- The Washington Times - Sunday, October 20, 2002

ANAHEIM, Calif. Two key parts of pro sports over the past 15 years have been an unprecedented wave of new stadium development, and an equally unprecedented wave of public money to help pay for those stadiums. Since 1987, more than $7billion in taxpayer money has been used.
The National League champion San Francisco Giants and owner Peter Magowan, however, can tell a very different story as the World Series shifts to Pacific Bell Park Tuesday. After four angry rejections by Bay Area voters for public stadium funds and a near-move of the club to St. Petersburg, Fla., Magowan built the $319million Pac Bell Park entirely with private money. The result is a visual and architectural triumph by any measure.
Amid a marked downturn in the national economy and still-growing voter angst over public stadium financing, Pac Bell's financing model remains unique. And the Giants situation still offers plenty of potential lessons for local baseball advocates even though the District of Columbia recently cut funds for public services and education to close a $323million budget gap for 2003, and Virginia Gov. Mark Warner grapples with a $1.5billion state budget deficit of his own,
With public coffers closed, Magowan used a three-pronged approach to fund the development of Pac Bell Park: a $50million naming rights agreement with Pac Bell, personal seat license fees similar to those common in NFL stadiums for seats in prime locations, and heavy upfront payments in multi-year contracts with other corporate sponsors and concessionaires. The combination generated $150million.
Magowan and his partners borrowed the rest, and the plan left them with $20million in annual debt service, roughly three times the average annual rent paid by a team playing in a publicly financed facility. Thanks to a fan base that has bought 99 percent of all available seats since Pac Bell Park's 2000 opening and the strongest base of corporate sponsorship in baseball, the Giants scratched out a small profit in 2000 and 2001.
But the Giants' payroll went up this year from $63million to $78million, and Magowan said a profit will be realized only if the World Series goes its full seven games, and even then it's not a sure bet.
"We're not hanging on by our fingernails by any stretch. But [the budget] is certainly tight," Magowan said. "Our payroll is as high as it will go until baseball in general generates more revenue. We can't sell more tickets. We can't just jack up ticket prices that's a dangerous road to go down. We have to go out and continue to create other incremental revenue, such as new sponsors, to keep growing and meet expenses. But what's made this work is an absolutely tremendous fan base. We have the largest fan base of season tickets [28,000] in baseball."
For the record, District mayor Anthony Williams pledged commissioner Bud Selig $200million in land and public financing toward a ballpark in the city. And the Virginia Baseball Stadium Authority continues to work to find full backing for the roughly $200million in bonding authority it already holds. About half of the Virginia bonds would essentially be self-funding mechanisms from ballpark-related revenues, while the backing for the other half stands as the commonwealth's unsolved challenge.
Neither funding stream can be counted as truly secure, particularly considering that the budget situations in both the District and Virginia figure to get worse before they get better. And no one knows how receptive local legislators really will be toward public ballpark financing if and when MLB executives place a team in the Washington area.
As a result, neither the District bid group led by financier Fred Malek or Virginia-based efforts are currently tied to any exact financing plan.
"We simply don't know what the exact [financing] model will be yet because there are still so many variables in play," said Winston Lord, executive director of the Malek-led Washington Baseball Club. "But we are committed to developing a true public-private partnership with the city, paying our fair share, and not having any current public funds diverted to a stadium."
Virginia Baseball Club, led by telecommunications executive William Collins, similarly does not intend to place ballpark financing in competition with existing needs in the general fund.
Magowan's private financing for Pac Bell Park made him something of a hero in the anti-stadium lobby, as well as a target of other sports team executives claiming the Giants' success has made it harder for them to secure taxpayer funds for their own stadium projects. Magowan is uncomfortable with either notion.
"We've never tried to say our way is right for everyone. Our approach does not work for everyone," Magowan said. "We simply had no choice at the time, and we were fortunate in that we built the stadium during a high time for the economy. Our timing was very good. If we had to do it now, I'm not sure if we could. But any new stadium project going forward is going to require more private participation than most of the ones already built. If Washington or anybody else has a real interest in learning about what we did, we would certainly share with them our experiences."
Magowan's hefty debt service will continue each year until 2022. But he has no real regrets, particularly not now with the Giants playing in the World Series.
"At end of all of this, we will have an essentially 'free' stadium we own, no debt, and have a far greater degree of operational control than any of the club's previous owners did at Candlestick [Park]," he said. "That situation certainly has its advantages."

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