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.
"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.