Fresno Grizzlies are looking for a break from city on stadium rent

Finally we are getting some serious reporting from The Bee on all this. Here is some truth on the table: the baseball team already plays nearly rent free. Add the Chukchansi annual naming rights ($1.1 million) to the annual city ticket tax ($0.2 million) and the total gets very close to the current rent ($1.5 million). This is a time for courage at City Hall on behalf of taxpayers. No more bailouts or subsidies. If the Grizzlies default, take the team, sell it to the fans and the general public, and share the revenue: first to pay the public debt and expenses, then whatever is left to pay the publically owned team. The city gets its costs paid, the fans and general public get ownership of their team, and the stadium gets a permanent tenant.

The Grizzlies claim that they are awash in red ink due to declines in fan attendance and corporate sponsorship. The article suggests that this has been the case since 2006. Then the article goes on to say the source of their woes is the stadium rent- preposterous!!!! I know of no connection between corporate sponsorship/ fan attendance and stadium rent. The Grizzlies management knew the stadium rent when they took the deal. Presumably they took the deal because they believed they could get corporate sponsorship and put fans in the park. Their inability to build their business has nothing to do with the City of Fresno. If they can't live within the deal they made, then I think (much to my chagrin) that Jim Patterson's suggestion makes the most sense. Although I don't think the City of Fresno will run the Grizzlies any better, at least the City will have some influence over how much money is lost.

Has anybody approached Rush Limbaugh as a possible partner? Seriously though cities that get suckered into or take on responsibility like golf courses,ball fields,museums,etc...do a disservice to the people they are supposed to work for.First of all it's not the business of government and second they don't have or care to have the expertise to evaluate or operate these things properly because they are not held personally responsible and more times than not squander taxpayer dollars.Stick to the basics and let private business finance and run the rest.

Problem with this logic is minor League baseball would probably not approve any city government or any "public" entity as an owner. Even if they did, who would run it? The City???? I can't believe anyone would think that is even a remotely serious possible option.

Even if by some miracle they did, all the employees would be city employees making much higher wages and being under the City Workers Union control. It would be a financial disaster. The cost structure would go through the roof.

The Grizzlies are considered one of the most efficently run business operations in the minor leagues. I doubt the City Government could continue that. Their problem is simple, the rent charged by the city is nearly 4 times higher than the next highest rent agreement and because of that the business model doesn't work.

Also, this notion that the Grizzlies are playing nearly "rent free" because of another revenue (naming rights)is like saying they are playing rent free because they sell over $1.5 million in tickets. A bit simplistic but I suppose it makes for a good soundbite. Without the naming rights, this problem would have surfaced a long time ago.

By the way, the naming rights are not transferable so there is no guarantee that if the team sold or the city took it over, those revenues would follow.

If the city does not do it right this time, Fresno taxpayers will be stuck with paying whatever it takes, for as long as it takes, to keep a team playing in the stadium. Those who shoved this deal at Fresno told us, in case of a default, taxpayers would be protected because the team was pledged as security. Really? I seriously doubt it. But if it is, and the team defaults, the city should take it, not run it, put it in a trust and sell it to fans and the public for a reasonable price-per-share (say $25).

About the only thing I agree with Mr. Duncan in all this, is that the city shouldn't own it or run it. But it sure could facilitate a public offering and sale. Something akin to the Green Bay Packers. Mr. Duncan's do-nothing solution is merely the continuation of the saga that got the city in this mess: Give the team anything it wants, no matter what the cost.

Assuming the PCL would approve of such an arrangement (not likely) who would actually run the team under a "public ownership" scenario?

If a professional management organization was hired, they would cost quite a lot and how does this option provide for the additional revenues to pay a rent that is 4 times higher than anyone elses? I would love to see an actual pro-forma profit and loss statement that would work under this "public option" but we won't. The business model for this won't generate the revenues or income to make it work. Please prove me wrong.

The reality is the current Grizzlies ownership is the best option (and probably the only option) to work out an agreement with.

Let the Grizzlies go and turn the park into the homeless village we so desperately need.I see this as cutting edge as more and more cities have to deal with an increase in homeless people as unemployment and foreclosures continue to rise.These parks,stadiums and arenas will soon sit vacant as consumers no longer have money for this luxury and owners go belly up with all the debt.The city should be looking at some minor conversions to facilitate this change of use instead of pumping money into a use that has no future.I think we are headed towards an "Omega Man" type scenario.

OK, Mr. Duncan, I give. You win. Let's let the team owners play rent free, pocket every dime of the naming rights, ticket tax, and parking fees, pay them for every empty seat, subsidize their $7.00 beer, and tap the city treasury every year to guarantee them a profit. This is precisely the path the city is on if it does not call a halt to ceaseless Grizzlies give-aways.

A deal is a deal. The team owners willingly entered a contract with the people of Fresno, and our elected leaders should hold them to it. It is the private owners of the team who should pay their obligations and raise the money to keep their team afloat. Not the taxpayers. If they are unwilling or unable to do so, there are other remedies, as I have mentioned.

But first things first. City officials cannot act in the interest of the people of Fresno so long as they are held hostage by the fear the team will fold or leave if it does not get its way. The best way to end this seemingly never-ending demand for more taxpayer money is to refuse to pay it.

From that closed door will emerge the open door to a pathway that respects and protects taxpayers.

If my memory is correct Autry became Mayor and Duncan, Perea Sr., and I forget who else voted for this fiasco. Maybe you guys should open your wallets and help pay for this asinine vision of yours that most sensible people knew would not work!!!!!

I'm wondering what kind of "deal" would be acceptable to the Grizzlies. According to the article the Grizzlies lost over $1.5 million per year for the 3-year period from 2006- 2008. Let's assume the City completely folds in these negotiations and gives the Grizzlies the stadium rent free and passes this cost onto the taxpayers. If that happens the Grizzlies would at best break even. Doesn't sound like a very good idea to me and it will inevitably lead to further concessions down the line.

I think the Grizzlies should come up with a plan to broaden their fan base and if the City can help them do that, they should and probably would. But this notion of subsidizing the Grizzlies to offset their ineffective marketing/ promotion efforts is not advisable.

Jim, the agreement was voted on in 2000 before Alan was Mayor and I was on the City Council. Just so you know it was Perea Sr., Sal Quintero, Gary Bredefeld, Dan Ronquillo, and Tom Boyajian who voted for the original lease.

The bottom line is that regardless of the ownership of the team, the business model is broken, largely due to the lease. It doesn't matter if Chris Cummings is the owner or some community group or the city itself - the status quo with the lease is obviously not working. Mayor Patterson's proposed solution does not solve the problem!

First, pushing the team into default neglects the fact that the minor league franchise and the Fresno Baseball Club are two different things. If you should lose the franchise & player development agreement, which is a potential risk if the club goes into default, the Fresno Baseball Club is worthless.

Second, assuming that the FBC goes into default, and the PCL and the SF Giants don't try to jump off the sinking ship in the process - now what? The team is now owned and operated by a private group of community stockholders, but the real problem - the $1.5 million a year lease, is still there. Mayor Patterson's solution makes the assumption that this new ownership group will somehow be able to wave a magic wand and make a viable business entity out of something that hasn't worked for close to ten years. As long as the lease stays the same, the problems will remain and this will all be back in a couple of years with the same problem.

Third, as I mentioned above, there is a risk that while the Fresno Baseball Club would remain in Fresno even in default, the important part - the AAA baseball part - might not be so secure in such circumstances. Should it come to that, the city would have to try to lure another ownership group and franchise to move Fresno. Not only would that also require a major lease modification, it would also likely involve other incentives. Look at the deal the Reno Aces got from the Reno RDA and City to move there last year from Tucson. We'd likely need to offer something more lucrative than that deal to bring another AAA franchise to Fresno. And without any tenant at all, even one paying reduced rent, the stadium debt doesn't go away. Now all that burden is placed on the taxpayers. Add in maintenance costs that would now have to come out of the general fund, a loss in parking revenue, a loss in sales tax revenue, and a loss of hundreds of jobs, and it's clear that the "no team" alternative is the worst of all worlds.

Mr. Moore and Mr. Duncan make the case for the "no way out, taxpayers trapped" alternative which presumes that a change of ownership means the PCL and the SF Giants would bolt Fresno in a heartbeat, something they did not do when the Diamond Group failed and the team went to the Fresno Baseball Club.

C'mon guys, where is your community spirit? This region is big and bold enough to raise the cash to own, market, and manage a hometown-owned team. I daresay it might fill more seats and even turn a profit. Why think so puny that the only solution you can endorse is one that rests on demonstrated failure, and never-ending subsidies?

Can I get an "Amen" from the Chamber of Commerce and Business Council?

Here's the real problem the stadium holds 12,700 people but they rarely even come close to selling out. If the team could average 6,350 fans at $14 each the team would clear $6,311,900 and that is without concessions.

Now, why do they not draw that many fans to every game? That's easy; it's because there are still a lot of people who live in north Fresno who think that downtown is not safe after dark and as long as that perception remains the team will struggle to put fans in the seats especially during the week.

Of course there are other reasons why people are not attending and I think that if parking and concession prices were reduced attendance would pick up and the team would make even more money.
Stop trying to gouge us, give us a good product and a good show in a safe environment and we will show up!

You ex politicians (who got us into this mess) are to busy pointing fingers at each other about whose fault this is instead of working on solutions to remove the barriers that keep most people away.

I agree with Robert. Our family has stayed away from the baseball games solely because of parking and concession prices. Give us cheap or free parking and reduced concession prices, and we'll be glad to spend summer evenings in attendance. The downtown safety perception is not an issue with us.

Attendance was down this year, yes. It was in the major leagues as well. It had been up for several years though, and overall the Grizzlies have decent to good paid attendance numbers in comparison to the rest of the league. Minor league teams just don't get crowds of 12,000 very often, so I don't think you can single out Fresno on that one. The new Reno Stadium is just around 8,000 capacity. And yes, our stadium was overbuilt, but there's no going back on that one.

A bigger issue than attendance is the lack of corporate support, which is something that plagues a lot of sectors of our economy. We just don't have a corporate base of firms headquartered here, and that makes a big impact on the bottom line, for the Grizzlies, for Fresno State sports, for local charities, etc.

Re: Jim's comment - an ownership change is one thing - a default is another. That's what raises concern about what action the PCL and Giants might take should it come to that. I don't think the Giants want to leave Fresno. This is a very important market for them. I met SF Giants Managing General Partner Bill Neukom when he was here in Fresno in August, and I get the feeling they'd like to solidify their presence here, perhaps even with an equity stake in the FBC. They did something similar earlier this year by entering into a purchase agreement with their single A affiliate in San Jose. But at the same time, I don't think they or the PCL would be excited to see the FBC go into default, and the prospect of city ownership would likely be a major roadblock. I also don't think the Giants would have any interest in getting involved with an ownership interest here in Fresno with the current lease the way it is. It just doesn't pencil out they way it stands.

I agree, the concessions price/quality/service is a problem and I think the team knows that. Unfortunately they don't have complete control over that area, and the contract with Ovations continues for many more years.

For the record.

All parking revenues go directly to the city. The City sets the price and gets all the money.

Concession choices and prices are not set by the Grizzlies but rather by Ovations, which has had the contract for the concessions since day one and will for another 8 years. The Grizzlies have no say in what price is charged. As a matter of fact, when there is a food discount promotion, the Grizzlies pay Ovations for the lower prices.

First, rumor is that no one knows how much money the Fresno Baseball Club has made or lost on the baseball team because their financials are a jumble and the operations of the baseball, hockey and soccer team (and perhaps other items), are combined. So, could a different owner group do a better job? Probably if they focused on baseball. Let's hope that Lee Brand sticks to his commitment of new transparency in city negotiations on requests for City subsidies. Perhaps the City will make their consultant's evaluation of the books public?

Second, Patteron's local ownership proposal has the benefit of taking away the leverage of the Club, which is the threat to "move the team" if they don't get more rent relief. As long as they can successfully pull that lever and City hall quivers, they will be coming back to the well over and over again.

Third, if you properly account for a $1M of naming rights, which are normally paid to the owner of the stadium (i.e. the City), and take them out of the FBC's revenues and "rent", the FBC is neither paying the highest rent in the PCL, nor are they the most effectively managed team. That claim is a cannard being used to mask the fact that the problem is lack the ability to achieve the originally projected attendance. The PCL, the baseball team owners, and our local newspaper editors, were the ones who endorsed and advocated those projections. If we are to learn anything form this, we should be sure that their new attitudes and approaches should be taken with a grain of salt.

The claim that the "rent" is the problem also masks the fact that the City already has another $2M per year payment on the bonds over and above the rent. That was supposed to have been covered by parking fees, sales taxes, etc. generated by attendees, and new property taxes. The last bailout had as its intent the goal of reducing the property tax bill of the team. Bottom line, the "deal" is already costing the City more than was intended, even before it opens up its wallet to more baseball shakedowns. That $2M per year could have paved a lot of neighborhood streets and sidewalks, built a lot of new neighborhood parks, and hired quite a few new officers and firefighters.

Finally, Jerry Duncan argues that he didn't vote for the lease. Well, he voted for the bonds. He voted for the construction contract. He voted for every other implementation measure (parking meter charges, parking lot construction...). If he wants to defend throwing more money at the baseball team on the basis that we have no other choice, that's a debate to be had. But, he really ought not run away from the deal that he championed long and hard before and after he joined the City Council. On his first day after being sworn in to the City Council Jerry made an emotion laden pledge that he was going to make sure the stadium was built. He got his way.

Here's an interesting news flash about the Ovation concessions deal that Jerry described (something you haven't read in the newspaper).

The owner of Ovation concessions (Kenneth J. Young) owns two AAA baseball teams, including one in the PCL. So, he has a vote as to whether the Fresno franchise stays or goes.

We at least know why there isn't going to be a renegotiation of the $7 beers and $3 water. As Jerry noted, whenever there are discounts, Ovations gets a refund. But, where does the Fresno Baseball Club get the money to pay Ovations? (How about the Fresno taxpayers....)

At the time, Fresno had ample detailed news about the failed ventures in other cities. But Fresno went ahead anyhow. Why? Because the tax payer is the surest cash-cow; willing or unwilling. Not to speak of personal gains made by some.

OK let me see if I understand this. Ovation concessions has the food and beverage contract for the stadium and it has 8 more years left on it. Who negotiated that contract and why is there not a termination clause in that contract? Who in their right mind would give anyone a long term deal with no way to get out of it?

Now we also learn that whenever a food promotion occurs like .25 hot dogs the Grizzlies pay Ovations for the difference. What a deal for Ovations. Again, it does not matter who is at fault here as I am sure there is plenty of blame to go around. I for one would like to see a copy of the contract for the concessions published for all to see and I would like to know who negotiated that contract.

Bottom line, until someone figures out how to increase attendance and the team gets the concessions back the Grizzlies are not going to be a profitable venture for anyone.

It's not rocket science here folks, ticket sales should cover your operations and maintenance costs and concession sales are where you make your profit.

"Who in their right mind would give anyone a long term deal with no way to get out of it?"

Who drafted that contract? The (at that time) City Attorney? All those records; have they been destroyed too?

I see the idea of a public (not Government) ownership of the team pooh pooh'd here. Has anyone looked at the Green Bay Packer Model? Let the people of Fresno and surrounding areas buy shares of the Team. Raise enough money to buy the team and capitalize it properly. Audited financials, Full Public Disclosure, and an ownership group with a vested interest in the Community. Is it that simple?

For the sake of full disclosure--though Jim and Jeff might not care for the reminder....

Mayor Patterson was all for the ballpark--as long as it was built where he wanted it to be. He only opposed it after his secret negotiations with John Welty of CSu, Fresno to build the ballfield (along with an arena and a hotel) on campus famland near Bullard and the 168 Freeway became public. I recall the City of Clovis wanted to remove some of the mayor's smaller body parts with a dull knife.

His delaying tactics upped the costs to build the darn thing, and bankrupted several downtown businesses--Coney Island, Butterfields and the Old Fresno Hofbrau come to mind.

Joe, Patterson postures that he was opposed to the ballpark from the beginning. He was not. He conveniently shades the truth to suit his purposes. Take anything Jim Patterson or Jeff Reid say about the ballpark deal now with a very large grain of salt.

As for the current issue, which is merely a continuation of the basic issue (finances) since the ballpark was originally proposed, I don't think the City has much choice.

Minor league ballball folks were in town awhile ago, and they told city reps that they would not look kindly upon any sort of take over of the team by the City or would they approve a sale of the team if there was any proposal to locate the team outside of Fresno.

Bottom line: the city has to work with the current ownership. Otherwise they will be stuck with an asset that will have no value.

Jeff - it's actually not uncommon for the tenant of a publicly owned stadium to receive the rights to sell the name of the facility as part of their lease. The most recent example would be the new Reno Aces stadium, which opened this year, though they haven't sold the rights yet.

Also, it's not essentially a baseball attendance problem (though more attendance would certainly help). If the Grizzlies were last in the league in attendance, you might have a point, but they're not. Take most any other AAA operation, put them in Fresno, and even the best run team would be having problems.

Also correct me if I'm wrong, but the Diamond Group pro formas were built on the rosy assumption of substantial concert ticket sales, after all that was Carbary's game. For a variety of reasons, that hasn't come to pass.

I know Mr. Reid and Mayor Patterson didn't like the deal at the time, and they're entitled to say "I told you so," but the fact is the stadium is here and we're stuck with the bond debt - it's not going away. So how do we solve the issue, and protect the taxpayers from getting stuck with the entire bill at the same time? We first have to admit that the financial assumptions made back in 2000 that led to the lease were simply wrong, for whatever reason, and continue to be flawed.

Mr. Reid and Mayor Patterson seem to want to have it both ways. You can't say that on one hand that the deal was bad, and then claim that all of a sudden that same bad deal is magically going to turn out just fine with a new stockholder based ownership group. The same problems that have plagued Carbary, Cummings and Glover will face this new entity as well.

Mr. Dan Whoeveryouare,

Come out from behind your chicken anonymity and face me like a man. I don't take kindly to being lied about.

I opposed the stadium because every sound analysis told me the Diamond Group was setting the city up for failure. I don't much like being right about all this. The city I served for 8 years is stuck bad, and I find no glee in that.

Note to the readers of this blog: A little fact-checking is in order. John Welty and I never had any discussions of any kind about any stadium any where, secret or otherwise. Period.

Maybe, just maybe, this time common sense and cool heads will prevail. Our city has been served up by Dan and his ilk a real lemon.

Lemonade, anyone?

Mr. Patterson--You apparently forget the news reports in The Bee regarding the University Village proposal Bill Tatham Jr. was involved in re: a hotel, arena, and ball park on campus farm land. In fact, Councilmember Lung accused you of "pushing construction of Freeway 168 to help" Mr. Tatham and his project (see Fresno Bee 8-18-96).

Seamus--my comments about the failure of Coney Island, Butterfields and the Old Fresno are based upon statements of the owners of those businesses that were reported in The Bee at the time.

For example, Butterfields built a new brewery and restuarant at Inyo and Van Ness (the building that United Security Bank now uses for offices). They sold their Tower District brewery/restuarant to the current owners in order to try to keep the downtown doors open. When the bank moved in, the owners told the newspaper that they had relied on promises that the downtown ballpark would be open in a year or two (it took almost 10 years).

Mr. Whoeveryouare,

What a first class source for your slander: Bob Lung, a Councilman who once dressed up like a plastic tree at a council meeting and went to jail for selling his vote. Your postings are just as ridiculous and corrupt.

So, please, again I challenge you to come out from behind your chicken anonymity and face me like a man. My hunch is you are a stadium insider of some sort. Someone responsible for getting the city in this mess. So fess up.

Jimbo--I'm not a stadium insider. I'm simply a private citizen who was working off memory. After looking at the Bee archive, I found that University Village was heavily favored by folks out in Clovis. Bill Tatham Jr., who was one of your big supporters when you ran for mayor, was supposed to be the developer. Bob Lung (who I'm no fan of) confronted you at a City Council meeting about your support of Freeway 168, hence it is a matter of public record. Tatham later withdrew from the project due to what the Bee reported as political backlash on you. And it eventually died.

Mr. Whoever...,

Then post your last name and a little biography. I'm Jim P-a-t-t-e-r-s-o-n, and I used to be mayor. Who are you?

Also, given your exhaustive research, will you now retract your libel that I held secret meetings with John Welty, and thank me for saving 168? Or, if you like, I'll confess to secret meetings with Dr. Welty, if you confess to secret ones with Bob Long. Deal?

Dan, all silliness aside, our city faces a steep challenge to fix this stadium mess. I think my original post suggesting how that might be accomplished has merit, and deserves consideration.

But, since my typing fingers are calloused, and I have a couple of grand kids to hang out with, I'm done. My first - and some might hope last - posting on this has come and gone. Honest.

Over and out, good buddy.

I would be curious to know who pockets the $5 parking fee during 'stadium events.' I doubt it's the Grizzlies which got me thinking -- if it were NOT for the Grizzlies (or the Monsters since this applies to Selland Arena as well) then the city wouldn't make $5/car either.

So, why don't the Grizzlies work out an arrangement with the City so that the Grizzlies get a portion of the $5?

Or, why doesn't the City just NOT enforce evening parking, save the tax/labor/fees, and let the Grizzlies run downtown parking during their events?

They could then not charge parking, they probably got the staff to do it already, and the $5 not spent on parking could be spent on concessions? Or towards another ticket..

I have a feeling a good chunk of money is made on parking alone and it seems silly the city pockets that money when it's the Grizzlies (or the Monsters or whatever) that bring the people to begin with.

I could be talking out my arse though too.

In any event, if I am right -- has anyone looked at this angle?

Or, what about this..

Stadium could probably be financially sound if more events were held at the stadium -- that's first and foremost.

So, to me, I would think you need:

Grizzlies - They'll pay the lions share being the biggest tenant.
Schools - Why don't the schools pay to play there?

Also - let's say the stadium hosts 250 events a year at $250/pop? That's $62,500 right there. $250 to me seems pretty affordable if you're hosting a large event.

That's just the fee to 'get space' at the park. Then you're probably going to charge guests of which the city/Grizzlies should be entitled to a percentage and a majority percentage should go to the person having the event -- since they're wanting to make money too.

The Grizzlies are already paying their staff to be at the park -- so seems if the Park was 'more open' and 'more affordable' to rent -- in combination with ticket pricing and of course throw in some sort of fee to park and seems like $100,000 could EASILY be made, right?

And that's probably the low end of the scale, too.

To me, Chukchansi Park seems like a great place for movies in the park -- let that be FREE while selling concessions..

To me, Chukchansi Park seems like a great place for Battle of the Bands -- I am sure something could be made to make that happen.

To me, Chukchansi Park seems like it could host more beerfests/bbq/gatherings of that nature.

So what's the hold up with implementing this? The baseball off-season is long, you know..

Mr Patterson's concept of community ownership only works if the City of Fresno is not involved in any way, shape or form. The leadership in place at City Hall has proven over and over again that they have no common sense when it comes to making the right decisions and I surely would not trust them with any of my personal money. I mean it's bad enough that they waste my tax money.

"I found that University Village was heavily favored by folks out in Clovis."

Only by some "folks"; if we are talking about the proposed development along Bullard Ave. I know! I was there! And that the mess was so many years ago does not make it any less messy. I do not have to go to the Bee for info. I have (on tape) my own testimonies before the Clovis City Council. And that is all I have to say because its relevancy to the current issue is remote.