SBJ/July 6-12, 1998/This Weeks News

New-stadium tabs could follow teams that flee state

HARRISBURG, Pa. – Under a proposed law to be considered this fall in Pennsylvania, sports franchises that receive public assistance with stadium construction, and then skip town, would have to pay some of the money back.

The bill by Rep. Don Walko (D-Pittsburgh) is being circulated prior to the legislative session that will begin in September. Walko anticipates support for the measure from both Democrats and conservative Republicans from rural districts who don’t want to provide funding for city stadiums.

Walko said he also is preparing his bill as an amendment that could be plugged into any measure that might be passed relating to stadium funding.

“I’m trying to protect the public in the event they just up and leave” after a new stadium is erected, Walko said.

Walko’s bill comes in the wake of an announcement from two Pittsburgh pro sports franchises about what they would contribute to their desired new facilities. The Pirates would contribute $40 million to a baseball-only complex. The Steelers would chip in $76.5 million for a football facility. Construction of each of the stadiums would require public funding as well.

The Pirates and Steelers currently share Three Rivers Stadium.

There are at least two scenarios under which the proposed legislation could play a role. If either the Steelers or Pirates simply chooses to relocate, leaving a publicly financed stadium empty, the team would have to pay 5 percent of the base value of the franchise to the “host municipality” and the state. If either team were to be sold and moved, that team would have to pay a percentage of its appreciated equity – the difference in the team’s value before a new stadium opened and its value when sold – or 5 percent of the base value, whichever is greater.

The proposal would pertain to all teams in Pennsylvania. In Philadelphia, both the Phillies and Eagles want new facilities as well.

Walko said evidence is abundant that a team’s value rises when it moves into a new stadium. For example, the Cleveland Indians were worth $35 million in 1986 but $175 million in 1996. The Baltimore Orioles’ value rose from $70 million in 1988 to $207 million in 1996. The Texas Rangers, purchased for a reported $46 million in 1989, were sold earlier this year for $250 million. Each of the team opened new ballparks in the 1990s.

“I want to provide protection for the people of Pennsylvania who are making these major investments,” Walko said. “If they’re going to make these investments, I believe they should also participate in an appreciation in the value of the franchises they helped to trigger.”

Robert Zausner is the Harrisburg, Pa., correspondent for the Pittsburgh Business Times.

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