BY GEOFF HOBSON
The Cincinnati Enquirer
Reds' needs
The Reds need at least $30 million to $35 million annual revenue to compete with other teams, Managing Executive John Allen says. The breakdown for use of the revenue:
$10 million-$15 million for elimination of operating losses.
$6 million-$8 million for incremental ballpark operating expenses.
$2 million-$4 million for increased player development costs.
$9 million-$13 million for variable expenses for higher attendance that include sales and marketing, and revenue sharing obligations.
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Even with a new ballpark, the Cincinnati Reds fear continuing financial struggles if they don't secure a good stadium deal from Hamilton County.
Several documents obtained by The Enquirer this week show the Reds' stance at the bargaining table is driven by the needs of a franchise in a small-market city of an industry driven by big-market costs.
In the documents, the Reds reveal their desire to pour new stadium revenues into player development instead of relying on expensive free agents and the willingness to eliminate operating losses of $49 million the past three seasons.
The team has proposed contributing $50 million - $30 million upfront and $20 million in rent over 10 years - for a new stadium. The county's initial request was for $80 million.
Reds' stadium consultant Robert Starkey wrote that the Reds' proposal "gives the Reds a fighting chance to remain competitive with other MLB clubs over the long term."
Mr. Starkey, who represents Major League Baseball in the talks, put together a March proposal in which he compared revenues the Reds could generate in a new ballpark in 2000 ($94.2 million) with the average of baseball's other new ballparks ($103.7 million). He projected the Reds will have an operating profit of $8.1 million in 2000 but sees a loss of $1.9 million by 2004.
Mr. Starkey's report says the Reds' projected $45 million payroll in 2000 would be $17.5 million less than the teams with new ballparks and $7.4 million less than the projected industry average.
City, county
feud over
consultant
STORY
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The report, which amounts to a primer on baseball economics, cited Cincinnati's small market size and Major League Baseball's unlimited spending on salaries as reasons why stadium revenues won't match those in Baltimore, Texas, Cleveland and Denver, where new parks have been built recently.
Although Mr. Starkey's analysis assumes a park opening in 2000, that now appears to be overly optimistic.
If the Reds don't get into a new stadium until 2002, the team is seeking financial consideration, said sources familiar with the stadium negotiations.
Sources told The Enquirer earlier this week that the framework for an agreement between the Reds and county is being hammered out. But the deal cannot be executed until the Reds are satisfied with a future engineering and architectural survey of the Baseball on Main site, also known as "The Wedge," between Cinergy Field and Riverfront Coliseum.
The negotiations are centered on such economic issues as responsibility for stadium operations and field maintenance, as well as reimbursement expenses.
For example, in its lease with the Bengals, Hamilton County is responsible for paying for stadium operations and field maintenance at an estimated $2 million to $3 million annually.
In the March proposal, the Reds suggest that the county pick up $2.5 million of an estimated $8 million-$10 million operation and that the club pay the rest.
The same small-market fear surfaces in a December 1996 response from Reds Managing Executive John Allen to a Hamilton County proposal. Mr. Allen said the club spent more than 90 percent of last year's revenues on payroll (in the $40 million range), the biggest slice of the 28 big-league teams.
Mr. Allen said the Reds need a minimum of $30 million to $35 million annual revenue to compete with other teams. Mr. Allen has recently refused to discuss stadium matters publicly, as has Mr. Starkey.
Mr. Starkey's projections for a new stadium - based on the newest parks and club trends - have the Reds' 2000 payroll at $45 million. That's about $12 million to $15 million more than this year. By 2004, it's nearly $60 million.
He pegs attendance at 2.8 million for 2000 before levelling off to 2.4 million in 2004. A box seat, which is now $14, would be $18 in 2000 and $21.88 in 2004. Bleachers would be $9 in 2000 and $10.94 in 2004. The cheapest seats - standing room only and group - are projected at $7.50 in 2000 and $9.12 in 2004.
REDS PAGE
Previous stadium stories
REDS ASKED FOR $235M STADIUM July 3, 1997
'WEDGE' FOES DEMAND STADIUM STUDY July 2, 1997
'WEDGE' TO BE PUT TO THE TEST July 1, 1997
REDS UNMOVED BY PRICE GAP June 20, 1997
DOWLIN SAYS BROADWAY CAN SAVE $62 MILLION June 19, 1997
BALLPARK ESTIMATE: $230 MILLION June 11, 1997
RIVERFRONT SITE BETTER BET June 6, 1997
BROADWAY, 'WEDGE' ONLY OPTIONS LEFT? June 4, 1997
REDS RELENT ON WEST SITE June 3, 1997
NOTHING WILL DISLODGE REDS FROM RIVERFRONT Tim Sullivan column, June 3, 1997
REDS TO KENTUCKY? WHISPERS PERSIST May 31, 1997
NO DEAL WITH REDS SEEN BY JUNE 1 May 23, 1997
REDS EASE STANCE ON 'WEDGE' May 16, 1997
REDS MIGHT HAVE TO WAITMay 5, 1997
COSTS GOING UPMay 5, 1997
SCHOTT SAYS 'NO WAY' TO WEDGE April 12, 1997
SULLIVAN COLUMN April 12, 1997
CITY COULD PAY TO DELAY STADIUM April 10, 1997
BENGALS LEERY OF 'WEDGE' April 9, 1997
THE GREAT STADIUM DEBATE
BALLPARK DEBATE LINGERS ON April 6, 1997
NEIGHBORHOOD A BIG PART OF BALLPARK April 6, 1997
BALLPARK, FANS' HONEYMOON SHORT April 6, 1997
REDS HAVE HURDLES, HELP IN SITE HUNT April 6, 1997
KENTUCKY DESERVES REDS, TOOApril 6, 1997
BORGMAN CARTOON
April 6, 1997
REDS PLAN SEAT LICENSING March 14, 1997
REDS TOLD BENGALS NOT PICKING SITE March 12, 1997
MAYOR SUPPORTS BROADWAY March 5, 1997
DESPITE FLOOD, REDS DON'T WAVER FROM RIVER March 5, 1997
BASEBALL ON MAIN PROPOSED Feb. 26, 1997
WEDGE SITE GETS BOOST FROM COUNTY Feb. 22, 1997
REDS, COUNTY RESUME STADIUM TALKS Feb. 19, 1997
ONLY CRIME IS NOT CONSIDERING BROADWAY Feb. 18, 1997
RIVER SITE OR LAWSUIT Feb. 15, 1997
REDS ARE READY TO PLAY HARDBALL Feb. 15, 1997
SCHOTT THREATENS TO MOVE IF REDS AREN'T ON RIVER Feb. 14, 1997
