Tuesday, October 11, 2011

The Truth is a Funny Thing in Aberdeen, MD When it Comes to Publicly Financed Ballparks

Ripken Stadium in Aberdeen, MD

Augusta, GA       **Updated on Friday, Oct 14th, 2011**
Some of you may remember last Monday, October 3rd, when some big wigs from Ripken Baseball flew down to Augusta with current Aberdeen, MD mayor Mike Bennett in tow to once again pitch their multi-purpose baseball stadium to select civic leaders and members of the media. The Augusta Chronicle covered their visit in this article: GreenJackets owners try to save downtown stadium plan.

Their stated purpose was to "dispel accusations that Ripken Baseball left Aberdeen in financial trouble when the team joined with the city and state to build a stadium in 2002,"  and to  "to clear up misconceptions and rumors", according to The Augusta Chronicle article.

 Apparently, the supposed "rumors" they were talking about stems from  a 2007 Baltimore Sun article that claims that the financial arrangement between Ripken Baseball and the City of Aberdeen to build a new ballpark in 2002 left the city struggling to meet debt service payments in subsequent years. In fact the article claimed that the city had to dip into its general fund to the tune of hundreds of thousands of dollars every year to service stadium debt because expected revenues were not materializing. Most importantly, adjacent development that the stadium was supposed to spur,  was also not materializing as city officials had initially been led to believe. The city was apparently counting on tax revenues from that adjacent private development to recoup their costs in the stadium.

At the Augusta PR event, Aberdeen mayor Mike Bennett said this about the 2007 Baltimore Sun article as quoted in The Augusta Chronicle: “As a citizen at the time, I can tell you that the city folks were not that happy with the things that were written. Most of us knew that the things in the article weren’t correct,” Bennett said. “Yes, the city has debt there. We've always had debt there. It is what it is. We were part of the process of building the stadium and we knew there would be debt and things are moving forward.”   Mr Bennett disputed that the city was losing money each year on the stadium.

Mr Bennett also said in The Chronicle article: "'We have a great relationship with Ripken Baseball. Ripken Baseball has a great relationship with us". 

However,  no one was suggesting that there was any bad blood between the city of Aberdeen and Ripken Baseball. And all evidence suggests that Ripken Baseball does a great job at running minor league baseball clubs. In fact, The Aberdeen Iron Birds consistently sell out Ripken Stadium. The problem is, with all that said, the city of Aberdeen still consistently loses money on the stadium. The city may very well be extremely happy with Ripken Baseball's ability to deliver a quality product, but that doesn't negate the fact that the financial arrangement between the company and the city of Aberdeen over the ballpark was decidedly lop-sided in favor of Ripken Baseball. The company received the bulk of revenues earned from the stadium, and the remainder going to the city could not even cover the debt payments.

In fact, documents forwarded to City Stink, appear to confirm the claims made in the Baltimore Sun article. According to the City of Aberdeen Operating and Capital Budgets (Actuals) for fiscal years 2005 thru 2012 shows that indeed the city was losing money each fiscal year on the stadium; so much in fact that the city was having to dip into its general fund each year to service stadium debt. In FY 2010 the city had to transfer $414,102 from its general fund to meet its obligations on their debt on the stadium, and the city's tax digest was not growing proportionally despite the presence of the stadium to cover these costs. In fact, the adjacent developments that were supposed to boost the tax digest to cover the stadium's cost and even yield a profit for the city were chronically delayed and many elements were cancelled.

Below is a clickable graphic from the budget report showing the general fund transfers. Pay close attention to the next to last line that reads "transfers from general fund".. you will notice that every year since 2007 when numbers were available for this report, the city had to transfer hundreds of thousands of dollars from the general fund to cover stadium debt and they project to do so next year. In total, since 2007, the city has transferred more than $2,000,000 from its general fund to service stadium debt. That's not counting the years between 2002  and 2007 when the city was losing even more on the stadium. The stadium was supposed to pay for itself. It clearly has not. (click the image below to enlarge):

This data seems to counter the rhetoric of mayor Mike Bennett at the Augusta PR junket. Was the mayor simply ignorant of his city's own budget and unaware of these numbers? Or was he purposefully trying to engage in political spin and obfuscate the real data in an attempt to rewrite history  to help Ripken Baseball sell a similarly lop-sided financial partnership to Augusta civic leaders that might put the city at financial risk for a new ballpark? 

For a city the size of Aberdeen to have to dip consistently into their general fund year after year to the tune of an average of   $300,000 seems to be indeed a financial millstone rather than the financial boon that stadium spin doctors were making it out to be. The numbers don't lie. And Mr Bennett, upon assuming office in 2007, even wanted to renegotiate  the terms with Ripken Baseball to lessen the city's financial losses. He was partly successful in being able to renegotiate slightly better terms. That alone would seem to indicate that the mayor knew the city had made a bad deal initially with Ripken. But Bennett was adamant in denying there were any missteps by the city in negotiating the financial arrangement with Ripken baseball over the stadium.

People in Harford County, MD were a bit surprised to hear about mayor Bennett's trip to Augusta to pitch the virtues of the city's financial arrangements with Ripken Baseball and seemingly to encourage Augusta leaders to enter a similar relationship with the company to build a new stadium here in Augusta, and seemingly having no regrets of the initial deal inked with Ripken. . 

Patrick McGrady, a candidate for Aberdeen mayor who is challenging Mike Bennett, questions the ethics of the trip. Ripken Baseball officials admit they paid for Mr. Bennett's plane ticket to Augusta. Mr McGrady wonders if it  is perhaps a conflict of interest for the sitting mayor to essentially act as a lobbyist for Ripken Baseball, a company with which the city has a financial relationship. Mr. McGrady said via Facebook of the trip, "I do believe it is unethical behavior, and I hope it will be investigated." 

The Baltimore Sun also found mayor Bennett's trip to Augusta to give a sales pitch for Ripken Baseball to be interesting as well. They even did a follow-up article in response to what mayor Bennett said about their previous article being untrue during his appearance in Augusta. You can read their follow-up article here: Aberdeen mayor helps Ripken Baseball make pitch for new Georgia stadium.

So just who is right here? Was mayor Mike Bennett just having a bout of amnesia on Oct 3rd in Augusta, GA? So just who was trying to spread "misinformation" in Augusta about the baseball stadium? 

The truth about what actually happened in Aberdeen has profound ramifications for Augusta, where the city is contemplating developing a financial relationship with Ripken Baseball to build a new stadium here. For the more than  five years that the stadium proposal has been batted about, Ripken Baseball officials have been conspicuously coy about exactly how much they will pitch in financially for the costs. They neglected to give any more details at the October 3rd Augusta PR event  to  clarify what their role and financial stake might be and how much they expect from the city for a new stadium..

The main pitch for building a new stadium in Augusta has consistently been that it would be a financial boon to the city, that it would spur economic and real estate development in the city and be an economic boost to downtown. Initially, claims were made that the stadium would spur a mixed-use condo/retail/hotel development adjacent to the stadium, boosting the city's tax digest. Ripken Baseball officials have even pointed to the Aberdeen model as a "success story" that Augusta could emulate. Obviously the stadium has not been the economic boon nor cash cow that the city of Aberdeen was hoping it would be. 

Augusta leaders should thus proceed with extreme caution in forging any financial relationship with Ripken Baseball over building a new stadium. In fact the financial situation Aberdeen finds itself in regarding their stadium is not an anomaly. In fact, it seems to be the norm, and we will have more on that in future updates. 

Augusta leaders are cautioned to take the overly enthusiastic hype of stadium proponents with a giant grain of salt and to look at the real evidence, the actual track records, the real numbers, and not just buy into the often exaggerated predictions of a big economic pay-off that in reality never seems to come.

You can be sure there will be more follow-ups to this story, and City Stink will keep you updated. We would like to also challenge members of the local Augusta media to update their stories from last week in light of this new information.

**Update Friday, October 14th, 2011**
It appears there has been more political fall-out for Aberdeen, MD mayor Mike Bennett from his trip to Augusta (paid for by Ripken Baseball) to lobby on their behalf to help sell a stadium proposal to Augusta leaders. Patrick McGrady, who is challenging Mr Bennett for the mayor's job, has filed an official complaint with the city of Aberdeen Ethics Commission regarding the trip. You can read more about this here: Mayor and Challenger Disagree Over Augusta Trip

Here is a copy of Patrick McGrady's ethics complaint filed with Aberdeen Ethics Commission: Ethics Complaint Filed Over Bennett's Trip To Augusta on behalf of Ripken

**More reaction from media sources in the Aberdeen, MD area regarding the political Fall-out from Mayor Mike Bennett's trip to Augusta, GA: The Dagger Blog

**Update Nov 2nd, 2011** The Aberdeen, MD Ethics Commission finds mayor Michael Bennett in violation of the city's ethics ordinance: Mayor Bennett hit with ethics violation and Ethics panel "admonishes" Bennett
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Taylor B said...

Good work. Interesting how other towns get screwed over identically to us, yet the snake oil salesmen find no major resistance from town to town.

City Stink said...

There is an upcoming article about Fort Wayne, IN stadium deal.. we will also compare fact vs fiction in that example as well. Stay tuned.

Brandon Reese said...

UPDATE: It appears that in response to Mayor Mike Bennett's trip to Augusta to help Ripken Baseball make a pitch for a stadium there, the city of Aberdeen has passed a new ETHICS ordinance.. that addresses public officials lobbying on behalf of the busness interests of companies that do business with the city.

Brandon Reese said...


City Stink said...

More to come