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 A Closer Look At Plan B: Teams have several payment options By Timothy McNulty, Post-Gazette Staff Writer This is the 12th in a series of articles taking a closer look at ''Plan B,'' the financing mechanism proposed by Pittsburgh and Allegheny County officials to pay for new baseball and football stadiums and the expansion of the David L. Lawrence Convention Center. Today's installment is about how teams might fund their share of stadium costs. Q: The Rooneys said they'll put $50 million toward construction of a new $192 million football stadium ($233 million with site acquisition, improvements and demolition). Do they just write a check or something? A: If they are like Art Modell, yes. The Baltimore Ravens owner paid the Maryland Stadium Authority $10 million in a lump sum toward construction of the team's new $220 million stadium and will pay another $10 million on May 15. Bruce Hoffman, executive director of the authority, said the payment was ''essentially in cash.'' Q: Why would Modell do that? A: It saves him money, over time. If he forked over the $20 million using a long-term payment schedule (which would include interest), he would end up paying more. The bad news with this kind of payment is that you need a lot of net worth to pull it off. That is easy in Modell's case, since Maryland allowed him to have the stadium's naming rights revenue, which will probably be more than $20 million when a company (Mayflower moving vans?) eventually pays for the rights. With the grand opening for the Ravens stadium four months away, incidentally, no one has yet bought the rights. Q: Will the Steelers owners pay that way? A: They are currently in talks with a city-county financial team to determine their share of Plan B. The Pirates owners are in similar talks. County Commissioner Bob Cranmer, who designed the construction plan with Commissioner Mike Dawida and Mayor Murphy, repeated last week that the Steelers should pay more than $50 million, or settle for a renovated Three Rivers Stadium. There is an unofficial June 1 deadline hanging over the negotiations. Q: Who will the checks be made out to? A: The multimillion-dollar checks will go to a city-county authority that will oversee the stadiums, perhaps the Public Auditorium Authority, which currently watches over the David L. Lawrence Convention Center. The authority will in turn be responsible for paying off the bonds that will fund construction. Q: The Pirates have pledged $35 million toward their $184 million stadium construction cost ($228 with site acquisition, improvements and demolition). How will they pay? A: Since the Pirates are not financially strong, they will certainly not use Modell's machismo. Instead, they will probably use a long-term payment plan over the length of their stadium lease. Essentially, they will be making mortgage payments. Really big mortgage payments. Q: The Pirates can't even afford star players. How will they be able to field a team while also making stadium payments? A: The city-county group negotiating the payment terms with the team is making a sort of wager. The wager is that the new stadium will bring in more fans and more money, and that the Pirates will use the latter to make their stadium payments. Don't be surprised, then, if the Pirates payments are small in the first years of the lease and get bigger thereafter. City-county Pirates negotiator William R. Newlin would not discuss details of possible payment plans, but said the tepid finances of the team -- and the region -- are inherent in the talks. ''We will shape something that gives an honest, realistic look at the economy in our area -- given the finite financial reality of our region -- so that you get the proper share for the public interest without killing the team in the process,'' Newlin said. Q: What are other teams doing? A: Teams use different methods, but the Pirates and/or Steelers could combine the lump-sum payment method used by Modell and the long-term mortgage-payment style used by other owners. They could also pay, in whole, for stadium amenities that they want and the city-county doesn't. A model of such mixed financing is the one used by the owners of the Colorado Rockies for their portion of the $215.5 million Coors Field, which opened in 1995. The Rockies share was $52 million, which paid for the scoreboard, a field warming system (to thaw the grass), 52 luxury boxes and team offices. Part of that money went directly to contractors in lump sums. The rest goes to Denver's stadium authority, which uses a six-county 1 percent sales tax to pay off the bonds that paid for the park. The Rockies are on a 22-year payment schedule with the authority to help pay off the bonds. With revenues above forecasts, the bonds are going to be paid off earlier than expected -- in 2001 -- but the team will keep paying its scheduled share throughout the 22-year lease, and that money (estimated to be about $32 million total) will be distributed to the six counties that pay the sales tax. On top of those payments, the team sends the authority a yearly check with the district's share of parking revenue and a payment tied to attendance. The team pays the district 25 cents for every ticket sold between 2 million and 2.5 million; 50 cents for every ticket between 2.5 million and 3 million; and $1 for every ticket more than 3 million. If 3.88 million fans went to the park (as they did last season), the team would owe the district about $1.25 million. In addition, the team pays stadium maintenance and operation costs of about $10 million per year.
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