Follow Up: Tampa Bay Rays Stadium Deal Falls Through

In a series of articles over the past few years this forum has followed the progress (or lack thereof) for the Tampa Bay Rays of Major League Baseball in their pursuit of a new stadium in the greater Tampa area.

The team currently plays in Tropicana Field, an indoor domed stadium facility built in the late 1980s and opened in 1990, which has been renovated several times at the personal expense of the Rays’ principle owner, Stuart Sternberg, to bring certain modern amenities to the fan experience.

The team has been locked into a lease that prohibits them from relocating the team or pursuing alternatives for a new facility outside of the St. Petersburg city limits. The team has stated numerous times in the past, with MLB executives backing it up with similar statements to the media, that the team cannot compete with larger market teams because of the current stadium.

The revenue streams from the agreement with the city is unfavorable to the Rays and with Mr. Sternberg using so much of his own money to maintain the facility, the St. Petersburg municipal government decided to grant the ownership of the team a three-year grace period in which to pursue proposals for a new stadium within the Tampa Bay area.

The ownership of the team and MLB executives in New York have long maintained that the location of Tropicana Field relative to the population centers in downtown Tampa is what has hurt the attendance of the club, causing them to lose money. The argument is that, from their perspective, a location that was more central or conveniently located to the downtown area of Tampa would be ideal for a new facility.
The Rays ownership pursued a few different locations and stadium concepts that I have detailed over time on this blog. The team’s ownership found their best opportunity in a proposal around a parcel of land in an area of downtown Tampa known as Ybor City.

That neighborhood was at one point very unsafe and was near the waterfront which was riddled with drug related activity and crime. The Tampa city officials, about twenty years ago, started a revitalization plan for the Ybor City neighborhood. This resulted in the area becoming a destination for nightlife, restaurants, bars, and retail.

The Rays were working with the neighborhood in Ybor City to construct a new $900 million baseball stadium on the parcel of unused land that was agreed upon with Hillsborough County officials. The three-year window referenced earlier to get the framework of a stadium deal agreed upon is expiring in three weeks.

However, the proposal was filled with uncertainty and vague commitments from the county government on funding. The proposal was also lacking many major infrastructure details to the point where MLB and the Rays had to announce on Tuesday that the Ybor City stadium plan would not move forward.

The Rays ownership has spent millions of dollars in trying to get a new facility built in the Tampa area over the course of the past thirteen years. The facility in Ybor City, had it progressed from proposal into an approved agreement would not be ready for play until 2024. The clock is literally ticking for the Rays in the Tampa area because each day that passes means that the timeline of the project gets pushed further into the future.

That is where the press conference on Tuesday during the MLB Winter Meetings took on a feeling of weary acceptance of the reality that the club will most likely remain playing in Tropicana Field until the troublesome lease term ends in 2027. The team will literally not have a home after the 2027 season if some other developments do not take shape in the next three years.

The post-2027 timeline is another direction that this story has inevitably taken with speculation that the Rays will ultimately seek to relocate to another city. The current ownership group remains committed, at this point at least, to trying to make a stadium deal work in Tampa. However, once those options are exhausted they may be left with no other choice but to consider relocation.

The Rays ownership has certainly built the case for relocation out of the market with repeated attempts for close to fifteen years to get an agreement on a new facility which would have easier accessibility for fans (according to them and to MLB assessments) and would provide them with a better revenue situation for competition with larger market teams.

The Rays have difficulty historically with getting top free agents because of their market size and revenue situation with being able to compete for top talent with other teams that have better attendance or that play in new facilities. The situation with the Rays is very similar to the struggles that the Oakland Raiders of the NFL had with Oakland and trying for several years to get a new facility built there, before ultimately deciding to relocate the franchise to Las Vegas in 2020.

The rumor mill is spinning with relocation ideas of the Rays going to Charlotte, Nashville, or Montreal. Those three cities would work from a geographical sense with the Rays playing in the American League East division. The move to Charlotte makes sense from a demographic perspective, with so much growth there and people from all over America relocating to that city. The city also has great corporate sponsorship opportunity with Honeywell just relocating their main headquarters as an example of the growth potential of Charlotte.

Nashville is an up and coming city with a population boost and with a demographic of young people that MLB is trying to attract to their sport. The league does not have a presence in that part of the southeast except for the Atlanta Braves, so this could serve as an American League outpost in the region.

Montreal will always make the most sense for a relocation or expansion franchise for MLB because of the history of the Expos. The most worrisome variable for a professional sports team that is started through relocation or expansion is in building the fan base. The “x factor” that Montreal brings to the equation is a ready-made base of loyal fans of the Expos which also would solve for the marketing aspect of the scenario as well. Expos gear and apparel still is sold in Montreal and the nostalgia for that team will bring a diversified group of fans back to the sport.

It is a long-shot to start planning the Rays move to Montreal or anywhere else because the team does have fans in Tampa and they have been in that market for 20 years. Most professional sports leagues are very sensitive to moving teams because it will alienate a group of people that have invested time, energy and money into supporting their product (in this case: baseball).

In my view, I have covered many sports teams’ relocations from the L.A. teams being moved into that market by the NFL, to the Raiders move to Las Vegas, the Coyotes potential move out of Arizona in the NHL, and the move by the owner of the Columbus Crew in MLS to move a soccer team to Austin. The common themes there are unfortunately present in this case with the Rays in Tampa: ownership that is trying and willing to spend money to commit funds to a new facility and being fought every step of the way by the politicians or residents that do not want public money spent on an asset like a sports stadium (which I completely understand).

I have visited the Tampa area and I know the area around the downtown and throughout the area to St. Petersburg. I have written previously about how Tropicana Field is an adequate facility and that maybe the focus should be a major renovation to that facility to retro-fit it to the standards of the new facilities within MLB.
In the cost-benefit analysis if the renovation was too inefficient, then another idea would be to build a new facility on the same parcel of land right next to the current facility like many other professional teams have done in recent years.

The news on Tuesday means that the Rays will be playing in their current home for the foreseeable future, what comes next is a mystery, and only time will tell whether or not their next home is nearby or very far away from Central Florida.

Follow Up: NHL Awards Expansion Team To Seattle

The National Hockey League (NHL) approved the expansion of the league to Seattle on Tuesday, ending months of speculation over the future of the 32nd franchise in the world’s premier hockey circuit.

The decision comes as no surprise, the Seattle bid had an aura of eventuality to it because of their record setting season ticket commitment drive. The city showed their commitment and determination for a major professional hockey team, and it was rewarded yesterday.

The Seattle bid had all the elements needed to succeed: a stable and committed ownership group, favorable market demographics, robust corporate sponsorship potential, large media presence, and a dynamic, ambitious arena plan. The team name has not been decided yet, those details in the marketing of the franchise will be forthcoming. That is a crucial decision that must be carefully weighed.

What is known from the announcement yesterday is that the team and the NHL pushed the inaugural season start date a year to the 2021-22 hockey season. This will provide some much-needed extra time for the arena renovation project to be not rushed to completion as well as allow for the proper marketing and branding of the team in the community.

The Seattle team will play in the Pacific Division, which makes geographic sense and to balance the divisions out, the Arizona Coyotes will move from the Pacific to the Central Division for the 2021-22 season. This part of the announcement has gained significant attention and it is in this portion of the news from the NHL meetings in Georgia that could get interesting.

The realignment of the league to put the Coyotes into the Central either could be just a sensible logistical decision, or the harbinger of things to come for that franchise. The league office was quick to their defense of moving the Coyotes, citing that because most of Arizona (besides the Navajo nation tribal lands) does not recognize Daylight Savings Time – the team spends most of the time of the hockey season in the Mountain Time Zone.

However, the current teams in the Central Division such as Minnesota, Chicago, Nashville, and St. Louis all play in the Central time zone. This will translate into earlier starting times for games on the road for the Coyotes as well as longer travel times for the team and a shift away from their geographic rivals in Las Vegas and Los Angeles respectively.

This shift in divisional alignment has caused rampant speculation about the Coyotes being relocated to another Central time zone city that is angling for an NHL team, Houston, with a billionaire who controls the world class arena in the nation’s fourth largest city.

The move to Houston may be a bit premature even though in my earlier coverage on the failed attempts that the Arizona Coyotes have made to gain an arena in a better location in the Phoenix metro area. The Coyotes ownership has an agreement with the arena management company that allows them to go to a year-to-year lease on their current home, Gila River Arena, for five years until they determine a plan for a future facility.

The Coyotes have no plan or site on the board currently, which only fuels the fire that the team will relocate to Houston. The Houston bid for expansion definitely took a setback because after Seattle enters as the 32nd team, and finally balances out the league from a geographic and conference balance perspective, the league would not expand and add just one team.

The NHL has been clear of their interest in Houston especially to grow TV ratings and reach a more diversified demographic. The owner of the arena in Houston, Tillman Fertitta, also owns the NBA’s Houston Rockets and has been vocal about his desire to bring the NHL to the city. He met with NHL Commissioner, Gary Bettman, earlier this year to discuss very generally, the vision for hockey in Houston.

Some feel that the league does not want to lose the Phoenix market and that the Coyotes will find a way to stay in the desert, where they do have a loyal fan base. The speculation about a move to Houston will continue until the Coyotes find a long-term home for an arena in the East Valley or downtown.

It should also be noted that the Calgary Flames have an issue with plans for a new arena there now looking very dismal. The ownership there has threatened to relocate the team or sell the team to a party in another city. The door for Houston remains open in that relocation scenario as well.

The option to expand to Houston would require the league to expand by two franchises to 34 teams total. The logical other bid would be from Quebec, which has a new arena built and ready, but the expansion fee would be enormous in Canadian dollar figures. The Quebecor group would have to be willing to shell out a huge front-end cost to make that work.

In my view, I do not see the NHL ownership being willing to cut the revenue pie into 34 slices. I think the addition of Seattle is a home run for the league and makes some much sense from so many perspectives to add that city to the hockey landscape.

In addition, I am in the minority of people I have talked to in recent days on this subject that thinks that Houston would be an excellent destination for hockey as well. The city is much more diverse than many Americans realize and they have passionate sports fans and many transplanted people from around the entire country that now call Houston home that would fuel the appetite for the game.

It remains to be seen what happens with the Coyotes, the Houston bid for a hockey team, and if Quebec will finally get a seat back at the league table. However, what we do know is that Seattle will be joining the league to play in a state-of-the-art renovated Key Arena in the center of that great American city. The league took a bold step forward with Seattle and hockey in North America will be the beneficiary of those efforts.

(some background courtesy of ESPN, NBC Sports)

Follow Up: CVS – Aetna Merger Could Be Challenged

In a follow up to earlier pieces on this topic, the mega-deal that merged CVS and Aetna in the healthcare sector totaling about $70 billion could be challenged in federal court. The federal judge, Richard Leon, on Monday indicated that he could stop the activity of both companies to join forces and keep them as separate entities while he weighs the consumer impact of the merger.

This is out of the ordinary as the merger has met approval through the Justice Department and the federal court proceeding is often a mere formality. It should also be noted that Judge Leon is the same court officer which presided over the controversial AT&T / Time Warner merger proceedings; that was a recent topic here on Frank’s Forum, because of the content sharing issues taking place in that industry.

It is not a coincidence that Judge Leon, who has received plenty of criticism for his handling of the AT&T/ Time Warner merger, is now considering putting the brakes on this CVS/Aetna planned consolidation. The conflict of interest issue can be raised very easily in the case of CVS/Aetna because of what each entity specializes in separately.

The merger of a major healthcare/retail pharmacy company with a major health insurance carrier presents plenty of ethical concerns that could mollify the public interest. The concern is that Aetna-insured patients, whether it is individual policies or employer-provided policy coverage will be forced to fill prescriptions for medication at CVS locations exclusively.

A related concern for the consumer is when their employer-provided coverage changes to Aetna from another carrier, which then could force them into an prescription arrangement with CVS after the individual has a long-term routine and trust with another pharmacy. A similar concern was raised during the discussions of the merger in some forums online regarding rural areas that will require the consumer to drive farther to a CVS location if they are insured through Aetna, and in areas of the U.S. where CVS does not have a large presence.

In fair balance, some proponents of the merger state that it will provide better care for less cost. The addition of Aetna to their ranks will help CVS gain leverage with PBMs for the negotiation of pricing on prescription medications, which I covered in an earlier related piece.

The federal court could make this situation both very interesting and very difficult for those involved at CVS and Aetna. Judge Leon used words like “less convinced” that the merger was not an anti-trust violation. That is a very bold statement on the record and certainly could be motivated by the flack that the judge received in the AT&T decision.

Americans have long been concerned by anti-trust or monopolies because they represent, at the core, a break from our national ideals of competition in the marketplace as well as limiting consumer choice. The American consumer favors both choice and competition to create favorable conditions for price and service. The limitation of either of these market forces is looked upon rather negatively in the court of public opinion.

Both CVS and Aetna have to be alarmed that they are potentially being painted with the monopoly brush, and that this deal could unravel in the eleventh hour, unhinged by a judge who is essentially trying to rectify a previous miscalculation with the AT&T decision, which looks more like a monopoly with each passing day.

The central question is whether or not the combination of CVS and Aetna is within the best interest of the consumer. It is starting to look like that answer may alter one of the largest healthcare mergers in American history.

(some background courtesy of Reuters, CBS Market Watch, and CNBC)