B'ham Barons Make Beeline for City Tax Dollars

B'ham Barons Make Beeline for City Tax Dollars
Hey! Look! A Birmingham Baron! // Chicago Tribune

There are a couple of ways owners of minor league teams can go about generating higher revenue.  One way is to arrange for the most popular athlete on the planet to play right field for your bus league franchise, and then reap the pecuniary windfall resulting from the Jordan Effect.  Another, more conventional route, involves persuading a host city to empty their coffers for your new baseball complex.  Don Logan, principal owner of our White Sox affiliated Birmingham Barons since 2005, after what this author can only assume was an exhaustive though ultimately doomed search for another transcendent professional athlete who might instantly double attendance, has decided to go the direction of the public financing thing.

The Barons are relocating from Hoover, Alabama after moving there from Birmingham in 1988 during what was then the popular trend of moving sports stadiums out of blighted urban areas and into more affluent suburbs.  We may consider the move out of Hoover unfortunate if only because it was pretty cool to have White Sox farmhands sucking up grounders in a town that shared its name with a popular line of vacuum cleaners.   But we can take solace in the fact that the Barons are moving back to a city known colloquially as “B’ham,” which kind of looks like Bam!, which seems fitting of a team walloping baseballs out of the park.  But that won’t be this Barons team, made up of White Sox prospects whose collective hitting has been described as “a disaster.”  Anyways, where was I?  Oh yeah…

Because bringing the team back to the city of Birmingham appealed to the backers of publicly funded Railroad Park development downtown (think along the lines of Central Loop TIF fund kind of arrangement between the municipality and private developers), the city’s boosters and PR machine was in full “Bring back the Barons!” mode by the time the city council voted on funding a new ballpark in 2010.

Lamentable realities like city budget deficits are nothing in the face of a good hoopla, and Birmingham’s elected council members didn’t want to be party poopers, voting 8-1 in favor of financing a new Baron’s ballpark in full, committing at that time $48 million to the project.  The city’s costs have now ballooned to $64 million and include an adjacent Negro League museum and $600,000 to buy out the Baron’s five year lease in Hoover, strangely signed after Birmingham had decided to fund a new stadium and the Barons had announced their intention to leave Hoover.

The full court press on politicians and the public always comes with “economic impact studies” paid for by the private ownership groups maneuvering for city funds.  A “feasibility study” in Birmingham found that a ballpark “could potentially bring in” hundreds of thousands of square feet of office and retail space, hundreds and hundreds of housing units, resulting in a $100 million tax-revenue pot of gold for the city that may or may not have a map of lost pirate treasure tucked inside.  Another privately funded study found that a ballpark downtown “could generate” more than $500 million in “direct and indirect spending” in B’ham over 30 years, presumably in the form of gold dust sprinkled over the town by magic pixies riding flying unicorns.

"When you look at revitalizing your community, it's important to have a thriving downtown," remarked Birmingham City Councilman Johnathan Austin to the Birmingham News, "The baseball stadium and Railroad Park will be an economic driver for downtown. We're not just building a baseball stadium, but investing in our inner-city infrastructure. The commitment the mayor and council has made in this park will pay off."

And the Mayor of Birmingham too is sprightly.  "As the city solidifies its plan for the ballpark and people begin to see site clearance and construction, that's going to be a big vote of confidence to other investors who want to come into that area," Mayor William Bell said. "There is going to be a lot of follow-on investment in that immediate area, and I think it's going to follow closely behind demolition and construction start on the baseball park."  I guess nothing screams investment opportunity like demolition!

The lone dissenter of note in B’ham is City Council President Roderick V. Royal.  But how an elected official could justify going against the grain on a project that has everyone in such a good mood is beyond me.

“[S]tadiums built over the past 10 years or so are in the hole or otherwise the teams cannot pay the host city's rent or fees,” wrote Royal in the Birmingham News.

Oh I get it.  He’s actually informed.

“In Alabama,” Royal contends, “downtown teams are struggling. In fact, according to the office of the mayor of Mobile, the Bay Bears receipts ‘plunged in 2009’ but began to slip before 2005. The result? The Mobile Bay Bears were reportedly in the hole in back rent to their host city by nearly $1 million.”

But the city of Mobile is booming from the proverbial investor confidence that came with all of the clearance, and demolition, and construction right?  The “economic driver” and “revitalizing” and all that?  Ehhhh, not so much (unemployment rate higher and per capita and household incomes well below national averages).  And Mobile is not alone.  According to my guy Neil DeMause, dozens of studies by sports economists over the last thirty years have found that shiny new sports facilities had “no measurable economic impact” or even decreases in economic activity in the cities that shell out for their construction.

There are a variety of reasons that ballparks do not spark the kind of economic activity predicted in privately funded impact studies.  For one, baseball parks are walled in venues where food, drink, and merchandise are all readily available; they are not conducive to the free flow of consumer activity to surrounding restaurants, bars, or retail stores.  The fact that sports facilities do not draw patrons daily or year round is another deterrent for potential adjacent businesses.  Also, consumers tend to have set leisure budgets, so if locals don’t spend their money on a baseball game, they’ll spend it at the movies or going bowling (or watching a movie about bowling).  This means that there is little money being generated by a ballpark that wouldn’t otherwise be spent at some other establishment.  In terms of employment, sports teams might employ around a hundred people in their front offices and many more in crummy, part time, service industry jobs.  Not the kind of “job creation” often advertised.

There is nothing new or innovative in the Birmingham stadium deal that suggests it will be profitable for the city where others have not been.  The city may earn around $315,000 annually from a revenue sharing agreement, plus $400,000 a year in rent.  The Barons have sold the naming rights for the park to Regions Financial (the new stadium will be known as “Regions Field”), and the city will earn an estimated $200,000 a year on that deal.  Even if all the money comes through, this hardly seems to justify an investment of more than $60 million.  And as Councilman Royal alludes to, these rent and revenue agreements often come with stipulations that allow teams to wiggle out of their obligations if attendance is down.  Or they just say they can’t pay, and there is not much the city is willing or able to do to get teams to pony up.

But wait!  B’ham is going to recoup their investment from an increase in lodging taxes, paid for by the impending hordes ready to descend upon Birmingham with unbounded appetites for minor league baseball!  As tax-paying White Sox fans, we know how this is going to turn out.  The “field of dreams,” writes Royal, “will be paid for by the city's normal cash flow if the lodging tax revenue does not come in as expected.”

Councilman Royal goes on to ask: “In a city where 23 percent, or 46,000 people, live below the poverty level, a city that has borrowed to keep from using emergency reserves, a city that has cut its employee pool by some 4 percent to save money and is seeking to cut more, a city where its most serious natural disaster occurred just 90 days ago and, finally, a city where a smaller fraction of the lodging tax could arguably be better used to fix transit for good, we're going to build a baseball stadium?”

Well yes, apparently.  And Stan Logan, son of Don, the Don of the ownership group Birmingham Barons, LLC., who has been in charge of handling club-seating and luxury boxes at new Regions Field, says that pre-sales have been going swimmingly.  "What we're seeing is a lot of pent-up demand for this park to come to fruition," Stan said.  Adjacent to club-level seats will be closed-off large bar area.  "It will be the area where people will go to mingle and network with corporate, city and community leaders.”  Great!  Poverty?  City budget problems?  This makes a lot of sense.  A $60 million project to enhance mingling!

Meanwhile, an astounding 41.9% of children in Birmingham lived below poverty level in 2009 according to city-data.com.  That’s basically double the national average, which in and of itself seems way too high.  In light of this, one would hope that if the city was able to get their hands on an extra $60 million, they would allot it to public education, day care centers, after school programs, or maybe public sector jobs for struggling parents.

Instead, the city continues to cut public services (and the jobs that go with them).   "This is not a good time to be poor in Birmingham," writes Eddie Lard in the Birmingham News, "With record budget deficits, the mantra...is to cut spending. That means big cuts in programs that help the poor."

Big cuts in programs that help the poor, and big spending on projects that help wealthy sports franchise owners.

The Birmingham deal couldn’t be sweeter for the Logans and Birmingham Barons LLC.  They are off the hook for their plush new ballpark.  The White Sox pay their players’ salaries.  Their new contract with the city gives them control of concessions and most of the ticket and luxury suite revenue.  I’m not sure where Barons LLC is kicking in, except to provide some bats and balls.

Anyways, being White Sox fans and having had hundreds of millions plundered from our city’s treasury by Reinsdorf & Co., there is something kind of adorable about the excitement in the small city of Birmingham, home to our Double-A Barons, where they’re forking over tens of millions for a baseball stadium and calling it "investing in our inner-city infrastructure."

Adorable like Bambi before he meets Godzilla.

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  • "What we're seeing is a lot of pent-up demand for this park to come to fruition," Stan said. Adjacent to club-level seats will be closed-off large bar area. "It will be the area where people will go to mingle and network with corporate, city and community leaders.

    mingle? haha, that's freakin' hilarious! who knew the 1% was interested in hanging out with the working class!

    another solid piece lamberti. fegan did good bring you here

  • In reply to The Wizard:

    Thanks for another vote of confidence. And James might appreciate it too, since originally I blackmailed my way on to this blog by threatening to never cease making lots of stupid jokes in the WSO comments.

    I don't want to turn this into a big business or "1%" bashing forum. It's easy to do, it might make us feel better, but it doesn't really get us anywhere, and the problems we're facing are more complicated than that. Also, this is a White Sox blog for chrissakes!

    My political views are what they are, but I hope readers value what I bring to this blog even if they don't agree with me on everything. It's my intention first and foremost to raise some questions and hold some folks accountable, often from the White Sox operations side. Somebody should.

    That said, since you allude to the occupy movement, I guess it's worth noting that Regions Financial, who will pay an estimated $400K yearly for the naming rights to the new Barons ballpark, accepted a $3.5 billion bailout from the federal government in 2008. They still owe that $3.5 billion to the government, most of any bank in the country as of Sept 2011.

    http://dealbook.nytimes.com/2011/09/14/some-banks-hang-on-to-bailout-billions/
    http://projects.propublica.org/bailout/entities/406-regions-financial-corp

  • In reply to Chris Lamberti:

    Well said in regards to the political bent, and emphasizing edifying over campaigning. I would like all the people nice enough to give me a chance to talk baseball to feel comfortable, no matter their views.

  • It's my intention first and foremost to raise some questions and hold some folks accountable, often from the White Sox operations side. Somebody should.

    absolutely. and all your arguments are well sourced.

    from the dealbook link:

    The $19 billion owed by banks is down 14 percent from May. The decline is partially a result of dozens of banks repaying their debts using a separate pool of government funds. Under a new program intended to encourage small-business lending, smaller banks can exchange their rescue money for cheaper capital, provided they meet certain lending targets.

    so, they're repaying their gov't loans with new cheaper gov't loans. I bet the new loans have a lower interest rate...

    since originally I blackmailed my way on to this blog by threatening to never cease making lots of stupid jokes in the WSO comments.

    hey, I have a lot of stupid jokes too. maybe I can...

    :p

  • In reply to The Wizard:

    Like I said, the problems we face are complicated.

    Having stupid jokes is not enough. You have to show a willingness to be nonsensical and a penchant for self-debasement at a rate of at least two or three jokes per day. For months. Maybe then you'll draw enough ire and pity to be considered for a contributor position on a blog somewhere. Good luck.

  • In reply to Chris Lamberti:

    nah, I don't have any such intentions. I was just joking!

  • In reply to The Wizard:

    Unfortunately, I was serious. This is my life!

    And um . . . Go Sox!

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