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Wednesday, Jan 24 1996
Water is flowing uphill. The sun is rising in the west. And the San Francisco Giants are preparing to build a $250 million ballpark on the bay with their own money.

The preliminary sketches of the China Basin proposal produced by Kansas City architects Helmuth, Obata & Kassabaum (HOK) aren't half-bad, either. Although the Giants' goal to finance their park privately is revolutionary -- almost insanely so -- the design falls short of miraculous. HOK Vice President Joe Spear concedes that the drawings released to the adoring press and public on Dec. 21 are "approximate."

"We're just scratching the surface at this point.There are a lot of questions not answered yet," he says. "We don't have final construction drawings down yet."

Spear isn't necessarily obfuscating: Any architectural project captured on paper four years from its completion date is subject to change. But the financial pressures the Giants have placed on themselves to pay for China Basin are certain to drive the evolving design. When Spear says the design is "approximate," that means that it could get better -- or worse. If the Giants find that they need more money, you can count on the ballpark getting worse.

The Giants' plan is the biggest financial swing for the fences taken by a Major League Baseball (MLB) franchise since the O'Malleys erected Dodger Stadium with their own money in 1960. The Giants expect to raise $140 million on the bond market; to collect about $90 million up front from the advance sale of advertising, seat licenses for 15,000 seats and 63 skybox rentals, and naming opportunities (à la 3Com) at the ballpark; and to collect $10 million in tax increment bonds from the city. (Tax increment financing is relatively painless for taxpayers because the bonds are paid off with the new property taxes generated by the new development.)

As roughed out by HOK draftsmen, the park continues the trend toward more "intimate" parks -- like the HOK-designed Camden Yards in Baltimore -- and away from 30 years' worth of concrete doughnuts.

But intimate compared to what? Most architects agree that the best benchmark of ballpark intimacy is not the amount of red brick on the walls but the diagonal distance from the first row of seats on the upper deck to home plate, representative of the territory occupied by fans who clap their hands at the action rather than rattle their jewelry. At Camden the tale of the tape from the upper deck to home plate is 152 feet. According to HOK, the distance at the proposed China Basin is 168 feet, inferior to Candlestick Park's 159 feet. (The good news at China Basin is that the first-row upper-deck seats are 16 feet closer to first base and third base than at Candlestick.)

Even Camden Yards' 152 feet is dismal compared to the parks of yore. At Chicago's old Comiskey Park, shuttered in 1990, the distance was a scant 100 feet, a glorious number we are not likely to see again for two reasons. The upper decks of old ballparks were constructed atop pillars and posts that thrust the upper deck forward toward the green, a design that is frowned upon today because it obstructs (a relatively few) lower-deck views. For the past three decades, architects have "solved" the obstructed-view problem by setting the upper decks away from the action on footings of their own. Some solution: It improves a thousand lower-deckers' view at the expense of the masses of upper-deckers.

Compared to Tiger Stadium, Fenway, and old Comiskey, parks like China Basin and Camden Yards are a step backward for every fan except those who like to take in a baseball game with their visit to the food court.

The second enemy of intimacy are the revenue-generating skyboxes and mezzanines, which catapult the upper decks into nosebleed altitudes. But revenue generation, not intimacy, is the reason behind the building of the new ballparks, which is why we should keep on eye on the HOK design as the Giants start counting their money. In Denver, HOK obeyed the dictates of Rockies management and added another 6,000 revenue-generating seats to Coors Field to bring the total to 50,200, cavernizing the place in the process. Intimacy was quickly sacrificed for dollars in the Ballpark in Arlington, where the Texas Rangers play, and the new Comiskey Park. Designed by David Schwarz, the Ballpark in Arlington places the first-row upper-deck seats an astonishing 176 feet from home. And at the HOK-designed Comiskey Park in Chicago, the skankiest of the new ballparks with two tiers of skyboxes, the distance between home and the first row is greater than it was from home to the last upper-deck seat in old Comiskey. Stadium architect Philip Bess calls these monstrosities "Mallparks."

If Giants President Peter Magowan wants to put the first-row upper deck on a barge, and can pay for it, let him. Just don't let him call China Basin intimate.

The $250 million question is, "Can the Giants afford the ballpark?" It's a question the boosterish Chronicle and Examiner have skirted. Apparently, the team believes it must afford the park in order to remain competitive. Financial World magazine's review of baseball revenues and expenses published last May asserted that the Giants earned average revenues in 1994 ($63.4 million) but lost more ($8.7 million) than all but five teams. (The magazine extrapolated the data from the strike-shortened 1994 season to create numbers representing an entire season.) In the fan-rebellion season of 1995, the Giants claimed losses of $22 million.

The reason the Giants think they can afford the park is the skyrocketing gate receipts and stadium revenues at the new parks in Baltimore, Cleveland, Denver, and even the skanky three -- Chicago, Arlington, and Toronto. Total 1994 revenues in those cities resided in the $70 million to $80 million range, making the teams profitable.

But here comes the rub: Those new-park franchises all enjoy sweet lease deals, with the teams rarely paying more than $4 million a year. The Giants paid only $800,000 in rent last year at Candlestick. At China Basin, the team would face a private debt unheard of in MLB.

According to Giants Chief Financial Officer John Yee, the team intends to finance $140 million worth of bonds over a minimum of 20 years. Assuming 9 percent rates, the annual principle and interest bond payments would be $15,335,000. That's 19 times what the team paid in rent last year, and many times the average MLB stadium rent of about $2 million.

Giants money woes only begin there. Remember, they expect to raise $90 million up front from seat licenses, skybox rentals, advertising, and naming opportunities for the ballpark.

How realistic is that?
Not very, says Andrew Zimbalist, an economist at Smith College and the author of Baseball and Billions. Seat licenses and boxes are avidly purchased in cities that are wooing teams, like football-hungry Nashville and St. Louis, where 46,000 seat licenses worth $75 million were sold to Rams fans.

"Is the Nashville and St. Louis experience duplicable? My hunch is not," says Zimbalist. "San Francisco is not a very good baseball city; there are so many other cultural things going on."

The Giants reportedly hope to sell $40 million worth of the licenses, but will the market be more resistant than they think? It resisted the Oakland Raiders, who still need to move 5,000 seat licenses to keep the Coliseum renovation project at break-even.

The Giants can't expect media money to float their park, either. The team bats average in the sale of TV, cable, and radio rights, due in part to competition from the Athletics, and the fact that the Bay Area has one of the lowest HUT (homes using television) ratios in the nation. What's worse, local Giants TV ratings dropped last year.

Robert Baade, a sports economist at Lake Forest College in Illinois, is as skeptical as anyone about the financing.

"I'm not discouraging the use of private funds, but it's hard to see how the Giants can remain competitive with other teams that receive stadium subsidies," Baade says. "If other cities are putting up more money, doesn't that put the Giants at a competitive disadvantage?"

No, says the Giants' green eyeshade.
"I've been living with this program for the last year, validating it from all perspectives," Yee says.

He cites the burgeoning "revenue swings" of the other new parks as evidence that this new park can pay for itself. Food concession stands will be more plentiful at China Basin, pushing up gross sales, as will the various retail outlets. There's also new revenue from the brew pub just beyond center field and potential revenue from the retail/office structure adjacent to the park.

It's a fact that gate and stadium revenues rise at new parks. Financial World reports that the gate nearly doubled and stadium revenue nearly quadrupled after the Orioles moved into Camden Yards. The team attracts 3.5 million fans a year, selling 90 percent of its capacity. (Similar increases are reported in Cleveland.) Yee bases his black-ink projections on selling just 75 percent to 80 percent of China Basin's 3.4 million tickets, or about 2.5 million. That's about as many as were sold in 1993, when the Giants chased the pennant. (Architecture critic/stadium consultant John Pastier warns that China Basin seats will be more expensive. Ticket prices rise about 35 percent at new ballparks, exclusive of seat licenses, he says.)

Is Yee's fiscal optimism warranted? In Chicago -- another two-team market -- the luster has gone off new (can we say "skanky" one more time?) Comiskey. Only 1.6 million White Sox tickets were sold in 1995, down from 2.5 million during the divisional championship year of 1993. Weep not for the Sox, though; under their sweet deal they only paid $1 million in rent last year, and probably made money.

The cyclical quality to sports revenues might undo the Giants' gilded spreadsheets, not to mention other financial bean balls. A recent New York magazine article found the average cost overrun on new stadiums is 73 percent. The Giants will watch the construction pennies closer than a profligate stadium authority, but remember, they'll be operating on a slim margin of error.

Although Smith economist Zimbalist wishes the privately financed project well -- "If Magowan wants to the roll the dice, let him" -- the professor thinks the Giants need to explain better their scheme to the public.

"Something is missing here," agrees sports economist Baade.
Architecture critic Pastier adds that if the Giants do build a park on their own and make money, the other owners will have to do some explaining to taxpayers, too.

For now, let's take the Giants at their word -- that they're not dragging a Trojan horse down to China Basin from which to stage an ambush on taxpayers. But let's also acknowledge that China Basin will put demands on the team's treasury that could result in the trading of expensive players like Bonds and Williams, or bankruptcy.

What's the worst thing that could happen at China Basin? That the Giants decide during the financing that they need larger revenue flows and ask HOK to skankify the preliminary China Basin design.

Or, that they have to destroy the ball palace in order to build it.

About The Author

Jack Shafer


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