News & Opinion » News

Rhinos and Red Wings and Rattlers, oh my


As any African guide will tell you, it's not a good idea to taunt a Rhino. But it seems the members of the Greater Rochester Sports Authority haven't been on a safari in quite some time. And if they don't placate both Rochester's Rhinos and Red Wings, there could be a stampede out of town.

            On September 9, the authority --- a three-member body created by the state to facilitate construction of a soccer-specific stadium downtown and oversee operations at Frontier Field --- voted to conduct a study examining ways Frontier can be retrofitted to better accommodate both the Rochester Rhinos soccer team and the Rochester Red Wings minor league baseball franchise. The authority also voted to terminate the Rochester Rattlers lacrosse team's lease at Frontier.

            The votes shocked and angered Rhinos and Rattlers fans and owners (the two teams have common principals). Proponents of a soccer-specific stadium have been frustrated by a series of setbacks and political squabbles since the stadium project began over two years ago.

            Recent discussions between Rhinos President Frank DuRoss and County Executive Jack Doyle about the possibility of constructing a scaled-down version of the proposed PaeTec Park downtown had buoyed the owners' hopes. But the authority's September 7 votes have cast doubt as to whether even a compromise plan for PaeTec will be realized.

In making its decision, the board said it believed a soccer-specific stadium would not be economically feasible to construct and maintain. That conclusion dumbfounds Rhinos officials, who feel they've put together a solid financial plan. That plan includes $15 million in state funding, $7 million from the county, $6 million in annual revenue from the Rhinos, and $22 million from bonds issued by the authority, but paid back by the Rhinos.

            Rhinos officials say they don't have a clear idea what part of the financing plan the authority is questioning, but DuRoss suspects they're worried about the bonds. "They believe we would be unsuccessful in trying to sell taxable bonds, or if we did, the revenue stream [to back the bonds] wouldn't be enough," he says.

            The authority "thinks this will fall on the taxpayers," DuRoss continues. "And it doesn't, obviously." The bonds would be "private investments," he says, investments that carry some risks, but also offer a commensurately high return --- 9.5 percent.

            "There's no guarantee from the county or the state" to repay bondholders, DuRoss says. "If you think about [the authority's] concerns, the bondholders would have more concerns than the authority, you would think."

            Authority board member --- and former County Executive --- Tom Frey knows the bonds wouldn't be backed by public money, but he fears investors would demand that the county or state step in if the bonds weren't repaid. "If [the Rhinos] went under and left bondholders outstanding, it wouldn't take long for the county or the state to bail them out," Frey says. "There'd be pressure to bail them out."

            Frey also points to an authority study that determined a downtown stadium would cost as much as $57 million to construct, largely due to the cost of acquiring property on the proposed site near Frontier Field. Building PaeTec Park in Gates, as the Rhinos' owners and some state lawmakers have proposed, is not only counter to the provisions by which the project qualifies for state aid, but is also questionable financially, Frey says.

            Frey says the authority did consider a scaled-down stadium downtown. "It's cheaper, but not enough cheaper that they could do it," he says.

The real sticking point, however, seems to be based on the county's experience with Frontier Field. "I start off with one proposition," Frey says. "We built a stadium for a team [the Red Wings] that has 72 dates, and the county's losing $2 million a year [on Frontier Field]. How do we build a separate stadium for a team that has 14 dates --- 18 at most --- and expect that not to lose money? There's no logic there."

            Doyle has also expressed reservations about building PaeTec Park, given that the county has spent about $12 million to pay off Frontier Field's debt. He's said the county's $7 million contribution ($700,000 for 10 years from revenues generated by an increase in the hotel-motel tax) is contingent upon the state paying off Frontier Field's remaining $24 million in debt.

            PaeTec's proponents have said revenue from Rhinos and Rattlers games, combined with income from other sporting and cultural events, including concerts, would keep the stadium in the black. But Frey says big rock shows and the like "never showed up at Frontier [and] they're unlikely to show up at another stadium, when we have the Finger Lakes [Performing Arts Center] and Darien Lake."

            Frey is convinced a retrofit of Frontier would work, and he's committed to addressing the Rhinos' concerns over the lack of field-side seating, locker room space, and other issues. But financial, rather than physical, hurdles pose the greatest risk to the Rhinos' future in Rochester.

            The Rhinos have the option of extending their lease at Frontier for another year this October. But team officials have said they'll be seeking a greater percentage of revenue from concessions (the team currently gets five percent), ticket sales, and other sources when lease negotiations take place later this month. Given concerns the authority and county officials have about Frontier Field's finances, the negotiations will likely pit the Rhinos' interests against those of the field's original tenant, the Red Wings.

The Rhinos, the Red Wings, and Frey all think the baseball team's lease is exceptional, but for very different reasons.

            According to Red Wings chief operating officer Naomi Silver, the county gets all the parking revenue from Red Wings games, most of the revenue from suites, all the ad revenue on some signs, and some of the money from concession sales. If the team's season attendance tops 300,000 --- which hasn't happened for the last few years --- the county gets a greater share of ad and concession revenue.

            "The county gets more revenues from the Red Wings than any lease I'm aware of," says Silver, referring to sports teams in other cities that have similar arrangements with their municipalities.

            Rossi, of the Rhinos, says the Red Wings' deal at Frontier is "the most unique lease I've ever seen in professional sports" --- a comment based as much in envy as exasperation. He's particularly critical of the clause allowing the Red Wings to keep a greater share of revenue when attendance falls below 300,000 --- a provision that seems to reward the team for failing to attract fans. "If I were a business man, why would I announce 300,000 in attendance?" he says. "I'd tell my ticket department to go home."

            Frey is also critical of the way the Wings' lease was structured. "It's unfortunate that lease lasts until 2016," he says. "That's one of the dumbest things that was done in connection with this stadium."

            Convincing the Red Wings to restructure their lease with the county in order to sweeten the Rhinos' deal will be a hard sell. Asked if she'd be willing to renegotiate her team's lease, Silver offered a simple answer: "No."

            "We have many reasons for feeling a renegotiation of the lease would be very difficult to conceive of," she continued.

            "Our own attendance is suffering," Silver says. "That's largely due to local economics, the fact the competition for the sports dollar in Rochester has so vastly changed since we negotiated our lease.

            "We have reason to believe our revenues will be diminished," she continues. "We would not want to put ourselves in a position to threaten our own future."

            Besides, Silver says, a lease is, after all, a lease, and past agreements shouldn't necessarily be restructured just because circumstances have since changed. "What problems the county has had with stadium debt really relates to the fact the stadium cost them much more than what was originally anticipated," she says. According to Silver, when Frontier Field was being built, former County Executive Bob King agreed that the Red Wings wouldn't be financially responsible for losses resulting from the cost over-runs.

            Frey, however, is less understanding. When the Rhinos meet with Frontier Field officials to discuss their lease, he says the Red Wings "could destroy the whole deal" if they're not willing renegotiate their lease with the county to make Frontier Field a more financially attractive place for the stadium's other major tenant.

            "It'll take cooperation from the Red Wings, as well as the Rhinos, to make this work," he says. "The Red Wings have to face up to that. They would have a very unhappy landlord if they don't."

            As to whether the Rhinos will exercise their option to extend their lease at Frontier another year, Rossi says, "I don't think it's a done deal." The authority's decisions to evict the Rattlers and study a retrofit of Frontier "have made us raise an eyebrow," he says.

            When it comes time to negotiate, "The ownership group here will make a business decision," Rossi says. "There are only so many times they can say, 'We'll do it for the fans, we'll do it for soccer, we'll do it for the good of the game.'"

            But he also adds, "Having said that, more times than not, their heart leads more than their wallet."