A better opportunity for St. Petersburg, Pinellas County and the Rays
The Tampa Bay Rays baseball team’s 30 year lease at Tropicana Field in St. Petersburg was set to end after the 2027 season. In September, 2023 the Rays and the city signed an agreement to build a new $1.3 billion stadium on the same site, the “Gas Plant” property. St. Petersburg and Pinellas County would contribute $600 million, and the Rays $700 million. The Rays also agreed to pay any cost overruns.
The agreement includes a lucrative opportunity for the Rays to acquire 64 acres of prime development land at a price that many believe to be significantly below-market (estimates range from a $500 million to $800 million discount off fair-market value). This substantial discount was rationalized, in large part, based on the team’s willingness to shoulder the financial risk of any cost overruns to build a new stadium.
But St. Petersburg was hit by two hurricanes in the fall of 2024, rendering the Trop unplayable for two years, and changing everything. The storms revealed vulnerabilities long overlooked. Pinellas County beaches face escalating risks from hurricanes, and St. Petersburg faces issues with its infrastructure. The Rays had to find a new, temporary place to play, and the costs to build a new stadium, according to the Rays, have increased to a point where team says they cannot afford to pay these increases alone. They blame the cost increases on a 22 day delay by Pinellas County in approving the sale of bonds. (The county had scheduled vote on October 29 but deferred it until November 19. The day before the November 19 meeting the Rays sent their letter saying they can’t afford the new higher costs.) Why does a 22 day delay increase costs so much that the Rays cannot afford them, something they agreement to do in the contract that they signed? It cannot be about 22 days.
The city and the county cannot afford to pay any more and the Rays say they wont. The deal is currently at a stalemate.
Baseball is a civic asset and retaining the Rays within the Tampa Bay market is important to the entire community. The stalemate should end with the current ownership, or new ownership, making a fair deal – but with the city of Tampa – playing in a more conventional sports venue location, closer to the center of the area population.
Tampa Bay is the 12th largest media market in the U.S and major league baseball should remain in Tampa Bay. But the Gas Plant property is not the location. The small nearby population and limited highway access will not result in significant attendance, no more than for the last 27 years. And the proposed plan, with parking garages and no surface parking would lead to significant traffic congestion. Baseball, like other major sports, thrives when it is located near the center of an area’s population, with reasonable access from many directions, and with adequate parking for easy ingress and egress.
And the Gas Plant site, nationally significant due to its size and location in the heart of one of the most popular cities in Florida, in a vibrant walkable neighborhood, should be developed for residential and commercial purposes. Developing the property without a stadium (and without the deal as negotiated), would result in a more vibrant continuation to the surrounding development, and would provide the city and the county with significantly more resources to meet their high priority needs.
The Rays and Rob Manfred, the Commissioner of Baseball, have both said they want to keep the team in the Tampa Bay area. A move to Tampa, with a more central location offers the team access to a broader fan base, better transportation options, and more corporate sponsorships. Tampa, already home to the Buccaneers and Lightning, is well positioned as the region’s sports hub.
For St. Petersburg, moving on means focusing on resilience, infrastructure, and its unique strengths – beaches, museums, restaurants, and the arts. In fact, St. Petersburg might explore the possibility of attracting a branch of a well respected museum like the Guggenheim. Pinellas and Hillsborough counties could collaborate to promote the entire metro region, enhancing cross-county access for tourists and residents alike.
For Pinellas County, moving on means it will have the funds to repair the beaches, set up reserves for future beach repairs, and promote what brings tourists.
St. Petersburg is not the place for baseball. Tampa is.
The Current Deal and What Would Be Better.
The Rays and St. Petersburg have negotiated a deal to redevelop 22 acres of the 86-acre Gas Plant site, home of Tropicana Field, into a new Rays stadium and parking garages for attendees. The deal also sells the balance of the 64 acres to Rays and Hines (a major commercial developer) for offices, residential properties, community assets and other uses, and (2)
As structured, the city and county provide a significant part of the cost of a new stadium and the infrastructure and sell the 64 acres to Rays/Hines at a price significantly below market value. The team ownership keeps all baseball and stadium revenue, pays no rent to the city and pays no real estate taxes. St. Petersburg and Pinellas County would be committing $2.4 billion in community resources to this project based on information available for this analysis.
It is not a fair deal. While it is a home run for Rays/Hines, it is not for St. Petersburg and Pinellas County. With a fair deal the city of St. Petersburg would have the funds to start focusing on $6 billion needed for sewer, stormwater, and seawall improvements to protect our homes, our businesses, and our community, and Pinellas County has the funds to continually re-nourish the beaches.
What would be better – the team should be located in a more conventional sports venue location, closer to the center of Tampa Bay’s population, freeing up significant resources for St. Petersburg and Pinellas County to focus on what truly matters.
THE COST OF A STADIUM IN ST. PETERSBURG
Total cost of Rays/Hines deal to St. Petersburg = $1.6 Billion
· $675 million – the cost to the city, including interest, to help pay for a new stadium and property infrastructure.
· $411 million – the value of 30 years real estate taxes that the city/public schools will give up on the 22 acres for the new stadium versus if it had been developed for other private purposes.
· $545 million – the revenue the city will lose by selling 64 acres to Rays/Hines for $105 million paid over 20 years (plus a $50 million contribution by Rays/Hines toward the Woodson Museum and other community initiatives), and not selling 22 acres, but giving it rent free for a stadium. The property is estimated to be worth up to $700 million.
Total cost of Rays/Hines Deal to Pinellas County = $808 Million
· $587 – The cost to the county, including interest, to help pay for a new stadium.
· $222 million – the value of 30 years of real estate taxes (after $25 million in lease payments) that the county will give up on the 22 acres for the new stadium.
Total Cost of Rays/Hines deal to St. Petersburg/Pinellas County = $2.4 Billion.
WHAT MATTERS
- St. Petersburg tax taxpayers’ resources that should be spent on more important priorities:
- Infrastructure – $6 billion needed for sewer, stormwater and sea wll improvements to prevent flooding in many neighborhoods.
- Affordable/Workforce housing – the city could establish a $250 million Citywide Affordable/Workforce Housing Trust to underwrite new construction and help residents buy and fix up homes – providing jobs to local contractors.
- Education – create a $50 million College Opportunity Fund, providing college scholarships leading to good jobs for 2,500 students who would not be able to go to college otherwise, as well as funding for high school career programs.
- A more significant commitment to the Black community than the $50 million in the Rays/Hines proposal (which proposal sets out no dates certain to fund their commitment.)
- Daycare and pre-school funds so that mothers can hold down jobs or go to school.
- Primary health care facilities – providing better health care than emergency rooms.
- Underwriting fresh food markets in areas that are currently food deserts.
- A $75 million new municipal services building.
- Tax relief.
- Pinellas County resources that should be spent on more important priorities:
- Setting aside funds for beach re-nourishment on a regular basis.
- Real estate taxes that should be spent on education.
- Tourist Development Tax that should be spent on promoting the activities that are most in demand – restaurants, the beaches, museums. (Not baseball – mentioned by only 3% of visitors.)
THE SITUATION
Downtown St. Petersburg is today one of the nation’s hottest real estate markets, and the city government finds itself in an enviable position. It controls a nationally significant 86-acre parcel of land within the downtown core of St. Petersburg – with outstanding transport access and adjacent to extremely popular walkable neighborhoods. The land is prime for development, as the economies of the area and the city are exploding. The value of the 86 acres has increased dramatically since the 1990’s, and it is hard to exaggerate the magnitude of the financial windfall this represents for St. Petersburg. At an estimated valuation of at least $700 million (which is consistent with local comparable real estate transactions), the value of the Gas Plant site is more than three times the amount of all property taxes the city will collect from all its residents and businesses in 2023.
At the same time, St. Petersburg sits today with huge known future capital needs for affordable housing, infrastructure, water supply/treatment, hardening city areas against rising sea levels, expanding transit systems, and other needs including better educational opportunities, none of which have meaningful capital reserved for those purposes today. Storm water, sewer and sea wall infrastructure needs alone over the next 30 years exceed $6 billion. St. Petersburg also has an obligation to the members of the Black community displaced by interstate highway and stadium construction in years past. The county also has considerable needs, starting with the funds to repair the beaches, and putting sufficient funds aside for future repairs, from storms sure to come.
While considerable work and thought has gone into the Rays/Hines proposal over an extended period of time, considering the current stalemate with the Rays, the extraordinary size of the windfall (86 acres acres) now in the hands of the city, the cost to the citizens of St. Petersburg and Pinellas County of making an epic financial error, should not the Rays, the city, and the county move on?
The Rays are terrific. And while the Rays are a private for-profit business, and there is no convincing data that sports team’s impact economic growth or job creation, pro sports teams are nonetheless civic assets which bring intangible value, passion and unity to their fans and communities. Therefore, it can be considered appropriate for the communities served by professional sports teams to consider paying some of the capital costs required to build and own the stadiums needed to comfortably host fans, if the terms are arms-length and with all parties receiving a reasonable, concrete financial return on their investment.
It is important to remember that baseball is not a requirement (and is in some ways a determent) to successfully develop the Gas Plant site, nor is there any persuasive data that indicates baseball provides any material economic or job growth. The four development teams that made proposals under the Kriseman administration to develop the 86 acres all said they would have preferred to develop the property without a stadium – the stadium provided no benefit and in fact was an obstacle. .
Does a stadium help the successful development of the Gas Plant property? No!
With the tremendous growth of St. Petersburg, and all the development taking place in the area serving as an anchor, the 86-acre Gas Plant site is ready for development. Conversations with major businesses, major developers, commercial real estate brokers and appraisers confirm these conclusions – St. Petersburg and the area around the current stadium are extremely vibrant – The Gas Plant site does not need a stadium to attract development.
For example, the new Orange Station is being developed with offices and an Autograph Collection hotel, around the corner from the 86-acres. Why? Their website says: “Surrounded by a plethora of retail shops, restaurants, bars, breweries, arts and entertainment with immediate access to a SunRunner Bus Rapid Transit stop… when you find yourself at Orange Station, you are in the center of it all…. When you live in the epicenter of the city…” There is no mention of a baseball stadium.
For its first 20-25 years, Tropicana Field, the current Rays stadium stimulated little development anywhere near it – few apartments, condominiums, restaurants, or office buildings. Now there is extensive retail, restaurant and residential development on either side of Central Avenue, and in the surrounding neighborhoods, within walking distance of the existing stadium. The growth cannot be attributed to the existing stadium. What is a new stadium going to do that the current one could not?
Baseball, by its nature, supports few job, most of which are part-time and are not career-tracking opportunities, and provides limited economic impact, with activity confined to fewer than 85 days a year. What is driving growth are the economic engines – tech, finance, health care and universities. And what is also driving growth is people moving to St. Petersburg from other parts of Tampa Bay and from outside the area because of the museums, the pier, the residential choices, and the restaurants. (The Dalí Museum alone has 400,000 attendees per year versus the Rays 1,200,000.) Even more numerous are the people moving here from outside Tampa Bay, many who can now work from home, and enjoy the same benefits plus those benefits they cannot get up North – the weather, sunshine, beaches, and no state income tax. It is developers and entrepreneurs seeing what is happening – the vibrancy and walkability of the neighborhoods nearby – and building the tremendous number of condominiums, apartments and restaurants/entertainment and other amenities. St. Petersburg is among the 20 fastest growing metropolitan areas in the nation. Ask any developer if they are building because of a stadium. They are not.
Wen it comes to tourism, according to a Visit St. Pete-Clearwater study, tourists visit beaches (44%), restaurants (68%), and museums (42%) – not baseball (3%). Investing in these areas will better serve the community than subsidizing a new stadium.
The property area has already been activated. It is the live-work-play nature of the area that is the anchor. Residential and office developers want to build here because of it. A stadium would not be a material influence on development. If anything, the rest of the property once developed will benefit the stadium and not the other way around.
A review of 130 studies of the economic impact of sports teams and stadiums published in 2023 by three economists consistently shows that teams and stadiums are associated with little or no economic impact on local communities. Their economic impact is commonly exaggerated, and they are poor public investments. The studies also show that stadiums don’t increase employment, other than part-time jobs in the stadium – and only for a few hours on about 81 days per year. Why would residential or office development or corporate relocations be positively impacted by being near a stadium?
The Gas Plant site is not comparable to the site of the Truist stadium in Atlanta. Here the property is surrounded by vibrant neighborhoods that act as an anchor for its success. In Atlanta, the property was devoid of surrounding development. Also of interest is that Atlanta had a relatively new stadium with Turner Field. Why did they move? Among other reasons, Turner Field failed to sustain the economic health of its nearby downtown neighborhoods. The site was also too arduous to get to from most other parts of Atlanta due to traffic congestion and distance. The increased traffic and parking congestion in the Gas Plant area from baseball would predictably be a negative influence on development of the rest of the Gas Plant site and would be a headache to the residents and businesses in the surrounding area.
The existing Rays stadium attendance averaged 15,002 per game (54% of average major league baseball attendance) over the past 10 years, ignoring 2020. The team could not draw more even this year in the playoffs – with one of the best teams in baseball. (What will happen if they start losing?) Why would a new stadium in the same location be any different? Consider the ever-increasing traffic backlog on 275 S and its influence on potential attendees from Tampa.
ALTERNATIVE DEVELOPMENT CONCEPT: DO IT OURSELVES
Total Cost – $130 million to St. Petersburg – $0 to Pinellas County
The Gas Plant site can become a transformative project that reflects the city’s character. Rather than turning the entire property over to a single developer, the city hire a nationally recognized master planner (who is not conflicted by its own development interests) to design a comprehensive site plan, without a stadium, establishing the framework for streets, green spaces, infrastructure and public amenities. The, it would sell the land parcel by parcel in an orderly, patient fashion for market value, with the city adopting relatively high-density zoning for the developable parcels, consistent with zoning density seen in other healthy high-growth U.S. cities today. This would allow diverse developers to develop the parcels with their own money and shape the area according to their own visions of what would be in the best interests of St. Petersburg. The result – a vibrant, mix-use community, preserving St. Petersburg’s unique character. This is precisely how St. Petersburg ended up with such diverse and authentic neighborhoods as Grand Central, Edge, Beach Drive, and others.
Benefits of the alternative development concept:
- The city gains from (1.) from the sale of the 86 acres at market value, (2.) not having to borrow funds, and (3.) real estate taxes on the 22 acres.
- The county gains from (1.) not having to borrow funds, and (2) real estate taxes on 22 acres.
- The city has the funds to begin more quickly addressing infrastructure needs.
- Increased funds to address St. Petersburg’s obligations to the Black community,
- Increased funds for other St. Petersburg priorities, including the public school system.
- Increased funds for other tourist development opportunities by Pinellas County, most importantly the funds to repair the beaches now and have funds in reserve for future needed beach repairs.
- Not jeopardize the city’s credit rating and its ability to borrow funds in an emergency.
- Allow the city to retain the flexibility to adjust the development requirements over time.
The Do It Ourselves’ path assumes the development of a Rays stadium elsewhere in the Tampa Bay region, in a more conventional sports venue location.
ST. PETERSBURG’S COMMITMENT TO THE BLACK COMMUNITY
The city has special obligations to the St. Petersburg Black community as it considers redevelopment concepts for the Gas Plant site, specifically opportunities for financial participation in the construction of the buildings and infrastructure, as well as quality employment and entrepreneurship opportunities within the private businesses and other enterprises that are created in the new neighborhood.
The Rays Hines development entity addresses these obligations with (1.) an intent to utilize minority-owned, women-owned or small business contractors for at least 10% of the overall +$6 billion of project construction costs, and (2.) a $50 million pool created for “intentional equity” initiatives such as affordable housing, Woodson Museum support, mentorships, skills training and the like.
However, the odds of delivering on these promises for the Black community are higher under the Due It Ourselves parcel-by-parcel development concept than under the Rays/Hines deal:
- St Pete tax revenues are far greater under the alternative development concept, and that means the St Pete municipal government itself simply has more money available to address promises to the city’s Black community than it would have under the Rays/Hines deal. As for developers’ contributions, the city can secure these outcomes from independent developers through contractual means or through the city’s existing Community Benefits Agreement process.
- Employment opportunities for South St Pete residents should be more numerous, as the full site would get developed with highest-and-best use occupants, instead of seeing 22 of the 86 acres devoted to baseball, which creates activity on less than 90 days per year, for only a few hours at a time, and with employment opportunities that tend to be part-time and relatively low-paying.
- Under the Rays/Hines deal, the promises to the Black community are wholly dependent on the success or failure of a single Ray/Hines corporate entity developing this single project. Under the parcel-by-parcel development concept, there is less risk as the obligations are diversified among many separate developers.
- Development of the Gas Plant site on an organic, parcel-by-parcel basis by dozens of different businesses, developers and entrepreneurs, primarily in the competitive private economy, will result in more authentic and diverse employment opportunities. The pace of development should also be faster than would be seen under the Rays/Hines timeline.
- Rays/Hines is committing to providing a limited number (600) units of affordable housing on site, with only 150 affordable to truly low-income tenants, and the first 300 units not until 2030. Rays/Hines can default on this commitment for a minimal penalty. If the 86 acres were sold at market prices and raised $700 million, in addition to affordable housing on the site, just a few blocks away property for affordable housing can be obtained at a much lower price. The city could use some of these new resources to give a much larger number of people access to affordable housing.
- The mayor has also said that the cost to the city of having to repay $675 million in principal and interest to finance its contribution to the development under the Rays/Hines proposal will not result in increased taxes, as payments for the borrowing will come from other city revenue sources. However, massive borrowings by the city to finance an asset which produces no revenue for the city is problematic, and thus can impact St. Petersburg residents as dollars spent for debt service necessarily reduce the revenue sources available to the city for other high priority city-wide purposes – especially the infrastructure needs.
WHAT ABOUT BASEBALL?
The Rays are terrific. This analysis is not intended to suggest the Rays should not remain a part of the Tampa Bay market. They absolutely should stay. While the Rays are a private for-profit business, and there is no convincing data that sports team’s impact economic growth, we acknowledge that pro sports teams are nonetheless civic assets which bring intangible value, passion and unity to their fans and communities.
We think it is appropriate for the communities served by professional sports teams to consider paying some of the capital costs required to build and own stadiums and arenas needed to comfortably host fans. However, the terms of that public financial support need to be reasonable from the standpoint of taxpayers when considering all the key economic deal points of a lease/use agreement.
In the specific case of the Rays, we would encourage development of a new Rays stadium location with the following attributes (which do not exist at the Gas Plant site:
- Much closer to the economic center of the Tampa Bay market.
- Far lower true land acquisition cost.
- A location where significant low capital cost ground level parking is available, as private autos will remain the way most fans travel to Rays games for the foreseeable future.
- A location that might induce more governmental entities than just St. Petersburg (with a population less than 10% of Rays’ overall market) and Pinellas County to contribute funds towards the construction and ownership of the new stadium.
A Path Forward
The hurricanes taught us a vital lesson: preparation and resilience are essential. St. Petersburg and Pinellas County must prioritize readiness, infrastructure and what makes the city and the county special.
The Rays, meanwhile, can thrive in Tampa with a centrally located stadium that draws larger crowds and ensures long-term financial success.
While it is possible (but unlikely) that the city and the Rays can renegotiate a deal, wouldn’t it really be better for St. Petersburg, Pinellas County and the Rays if everyone moved on – focusing on what truly matters for each?
Comments from Major Developers Working in St Petersburg, Major Commercial Brokers, and Important Community Leaders:
“The demographics are strong enough to successfully develop the property without a stadium.”
“I think the city knows it but has tied their reputation to the Rays – no matter the facts”
“There were developers who submitted proposals without a stadium, and they all said this is a better alternative for the property.”
“Interest in the property would not be less without a stadium. There is plenty of interest”
“It’s the vitality of the area that is the anchor”
“Stadiums are boondoggles”
“It is the walkable communities nearby that make the property a success.”
