The Rays made two moves yesterday that will greatly impact the business aspect of the franchise, first rejecting the counter offer from the city of St. Petersburg to allow the Rays to leave Tropicana Field. The second was to finally add to the c-suite level of the front office.
After two key departures last year, the Rays offered a job to the successful CEO of the Nashville Predators Jeff Cogen yesterday afternoon.
These moves may be related.
The Art of Rejecting a Deal
The city of St. Petersburg controls what has been described as an "iron-clad lease" for Tropicana Field*, which retains the Rays through 2027 with language preventing the team from even considering a new stadium site outside the city limits. Any changes to the agreement require a majority vote from the City Council, which comprises a revolving door of elected official.
Who sits on the Council is likely to change with next month's elections, but in their final meeting the current Council made a counter proposal to the Rays request to eventually break their lease, with immediate permission to look for a new stadium in any location between Hillsborough and Pinellas counties, the east and west sides of Tampa Bay.
Originally negotiated last year by St. Pete's mayor Rick Kriseman, the Rays offer would have likely paid the city $20M with an anticipated move in 2019, though exact numbers fluctuated based on when the stadium was vacated. The counter proposal from the Council offered the same basic permissions, but with a payout escalating significantly.
The new deal, which included the cost of demolishing Tropicana Field, would have cost $41M for the Rays to move to Hillsborough County in 2019, or $33M for a move in 2020. Those figures could have been further lowered in the Rays stayed in Pinellas County, where St. Petersburg is located, and would have been $5M if the Rays remained in the city limits, covering the cost of demolition.
The Rays said no.
Mayor Kriseman met with the team for an hour yesterday as the liaison of the City Council, but gave no information on why the proposal was rejected. A statement from his office noted that, "Mayor Kriseman is disappointed but not surprised."
Rays president Brain Auld provided a statement as well, saying "Although we appreciate the time and attention that Mayor Kriseman and the City Council have dedicated to this issue, we do not agree to this proposal. We remain open to pursuing a cooperative path forward."
You may be surprised that the Rays rejected the offer for what, at most, was the increased cost of James Loney's contract, but when I asked those more in the know around the team, their response was similar to Kriseman's: not surprised.
A Wise Decision?
The Rays ownership has spent a decade trying to improve Tropicana Field, but have always sought fairness from the City Council in looking for a permanent home for the franchise, with which there was not always an impasse. The Rays nearly built a stadium on the city's waterfront in 2008 before the economy made a public appeal for permissions impractical, but the vicissitudinous City Council has wavered since that time.
With the continued inability of the Rays to draw a steady fanbase to that stadium, due large-in-part to the lack of a population near St. Petersburg, ticket sales will continue to be low, impacting the team's revenue and buying power on the free agent market. Viability of Tampa Bay as a market is a topic of frequent conversation at the national level, and those critical of the City Council believe they are not concerned with keeping the Rays in Florida, seeking only the highest payout possible for a team destined to leave its stadium one way or another.
On the other hand, the Rays remain immensely popular when it comes to television ratings, with a 5% increase in local viewership, and a 16% increase in the Orlando Market. The team placed 12th in overall viewership across baseball, ahead of the Nationals, Orioles, and Braves by a good margin. If you combined the viewership of the Reds and the Brewers, the Rays would still have higher viewership.
The Rays are a popular team, and they're about to get a lot richer. Tampa Bay is entering the final year of its television contract with Fox Sports, and if history is our guide, the new deal could be a massive pay out to the team, with estimates in the $25M per year range. It's for that reason some might scoff at the Rays potentially wanting a smaller fee to leave St. Petersburg, and was certainly a motivating factor for the City Council.
Given the projected rise in future revenue, are the Rays unwise to reject the only offer they've ever had to leave Tropicana Field? Or did the reject the deal because this is the very first offer received, and are looking to save as much money as possible? Either way, there is a lot of negotiating left to do, and a new stadium could not be built soon enough.
A New Executive
This is why the Rays are bringing in Jeff Cogen, who helps fill the void left by the departures of former stadium negotiator Michael Kalt, SVP of Development and Business Affairs, and Mark Fernandez, former SVP and Chief Sales Officer. Cogen could fill both of those roles any day of the week and twice on sunday.
A previous resident of St. Petersburg who got his start with the Ringling Brothers Circus, he parlayed that experience in the entertainment industry into a career of success in baseball and hockey front offices, including time as President of the Texas Rangers from 2004-2007.
Cogen ran all business aspects of the franchise, and also served on the board of the Dallas Stars hockey arena, providing oversight and leadership on overall financial performance, capital expenditures, third party events, and team operations. He would transition to the Stars front office after leaving the Rangers.
With Texas he was also Chief Operating Officer for one year. Among his accomplishments with the Rangers, Cogen increased revenues by 20 percent over a three-year span, and pioneered revenue streams through several technological partnerships, as well as a landmark naming-rights deal for "Ameriquest Field" in Arlington, as well as its return to becoming Rangers Ballpark shortly before he left as part of a branding overhaul at the stadium.
When the Predators hired Cogen as CEO in 2010, it was a five year plan to get the franchise back on track before handing the reins to his deputy. Now he plans to leave Nashville ahead of schedule, joining the Rays full time in February after Nashville hosts the NHL All-Star Game. He leaves Nashville in a far better place than he found it, and the Rays stand to benefit from his experience and expertise.
SB Nation writer and Nashville Radio personality Dan Bradley dropped by the site yesterday, proclaiming Cogen to be "a great hire!":
He got the city of Nashville and the team together on the arena lease, and was a beast at booking the building out. Plus, and Henry employed a great plan to fill the building.
Where I see him helping the Rays right away is his negotiation on the stadium. If there's anyone to stabilize the situation, it could be him.
Nashville was among the bottom in attendance and ticket prices in the NHL when Cogen took over, but true to the statement above, he brought attendance to a near 99-percent capacity last season, including 30 sold-out games.
Upon accepting the opportunity to join the Rays, Cogen called baseball his "true love." Whether that love extends to St. Petersburg remains to be seen.
* For those unfamiliar, the lease is actually an obscure legal document called a use-agreement, which has less precedent and provides less wiggle room for the team, and any adjustment to the document must be made through a "Memorandum of Understanding."