Sorry I've been out of touch so long -- let me know when you figure out how to use your e-mail, and I'll write more often. And thanks for giving me my choice of ambassadorships. Would've been nice, but I've been pretty busy trying to nail down this stadium deal out in St. Louis.
All those trips to Missouri have really paid off. It couldn't have gone any better last week when I inked the deal -- this will make that fortune you made with the Rangers (with my help, remember?) look like something the tooth fairy left under Jenna's pillow.
Giving Michael Pulitzer a piece of the team proved an outstanding investment. We couldn't have asked for better coverage from the Post-Dispatch. It was immaculately orchestrated -- a full-page ad in the sports section, a favorable editorial, a lengthy (and friendly) analysis of the deal by an economics professor, along with a fancy photo illustration that included the purported dollar figures with cheering fans in the foreground. On the front page, the headline blared, "Team Sets Big-League Standard," with a story that said we accepted one of the priciest stadium deals in baseball. Hah!
The only sour note was a short story -- buried deep in the front section -- that reported fans at Busch that day almost universally panned the deal, but who cares what they think? Plus, we held the press conference late in the day with no copies of the agreement available for the press, in case overly ambitious journalists had notions about reading the fine print and calling wiseguys who might be able to decipher it.
The pols outdid themselves. I couldn't believe it when the straight-faced mayor kept telling reporters the ballpark will pay for itself -- he even proclaimed this deal will produce $1 billion in annual economic-development activity in the city! Rep. Dick Gephardt and Gov. Bob Holden were also all smiles. "As you know from the high standards I established for any acceptable Cardinals' agreement, we at the state level, along with our friends in the city and county, drove a hard bargain with the Cardinals to reach this point," the guv gushed. "The agreement, in reality, will not cost our state taxpayers a dime." Strange words from a man who just gave me $100 million of taxpayer money to build the world's largest ATM -- and I'm the only one with the PIN.
Then there was baseball commissioner Bud Selig, who got the loudest applause when he promised to park his fanny in my new ballpark in 2006 to enjoy the annual All-Star Game -- they were like 10-year-olds celebrating the discovery of a 2-cent toy in a $2 box of moldy Cracker Jack. And I didn't even have to pay him to say, "There is no franchise anywhere in any sport that has a greater history and tradition than the St. Louis Cardinals." Guess the Budmeister never heard of the Boston Celtics, the Montreal Canadiens or even the New York Yankees (that would be the team of Babe Ruth, Lou Gehrig, Casey Stengel, Yogi Berra and Mickey Mantle, which has won 26 World Series, as opposed to my team's nine world championships).
Good thing I was standing behind the cameras -- even a stoic like me can only take so much. I was beginning to think these guys would believe me if I told them the starship Enterprise is now in orbit and ready to beam down stacks of krugerrands.
But that would have been wrong. The pitch was much more believable, if equally fantastic. Here's the deal: I put up $118 million and donate the land (thank God I won't have to pay those property taxes anymore). And they were all kind enough to take my word that my piece of dirt, now used as a bus-parking lot, is worth $20 million, so I can boast I'm really contributing $138 million (just $18 million more in cash than I offered in my opening bid -- not much more than keeping a couple of mediocre relief pitchers on the payroll for one season, let alone 30 years). The state kicks in $100 million, the city covers $60 million and the county coughs up $40 million. The city also reduces its tax on tickets from 5 percent to 1.5 percent after the first $85 million in gross sales.
Everyone except me is getting rooked here, but the county, which is coming up with its money from a hotel-motel tax used to pay off the TransWorld Dome, is getting rooked the least. Theirs is a simple, clear-cut deal, and when you're dealing with me, that's the best kind of deal you're going to get. At least Buzz Westfall knows upfront how much KY jelly he'll need.
It's a far trickier matter for the state and city, which are both putting up a lot more than the county. They've tried to cover their butts by swearing there'll be no new taxes -- that should go over well with state legislators, especially in an election year. They're counting on vaults full of new tax dollars from fancy luxury boxes and ballpark beer, but they'll be on the hook big-time if the players go on strike or a recession hits.
Not to worry. Even if attendance goes kablooey or the players go on strike or big corporations -- perish the thought -- move out of the city or projections showing tens of millions of dollars in new tax revenue prove flat wrong, there's still all that money from naming rights. If the increased taxes don't cover the public's debt service, the city (on the hook for $4.2 million a year) and the state (responsible for $7 million) can make up the difference with money from naming rights. That's what the guv and Hizzoner told 'em.
But only if forecasting mistakes aren't big, strikes are short and the city, already short of money for cops and decently paved streets, doesn't keep losing corporations such as McDonnell Douglas (now Boeing) and TWA (now American Airlines). No one mentioned this at the press conference, but, as you know from owning a ballclub and being president, the federal tax code says just 10 percent of the money used to pay off a publicly issued stadium bond can be private money like, say, money from naming rights. If it's more than that, the IRS says the bonds are taxable, which wrecks everything. Together, the state and city will pay $326 million over 30 years to service the debt. Let me do the math for you: That's $32.6 million ($43 million, if the county's share is counted) from naming-rights money that can be used to reimburse taxpayers if projections fall short. And I wish the public well. If projections are accurate and the city and state don't have to tap into naming-rights money, that cash will be used to pay for operating costs, capital improvements and maintenance, expenses that would otherwise be mine.
No matter what the Post-Dispatch says, I'm in charge of naming rights under this deal, and I should be able to get a lot more than $32.6 million for the right to name the home field of the most storied franchise in all of professional sports -- Enron Corp. is paying $100 million for the right to name the Houston Astros' ballfield, for chrissakes. I'm hoping to keep all the naming-rights money above $32.6 million, but I may need a little help from you. The feds have started auditing financing schemes for stadiums that make guys like me even richer -- just this spring, folks down in Memphis had to pay a $1.6 million settlement after the IRS ruled the Cardinals are the main beneficiary of a minor-league stadium built with tax-exempt bonds, which aren't supposed to be used for private purposes. And you can bet I'm keeping a close eye on Nashville, where the IRS is looking at the stadium deal cut by the Tennessee Titans, who get to keep all the naming-rights money for the Adelphia Coliseum. Even the tax enforcers haven't quite figured out whether it's kosher for multimillionaires like me to keep naming-rights money for ballfields built with tax-exempt bonds and paid off by taxpayers. "It's an emerging issue that we in the IRS even need to clarify to ourselves what the tax ramifications are," IRS field manager Charles Anderson told the Nashville Tennessean. "There are so many new deals coming forward and they're all different." I'm sure I can count on you to give the right guidance to the IRS.
Of course, there's a lot more than naming rights here. Just like at Busch, I'll collect pouring rights for breweries and soda companies, leases for luxury suites that will cost upwards of $150,000 each season and ticket receipts, including money for premium club seats for which I can charge $100 per game (and there'll be more than twice as many club seats at my new park as there are at Busch). It gets even better. I may not have to fork over much, if any, cash for rent. "Actually, I think that the Cardinals' primary obligation [under the lease] will be to maintain the stadium and use it and keep it up in terms of capital improvements and keep it in first class condition," says Greg Smith, attorney for the city. "That is a huge obligation." But I'll get some help from the public stadium authority. The deal says the authority must spend anything it collects -- including interest from the money I have to set aside from naming rights -- on upkeep. Only after the authority runs out of cash do I have to pull out my checkbook.
As for this Ballpark Village you may have heard about, I'll finish building that the day the Land of Oz gets an expansion franchise. Wonder why the cost of the village, with its shops, apartments, offices and -- get this -- aquarium, is pegged at just $300 million when everyone knows this six-block urban wonderland could easily cost more than twice that? Well, if I don't get it done, there's this clause that says I have to pay the government an amount equal to the taxes it would have received had Ballpark Village been built. And how can anyone know how much tax money an imaginary building would produce? In Missouri, they have this thing called tax-increment financing, where they figure out ahead of time how much the government would collect from a proposed project, then give you that money up front as a subsidy to actually build it. It's an appraisal exercise they do all the time, so I figure the simplest way to decide the penalty for not building Ballpark Village is to use the TIF number -- I'm not one to turn down a subsidy, so I made sure the deal says the government won't do anything to prevent me from getting a TIF for the village. But I'm lowballing the price tag so I won't end up on too big a hook when the village isn't built.
I will build some of it. A new baseball museum where I can sell more souvenirs is a lock, just like 1,850 parking spaces next to my new ballpark where Busch now stands. But building a bunch of restaurants, offices, banks, convenience stores, bookshops, daycare centers and apartments in a dying downtown doesn't seem like a very good idea. I'd be better off paying the penalty and walking away. And walking should be easy, because I only have to pay a fine for things that aren't done on three of the six blocks. If I leave the other half vacant (where the real pie-in-the-sky stuff, such as apartments, would go), the punishment is deeding that worthless land to the government. Good riddance.
Of course, if they give me a really big TIF, I could always change my mind and build more. That's the beauty of Ballpark Village -- it's the squishiest part of this deal, and I like it that way. The penalties, detailed plans and the development company that would do the real work are all players to be named later. It's just like that profit-sharing thing in the deal, which says I have to give the government part of the windfall I'll get if I sell the team -- it doesn't say how much. Meanwhile, I get a new stadium with locked-in public subsidies.
Why would anyone agree to do all this for me? Because they have no choice. As Aldermanic President Jim Shrewsbury notes, cities in the suburbs are ready to roll out red carpets. And if a burb that doesn't have a ticket tax makes me a serious offer, it would be awfully tough for Buzz to offer millions in county tax dollars for a stadium in the city.
You may wonder when the voters weigh in. They won't. The pols say there won't be a vote because elected representatives, not the electorate,are supposed to make tough decisions like this. "You can't negotiate with the public," says Ald. Stephen Gregali. But you sure can put the screws to the elected suits.
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