Introduction
Hello everyone. I’m Carlos – I’d like to thank Brutus for inviting me to post articles on his esteemed blog.
By way of limited introduction, I’m a lifelong resident of El Paso. I’ve seen this city strive higher only to be shackled by corporate interests that seem to hold sway in this town. In the old days it was Jonathan Rogers, Larry Francis and their ilk; now, it’s the Fosters and the de la Vegas. I’m beholden to neither nor to anyone in city or any other administration – I’m just a guy with some business experience, much of it dealing with public sector entities.
My comments and responses on Brutus’ Meteoric Rates article (here) were some of the longest I’ve ever posted. Anywhere. One response after another, each displaying more narrowly than the previous, made me think that it would be more appropriate to post as an article by itself.
As an aside, my spouse officially hates that I post here. I research issues here like I’m trying to get a grant to study mating habits of boll weevils.
Most of the following is in response to comments by william and Mock EPT (here, opens in a new window). Please refer to that if the following seems a bit disjointed.
I’ve mentioned I would do what I could to dispel myths and misconceptions. I have a good idea what that’s gonna get me, but here goes anyway —
Regarding stadium financing
Financial predictions to fund ballparks, streets, recreation centers or public bathrooms are almost invariably more rosy than they appear, although in this case they are reasonable – 3% inflation and 3% growth are not outrageous by any stretch. A review of the city plan to finance the ballpark reveals the following:
- The city borrowed $60.8 million, which included bond costs, for the ballpark not $70 million as has been alleged.
- The first year’s (2014) payment always included some contribution from city revenue. It was scheduled to be from sales tax or some other source. And future payments will have the same provision, simply because no underwriter would touch them without it. If sales taxes continue to go down and the visitors we expect don’t materialize, then we get the Worst Case Scenario – a property tax increase. I expect that would be the absolute last resort to cover payments – they’d sell off the new Mulligan building before they do that.
Sorry kids, the Worst Case Scenario is not going to be here in Year One. The stadium hasn’t been built and half the city (it seems) is under construction. We’re in the first five minutes of the first quarter here. Dare I say we may not even be that far along.
Incompetence on the part of City administration? The jury is still out. But the financing does have cause for worry.
Regarding HOT (Hotel Occupancy Tax):
A commenter said looming federal spending at Fort Bliss impacts HOT revenue. Agreed – but sources that produce HOT revenue include much more than Fort Bliss. One could argue that the loss of Fort Bliss money isn’t looming – it’s already here, and it’s already been factored into the El Paso market.
We all know HOT revenues increase if El Paso becomes more attractive to visit. The ballpark will play a part; San Jacinto Plaza will play another. The upcoming bowling tournament is another, as was the C-USA basketball tournament. It seems to me that the construction of several new hotels, and the construction of a new rental car facility at the Airport that can handle more than current capacity, bodes well for the El Paso economy and for HOT tax revenue. There are no slam dunks obviously, but it’s more than enough to keep us in the game.
We also need to be a little lucky – the Lady Miners unexpectedly playing and hosting the WNIT championship, and the resulting positive publicity, has benefits we just can’t quantify.
More ballpark stuff
There are 7,000 seats to fill in the ballpark, 9,000 if you count party and standing areas. I don’t believe even Mountainstar expects the ballpark to sell out every night, but it wouldn’t be unheard of in professional baseball. For context, the latest incarnation of the Diablos averaged 2,270 a game – for the Diablos! Not when they were AA — last year! The one thing that will definitely break the financing for this situation is a consistently bad team. But there’s hope – even the perenially mediocre Miner football team gets about 30,000 souls to the Sun Bowl. We’re a city of 700,000 plus – if the club can’t get between 0.5 to 1.0 percent of the population (that doesn’t even count people in the County or Cruces) to head downtown for real, professional baseball 71 times a year then our problems are bigger than even you guys realize.
And finally…
I don’t think there’s much more I can say to shake people here off the “we’re getting screwed” mindset. To be honest, as I’ve said, I’m concerned about it. The assumptions are fairly optimistic. But again, it’s not out of the ordinary. A better deal would have been the City sharing in concession revenues, much like the Albuquerque deal. City does get ticket fees and shares some parking. But merchandise, lux boxes, all that the club gets. Sad? I agree – but it’s not out of the ordinary. But you know one thing I keep coming across that I don’t see anywhere else? That Mountainstar is giving profits to charity for 10 years. That is out of the ordinary for a sports team. Now, as a analytical business guy, I know how a corporation cooks the books. There’s a real possibility the club says ‘sorry, no profits to deliver this year’ when the time comes. That would be a huge public relations mistake for Mountainstar.
None of this should imply that I believe the ballpark will be an unmitigated success. But the more you guys make me talk about it, the more I dig through the details, the more I think I’ll be writing posts in about a year that will gracefully, eloquently say “I told you so.”
Warm regards,
Carlos
Posted by Brutus 
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