

Benjamin Grove

Saturday, Jan. 1, 2005 | 3:19 a.m.

Las Vegas can learn a lot from the deal struck last month to bring the Montreal Expos to the nation's capital.

"The question you have to ask," District of Columbia Council member Harold Brazil said, "is: 'How bad do you want baseball?' "

The two-year saga of Washington's anguished courting of baseball was a tutorial for cities, such as Las Vegas, that are hunting big league teams.

Washington, the front-runner of several cities, including Las Vegas, bidding to be the next home of the Expos, went through a tumultuous ordeal that ended dramatically Dec. 21 with a final-hour resolution to a potentially deal-breaking impasse.

Washington learned that baseball owners demand a lot -- a sparkling new stadium, for starters, along with a host of other financial concessions.

The city learned that devising a stadium financing package that is both attractive to baseball and tolerable to taxpayers is no easy feat. Another lesson: Baseball doesn't have much patience for bickering among the city officials who are supposed to be selling the league on a pitch. And -- deals don't happen overnight.

What Washington also found was that it's not easy to land a team, even if you are the favorite. It's not enough to "be the prettiest girl at the dance," one insider said.

Navigating the dance floor of baseball deals can be tricky, experts and observers of the Washington experience said. They offered this advice on how to go home with a Major League team.

If you build it ...

The first, most important step in luring a team is devising a strategy to offer owners a new or dramatically renovated stadium, experts said. Deals won't get done without one.

In an era when taxpayers and corporations typically foot the bill for new stadiums, team owners won't pay a dime, insiders to the Washington deal told the Sun.

In the end, Washington won the Expos because it simply offered baseball a better deal, said Charlie Brotman, the former Washington Senators announcer, who has long been a vocal advocate for the return of baseball to the nation's capital.

Washington had an available temporary stadium the city said could be ready by April. Washington also offered a public financing package to pay for a new stadium at no cost to baseball, said Brotman, who closely followed the council deal.

"It's an expense. It's an investment," Brotman said. "It's business."

The Expos deal was complicated by the fact that Major League Baseball team owners collectively owned the team, which put more pressure on the league to get the most it could for its members.

Despite the projected cost of a stadium in Washington, which rose as the deal dragged on, Washington eventually agreed to pay for it because that was the price of getting the team, several D.C. council members said.

Baseball has a lot of negotiating power through its antitrust exemption, which gives the league sole control over whether and where teams move, Brazil said.

"Baseball doesn't make it easy," Brazil said. "They've got a monopoly and they drive a hard deal."

Las Vegas needs a strategic plan, public support and, most importantly, stadium financing before it can lure a team, Smith College economics professor Andrew Zimbalist, a sports economics expert, said. Las Vegas will have to put together a pitch to convince investors that the city's "undersized" media market can fill a stadium and support a team, he said.

"It's always going to be a three-shift town, where you've always got one-third of the town who can't go see a game," Zimbalist said.

Las Vegas may need a specially designed stadium with more high-end seating and luxury boxes because it likely would draw fewer working-class fans than most big-city stadiums, Zimbalist said.

But backers of baseball in Las Vegas note that the city's tourism industry, with 38 million visitors a year, could pump a lot of people into the ballpark to make up for market size.

With planning and some creativity, the plan is "doable" in Las Vegas, Zimbalist said.

Public vs. private

Experts say cities can expect to cobble together a package of both "public" funds -- taxpayer money -- and "private" funds -- investment from corporations that want some share of stadium concessions.

The deal in Washington offered Las Vegas an example of what baseball will accept.

The D.C. council ultimately voted to pay for a new stadium with public funds through a gross receipts tax on its biggest businesses, the cost of which likely would be passed on to consumers. City officials in the next few months also plan to secure corporate money to ease the burden on residents.

Although opponents have harshly criticized the plan as a giveaway, the final deal was as good as it gets, Brazil said.

"We couldn't have modified the deal much more from what it was, or (baseball) would have gone to Las Vegas or Portland, (Ore.) or some other deserving city," Brazil said.

But nearly half the council -- and half of the city's residents, according to a Washington Post poll -- said Mayor Anthony Williams could have gotten more from baseball.

Washington Councilwoman Carol Schwartz sarcastically congratulated baseball for its negotiating prowess.

"They cleaned our clock," Schwartz said.

The proposal to bring the Expos to Las Vegas relied on private financing that was not as much of a guarantee to baseball as the public financing deal Washington offered.

Baseball officials view public money as a guarantee because tax revenue is typically a steady stream of income.

The Las Vegas deal, submitted to Major League Baseball in May by two private groups -- Teamscape and Las Vegas Stadium Co. LLC -- included a $420 million glass-and-steel stadium to be constructed behind Bally's and Paris Las Vegas, with Caesars Entertainment Inc. acting as landlord.

Las Vegas city officials have said they don't expect the public financing issue to be a problem in future deals in Las Vegas, largely because they expect substantial private money could be raised to pay for a stadium, leaving little for the public to pick up. But for now it's not clear which corporations would step forward with serious cash.

Las Vegas Mayor Oscar Goodman has led recent efforts to push the idea of a downtown stadium with a financing package that would include some sort of a tax break. The city has used incentives and tax breaks for projects such as the Las Vegas Premium Outlets.

In an interview Thursday, Goodman said it is too early to know how much public money, and how much private money, would make up the city's next proposal. The city's plan to land baseball is still in the earliest stages, still a "glint in my eye," he said.

But Goodman hopes the financing package could be mostly private money. He said the city could offer incentives, including land, referencing a downtown parcel. Clark County's development agency also has the power to raise up to $8 million in bonds to jump-start a redevelopment project, including a stadium.

But the county likely would need the permission of the state Legislature to raise other kinds of taxes for a stadium -- and Goodman said that's not a likely scenario. "I don't see that happening," he said.

Stadium deals around the country offer this valuable lesson for Las Vegas: Find private financing if you can; otherwise, devise public financing deals that voters could accept.

Stadiums in recent years average roughly 60 percent public financing, Zimbalist said.

Of the nine major league stadiums built or renovated since 2000, six have relied on more than 50 percent public financing.

The San Francisco Giants owners eventually agreed to pay for the new $315 million SBC park with nearly all private financing, but only after voters refused to pay for it four times.

In Cleveland, public financing paid for 48 percent of the Indians' $175 million Jacobs Field, opened in 1994, through a voter-approved alcohol and cigarette tax.

And in Colorado, voters agreed to a one-tenth of 1 percent sales tax in six counties in the Denver metro area to pay most of the cost of the $215 million Coors Field, home of the Rockies baseball team.

That was a "marketable" amount, said Don Hinchey, who was administrator of the commission that led the effort to bring baseball to Denver from 1984 to 1990.

"It's really a pittance," said Hinchey, now vice president of communications for the Bonham Group, a Denver-based sports marketing firm that advises corporations and teams in stadium deals. "It was very palatable to the electorate."

The tax paid for the public's share of the stadium within 10 years, Hinchey said. "That was the price we had to pay," he said. "That was the price of our admittance into Major League Baseball for Denver."

Be a team

Experts say Las Vegas needs to assemble all the pieces of a complete financing package, and then assemble a savvy leadership team to shepherd the deal.

The city council, the mayor and other lead players must be unified in their pitch to baseball, observers said. That was the lesson learned in Washington where disharmony almost killed the deal, they said.

Critics of Williams said the D.C. mayor never had the support of a majority of the council, including Chairwoman Linda Cropp, when he negotiated the deal with baseball on behalf of the city. Cropp and six other council members revolted and threw the deal into jeopardy by crafting new requirements for private financing.

One week later -- just 10 days before baseball said it would walk away from Washington without public financing guarantees -- a narrow majority of the council stripped those requirements out and approved the deal with the guarantees.

The lesson is clear, insiders said.

"If you are going to put a major strategy in front of a board or council, you'd better be very confident it's going to pass," said Gary Adelson, head of the media, sports and entertainment group of Los Angeles investment banking firm Houlihan Lokey.

Washington Councilman Adrian Fenty, who opposed the baseball deal, had additional advice for Las Vegas' leadership team: Don't bow to baseball -- negotiate from a position of power. Washington should have demanded that baseball owners make some investment in the stadium, Fenty said.

The mayor gave up too much too soon in his negotiations, Fenty said.

"We had unbelievable leverage early," Fenty told the Sun, "and we squandered it."

Williams should have sought a deal with the council early that included investment by both private interests and baseball owners -- a deal the public could swallow, said Steve Weiss, who led NO DC Taxes for Baseball, which lobbied against public funding in Washington.

Baseball owners eventually would have caved and agreed to invest some of their own money, he said.

"No one had ever stood up to them before," Weiss said.

Experts caution city negotiation leaders to understand that baseball deals are not about the sunny summer-afternoons-at-the-ballpark rhetoric that deal-makers use to build taxpayer support. Behind closed doors, it's about money. Team owners are looking for the biggest profit, just like any other business.

"Baseball owners are, if nothing else, greedy," said Dennis Coates, economics professor at the University of Maryland, Baltimore County, who specializes in sports economics.

Coates summed up his advice for team-hunting cities: "Get real public support, and if you've got that, make baseball an offer it can't refuse. And that's just a boatload of money."

Best 'salesman'

Cities benefit from an effective leader who acts as point person on a deal -- a hard-nosed negotiator who is also media-friendly and can project optimism when backroom negotiations are flagging, observers said.

Critics such as Weiss said Williams was a tin-eared politician and not a charismatic leader for the plan.

Is Goodman, the former mob lawyer long in the spotlight, the man for the job in Las Vegas? So far he has been the epicenter of the push for a Las Vegas team, saying that the city would be next to get a team.

Sports deal makers and other observers took note when Goodman showed up with an Elvis impersonator and a showgirl on each arm at a baseball meeting in Anaheim last month.

"He has real style," Weiss said. "It looks like he is a real salesman."

But Las Vegas leaders would do well to read their audience in future negotiations, said David Carter, principal in the Sports Business Group, in Redondo Beach, Calif. Many big-league sports executives are quiet conservatives who are uncomfortable with flamboyant displays, Carter said.

"That may work in some settings, and less so in others," he said.

Observers also noted that the public face of a deal doesn't have to be a politician at all. A powerful personality empowered by elected officials to shepherd the deal, someone like Hall of Famer Reggie Jackson, likely would make a good leader, observers said. Jackson said he is leading a group of investors who want to buy a team and he has said Las Vegas is an attractive venue.

Go to the brink

Washington's deal wasn't unusual in that it was decided in the ninth inning -- snatched from the trash bin at the final council meeting of the year, observers said.

"The fact of the matter is, a lot of horsetrading goes on in deals like these," Hinchey said. "And these deals are typically done in the 11th hour."

In fact, last-minute negotiating often pays dividends, experts said. Fans appreciate a team even more if there was a real risk of losing it, Hinchey said. More importantly, deadline pressure can yield new benefits for the city that enhance -- or assure -- a deal.

Cropp won several new concessions from baseball one day before the final council meeting, including a lower city penalty if the stadium is not finished on time.

Of course, deals can also collapse at the last minute.

"That's the risk you face," Hinchey said.

Another lesson: Major League Baseball doesn't hold all the cards, said Neil Alpert, organizer of a group called DC Baseball PAC that advocated to bring baseball to Washington. The city had leverage late in the deal because baseball was already "on the hook" with Washington, he said. The team had opened operations in Washington, selling tickets and merchandise.

Baseball faced headaches trying to place the team by April if the deal fell through. Plus, the league didn't want to be viewed as greedily sticking it to the nation's capital, said Alpert, who is also a political consultant with Capitol City Advisors.

"You get baseball to commit to something publicly, and you go from there," he advised.

Weather the storm

Vocal, media-loving critics will dog every deal, insiders said. It's best to anticipate their arguments early -- or quietly get them on board.

"A lot of this is just politics," Brazil said.

Some critics have legitimate criticism that should be taken seriously, said Carter, who noted that historic preservationists in Pasadena, Calif., helped improve a Rose Bowl deal. Negotiating directly with critics can make the deal more attractive to the general public, Carter said.

"When you walk away from a negotiation and everyone's angry, then it's probably a pretty good deal," he said.

Baseball Commissioner Bud Selig in the Washington Post noted that Wisconsin residents once opposed the financing package for Lambeau Field in Green Bay. They wanted hospitals.

"You have to remember that every stadium deal is bitter everywhere. I have never seen a single exception," Selig said in the Post. "But today they call Lambeau Field 'the shrine.' "

Stay at the plate

Washington proved that patience pays, insiders said.

"You have to be a tough negotiator to make sure a contract is in the best interest of the citizens and not just in the interest of baseball," said weary D.C. Council member Sandy Allen, shortly after the deal was finalized. "It's a constant negotiation."

Hinchey was administrator of the Denver deal for six years, and the Colorado Rockies didn't even play their first game in the new Coors Field for another five. Acquiring a team "is more of a process than an event," he said.

Washington Councilman Vincent Orange likened Cropp's efforts to a batter hitting "foul ball after foul ball" as she sought to craft a deal the city and baseball could accept.

The lesson for cities like Las Vegas, Orange said: "Stay at the plate, and keep taking your swings."

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