Running the numbers on the WooSox deal
With construction costs up and the land acquisition going more than triple over budget, the City of Worcester is in the process of increasing to $132 million the price tag of the new Worcester Red Sox stadium, set to open in April 2021. In order to absorb the cost increase, the project upped ticket and parking fees and added more properties to the special taxing district where new tax revenues are to cover the stadium loans. Based on how most large-scale public projects proceed, it would be naive to think there will not be additional increases over the next year.
Reading the administration’s 132-page report to the City Council, the promise that revenues from new development in the immediate area of the stadium will more than cover the stadium’s debt service is laid down as not just as a guiding principle, but an ironclad promise. Continuing to make that guarantee isn’t wise, or realistic. As costs rise and developments around the stadium encounter the inevitable unforeseen circumstances – just like the circumstances causing this latest expensive increase – the project paying for itself just won’t be in the offing.
But that doesn’t mean the stadium will be a failure. On the contrary, the pending WooSox arrival has been a rallying cry from outside investors who are putting money into the city. There was growing momentum in Worcester well before the Boston Red Sox minor league affiliate went looking for a new home, and if the team had decided to stay in Pawtucket, it’s hardly as if Worcester would have been crestfallen. But, there is also no question the WooSox imminent arrival has allowed Worcester to double down on the buzz. Two high-profile Worcester economic development announcements at the end of 2019 – the two-story restaurant in the Mercantile Center and the planned demolition of the Greendale Mall in favor of an open-air lifestyle center – both cited the WooSox’s plans to come to the city as a major motivating factor. Neither project is close to the district where the new tax revenues to pay for the stadium are supposed to be generated, but they will increase the overall tax collections in the city.
Nonetheless, we applaud the effort to hold the project accountable to the high standard of paying for itself, and the city administration should remain accountable for the baseball stadium not hamstringing city finances or compromising other priorities. The city must keep a watchful eye to mitigate any future cost overruns. Worcester’s bond obligations floating up from $101 million to $132 million (plus $5 million in expected operating costs over the next 30 years) happened pretty quickly. Another $19 million more, and this becomes the most expensive stadium project in minor league baseball history, surpassing the $150-million stadium for the Las Vegas Aviators.
Yet, a better measure for judging project success than the tax revenues from properties in close proximity to the new stadium would be the overall municipal tax revenues rising at a healthy pace, as the dividend of the current economic momentum is driving new projects across the city. The challenge for the city is to use that leverage of the hot market to cut better deals – giving less in subsidies and tax breaks as the appeal of properties here goes up.
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