What killed the Rays stadium deal? Here were the biggest risks for the team

Yahoo

20-03-2025

For the past several months, The Tampa Bay Rays' future in St. Petersburg has been a near-constant topic of discussion among residents, a question almost as ubiquitous as 'How about this weather we're having?'
Rays owner Stuart Sternberg provided some clarity last week when he announced the team would not move forward with building a new stadium.
Government officials, business leaders and opinionated neighbors have now turned their attention toward searching for the straw that broke the camel's back. Some have theorized that the financial risks the team faced were too much to stomach.
Under the deal, the Rays would no longer have the city as their landlord. That means it would have been up to the team to pay for insurance and upkeep on the stadium. The Rays also would have been responsible for cost overruns in a time of rising construction prices and labor shortages.
Was it that added risk that caused the team to back out?
Conversations between the Rays and local government officials began to deteriorate after hurricanes Helene and Milton caused serious damage to the roof of Tropicana Field, ultimately forcing the team to play the 2025 MLB season at Steinbrenner Field in Tampa. The future use of the Trop, at least in the short term, is still in flux.
Jason Spears, vice president of Peninsular Mechanical Contractors, said this hurricane season set off a chain reaction no one could have predicted.
'It was already a thin deal to begin with and the numbers just stopped making sense,' said Spears, who also sits on the board of the Associated Builders and Contractors of Florida Gulf Coast chapter, a construction industry group that advocated to keep the Rays in St. Pete.
Under the now-defunct deal, the team would have gotten almost $600 million from the City of St. Petersburg and Pinellas County to offset the cost of their $1.3 billion stadium. The city also pledged to pitch in another $142 million for infrastructure costs and sell the land to the team at a steep discount.
Those terms are in line with other publicly funded stadium deals that have been cut in recent years, said Victor Matheson, a professor at the College of Holy Cross in Massachusetts who specializes in sports economics.
'It's tempting to say, 'these poor team owners had all this money at risk,' but guess what? Every major business deal is like that,' he said.
As the Rays landlord, the city must now foot the nearly $55 million bill for hurricane-related repairs to the Trop. The city will also have to pay for insurance on the ballpark until it is demolished or the team's lease runs out.
City officials reduced insurance coverage on the Trop just months before hurricane winds tore the roof off. Under the current policy, the most the city could receive from insurance is $22 million, and that's after paying a $22.5 million deductible.
In an interview last week on the sports talk radio station WDAE, Rays President Matt Silverman said the high cost of insurance was one factor that caused the team to back out of the deal. The Rays would have been responsible insuring, maintaining and repairing their new stadium.
After this year's ultra destructive hurricane season, everyone is likely to see their insurance premiums go up because providers have been bombarded with so many claims, said Dustin Applebaum, president of the Clearwater insurance brokerage Element22 Insurance Services.
Insuring a new stadium might have been slightly more expensive, but only because the property would have been worth more, he said. In all likelihood, the Rays would have paid a lower rate than whatever the city is paying now.
'Just like with a home, if you have a brand-new home, your insurance is going to be much less than your neighbor who has a 1970s home,' Applebaum said.
If insurance really was a chief concern for the team, building a new stadium in Florida probably doesn't make much sense, since the risk is inherently higher than other locations that don't face frequent hurricanes.
Rising construction costs were also a point of contention for the Rays. The team started to falter on the deal in November after Pinellas County delayed voting on a bond needed for the deal to move forward.
'As a result, the cost of the project has increased significantly, and we cannot absorb this increase alone,' Silverman said at the time.
A series of new tariffs imposed by the Trump administration, including a 25% tax on all steel and aluminum imports, have created uncertainty for builders, with the cost of materials fluctuating on a daily basis, Spears said.
Finding and paying for skilled laborers could have posed an even greater challenge. The Rays would have had to compete for talent against other massive developments including the Tampa International Airport expansion, the Gas Worx mixed-use district in Tampa and the new stadium project at the University of South Florida.
'In construction in particular, everything is so time-sensitive,' Spears said. 'The longer you wait for everything, you're just burning costs.'
With any major development project, there are there's always going to be unanticipated costs, Matheson said. But the fact that the Rays had access to millions in public subsidies means they were less exposed to risk than a typical developer would be.
'The only thing really stopping this deal from being done is not anything that (St. Pete) did, it's that these owners feel entitled to taxpayer money,' he said.