After considering a proposal for the building of a new stadium for the Pawtucket Red Sox, Sen. James C. Sheehan (D-Dist. 36, Narragansett, North Kingstown) has stated that unless certain risked are either guaranteed or mitigated by team owners, the state should walk away from the deal.
Under the current legislative proposal, the Pawsox would contribute $12 million toward stadium-construction costs. The Pawtucket Redevelopment Agency would then raise $71 million through a series of bonds to cover an additional $33 million from the team, $23 million from the state and $15 million from the city, plus interest.
“A troublesome concern with the proposal is that it outsources the risk of stadium ownership to the public sector,” said Senator Sheehan. “What happens if the team’s tax revenue projections fall short due to a drop in attendance numbers, and the team cannot make its lease payments some time over the next 30 years? It is not hard to imagine in our impatient and instant gratification-oriented culture that stadium attendance numbers in a traditional and slow-paced sport may decline over time. In fact, this has already taken place at McCoy Stadium. Since the PawSox are a minor league baseball franchise, the drop in attendance could be greater and take place sooner than might occur with a major league franchise.”
Senator Sheehan is also concerned that the financial state of Pawtucket would, by default, put the city’s fiscal burdens on the backs of Rhode Island’s taxpayers.
“The city is depending on an increase in tax revenues derived from prospective commercial development built adjacent to the stadium to pay off its share of debt,” said Senator Sheehan. “I am concerned about Pawtucket’s ability to pay off its share, especially since it could be years for this commercial development to take place if all goes well. Pawtucket’s financial position and the potential for declining attendance over the next 30 years are risks that must be addressed in ongoing negotiations. If not, the state and its taxpayers, as the ultimate financial backstop of the stadium, could be left holding the bag much as they did with 38 Studios. If the team owners are unwilling to guarantee or substantially mitigate these risks, the state should walk away from the deal.”
The Senate Finance Committee held a series of hearings on the proposal.
“In the worst case scenario, what would happen if the franchise were to become insolvent?” said Senator Sheehan. “Despite assurances to the contrary, there is no ironclad financial guarantee for any third party to pay off the balance of the stadium debt. Without a strong anchor tenant, the largely vacant stadium assuredly would become a taxpayer liability.”
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