Beyond Washington, Most Teams Cover Stadium Overruns
Sunday, December 18, 2005
Workers had barely broken ground on Safeco Field in 1997 and already construction costs were spiraling upward. By the time the first pitch was thrown two years later, the Seattle Mariners' new retractable-roof stadium had become the most expensive ballpark ever built, swelling nearly $100 million over budget to more than a half-billion dollars.
Cost overruns were hardly unique to Safeco, which was completed in 1999. And neither was the solution of who would pay them: As with most recent deals, the team was contractually bound to cover overruns as part of its agreement with local and state officials to get a stadium financed largely by taxpayers.
Washington won't be so lucky. Under last year's agreement with Major League Baseball that returned professional baseball to the city, the District said it would absorb all overruns in building a ballpark for the Nationals, unless the extra cost was caused by last-minute enhancements demanded by the team or baseball.
The debate over the ballpark's price has focused on whether it should be built on the Anacostia waterfront or adjacent to Robert F. Kennedy Memorial Stadium, and it has been based on rising cost projections for the stadium and surrounding infrastructure. The D.C. Council approved $535 million for the project, not counting financing fees -- more public money than has ever been spent on a professional sports stadium. Mayor Anthony A. Williams (D) has promised to limit the city's investment to the amount approved by the council, even as estimates have risen to $667 million or higher if underground parking is included.
Thus far, little has been said about how the District would pay for overruns should costs exceed projections. And history shows that overrun costs of major construction projects can be staggering.
The Washington Post reviewed the nine most recent publicly financed Major League Baseball stadiums. Six had overruns ranging from $30 million, for the Philadelphia Phillies, to $115 million, for the Arizona Diamondbacks. In all but one of the six cases, the team was obligated to pay the extra costs.
"That was a huge consideration," said Les Girard, former San Diego assistant city attorney who led the city's negotiations over the Padres' new stadium, which went $39 million over budget. "We knew in advance that there would likely be cost overruns, and we were not going to let the city have an open checkbook."
Washington's concession on the overruns was just part of a deal that some baseball officials have privately said is among the most generous they've seen -- even by the standards of an organization that, by virtue of its monopoly status, enjoys extraordinary leverage over cities trying to get or keep franchises.
District officials, determined to return a baseball team to Washington and led to believe that the league might relocate the Montreal Expos elsewhere, gave baseball virtually everything it wanted -- naming rights and stadium, parking and concession revenue. And by initially offering to fully finance the stadium, the District bucked a 14-year trend in which cities were demanding that teams pay a significant share of building costs.
The generous terms of the deal were set against three decades of frustration in which the city had twice failed to lure teams to the District after losing the Washington Senators in 1971.
"We went to great efforts to establish the District's credibility as a major sports venue for baseball," said Mark H. Tuohey, chairman of the D.C. Sports and Entertainment Commission, one of the city's negotiators. "The District had lost too many teams. We were not going to lose this one."
The deal has left the District with few bargaining chips as estimates for the stadium cost increase. Baseball, in its biggest concession since the stadium agreement was signed, agreed this month to pitch in an additional $20 million toward construction. But in return, the District gave up a percentage of off-game day parking revenue, which over the life of the 30-year lease will about equal that contribution.