The Art of Negotiating a Deal
As part of the 100th anniversary of Wisconsin’s statehood, Milwaukee politicians and business leaders began an ambitious revitalization of the city. Part of the project included replacement of Borchert Field which was constructed in 1888. Milwaukee was home of the minor league Brewers who were owned by Boston Braves, proprietor Lou Perini. County Stadium was the first fully financed ballpark paid for exclusively by public funding at a cost of $5.8 million. Seating capacity was initially 14,000 but included in the architectural drawings was a possible expansion to 28,000 seats.
The Braves were a losing proposition in competing against the Red Sox and the owner saw County Stadium as a possible escape. Perini privately entered into discussions with Milwaukee politicians who agreed to increase capacity to 36,031 at the taxpayer’s expense. The rental price for use of County Stadium was the best in the major leagues for an owner who did not own the ballpark. In the first two years of the lease agreement, the Braves paid $1,000 annually. For the next three years, the Braves paid the city of Milwaukee five percent of the ticket and concession sales. After the five-year period, the parties agreed to negotiate a new lease. This was be based on the financial reports of the club. The Boston Braves in 1953 became the first major league team to relocate since 1903.
By the thirteenth home game, the Braves already surpassed the entire attendance for their 1952 season in Boston. Milwaukee set a new all-time major league attendance record with a turnout of 1,826,397. This was accomplished with tickets going on sales only three weeks before that season started. The Braves became the first baseball team to exceed the 2 million mark in attendance and annually led MLB at the gate until the Dodgers move to Los Angeles in 1958. Unknowingly, Dan Perini had set the blueprint on how to secure a great financial deal by relocating a franchise.
The Los Angeles Dodgers and the Most Lucrative Stadium Deal in Baseball
Brooklyn Dodgers owner Walter O’Malley’s deal with Los Angeles still today ranks as one of the best agreements made by any stakeholder of a franchise. Los Angeles officials offered a site of 350 acres in the area known as Chavez Ravine. Of the proposed 300-acre site, the city of Los Angeles owned only 185 acres. The remaining land had to be purchased by the city and then turned over to O’Malley. The property was sold to the Dodgers owner for $2.4 million, when in reality its real worth was later estimated to be valued at $15 million once cleared and ready for development. O’Malley covered the cost of the land purchase and construction of Dodgers Stadium by selling of excess land at Chavez Ravine. This made a handsome profit.
Why Chavez Ravine Changed the Economics of Baseball Stadium Deals
The new Los Angeles ballpark with a capacity of 56,000 was much larger then the 35,000 housed at Ebbets Field. More important the Chavez Ravine had a parking capacity of 16,000, which New York in all of their proposed sites, was unable to even come close to (Ebbets Field accommodated 700 cars).
Dodgers Stadium officially opened in April 1963, with the team setting a new major league attendance record of 2,755,184. In the first twenty-five years of their existence in Los Angeles, the Dodgers led baseball in attendance twenty of those years.
The San Francisco Giants and the Power of Lease-Based Negotiations
New York’s other National League team the Giants, also played in an outdated facility that no longer suited the requirements. The Polo Grounds last refurbished in 1911, was never designed for baseball. Unlike his Dodgers counterpart, Howard Stoneham did not have funds to purchase a site or build a new ballpark; he required a lease arrangement.
Unable to secure a new site in New York, Stoneham looked for alternative cities. Minneapolis and San Francisco came forward with proposals, which upon inspection, favored a move to California. San Francisco provided the land at no cost in addition to $10 million ($109 million in todays dollars) for construction of the new stadium. Stoneham had input on the design in addition to final approval of the new facility, plus exclusive rights to what became Candlestick Park (the city eventually reneged on this part of the deal, allowing the NFL San Francisco 49ers to use the stadium). Rental for the Giants was $125,000 per year or 5 percent of gate receipts, if greater. Minneapolis by comparison wanted an annual rent of $496,000 per season. In addition, to the favorable lease, the city of San Francisco agreed to an additional $5 million expenditure on local improvements surrounding the ballpark, which included parking for 10,000 cars. Revenues generated from the concessions were allotted to the Giants. Opened in 1960, the Giants season attendance of 1,795,356 was second only to the Dodgers.
How NFL Relocations Escalated Stadium Demands Nationwide
The successful move of the NFL Raiders by Al Davis from Oakland to Los Angeles in 1982 made relocation of a football team a reality. It was this move that in fact allowed Rams owner Georgia Frontiere to justify uprooting her team to St. Louis. Six years after the Raiders shift in 1988 the Cardinals departed St. Louis for Arizona. Confident in being awarded an NFL expansion franchise, the three levels of government (city, county and state) approved construction of a new domed stadium. Construction began in 1992 and was completed in 1995 at a cost of $280 million ($538 million in todays dollars). Based on a twenty-five-year amortization, the state’s annual cost was $12 million, while the county and city each contributed $6 million to pay off the costs. In 2021 the cost of the stadium would be paid off.
The St. Louis Rams Relocation and the Cost of Chasing an NFL Franchise
In 1993, the NFL expansion committee awarded franchises to Charlotte, North Carolina and Jacksonville, Florida over St. Louis. With no further expansion on the horizon, St. Louis officials began an aggressive search to convince an existing team to relocate.
Rams owner Frontiere stated that because of the dwindling attendance, the team on average had lost $6 million per year for the period 1992-1994. Having to share the Los Angeles market with the Raiders, was the major reason in the downturn in attendance and cause for the annual team deficit.
No financial statements were provided by Frontiere to back up the stated figures, but her argument swayed the fraternity of owners to allow for the Rams to move.
Breaking Down the Rams’ Relocation Package
Frontiere, a native of Missouri, was in favor of relocating to St. Louis if her demands were met. The bill presented by Frontiere totalled $64 million, in addition to a favourable lease and additional revenue streams. From this amount:
$26 million was to be paid to Anaheim for the breaking of the lease;
$10 million to the NFL for a relocation fee;
$13 million for team relocation costs, and;
$5 million for the construction of a new practice facility
In addition, there was $5-10 million set aside for improvements on a brand-new stadium. Even two thousand parking spaces were allotted to the organization at a cost of two dollars. These could be used by the team to resell at any price, with the team keeping the revenues.
Similar to St. Louis, Baltimore having lost the Colts in 1984 to Indianapolis, was confident the city was to be awarded an NFL expansion franchise. In 1993 Baltimore was one of five cities that vied for one of the two viable expansion franchises, but lost out to Charlotte and Jacksonville. City and state officials began their pursuit to convince an existing team to relocate to Baltimore.
The Cleveland Browns Move to Baltimore and Maximum Owner Leverage
Cleveland Browns owner Art Modell had been in never ending negotiations to persuade the use of taxpayer’s money to fund renovations at Cleveland’s Municipal Stadium. Ohio governor George Voinovich made it clear there was no money available for the construction of a new stadium or a stadium renovation. Modell felt he was being dealt with unfairly, considering the MLB Cleveland Indians had successfully made a deal that resulted in the construction of Jacobs Field. The new ballpark represented a significant loss to Modell, since the Indians paid him rent for use of Municipal Stadium. Modell claimed the Browns lost $21 million over the 1991 and 1992 seasons. All told, the team was in debt $40 million and he had reportedly borrowed $10 million from the banks, just to cover operating costs. Among the annual leaders in NFL attendance, combined with a lucrative national television deal (to which he was a main contributor in the negotiations), made the public skeptical about these proclamations.
Modell found a willing partner in Maryland that was willing to acquiesce to his demands if he relocated the Browns. Baltimore proposed to build a new stadium, projected at a cost of $200 million ($420 million in todays dollars), at no cost to Modell. In addition to the construction of a new facility which was rent free for twenty-five years, Modell received:
All revenues generated from concessions, parking, stadium advertising and naming rights;
A new $15 million training facility, and;
$60 million for relocation costs.
The team did have to pay a management fee to the Maryland Stadium Authority, to operate the stadium. Modell paid the city of Cleveland $11.5 million, which covered the lost rental revenues that Stadium Corporation would have to paid for the three remaining years in the lease. Additionally, it covered the cities legal fees and administration costs. Modell was able to use a portion of the relocation fees provided by Baltimore, to cover these costs.
Why Stadium Negotiations Consistently Favor Team Owners
At the press conference that made the official announcement, Modell was asked why he left Cleveland. His response was “I had no choice.” NFL owners have carte blanche in their demands for stadium retrofits or new facilities altogether, with the threat of other cities willing to offer a better deal. Although proprietors in MLB, the NBA and NHL do not hold as large of a bargaining chip as their NFL counterparts, they are able to extract better terms with the ever-present threat of Leaving Town. With each new agreement between an owner and the city it which they reside, marks a new starting point in the next negotiation process.