On May 6, Durham City Council will likely approve a new 20-year lease between the local baseball club and the city-owned Durham Bulls Athletic Park. In a complex reworking of the old lease terms, the city is offering a substantial discount on the rent in exchange for the Bulls taking on operating expenses that approach $1 million annually.
The city threw in a considerable sweetener: It agreed to pay for $12 million of badly needed repairs (the first $6 million) and badly desired upgrades (the second $6 million). The baseball team will pay for an additional $2 million worth of upgrades and assume the burden of cost overruns.
Where will the city's investment come from? It will be borrowed, of course.
There's nothing intrinsically wrong with municipalities issuing debt to pay for roads, bridges, schools and even baseball stadiums. But it seems to be a good time to step back and note that the city's commitment to subsidize this professional baseball operation would expand to 40 years. Finance Director David Boyd acknowledged as much in an April 18 city council work session: "We are still going to be subsidizing, for lack of a better word, the ballpark with general fund revenue. That's going to continue. It's just going to be at a reduced level."
Few in Durham today remember the controversy over the proposed stadium in the early 1990s. Jim Goodmon of Capitol Broadcasting, the owner of the Bulls, proposed a stadium in Wake County near the airport. Meanwhile, Durham leaders, eager to lure Triple-A baseball downtown, promoted a bond referendum to build a stadium.
The voters, however, didn't play ball. The bond issue was defeated in 1990. Undeterred, city council two years later found a way to issue debt that didn't require public approval. After many delays, millions of dollars in cost overruns, proposals to turn the old ballpark into a theme park and controversies over $450 gallons of paint, the stadium opened in 1995.
In the ensuing years, DBAP became the anchor to a redeveloped American Tobacco Historic District, and much of the bitterness seems to have subsided.
But now, 20 years later, the stadium is a movie star who has aged quickly and is in want of expensive cosmetic surgery. The original debt, with refinancings, was paid off last October. But DBAP is no longer a new ballpark and, after more recent borrowing, it's far from debt-free. It's the sixth-oldest in the 14-team International League, and 12th-oldest of the 30 U.S.-based Triple-A teams. The new lease will see the team to the cusp of the stadium's 40th birthday.
It's worth noting that only two Triple-A stadiums are older than 40 years. Will there be a tenant that wants to play Triple-A baseball in DBAP in 2033?
The needs of the stadium are many, from disability access issues to HVAC upkeep to mold damage. In an email to INDY Week, City Councilman Don Moffitt wrote: "There are repairs—like replacing the seating—that 20 years of wear and tear now require, and if we don't make those repairs the ballpark will be less and less attractive to visitors. That would likely start a downward spiral, a place I don't want to go."
On top of the repairs ("deferred maintenance," in budgetary parlance) are upgrades requested by the Bulls that would improve the food—and access to it—to help Durham live up to its "South's Tastiest Town" award from Southern Living magazine, as Bulls General Manager Mike Birling said to the council.
The investments would also spruce up the skyboxes, expand the picnic areas, convert some of the outfield seating into higher-priced terrace seating and more. There is also a plan to create a banquet facility that the team can rent out year-round.
As a going business concern, the Bulls seem to be solidly average. In 2012, the Bulls ranked eighth in attendance in the International League (and 14th of Triple-A teams nationwide) with 6,811 per game. Forbes.com, in its most recent ranking of the most valuable minor league baseball teams, put the Bulls in 18th place, with an annual operating income of less than $1 million. This latter figure lags significantly behind other top clubs. (It should be noted that Forbes' methodology is a mysterious one; most teams, except for the nonprofit Memphis Redbirds, don't disclose their finances.)
Don't get me wrong. I love having the Bulls in Durham. I do worry about the atmospheric drift toward ice hockey-style sensory overload—Birling told the council the planned upgrades include a bigger video board and LED signage on the outfield walls that will contribute to a Carolina Hurricanes-inspired "wow factor" that would make the stadium "feel alive."
Are public subsidies the only way for us to have baseball here? It's true that, as Moffitt argues, the Bulls generate indirect income for the city, in sales and property taxes. "I'd love for the city to make money directly from the ballpark, but I don't think that will happen," Moffitt writes. "I do think that the city makes money when every impact—jobs, sales taxes, property taxes, public relations value and of course revenues from the ballpark itself—are taken into account."
Still, the Bulls baseball club is a private business—and one that is increasingly surrounded by office buildings and retail spaces that were developed by Capitol Broadcasting. (In addition to Capitol's Diamond View III that is going up beyond the left field line, there is "ATC East Hotel," its proposed hotel, restaurant, commercial and retail development to the north, adjacent to Durham Performing Arts Center, which is under planning review.)
And yet, the community asset that is the Bulls is one that, for the next 20 years, will benefit from $23.7 million of stadium debt payments covered in part from the city's general fund.
If the Bulls were a true asset—as opposed to a symbolic asset—the club would be something in which we owned an equity stake. But the present arrangement looks a lot like socializing the risk and privatizing the profits.
This article appeared in print with the headline "Community assets."