Say you’re the wealthy owner of a professional baseball franchise and you want to build a new stadium but you don’t want to pay for it. If you’re Ray Davis and Bob Simpson, you turn to taxpayers.
In 2016, the Texas Rangers won a contentious referendum election that put Arlington’s citizens on the hook for $500 million of the total $1.2 billion cost to build Globe Life Field. Not only did the city pitch in with its sales tax and a car rental tax and a hotel occupancy tax, but it levied two new taxes—one on ticket sales and another on parking revenue—that would go toward paying the team’s portion of the bill.
After the vote, the financing went smoothly. In 2017, the team took out $600 million in loans to pay for stadium construction, and, in April of this year, Arlington issued $321 million in taxable revenue bonds, secured by future ticket and parking taxes, to refinance more than half of that debt. Then the coronavirus pandemic forced Major League Baseball to cancel more than half the season, and without fans at the remaining games, the Rangers no longer had seats and parking spaces to sell. The bottom had fallen out of the deal.
The good news for the residents of Arlington is that a provision in the city’s master agreement with the ballclub anticipated such a nightmare scenario. If the Rangers’ ticket and parking taxes were unable to meet the annual debt service due on the city’s bonds, the team would be forced to make an additional rent payment to the city. According to a Rangers spokesperson, the club expects to pay about $6 million to the city this year to service those bonds—or around three times the Rangers’ usual $2 million in annual rent.
Initially, the team didn’t play fair with its season ticket holders. A USA Today report in May found that the Rangers were among the least generous among MLB teams when it came to offering credits and refunds. Some season ticket holders complained that team representatives offered credit only for food, beverages, and merchandise to cover the price of their useless tickets. The team has since reversed course and is now giving full refunds or 2021 credit to fans who purchased season ticket packages or single game tickets.
So it looks like the Rangers have decided to eat the extra cost of paying for the stadium this year, with hopes that a full 2021 schedule will get the taxpayer-funded refinance back on track. As for the city’s $500 million? Even though sales and hotel occupancy tax revenues are down sharply, city officials believe they’ll still bring in enough to service the stadium bonds. But as the city plans to cut services this budget season, residents may wonder if the tax revenue being shoveled into the new ballpark could have been put to better use.
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