Ripken Stadium expensive for city

The Baltimore Sun

The minor league Ripken Stadium, which opened to acclaim and sold-out games five years ago, has proved to be such a financial drain to the small town of Aberdeen that the mayor now wants to sell it.

Mayor S. Fred Simmons says that he has had conversations with several potential buyers but that the most promising involve the stadium's namesake: hometown hero Cal Ripken Jr., who owns the team that plays there, as well as a sprawling youth baseball operation headquartered nearby.

"We're figuring out ways to untie this Gordian knot, to figure out just how much money it would cost the buyer so the city could get out of it debt-free," Simmons said, referring to the legendary, intractable knot that Alexander the Great is said to have cut in half. "I think it's a challenge that rivals the size of the deficit that it brings."

The team pays only $1 a year for use of the stadium and keeps virtually all of the money generated from games. But officials say the biggest hit has come from an adjacent development project that was counted on to help pay for the stadium but has been delayed. Each year Aberdeen loses several hundred thousand dollars - a significant problem for a city with an annual budget of only $16 million.

Completed in 2002, the stadium became an instant draw and point of pride for the city of 14,000. Named for the Harford County city's most famous family, the stadium was seen as a logical extension of the tradition that began when Ripken's late father taught his two sons baseball at a home a few miles away, where their mother still lives.

Those sons, of course, went on to be major leaguers - for a while making up half of the Orioles' infield while their father was the manager. A museum downtown memorialized the legacy of the family and of Ripken, who became one of the nation's most beloved sports figures when he surpassed Lou Gehrig's record of consecutive games played. Ripken will be inducted to the Hall of Fame this summer.

The home team, the Aberdeen IronBirds, are a short-season Single-A Orioles affiliate, and their stadium is projected to be the hub of a unique complex of youth baseball taught "the Ripken way" and the driving force behind a new development of homes and shops, including a movie theater.

But the city's commitment to the stadium project - annual payments on about $4.8 million in state bonds - has proved difficult to meet, with expenses outpacing the money the city makes on the facility and forcing city leaders to dip into the general fund.

Simmons said he is "dead serious" about selling the stadium, but is still trying to untangle the original agreements and determine the feasibility. His ideal buyer would be Ripken and his company, Tufton Professional Baseball LLC.

But he said he has also received two unsolicited offers from private individuals, whom he declined to name.

This month, Simmons began negotiations in earnest with Chris Flannery, whose work for Ripken includes overseeing the Aberdeen projects. In an interview Thursday, Flannery acknowledged that the city has encountered problems and said that Ripken wants to offer assistance.

"We partnered with the city, and we're not the type of organization that takes that responsibility lightly," Flannery said. "As things perhaps change over time, because you learn that things are different, you have to react to them."

Flannery said Ripken would be interested in purchasing the stadium if the right deal could be worked out. "I think it's a good solution for us," he said.

In total, the baseball and non-baseball events bring in about $260,000 to the city, mostly from the proceeds of a tax on tickets. But Aberdeen's operating expenses - as well as interest and principal payments to bondholders - have pumped the city's losses up to as much as $485,000 in a single year, according to city figures.

Those losses have prevented the city from making any contribution to a "sinking fund" for future repairs to the stadium that planners envisioned would be necessary. The city is responsible for capital maintenance, or long-term infrastructure repairs and upgrades at Ripken Stadium, and a consultant last year identified $2 million in repairs that will need to be made over the next five to 10 years, including $410,000 urgently needed to replace faulty handrails.

Aberdeen officials, led by Councilman Michael G. Hiob, are seeking a room tax at city hotels to help create more cash but have been blocked by members of Harford's legislative delegation.

"The deal they made with the Ripken thing is one of the worst deals they ever made, and now they expect the taxpayers of Aberdeen to pay for their ineptness," said state Sen. Nancy Jacobs, a Harford County Republican. "That was a terrible deal, for very little return. It could've been a gold mine."

Publicly funded stadiums have long drawn the ire of taxpayers and economists, but rarely have local officials conceded defeat the way Aberdeen seems prepared to do.

Simmons, an insurance salesman who served on the board that oversees the stadium before being elected mayor in 2005, said the city is proud to be associated with Ripken and his minor league team and youth academy. But he said a series of poor decisions have backed the city into a financial corner.

Negotiating a sale back to the team owner, however, could be difficult without offering sizable incentives, said Martin J. Greenberg, a real estate and sports law attorney who is an expert on sports facility funding.

"Private ownership of stadiums, unless there's some other component, makes little financial sense," Greenberg said. "It's a limited-use facility. There's got to be something other than just buying the stadium."

The deal between the city and Ripken, drafted and signed in late 2000, called for the city to purchase 112 acres of rolling farmland just north of Interstate 95.

Ripken, who writes a weekly advice column on youth sports for The Sun, agreed to build the $18 million, 6,000-seat stadium on 30 of those acres, splitting the costs with city, county and state taxpayers. Tufton Professional Baseball LLC contributed $6 million of the construction costs, which helped convince state leaders to put in another $6 million. Aberdeen contributed $4 million, and Harford County added $2 million.

The city, working through the state, raised the money to buy the land through the sale of $4.8 million in bonds - backed by a promise to raise taxes if necessary to repay bondholders.

The city depends on the proceeds of a 10 percent tax on tickets, as well as a share of the profits it shares with the team for concerts and other nonbaseball events held there, to cover its costs. So far, that revenue hasn't been enough.

From the start, the viability of the project hinged on development around the stadium - only some of which has come to fruition.

The Ripken Baseball Academy, a youth baseball facility that attracts thousands to the city annually and hosts the Cal Ripken 12-and-under World Series, has been built, and a Marriott hotel, modeled after Camden Yards' B&O; Warehouse, looms beyond right field and will open next month.

The true windfall, however, was expected to be 30 acres of adjacent land for development, including homes, restaurants, shopping and a movie theater.

Real estate, property and amusement taxes were predicted to bring in more than $900,000 annually, according to city documents, easily covering the city's expenses.

"The operating expenses of the stadium would never have been completely offset by the income of the stadium," Flannery said. "Just as you find in many other minor league parks [and] arenas, the stadiums themselves are not a break-even proposition, but become a catalyst for growth and improve the overall tax base."

After years of costly delay following a lawsuit from a rival developer, a deal was struck in early 2005 between the city and Nottingham Properties Inc., developer of The Avenue at White Marsh.

But the development has yet to take shape.

Mark E. Mueller, an associate with KLNB, the leasing agent for Nottingham, said that the company intends to see the project through. A sticking point has been securing a movie theater chain - which would be the main draw when baseball is out of season.

"Because of the sale of the [company's] assets down in White Marsh, fairly or unfairly, this project has not been the focus of their attention. But it is now, and it is their intention to see it through," Mueller said.

Former City Manager Peter A. Dacey said the sale of the land alone should have offset losses until development finally took place.

After recouping expenses, about $1.2 million was placed into the city's stadium fund that would have more than covered the expected shortfalls.

But operating losses of several hundred thousands of dollars a year are eating into that fund. At the end of fiscal 2006, the fund showed a cumulative balance of only $251,520, even after the sale of adjacent land. The fund balance could plunge into the red this fiscal year.

"There is a temptation now, because we don't have the revenue streams we thought we'd have, to try to squeeze not only the taxpayer but other revenue streams as well," Simmons said. "I find that patently unfair."

Ultimately, any sale would require approval of the City Council. Aberdeen Councilman Ronald Kupferman said the mayor has told him of the talks with Ripken.

"I would definitely be in favor of selling the stadium so that we can get back to square one," Kupferman said.

Other cities have tried to sell stadiums, with mixed results.

In Lake Elsinore, Calif., officials have been trying for five years to unload The Diamond, a $22 million ballpark built in 1994 that now carries a debt of $38 million. Negotiations with the local minor league team's owner have been going on since November.

"We realized the debt was something we were going to have to eat, forever, until it's paid," said Lake Elsinore City Councilman Thomas Buckley, who said the city banked on the stadium creating economic development. "You can make it work, but for all the times an athletic facility has sparked significant development, you can cite 10 examples where it hasn't."

Former Mayor Doug Wilson, who led the city through negotiations, maintains that the outlook for the city's stadium fund was sound when he left office. He said the city and stadium management board need to work harder to make the project work.

"We built a stadium, and yes, we wanted to break even, but we've never gotten to that point," said Wilson, who lost in 2005 to Simmons. "We need a little more effort to get it done. You don't just throw up your hands and say, 'I can't do it.'"

Deal at a glance

Term: 20 years.

Rent: $1 a year.

Revenues to the team: ticket sales, food and beverage concessions, stadium advertising and skybox rentals. Revenues to the city: a 10 percent ticket tax, 100 free tickets for every game and up to $2 a car parking fee - which has so far not been assessed because of objections from the team. Nongame events: the team gets to book concerts and other events in exchange for paying the city $40,000 a year and a percentage of the revenue.

Operation and maintenance: paid by team.

Capital projects: paid by city.

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