When you look at the numbers and the existing revenue streams, it’s hard to be optimistic about the future of a new Portland Beavers ballpark.
When the Portland City Council approved an $88.8 million agreement with Merritt Paulson to renovate PGE Park for MLS soccer and build a new Portland Beavers (Class AAA; Pacific Coast League) ballpark in the city’s Rose Garden arena, many in the city and the sports world assumed it was a done deal. MLS even went ahead and awarded a 2011 expansion franchise to Paulson, with the understanding the team would be playing in a soccer-only facility.
But a closer look at the numbers shows how far away we are from new facilities. And while it will not be impossible for Paulson to pull off this deal, it will be extremely difficult.
Paulson and his largest investor, former Goldman Sachs head and Treasury Secretary Henry Paulson, have committed to spending $12.5 million on the plan and cover cost overruns past an initial $2.5 million. In addition, they’ve agreed to raise the ticket tax at the new Beavers ballpark and PGE Park.
In addition, Paulson is seeking to use tax revenues generated by player and executive for the project, which could raise another $5 million. That requires state approval — and such approval is not a given, as it basically diverts that money from the state’s general fund at a time when Oregon lawmakers are struggling to make ends meet.
Out of the $88.8 million proposed by Paulson, only $62 million comes from identifiable sources: there are $26.8 million in costs that must be addressed by someone. In addition, $36.2 million comes from bonds issued by the city under some extremely tenuous circumstances, with the very real prospect that the bonds will not sell at all. By our math, that’s two-thirds of the project cost.
And right now there’s no clear plan to address the gap. Paulson says he’s not willing to put more money into the project, and city officials say they’ll look at other taxes and the creation of an urban-development district or two to raise more cash.
Under the broad terms of the deal, Portland agreed to spend $31 million from the city’s so-called Spectator Fund and $18.5 million from city redevelopment funds. But there’s not actually $49.5 million sitting in any city account. Instead, the city will need to sell bonds backed by those funds.
Here’s where the plan run into serious trouble. The city has already borrowed against those funds and can’t borrow more under traditional circumstances. So Portland is looking at selling zero-coupon bonds, where no payments are made for 11 years while interest accrues; paying the big bucks is put off. They’re not necessarily uncommon, but they reflect a certain level of desperation on the part of city officials and would carry an interest rate of 9 percent — a staggeringly high number for a municipally backed bond.
And complicating things even further is the proposal to place the new ballpark at the Memorial Coliseum site, as part of a larger entertainment district proposed by the owners of the Portland Trail Blazers. Great idea; it’s a potentially lovely site, and the synergies between the two facilities could be strong. But the Trail Blazers already say they’ll want city aid to make an entertainment district fly. So add this to the list of unfunded proposals.
One option floated to us by Portland insiders is simply to scale back the project to fit within the available funds. Spending $55 million on a new ballpark when land acquisition costs are not a consideration may not be out of line when compared to new AAA facilities in Gwinnett County (where the new Gwinnett Braves ballpark project is pegged with a $64 million price tag, although that includes land acquisition) and Reno, but many are wondering if a more realistic price tag is $45 million or less, especially when Sarpy County and the Omaha Royals are budgeting a little over $20 million for a new Class AAA facility. Similarly, there are questions about exactly what PGE Park needs to host MLS soccer: even if there are no changes past the removal of baseball-only features it would stand up well when compared to other MLS facilities with a capacity of 19,000, expandable to 25,000 for soccer.
Coming up with great ideas is, to be blunt, the easy part. Figuring out how to pay for them is usually hard, and right now the Portland ballpark proposal to date has accomplished only the easy part.
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