I couldn’t resist a blog about the Rochester Rhinos.
The story is in the Rochester, NY, Democrat and Chronicle. Here is how it opens.
When Mayor Robert Duffy presents his proposed budget on Friday, it will include a new $420,000 subsidy for Rhinos Stadium — a move necessary despite tough financial times, officials said, after the new team owners lost $2 million in their first season.
This story is interesting in part because the situation may be one in which nearly every problem with stadiums as development tool is evident. For example, the story tells us that the stadium is in a section of town that many citizens are afraid to visit. We learn that there are several other stadium and event facilities in the city competing for opportunities to host events. And, it’s a soccer only venue, at least so far.
We are also told that
“We aren’t giving them tax money,” said city Corporation Counsel Thomas Richards. “What we are doing is taking over our building and maintaining it. … We won’t be in there changing light bulbs, that sort of thing. But in terms of anything significant for the property, we will be responsible for it.”
Here are some of the items included in the $420k, that isn’t money given to the team:
Clark said the team asked for assistance with expenses such as utilities. The city, for example, can combine its electricity billings with other city properties and get a better rate. The budgeted $421,300 also include estimated insurance costs, water, shared maintenance and management and past taxes
I fail to see the difference between giving someone money and paying their bills for them, but I was trained as an economist rather than a lawyer.
Also, from the Mayor, “Clearly we are not in the business of bailouts, but we do everything we can to try and maintain assets in the community,” Duffy said. “And the Rhinos are an asset.”
Not a terribly valuable asset, of course, as the first owners defaulted on loans paid to them between 2004 and 2007, which forced the sale of the club to the current owner. Surprisingly, this owner is also struggling to make a profit with the club. Who would have thought it?
Don’t worry, the economic development office for the city is involved as well.
The actual estimated cash outlay is $387,000, said Carlos Carballada, the city’s economic development commissioner.
“Our determination was, do we just shut it down, or do we try and protect the asset and the only tenant?” he said.
In the real world, sunk costs are rarely sunk and the urge to throw good money after bad seems impossible to resist.