Taxpayers tapped to keep Grizzlies afloat

Fresno leaders face tough choices over team's request for lower rent.

Published online on Saturday, Aug. 15, 2009

Locked in closed-door negotiations with owners of the struggling Fresno Grizzlies, city officials have few options. And none of them is attractive.

A financial nightmare predicted by some when the city decided to build a downtown baseball park has come true.

Now Fresno City Hall must decide whether to take on a bigger share of the construction debt to keep the stadium occupied and preserve hopes for downtown revival. Or let the team fold and pay even more for a virtually unused building.

Lurking in the distance, however, is a third choice. Some say the city could let the team fail and take it over or give it to a community group, saving money and preserving baseball downtown. But there are few examples nationally of cities that have successfully followed this path.

Grizzlies owners want major revisions in their agreement at city-owned Chukchansi Park, including as much as a $1 million yearly cut in a rent that, they say, is on the verge of driving them out of business.

The Grizzlies have lost more than $5 million from 2006 through 2008; this season, with declining attendance and falling corporate sponsorships, is also running in the red.

"We're at the point where we're in need of relief," says Grizzlies partner Chris Cummings.

Council Member Lee Brand says the city desperately needs to keep a tenant in the stadium, adding that the negotiations "are like déjà vû on The Met."

The comparison is clear: After months of tough talk, the city in June essentially acknowledged it had little leverage and cut an expensive deal with the insolvent Fresno Metropolitan Museum: Taxpayers paid off a $15 million defaulted bank loan the city had guaranteed, took possession of property The Met couldn't use anyway, left museum officials in control of operations, then gave The Met a huge rent break on the now city-owned museum building.

City officials couldn't imagine downtown with an empty building designed for only one purpose, nor imagine running the museum themselves. Met officials knew as much.

Grizzlies owners are in the same position -- all but insolvent, but too big to fail because they, too, are the only possible tenant for a one-purpose, city-owned downtown building.

Branch B. Rickey, president of the league in which the Grizzlies play, the Pacific Coast League, was in town late last month, making a pitch on the team's behalf to city and community leaders.

Rickey summed up the dilemma of anyone who suggests City Hall should play hardball in negotiations with the Grizzlies: "What are the alternatives?"

Taxpayers on the hook

There may be none, which is why this deal could cost taxpayers far more than $15 million.

Chukchansi Park opened May 1, 2002, and about 22 years remain on the Grizzlies' 30-year lease. Rent is $1.5 million a year.

A $1 million annual rent break means an extra $22 million for the team owners' bottom line over the life of the agreement. Since the Grizzlies' rent helps pay for the bonds that funded the $46 million stadium's construction, the public would make up the difference, most likely out of the same pot of money that helps pay for police and fire services.

Grizzlies owners say high rent isn't their only problem, but it's the main sticking point in turning around the team's finances.

"We're not looking for the best lease in baseball," Cummings says. "We're just looking for something that's going to work for us and will also work for the city."

City officials say they expect a proposed deal to go before the City Council in late August or early September. But finding a win-win will be difficult because the Grizzlies owners acknowledge they are unwilling to bend in their demands and incapable of offering the city much in the way of a trade or concession.