THE HOUSE THAT YOU BUILT
Let's daydream for a minute.
It's opening day, 1998.
Nearly 50,000 fans are tightly packed into Bank One Ballpark's dark green seats, eagerly anticipating the first pitch in America's grandest and most expensive new generation of baseball stadiums--$70 million more than the next most expensive ballpark, Denver's $215 million Coors Field.
The retractable dome is open, letting the warm April sun shine down on the zoysia-grass field. The Phoenix skyline is visible over the left-field wall, and Squaw Peak beckons above right field.
Excitement fills the air. The smells of beer, hot dogs, peanuts and freshly cut grass commingle, creating that unmistakable baseball fragrance. The dream of Major League Baseball in Phoenix has finally arrived.
The Arizona Diamondbacks' chief executive officer, Gerald J. Colangelo, stands up in the Diamondbacks' tastefully appointed team suite, slightly to the third-base side of and overlooking home plate. He heads to the more exclusive and intimate confines of the owners' luxury suite directly below.
A smile crosses Colangelo's face as he descends the spiral staircase he ordered to connect the two suites. He passes through the owners' suite and picks up a cool drink inside the adjacent 400-square-foot owners' lounge.
He congratulates himself for pulling off the nearly impossible--again.
He thinks back a few years, when taxpayers covered $48 million of the $101 million cost of building America West Arena, completed in 1992. He recalls the tremendous impact the new venue had on the value of his Phoenix Suns basketball team. The revenue generated by the arena's luxury suites, 19,023 sold-out seats and advertising placards helped increase the estimated market value of the Suns 45 percent to $156 million.
Not a bad return for his partnership, which purchased the Suns for a mere $44.5 million in 1987.
The Bank One Ballpark takes up where the arena left off in extracting revenue beyond the sale of tickets. Money will pour in from premium and suite seating, concessions, merchandise, restaurants, advertising, media deals, naming rights, tours, interactive videos and parking.
Nothing even remotely related to ringing up sales has been left to chance.
The Bank One Ballpark also greatly expands public investment in sports facilities Colangelo controls. The public kicked in at least 85 percent of the cost of the ballpark, compared with only 48 percent for the arena.
"Now that's leverage," Colangelo says to himself as he sits down in his seat in the owners' suite. He knows the view will be great. Years earlier, he had his team of architects prepare three-dimensional, computer-generated drawings of views from the owners' box.
Colangelo scans across the field and sees 75 luxury suites, each leased at $100,000 per year, generating at least $7 million for the team. His eye delights in 5,500-plus club seats in front of the suites. At a $600 premium for each seat, they kick in another $3.2 million for Colangelo and Company. Ten million dollars already tucked into ownership pockets, and the season hasn't even begun.
Before the inaugural season ends in late September, his Diamondbacks are expected to draw 3.2 million fans who will buy $40 million in tickets--one of the highest gates in Major League Baseball. Total revenue for the year should surpass $80 million, an amount that puts the rookie Diamondbacks in the upper economic echelon of baseball.
Net profits should hit $13 million.
Colangelo looks into the outfield at 5,000 or so $6 seats; they have been designed to dispel any perception that the publicly owned Bank One Ballpark--with an average baseball ticket price of $12.50, plus seat premiums--is elitist. He ponders how many of the workingman's cheap seats were long ago snapped up by scalpers and resold--quite legally--outside the stadium gates for much higher prices.
A twinge of guilt crosses Colangelo's mind. The Diamondbacks' coffers might never have begun to fill if a reluctant public hadn't been subjected to an unpopular $238 million tax to build the ballpark. But, after all, the free market rules.
And speaking of the market, Colangelo wonders just how much the fledgling team is worth, as his young and comparatively low-paid Diamondbacks take the field to a thunderous roar from the ecstatic crowd.
Win or lose, some financial experts predict his team could soon surpass the market value of baseball's most profitable franchise, the New York Yankees, whose television-driven $185 million net worth may have peaked unless a new stadium is soon built.
Not a bad outlook for the expansion team Colangelo and his wealthy partners bought for $130 million.
Let's end the daydream, and ask a question from the land of reality: Can it be true that Colangelo and his Diamondbacks partners will use public subsidies and favors--many unrecognized by or unknown to the public--to make a financial killing, while thousands cheer the Diamondbacks on?
The real-life answer is . . . well . . . yes.
And even stadium opponents may not understand the extent of the profit potential at Bank One Ballpark.
Well-heeled businesses like the Dial Corporation, Phoenix Newspapers, Inc., Discount Tire, Nike, Pinnacle West Capital Corporation, First Interstate Bank, Bank One, Bank of America, Circle K Corporation, America West Airlines, KTAR Radio and Swift Transportation don't plop down millions of dollars to buy something, without believing it will make money.
While profits might not come immediately from the baseball team's operations, the owners certainly expect to rake in cash from any number of side business deals connected to the arrival of Major League Baseball in Phoenix, stadium district and Diamondbacks documents show.
The process could not really be called money laundering, because there's nothing illegal about it. It's more akin to money recycling.
An example: The Dial Corporation has ponied up $10 million for its ownership stake. But a Dial subsidiary will also obtain the stadium's exclusive concession rights, a benefit that should throw more than $17 million a year right back at Dial.
In return for its $5 million investment, KTAR will get broadcast rights to all Diamondbacks games; the associated advertising revenue will likely run well into the millions.
Another corporate owner, Pinnacle West, will benefit from huge electric bills that its subsidiary, Arizona Public Service Company, will charge about $2.4 million for the massive amounts of power necessary to cool the stadium.
Phoenix Newspapers cashes in on its $5 million share the quickest, collecting $2.2 million from the condemnation of an abandoned warehouse that is located where the ballpark's infield will be built. The newspapers can be expected to benefit from increased advertising revenue from the team, the team's media outlets and the bars, restaurants and other entertainment venues expected to develop near the stadium.
The corporate back scratching goes on and on. But the key to the financial feeding frenzy is the ballpark itself.
Gone are the days of multiuse stadiums, where one building fits all sports. Nowadays, professional sports teams demand, and get, state-of-the-art facilities designed to pamper fans--and to separate them from their money in as many different ways as possible. Hawking warm beer and cold hot dogs no longer cuts the institutional mustard.
"You have to make sure you have the revenue streams to make money," Arizona Diamondbacks president Rich Dozer says mildly.
The Diamondbacks expect a torrent of dollars to flow annually from Bank One Ballpark. Besides the $10 million from luxury suites and club seats, the team projects that, in the Diamondbacks' first year, stadium advertising will generate $4.2 million, concessions $7.3 million and merchandising $4.3 million.
If the stadium is as successful as everyone connected with the project expects, then Colangelo's newest business venture should be immensely popular and profitable.
As part of the ongoing negotiations between Colangelo and the stadium district over the ballpark's operations, Colangelo has secured the right to build a 20,000-square-foot microbrewery on the northwest corner of the main plaza leading into the stadium.
The business could be the first of several Colangelo opens near the ballpark on stadium district property.
Colangelo has the right to operate the microbrewery under a proposed Real Estate Management Agreement with the stadium district. As part of the negotiations, Colangelo gave up the right to control booking events into Bank One Ballpark. The stadium district insisted it have control over booking since Colangelo already controls event scheduling at America West Arena.
In addition to the microbrewery, Colangelo will have rights to control the commercial and retail space reserved on the ground floor of a 1,500-space parking garage to be built immediately south of the stadium for use by luxury-suite and premium-ticket holders.
But the first order of business will be operating a brew pub at a location where 80 percent or more of the projected 40,000 spectators per game will pass.
Dozer is quick to downplay the financial impact of operating a microbrewery at the front door to the most modern and expensive baseball stadium in the country.
"The net won't be much," he says before adding the microbrewery will probably drop "$300,000 to $400,000 to the bottom line."
Baseball fans who bypass the microbrewery have plenty of other options for food and drink once they enter the stadium. One of the most popular destinations will be a two-story, 17,000-square-foot TGI Friday's sports bar, to be located in left field.
Once again, Colangelo will get a piece of the action. Friday's will be open every day, game or not, for lunch and dinner. On game days, a ticket will be required to enter.
Colangelo's entry into the microbrewery business on public property might ruffle the feathers of some restaurant owners trying to make a go of it downtown. But it doesn't faze Bill Girard, the owner of the popular Coyote Springs Brewing Company and Cafe, which just opened its second microbrewery a few blocks from the stadium on Washington Street.
"From a competition standpoint, I think it is excellent," Girard says of Colangelo's microbrewery plans. "You want more facilities like that."
Girard compares the area near the stadium to what once existed adjacent to Coors Field in Denver. "That was a veritable war zone," he says.
Now, the area near Coors Field is jammed with microbreweries, nightclubs and restaurants. "What it has become is a location to go to," Girard says.
The same potential holds for the areas near the ballpark, particularly west on Jackson Street, predicts Girard, a former banker turned brewmaster.
And if the area develops as expected, no one will benefit more than Gerald J. Colangelo.
While they were maximizing revenue from the stadium, the Diamondbacks' investors also wanted to minimize their exposure to construction costs and future maintenance and renovations.
The cost of building the stadium, and the very real potential for expensive upgrades in the future, lies primarily on Maricopa County taxpayers. The county will divert most of its earnings from the ballpark, estimated at about $2.5 million a year--primarily from rent paid by the Diamondbacks--into a special fund to cover future upgrades. The team also makes a small contribution to the maintanence fund--about $250,000 a year.
Stadium upgrades can be extremely expensive. Tampa, for instance, just pumped in $50 million to get its six-year-old domed stadium, which has never seen a professional baseball game, in shape for the expansion Devil Rays.
San Diego recently agreed to spend $60 million to upgrade Jack Murphy Stadium, the home of baseball's San Diego Padres and the National Football League's San Diego Chargers. The improvements were made primarily to extract a long-term commitment from the Chargers to remain in the city.
In Massachusetts, the NFL's New England Patriots are asking the public to invest $50 million to upgrade Foxboro Stadium. The public reception has been less than lukewarm.
In Houston, taxpayers just pumped $60 million into the Astrodome to meet the needs of the city's professional football team, the Houston Oilers. Even with the improvements, the Oilers are now making noises about moving to Nashville, Tennessee, where a new stadium has been promised.
Although Maricopa County's Bank One Ballpark will incorporate the latest technology, maintenance problems inevitably appear over time with any stadium.
The potential for future taxpayer outlays to repair or upgrade Bank One Ballpark is very real and troublesome, says Maricopa County Supervisor Tom Rawles, who was the sole vote against the quarter-cent sales tax used to pay for the stadium.
"Once you put your feet into this tar baby, I'm not sure you can get out," says Rawles.
But even if the public is bearing most of the stadium's construction and future maintenance costs, Colangelo and his investors have their worries, too.
Taxpayers are covering the first $238 million of the project and Maricopa County will contribute another $15 million in bond proceeds. Anything above $253 million in development outlays will be the Diamondbacks' responsibility.
Colangelo, who is controlling design and construction of the ballpark with oversight from the stadium district, has tremendous incentive to keep construction costs from ballooning. Overruns are one of the few stadium costs that come out of his pocket.
Even though demolition of buildings and utility relocation have begun at the site--bounded by Fourth and Seventh streets and Jefferson Street and the Southern Pacific Railroad tracks through downtown--there are clear signs that penny-pinching will soon be necessary. Trade-offs in quality seem imminent.
Cost estimates are creeping upward from the original $278 million estimate toward $285 million--two months before excavation and heavy construction get under way. Groundbreaking already has been pushed back six weeks later than planned, to mid-November.
The massive stadium, which will span 18 stories from playing field to roof, is expected to take 30 months to build. Unless time can be cut from the construction schedule, the stadium will not be ready for the start of the 1998 baseball season, a revenue-reducing outcome Colangelo wants to avoid at all costs.
The pressure is on and crucial decisions must soon be made.
"We are quickly reaching a point where the team is going to have to make cuts or ante up," says Joe Diesko, stadium project manager for Ellerbe Becket, the architecture firm that has a $16 million contract with the team and the stadium district to design the ballpark.
Any delays from now until April 1998 could prove extremely expensive.
"There is no slack," Diesko says.
An insider close to the Diamondbacks says Colangelo will soon be asking his investors, who already have contributed $107 million toward the $130 million expansion fee, for additional funds. Colangelo, who is the managing partner, has personally contributed less than $1 million, according to the team's prospectus.
Diamondbacks president Rich Dozer strongly denies the team is about to ask investors for more money.
Lurking in the background of the cost equation is confusion over how extensive ballpark food services operations should be. Of particular concern is the exclusive club restaurant planned for right field, designed to cater to luxury-suite and premium-seat fans. Stadium district records show that two options have been discussed: The first proposal is to eliminate the club, which Colangelo believes will lose money, and replace it with five additional luxury suites and 725 premium club seats--a move that would add more than $500,000 in annual revenue. The second option involves selling several hundred seats in the club for each game, eliminating the kitchen and reducing the size of the club from 20,000 square feet to 13,000 square feet. Colangelo seems to be leaning toward the latter.
Colangelo's desire to increase seating is a reflection of rising construction costs.
But there is little room to shoehorn more seats into the stadium's tight floor plan. The ballpark is already compact when compared with recently completed facilities, such as Coors Field in Denver and Camden Yards in Baltimore. Bank One Ballpark is about three fourths as large as Coors and Camden, but will seat about the same number of fans--49,000 plus.
Officially, stadium district officials and Diamondbacks executives are downplaying any problems. But weekly written reports prepared by the stadium architect reveal hairline fractures in the plans that could become full breakdowns as construction heads into full swing.
There is one problem that drives many others: making up time lost when landowners sued the stadium district to stop seizure of their property. Property owners were unhappy with the amount of money the stadium district was offering.
Going to court appears to have greatly increased the compensation property owners will receive. King's Onion House at 425 East Jackson increased its land sales price and relocation compensation to $6.2 million from the district's original offer of $2.1 million.
Other property owners are continuing to negotiate over price, but all have been ordered by Maricopa County Superior Court to vacate their land by different dates over the next eight months, depending on construction schedules.
The cost of acquiring the property is included in the overall cost of the stadium. If King's Onion is any indication of how other property owners will fare, the Diamondbacks could be on the hook for higher-than-anticipated property settlements.
The delay in obtaining the property is also forcing ballpark designers and contractors to reconfigure their schedules. This costly, stressful procedure is triggering a chain reaction that ripples throughout the project.
Huber, Hunt and Nichols, the Indianapolis-based firm that built America West Arena and landed a $5 million contract to oversee construction of the ballpark, hopes to regain four to six weeks by accelerating the schedule for erecting the massive 500-foot-long steel frames that will support the retractable roof of the stadium. To accomplish this, Huber Hunt is urging the stadium district to avoid competitive bidding by entering a $1.7 million sole-source contract for specialty steel from a mill in Luxembourg.
The redesign is causing considerable stress for the structural engineers designing the steel frame. The Wheat Ridge, Colorado, engineering firm of Martin/Martin was focusing its energy on the stadium's concrete foundations. Now, the firm is switching, midstream, to concentrate on the steel support structures.
"Due to the short notice, we will be forced to be inefficient in our design," Stanley Welton, principal engineer for the firm, said in an August 3 letter to Ellerbe Becket.
Welton estimated the design change would increase the $2.4 million subcontract with Ellerbe Becket by $107,000. While the increase is relatively small, the potential for further problems is underscored by Welton's gloomy assessment of the challenge ahead.
"It will be a monumental effort on our part, as well as for the rest of the design team, to meet the proposed schedule," Welton concluded in his August 3 letter.
At the same time the team is scrambling to make up lost time, there are indications that Colangelo is willing to sacrifice at least some quality and comfort to save money.
In June, Colangelo ordered designers to slice four feet from the distance to the center-field wall, making it 401 feet from home plate. He also eliminated a 25-foot-high wall that was planned for center field, replacing it with a seven-foot-high fence. The changes allow 460 seats to be added to center field. Another 175 seats were added in the upper deck.
Ellerbe Becket architects suggested that the additional seats would require an increase in the number of support facilities--such as toilets and concession areas.
Adding seats is fine, but Colangelo put his foot down on extra amenities.
"Jerry Colangelo felt that because the team had exceeded the code minimum for toilets no additional toilets should be provided," the minutes of the June 21 meeting between the team and its architects state.
The number of toilets aside, Colangelo also appears determined to minimize team maintenance costs by literally sweeping the dirt under the carpet. While Colangelo wants his $100,000-a-year luxury suites to "speak of money," according to the June 21 meeting minutes, he's ordered designers to use only dark colors in the suites so dirt and grime will blend in with the background, reducing upkeep.
"This is a big concern for the team," the minutes note.
The shortcuts may prove to be only minor drawbacks in a customer-pleasing ballpark. The Diamondbacks have spent several million extra dollars to make sure 472 wheelchair slots have unobstructed views of the field and scoreboard.
In fact, the team also is paying great attention to views from all seating areas. Colangelo has requested that 30,000 seats be angled toward home plate to make watching the game more comfortable. Most of the seats, however, will be only 19 inches wide, down an inch from the standard 20-inch seats. The reason: Phoenix residents, who won't be wearing bulky coats to the stadium, can tolerate slightly narrower seats. The seats will be slightly wider than the 18 3/4-inch coach seats used by Southwest Airlines.
Even if the Diamondbacks avoid problems stemming from construction delays, other significant challenges remain, given the promises Colangelo made when persuading county supervisors to approve the sales tax. Colangelo assured the supervisors that he would deliver the finest baseball stadium in the land, complete with three major features never built together in one stadium--a retractable roof, an air-conditioning system powerful enough to combat desert heat, and a natural-grass field.
Retractable-dome stadiums have proved to be risky and costly endeavors.
The only two constructed in North America have been in Canada. Montreal built the Olympic Stadium for the 1976 Summer Olympics. The roof has never worked.
The retractable roof on Toronto's stadium, the SkyDome, works, but the project was dreadfully expensive with cost overruns exceeding $500 million (although much of the added expense was not related to the roof).
Bank One Ballpark will be the third attempt at obtaining retractable-roof baseball nirvana.
"Montreal didn't work. Toronto did," says Bank One Ballpark's chief roof engineer Felim McCaffrey of Hatch Associates in Toronto. "We are batting .500. The question is, does it go up to .667, or does it go down to .333?"
McCaffrey and everyone else associated with the project are praying the average goes up.
McCaffrey doesn't expect to disappoint anyone.
"I don't have a major concern about it not working," he says. "We feel very confident."
Optimism runs high because the design of the retractable roof is based on applications used for 100 years in shipyards and heavy industry.
"We are transferring heavy industrial equipment from a factory or steel works and putting it on top of a sports facility," McCaffrey says.
The roof will be supported by two steel trusses that are, essentially, elevated railroad tracks. The retractable portion of the roof will be mounted on wheels similar to railroad cars and divided into six panels.
Three panels will be pulled to the east side of the stadium, and three to the west side, where they will stack on top of each other. An elaborate array of steel cables, winches, pulleys and gears, powered by a 150-horsepower electric motor, will open or close the roof in as little as five minutes.
McCaffrey says the 5.25-acre opening created when the roof is fully retracted can be constantly adjusted to minimize heat buildup in the stadium seating areas. Opening or closing one side of the roof can throw shadows on seating areas.
This may prove to be an essential feature in realizing a second unusual but fundamental feature of the ballpark. Designers want to keep the roof open as much as possible to provide sunlight for a natural-grass field.
Summertime sunlight obviously creates very high temperatures in the seating areas. The Diamondbacks plan to close the dome three to four hours before game time and then use a powerful cooling system to lower summertime temperatures inside the stadium from 115 degrees or more to about 78 degrees before the first pitch.
The solution to the problem is brute force--8,000 tons of water-chilled coolers.
"There really is no magic or cutting-edge technology," says cooling engineer Robert Barrett, of ME Engineers, Inc., of Denver. "It's pretty basic. We will throw a lot of cooling at it, and it will do the job."
The stadium's electrical system will draw up to 14 megawatts of power, most of it associated with cooling the building. That's enough energy to meet the electrical needs of 1,700 homes.
APS obviously is happy to have the stadium on its grid. The ballpark will rate as one of the utility's 200 largest customers. But electrical costs are not now expected to be as high as first feared. The industrial rate structure offered by APS "eliminates much of the penalty associated with the ballpark's large electrical demand load," Barrett says.
Cool air will only be circulated on the concourse and above the seating areas of the stadium. The air will be blown across the top of the stands from vents located along the perimeter of the upper and lower concourses. The cool air is expected to cascade across spectators and toward the field.
Temperatures in the seats will differ by as much as ten degrees from the 78-degree target, with the coolest seats closest to the field and warmest seats in the upper reaches of the stadium.
The playing field will be the warmest spot in the stadium, with temperatures expected to be around 88 degrees when the roof is closed.
Even though designers express confidence in the cooling system, it has the Diamondbacks nervous.
"One of the scariest things about this whole project is the AC," says Diamondbacks president Rich Dozer. "I'm on edge," he continues. "That's just a big risk factor, air conditioning that place."
And the Diamondbacks are responsible for the operating costs of the stadium--including the cooling.
Colangelo has always insisted that Bank One Ballpark will be a natural-grass field. But no domed or retractable-roof stadium has been able to keep a living field.
Turf scientists at the University of California at Riverside claim they have found a solution. Steve Cockerham, superintendent of agricultural operations, has led a summerlong experiment, testing several different grass varieties to see which types can tolerate long periods of shade and are tough enough to be used as an athletic playing surface.
Cockerham believes one of the grasses he tested, a hybrid zoysia grass called DeAnza, which has been used in golf courses since 1982, will meet the needs of the ballpark.
"I don't think it's going to be great, but it is going to be a damn good grass," Cockerham says.
In testing, the DeAnza kept growing even when it was repeatedly subjected to complete shade for up to eight days, Cockerham says.
The grass exceeds the team's expectations. The Diamondbacks were hoping to find a grass that could survive for three or four days--the maximum length of time the stadium roof is expected to be closed during home stands.
There are a couple of drawbacks to zoysia grass as a baseball surface. The turf doesn't mend itself as quickly as the Bermuda grasses generally used in Major League Baseball fields in warmer climates. And there is a tendency for zoysia grass to cause a baseball to zigzag as it rolls. This effect can be diminished or eliminated if the grass is cut short, turf experts say.
The real test for the grass, however, will come next year when the team plans to plant a field in the Phoenix area to see how it grows.
While the DeAnza may not be the ideal grass, the alternative is dreadful.
"Players would rather have zoysia than [artificial] turf," Dozer says.
Only time will tell if the stadium's innovations--its roof, air conditioners and grass--will perform as hoped. If they do, Bank One Ballpark could set a standard other teams will shoot to exceed, just as America West Arena has in the NBA. Baseball's Seattle Mariners and Milwaukee Brewers already are pushing for retractable-dome stadiums.
"If we pull this off, this will be a fabulously successful venue," Ellerbe Becket project manager Joe Diesko says. He sounds as if he were living a dream. An April daydream, perhaps.
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