Ghost of 38 Studios hovers over Rhode Island ballpark proposal

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PAWTUCKET, R.I. – The public hearing on a controversial ballpark proposal in this Rhode Island city resembled a festival.

Outside William E. Tolman High School, police managed heavy traffic, scorers of laborers wore baseball T-shirts and hosted signs and banners while a band repeatedly played “Sweet Caroline.”

Even the state’s attorney general, Pawtucket lifer Peter Kilmartin, was decked not in a lawyerly suit but in a Pawtucket Red Sox sweater.

This Senate finance committee hearing was but one in a series by lawmakers throughout Rhode Island as state and Pawtucket officials seek General Assembly approval for a replacement to Pawtucket's aging McCoy Stadium, home to the Class AAA minor-league baseball affiliate of the Boston Red Sox.

Pawtucket Red Sox and city officials covet the site of the former Apex department store and nearby properties in this 71,000-population city along the Blackstone River, five miles north of capital Providence.

Rhode Island's House of Representatives and Senate have held about 25 hours of public hearings on a proposal to replace iconic but aging McCoy with a 10,000-seat stadium, called the Ballpark at Slater Mill. Lawmakers may vote on the proposal next month.

The estimated cost is $83 million. According to team and city documents, the PawSox, as the team is known locally, would kick in $45 million -- $12 million in cash upfront and $33 million through Series A bonds -- while the state and city would account for $23 million and $15 million through Series B and Series C bonds, respectively.

Pawtucket has become a battleground within Rhode Island, where the mingling of sports, economic development and taxpayer dollars resonates after the 38 Studios bond financing fiasco.

Eight miles away, in Cranston – the home district of House Speaker Nicholas Mattiello -- Steven Frias has been going door-to-door generating opposition to the ballpark proposal. Frias, Rhode Island's Republican national committeeman, lost to Mattiello by a mere 85 votes last November. Unlike many defeated politicians, he is not going away.

“Economists for decades have said that sports stadiums do not deliver on jobs and economic development,” said Frias. “They rely on overly rosy projections and the taxpayers wind up paying the bill.”

Proponents are touting economic development for a state and city that still need a boost despite a recent uptick.

Attachment to a ballclub that has fed talent to the parent Red Sox since 1973 is another emotional component. Pawtucket has been a stomping ground for the likes of Fred Lynn, Jim Rice and Wade Boggs en route to stardom. McCoy Stadium was also the site of the longest professional baseball game, 33 innings in 1981.

“In Rhode Island, the general pattern is the same as it is elsewhere in the country," said Lee Igel, an associate professor at New York University's Tisch Institute for sports management, media and business.

“We've gone from a focus on economic development to a focus on society. The same issue five or 10 years ago would have been 'it's the economy, stupid.' Now, in part, it's social-shaped, with quality of life aspects.”

Opponents – an odd mix of conservatives and progressives -- are wary of state bonding to benefit a private entity.

Concerns include unreliable cost projections; the refusal of the ballclub to guarantee tax-revenue projections; land acquisition costs; expansion of eminent domain; and priorities in other matters such as schools.

The structure of the new plan, still a work in progress, may include the same moral obligation credit that felled Rhode Island with 38 Studios. The video-game company failed, leaving Rhode Island stranded with debt that it backed with its moral obligation.

State General Treasurer Seth Magaziner, wary of possible cost overruns, has suggested the state could trim borrowing costs by issuing bonds through Rhode Island Commerce Corp. or the Rhode Island Infrastructure Bank.

For all the number-crunching, the one number hanging over Rhode Island is 38 -- as in 38 Studios. Rhode Island issued a $75 million loan in 2010 to lure former baseball pitcher Curt Schilling's company to Providence from Maynard, Mass. Schilling, who helped the Boston Red Sox win their first two World Series championships since 1918, was a video-game enthusiast who had hoped to cash in on his celebrity, only to see the business fail.

Both sides have played the 38 Studios card. Supporters say the deal is much different this time while opponents call it a fiasco revisited.

"This city needs this project," said Grebien. "It is a gateway to Rhode Island and a gateway to revitalizing our downtown and our waterfront."

PawSox chairman and former Boston Red Sox chairman Larry Lucchino cited regional appeal.

"Half of our fans bring their dollars from other states," he said. Pawtucket sits near the Massachusetts border.

Speaking at Tolman High, Pawtucket Mayor Don Grebien and city director of administration Tony Pires touted the city’s recovery over seven years. During fiscal 2011, when Grebien took office, the city’s bonds were junk, its rainy day fund was bone dry and its neighbor to the north, Central Falls, was about to file bankruptcy.

Today, an arts district springs up at the site of old mills. The city has a $12 million rainy-day surplus, its bond rating is up to A, pensions are fully funded and a Massachusetts Bay Transportation Authority commuter rail stop is earmarked for Pawtucket-Central Falls by around 2020.

“Where there is an economic development project built around sports, all sorts of other businesses come into play,” said Igel.

The deal, according to Grebien, protects the state and city from financial risk.

"That needs to be out there and people need to understand that," he said. The $45 million from the ballclub, said Grebien, would mark the largest private investment in city history.

Not so fast, said Frias.

“This project is comparable to 38 Studios. It's more of a moral obligation than a revenue bond,” he said in an interview.

“They are asking taxpayers to pay for bonds to benefit a private company without taxpayer approval. One thing we should have learned from 38 Studios is that taxpayers should have some say when borrowing is issued in the name of economic development.”

A referendum is still not out of the question. Team owners, meanwhile, have threatened to move out of state.

City officials in Worcester, Mass., 38 miles northwest, have been eyeballing a parcel near the city’s Canal District south of downtown for a minor-league park, though their public profile regarding the field has been much more low-key.

Worcester has been marketing itself aggressively after years of promotional dormancy. On Tuesday, city officials there released an offer to land Amazon's second world headquarters, which includes up to $500 million in tax breaks.

Montreal has also appeared on the PawSox relocation radar, though probably as a leverage play. The French-Canadian city, which lost Major League Baseball’s Expos in 2005 when they became the Washington Nationals, is looking for a big-league club if it can land a stadium.

PawSox officials in 2015 proposed an $85 million, privately owned stadium on the Providence land vacated by the relocation of Interstate 195, but pulled the plan after state officials objected to picking up an estimated 80% of the tab. Rhode Island, meanwhile, is building up a technology presence on those parcels.

“How they have handled this is a profile in how not to do PR,” Frias said of the ownership team. “The PawSox are not in a good bargaining position. If Massachusetts is not interested, they would stay in Rhode Island or go to Montreal, and I don’t think they want to go to Montreal. I don’t think there’s anywhere to go that’s viable for them.

“You have to question whether bond buyers will buy these bonds at 5% after the experience Rhode Island had with 38 Studios. There's also a fear of inside politics."

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Budgets Revenue bonds Gina Raimondo State of Rhode Island City of Pawtucket, RI Rhode Island