Eastlake Update -- Don't Worry, Be Broke
This has actually been a topic I've wanted to get to for almost a week. The city is still broke. Eastlake is staring down the barrel off an ever growing debt burden for building a minor league ballpark. The new Mayor of Eastlake is trying to deal with it. Some smart, some dumb.
The smart first. He is
coming down on the price for naming rights.
"We had been working with the Superlative Group, but it was almost a 'see what you can do' thing," Andrzejewski said. "Now it's 'let's do this.' We don't have a written deal yet, but the verbal agreement is that there is no retainer. Together, we are targeting 15 companies in Northeast Ohio to see if they are interested."
The mayor would not disclose the names of the companies.
Andrzejewski has given the firm a deadline of the Lake County Captains home opener on April 11.
"That's the latest," Andrzejewski said.
City officials had originally hoped to get $5 million for naming rights.
That number is no longer solid, Andrzejewski said.
"We're going to be flexible with the $5 million," the mayor said. "It's negotiable."
A naming rights deal was supposed to be secured by Thomas Chema, who was the consultant for the stadium project.
Chema's agreement with the city specified that he would collect 6 percent of the total sale.
Former Mayor George Spinner, who was appointed mayor after DiLiberto retired in May, fired Chema earlier this year after Chema failed to find an interested buyer by a deadline.
Any money secured for naming rights will go to pay off long-term bonds the city has out for the stadium project.
After the ballpark was built the former(likely, soon to be indicted, Mayor) refused to budge on the price of naming rights even though there were no buyers.
At this point, the city needs whatever it can get now. It has no leverage. Businesses are not bidding against each other for naming rights. They misunderstood or mislead people as to the interest in corporate naming rights interest.
Now
the dumb:
Eastlake Mayor Ted Andrzejewski has an idea to pitch to management of the Lake County Captains.
When he meets Friday at Eastlake Ballpark with Captains' co-owner Peter Carfagna and General Manager Casey Stump, Andrzejewski will ask the minor-league baseball team to raise ticket prices by $1 next season.
Ticket prices for the Cleveland Indians' lower-Class A farm team are $8, $6 and $5.
Andrzejewski proposes that all funds generated by the increase accrue to the city to pay down debt on the 7,273-seat ballpark that opened in April 2003.
"Right now, this thing is not even close to paying for itself," Andrzejewski said. "It's a drain on us."
Eastlake already is dealing with a $3.2 million budget deficit that resulted in a declaration of fiscal emergency by the state auditor in May.
Projections put the price of the stadium project championed by former Mayor Dan DiLiberto at $37 million by the time loan payments end in 2027.
This is not a new idea from the Mayor. Last year when he joined council he started floating this idea. Andrzejewski complained how one-sided the lease was, and how he could not believe what Eastlake had gotten itself into. I wasn't. This was a city that was building a ballpark before securing a tenant, competing against other dumb cities to get a minor league baseball team to move. Of course it wouldn't be a good fiscal deal.
The problem for the new Mayor, and why I didn't buy into his campaign, is that the city has no leverage. The city has a lease with the ball club. It has no ability to change it. The club has no reason to change it. Eastlake needs the ball club, more than the ball club needs the city. There are plenty of other suckers out there with, building or willing to build a ball park for a minor league team. Trust me, Zanesville keeps talking about getting one. Canton has an empty park. And that is just 2 places I know off the top of my head in Ohio.
What incentive is there for the Captains to impose a price increase where it doesn't get any profit? Especially when it has to be concerned about what an improving Cleveland Indians MLB team could mean. The prices to a Captains game is far cheaper, but the emotional ties to the Indians can easily trump that for most. Cleveland looks like it will contend for, at a minimum, the American League Central title. This will be the 3rd season for the Captains. You have to imagine sales might drop a little more as the novelty wears off and the Indians improve.
Actually, it could end up worse for Eastlake. Afterall, the Captains wouldn't agree to such a deal out of shear benevolence. There would have to be some
quid pro quo that might make things worse. Say like a guaranteed floor in sales, that would come out of the money if not met. Imagine, if there was an agreement where the price went up $1/ticket, but was escrowed until the end of the season. Allowing the Captains to earn interest on it. Then, ticket sales from year 3 are compared to the average of years 1&2. Let's keep it simple so we'll pretend all ticket prices are the same price (not 3 different prices)
x=ticket price
y=tickets sold
z=total sales
Simple model is x*y=z.
x is inversely related to y. Meaning that as the price increases, the number of tickets sold decreases. This means the club loses The problem is, it is unknown what the exact correlation x is to y.
The ballpark holds 7273 fans. I think there are 80 games in a season. That would be a max of 581840 tickets in a season. For arguments sake, let's say that the ball park completely sold out the first 2 years.
With an increase of ticket prices of x+1, it is reasonable to expect a drop of overall sales. So how unreasonable would it be for the ball club to get back its lost ticket sales.
The 3 prices on tickets at the ball park are $5, $6 and $8. The majority, I believe are closer to $8 buy we'll average it out to $7 per ticket. 80 sellouts at $7/ticket holding 7273 fans results in $4,072,880 in gross sales. That's with attendance at 581,540. Now suppose attendance drops off 10% because of the price increase. Fan attendance is suddenly 523,656 at ($7+$1)/ticket. This means the club has gross sales of $4,189,248. But you lop off $523, 656 for the tax. Suddenly the ball club has only $3,665,592 in gross sales. A drop of $407,288 from the previous year. If that is made up from the escrowed tax receipts then there is only $116,368 left.
And this wouldn't even begin to account for lost revenue from the sales at concessions. There would have to be some agreed upon compensation for that too. Quickly, what would appear to be a simple way to get some money back to Eastlake, could become a floor costing the city even more money or giving them nothing.
I'm trying to lay it out as a simple economic model. The fact that there are legal contracts and parties at unequal bargaining positions makes it even crazier. The city of Eastlake is screwed with the ballpark, and sadly, really can't look to the park for help.
The most galling thing. This agrees with the
News-Herald Editorial Board in the ultimate conclusion -- even if I find their reasoning lacking. Just because they piss me off, I will point out how they pretend that the project has been paying for itself even though all figures put Eastlake deep in a long-term whole within a couple years.
Conversations With My Daughter
So we're at a store looking to pick up Hanukkah candles at the last minute. I always forget until either the day of or day before. Found some, and we wandered over to the wine section. My folks are coming up this weekend, and I was trying to remember what we had at the house, and if I should buy some more. Not to mention, whether I should pick up some champagne for New Years at this point. Pushing Angie, in the shopping cart as we go past the rows of bottles. Every now and again she reaches out for a bottle -- always just out of her reach.
I'm running some of the choices past her. Then she reaches out and manages to snag a bottle. Well, grab and almost knock it to the floor. I snag the bottle from her, and she suddenly says, "Must drink, da-dee!"
That's my girl. I put the bottle back and say, "Wish I could Angie, but we promised Children and Family Services that I wouldn't do that any more during the day."
That made some of the other customers look up, then laugh a little when they decided that I probably was joking.
Even More Distracting
I keep saying I'll be back to this blog soon, but I keep finding excuses. Here's the latest. I'll be guest-blogging over at
College Basketball for the next week or so. There will be others there, so it should be an interesting time.
Grandstanding
There are times when I like John McCain, because you never know what he will say or do next. I like that he has been fairly consistent railing against Congressional pork (at least as consistent as any longtime incumbent can be) I also find it amusing how many people treat him like an inkblot test projecting their own things onto him.
What I don't like is his continual attempts to abridge free speech that he masquerades as campaign finance reform. I also don't like his
grandstanding attempts:
Sen. John McCain demanded immediate action by representatives of major league baseball's players and owners to tighten the sport's drug-testing policy "to restore the integrity of baseball" or face possible congressional action.
"I warned them a long time ago that we needed to fix this problem," McCain told reporters Saturday after attending the Army-Navy football game with President Bush. "It's time for them to sit down together and act. And that's what they should do. If not, clearly, we have to act legislatively, which we don't want to do."
Expressing dismay over recurring reports of steroid abuse by some of baseball's top stars, the Arizona Republican threatened to legislate stricter rules if the sport fails to police itself.
"I'll introduce legislation in January, but I hope I don't have to do that," he said, speaking to reporters at Andrews Air Force Base.
Under what authority, I wonder would Congress pass laws mandating stricter drug testing and penalties for MLB? Presumably, it would somehow find its way under the rubric of the Commerce Clause, but it just seems like a load of crap. Yes, I suppose it is something of his attempt to add additional pressure to get a more stringent drug testing policy in MLB, but it is wrongheaded. You just can't legislate this stuff from the federal government. Laws like this tend to become clubs that one side tries to use to bludgeon the other. Try and enforce it, and not only will it be held up by court challenges, it will just give MLB (players and owners) more time to figure out the loopholes to render it useless and as much a paper tiger as the present testing is.
