Tuesday, February 1, 2011

Can-Am League and a study in public policy failure

TUESDAY, 01 FEBRUARY 2011 12:50


Just in case you haven't notice, and many in New Jersey probably have not, New Jersey lost a professional baseball team in January. Floyd Hall decided to disband his Sussex Skyhawks of the independent Canadian American Association of Professional Baseball, or Can-Am League for short on January 11. The reason for the team's demise is pretty simple. Hall's lease at the August baseball park had expired and he was unable to sell the customer-challenged franchise to an investor so he cut his losses and folded the team.
Only Skyhawks diehards, and there were not many of them, will miss the team.
New Jersey Governor Chris Christie may want a replacement team in Newark after National Basketball Association's New Jersey Nets depart for Brooklyn sometime in the future, but he is not clamouring for a Sussex Skyhawks replacement in the Can-Am League.
The Can-Am League is just not that important.
Skyhawks fans can watch Can-Am League baseball elsewhere in New Jersey, either in Montclair or Newark or can make a short drive into Rockland County, New York and watch the Ramapo-based Rockland Boulders. That is if there is a Boulders franchise as all of a sudden, the future of that franchise may be deciding by a New York State Supreme Court Judge.
People in northwest New Jersey apparently had a lot of other things to do in June, July and August each summer and neglected to show up at the Augusta yard. Hall's team drew just 71,826 "paid" customers or 1,670 per game in 43 openings. That was not the worst attendance in the league in 2010. That honor belonged to Pittsfield, a team that averaged 702 paying customers a game and drew 29,485 people in 42 openings in the western Massachusetts city in the Berkshires.
Hall will still operate a New Jersey team in the league as his New Jersey Jackals will once again play at Yogi Berra Stadium on the Montclair State University campus. Hall's other team, the Jackals, didn't excite too many people either, the Jackals attendance figure was 86,014 "paying" customers in 44 dates or an average of 1,954 per game in an affluent market with demographics that would be the envy of most affiliated minor league baseball team owners.
The Can-Am League is in many ways the last stop for players who still have the dream of making it to the Major Leagues. The league has some older players who are looking at one more shot at Major League Baseball and younger players who have been overlooked and may have fallen through scouting cracks that are hoping to impress someone who works in player personnel major league team. The league lacks fans in large numbers and is publicity starved as well as media-challenged since there are no TV and radio contracts with stations that have limited signals although those broadcasts are available on the Internet.
It is also a league that has seen franchises come and go at alarming rates. The independent circuit has lost Sussex but gained Newark after Tom Cetnar purchased the Bears franchise and decided to move the team from the Atlantic League to the Can-Am League last October. That gave the league six teams but there is a seventh and an eight team scheduled to compete in 2011 and the eighth franchise (which is located about eight miles north of the New Jersey-New York border in Montvale up New York's Route 45 in Ramapo, New York) is going to be a problem for the league.
The seventh franchise seems to be a travelling squad made up of New York State League players looking for a chance. The eighth team is the Rockland Boulders and the franchise already has a sordid history. That "history" is going to be played out in court very shortly. Some Ramapo, New York residents are a tad upset with Ramapo Town Supervisor Christopher St. Lawrence who decided to go ahead and build a 3,500-seat stadium off of Route 45 despite the fact that local residents overwhelming voted against funding of the ballpark last August.
St. Lawrence probably thought the vote was a mirage as construction of the stadium continued despite the fact that local voters said there were not giving permission to use town funds to pay off $16.5 million worth of debt. Last Friday, St. Lawrence was hit with a lawsuit, which cannot make the Can-Am League too happy.
The suit filed on Friday in the State Supreme Court of New York State in Rockland County has 390 points of discussion (including item 233, a column by this reporter on the economics of the Can-Am League). The lawsuit is asking for a judgment to stop the project.
Meanwhile the Rockland Boulders along with the rest of the Can-Am League are scheduled to start playing in late May.
Spending on sports facilities in the United States is a major issue and when a municipality decides to get into the sports business, it becomes a money pit of which there seems to be no escape. Ramapo Town Supervisor Christopher St. Lawrence is hell bent on building a baseball park for a sports league which has at best a mediocre financial history.
The Can-Am League had six (two from New Jersey) teams playing in 2010. St. Lawrence wanted to see Ramapo included as the league's seventh team in 2011 and authorized the town to build a $25 million ($16.7 million for the stadium the rest for land acquisition), 3,500-seat park for an owner who wants to cast his lot in a league that doesn't seem to have too many fans.
The Canadian American Association of Professional Baseball.
Because of the number of teams that have folded, offers little more than a grim financial picture but St. Lawrence wanted his taxpayers to invest in by building a stadium for prospective owners. As St. Lawrence continued to make his push to get a stadium funded and a prospective owner, the East Ramapo School District (which is part of the Town of Ramapo) made plans to lay off workers and close a school, the Hillcrest School, which is not far from where the stadium with a promise of a few minimum wage per diem jobs will be built.
Can-Am League players don't get paid much money either. Independent baseball differs from minor league baseball in a significant way. Major League Baseball teams pick up the salaries for managers, coaches, players and trainers in the farm system which eliminates a significant payroll item for owners; in the independent leagues, owners pay for everything. There is a tight salary cap in the independent leagues.
The Can-Am League has a long list of defunct teams: Atlantic City, N.J., Elmira, N.Y., New Hampshire (Nashua), New Haven, North Shore (Lynn, Ma.), Ottawa, Ontario and Sussex.
A 2005 team was supposed to play in Bangor, Maine. That franchise became a road team known as the Grays and folded with Elmira after the 2005 inaugural Can-Am season. The league had 10 teams in 2007 and by 2010 lost 40 percent of the league members.
The league could not find an investor for Sussex and has a travelling team of guys who are basically auditioning for the Can-Am League in the New York State League players. That history should not give anyone any real confidence in the league's financial wherewithal.
But in 2010, St. Lawrence moved ahead and signed a memorandum of understanding through the not-for-profit Ramapo Local Development Corporation and Bottom 9 Baseball, LLC and landed a team. The document was not a binding legal paper but it laid out a road map for Ramapo taxpayers and the baseball team owners. RLDC and Bottom 9 Baseball had 18 months to finish a deal after the clock started on June 4, 2010. It is not as though Ramapo had many suitors at the town's doorstep for the new stadium. It is going to be a tough go for anyone to sellout a 3,500-seat baseball stadium in Ramapo and in the "secondary" markets of Rockland and Orange Counties in New York and Bergen County in New Jersey.
The contract between the town and the team is for 20-years, which is quite a stretch considering the Can-Am League is just playing a seventh season after reorganizing following the failure of the Northeast League. The Northeast League began in 1995 and merged with the Northern League in 1998. The two groups split after the 2002 season.
The league has never enjoyed financial stability in 16-years of various incarnations.
The Ramapo-Bottom 9 Baseball deal could have fallen apart on August 15, 2010 if a number of conditions were not been met. Ramapo and RLDC had to find money to support the construction (with or without Ramapo taxpayers' approval) and have to get all the necessary land approvals. Bottom 9 Baseball had to be in a league by October 8, 2010.
St. Lawrence lost the financial referendum in late August by a 2 to 1 margin, but no matter he forged ahead. Bottom 9 Baseball also missed the October 8 deadline. On January 11, 2011, three months later, Bottom 9 Baseball officials joined the Can-Am League.
The baseball facility is supposed to be ready to open on June 6, 2011. Bottom 9 Baseball will be throwing a million dollars or four percent of the estimated costs into the venue. The team will pay $175,000 a year in rent. It would take more than a century for Ramapo to get back the construction costs at that rate. The team threw a couple of bones to Ramapo. The municipality will get a dollar for each ticket sold (not including those seats in the stadium's 20 luxury boxes — the town will get some money from those seats and some money from the sale of the stadium's naming rights.

What are the odds that a Ramapo Stadium can get any money for naming rights when the New York Giants/Jets Meadowlands Stadium and the Dallas Cowboys Stadium (where Sunday's Super Bowl is taking place) are still unnamed? What also has to be disturbing to St. Lawrence is that the city of Jacksonville waived the 25 percent of an estimated $16 million naming rights deal at the city's stadium to help the Jacksonville Jaguars bottom line. The city is forfeiting $800,000 in revenues annually for the next five years.)
The team will give Ramapo two dollars from each car parked in the stadium's lot for a game. The town will also get 10 percent of the concessions whether it is food, beverage or merchandise sold at the stadium. The team will keep signage rights in the building.
Based on Can-Am League attendance figures, the Town of Ramapo will get somewhere between $3,000 and $4,000 a game if the town and team is lucky.
The Ramapo paid financial consultant on the project thinks the stadium will bring in $1.4 million a year which would cover the $1.3 million annual debt service that St. Lawrence projects for the stadium.
Politicians when it comes to stadium costs are so easily fooled.
There is a treasure chest of consultant figures that can fill up rooms at municipal buildings around the country with rosy projections. In Cincinnati, the city and Hamilton County need to find money somewhere to cover the debt of the city's football stadium.
Revenues will come in at $500,000 for the Town of Ramapo and that is a big maybe from games in real world projections not Town of Ramapo-hired economist projections.
Ramapo taxpayers better understand that this stadium will be a loss leader no matter what both sides say. Ramapo officials think the team will bring in $900,000 in stadium related revenues. The bad news, the revenues figure is grossly overstated, the good news for Ramapo is that at this point they are not being asked to pay the team's expenses like New Orleans and Indianapolis and Glendale, Arizona residents are doing for pro sports teams. The bad news is that Ramapo will have to find money somewhere to pay from the annual $1.3 million stadium debt. That money won't be coming from local college baseball teams (Rockland Community College, St. Thomas Aquinas College and Dominican College) or high school baseball or stadium concerts, as the seating capacity is too small for anything but small acts.
There is also a question of infrastructure (road repairs, sewer installation and other improvements) and other costs including police. Can the area also handle game day traffic, although that would seem to be a moot point considering the lack of attendance in the Can-Am league?
Another question that should be answered: Who is paying RLDC's legal fees? St. Lawrence or the town?
There is a laughable clause about radio and TV and how Ramapo and the RLDC will get some advertising money from broadcasts and telecasts of the team. Many Major League Baseball teams, National Basketball Association, National Hockey League and National Football League teams have revenue sharing deals with local radio stations and a radio network.
Ramapo has two radio stations.
There is a major radio problem, the stronger signal of the two Rockland radio stations (a 1,000 watt daytime) broadcasts in Polish and the other is a 500 watt station daytime that doesn't cover the entire county. Most games will be played at night when the station's signals are diminished under rules established by the Federal Communications Commission. The money that can be charged for a commercial on a small radio station for an independent baseball league team might amount to tip money at a local diner.
There is always Internet radio.
Unless some local access cable TV company wants to put some games on TV, there will be no TV. The affiliated Brooklyn Cyclones franchise in the Short Season A Ball, New York-Penn League is owned by the New York Mets and there are a couple games on TV on SNY and maybe a game here or there on WFAN. The Yankees' Staten Island affiliate in the New York Penn League is on the YES Network once in a while or a blue moon, whatever frequency is less.
The terms of the Ramapo-Bottom 9 Baseball agreement heavily favors the baseball team which is not surprising.
If the stadium is not done by June 6, 2011, Ramapo will pay Bottom 9 Baseball a penalty of $2,500 a day for every day the stadium is unusable or up to $175,000. If construction of the stadium starts and Bottom 9 Baseball cannot get into a league, Bottom 9 Baseball has to give Ramapo $675,000.
If the stadium isn't built and the RLDC and Bottom 9 Baseball have an agreement and the agreement is canceled out because there is no stadium by September 30, 2011, Ramapo taxpayers are on the hook for $500,000 as a penalty for Ramapo not living up to the contract.
Bottom 9 Baseball gets exclusive use of the stadium 85 days a year, which is the summer when an outdoor stadium in the northeastern part of the United States should be most utilized. Ramapo gets the stadium 280 days a year, mostly in the winter. It is hard to hold an outdoor concert on January 17 and putting a temporary ice rink in the middle of a 3,500-seat outdoor facility in winter borders on financial lunacy if the town thinks that an outdoor rink in a baseball stadium will make some money.
There is a high baseball team mortality rate in the Can-Am league. Chris St. Lawrence probably doesn't want to know all of this but Ramapo residents should. Publicly funded stadium and arena construction is a failed urban and public policy
Stadium and arena building became an integral part of public policy in the 1940s when Oakland decided to build a football stadium however that was shot down in a referendum. But other cities such as Baltimore and Milwaukee jumped onto the stadium building bandwagon and by the 1950s, cities began putting money aside for simple stadiums that could be used for baseball and football. By the 1990s, (after the 1986 Tax Act was passed by Congress and signed into law by President Ronald Reagan which somehow changed the way stadium debt was paid down---only eight cents of every dollar generated in a stadium or arena built with public funds could go to pay off debt) sports executives convinced politicians that building a sports arena or stadium would be an economic engine. That was the mantra in Cleveland and people said yes to a baseball stadium for the Indians and a project called The Gateway was built which came complete with a baseball stadium, a multipurpose arena, a football stadium and the Rock and Roll Hall of Fame. The project has been bleeding money and the latest plan to help Cleveland's downtown is opening a casino next to the arena.
Sports owners got great leases though at the stadiums and arenas built on the public dime.
Now the Can-Am League is encountering a major problem, a lawsuit that could result in Ramapo having the stadium construction halted. Actually, it is not really much of a problem for the Can-Am League as the baseball grouping has lost franchises before. It is a problem for Christopher St. Lawrence and the residents of Ramapo, New York.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition is available at www.bickley.com, Barnes and Noble or amazonkindle. He can be reached at evanjweiner@yahoo.com

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