Upkeep of Gwinnett Braves' stadium is county's burden


The Atlanta Journal-Constitution
Published on: 03/02/08

When the Atlanta Braves decided to move their top minor-league team from Richmond's run-down stadium to a new place in Gwinnett County, they wanted to make sure history wouldn't repeat itself.

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So they negotiated hard to ensure that the Gwinnett stadium would be kept in top-notch condition — at county cost.

If it isn't, the deal could allow the Braves to pull their team out of the stadium after 15 years, leaving Gwinnett an empty ballpark halfway through the county's debt payments.

Under the agreement struck earlier this year, the Braves next year will move their Class AAA team from a 22-year-old stadium in Richmond to a $45 million ballpark to be built by Gwinnett near the Mall of Georgia. A pivotal issue in negotiations was the multi-million-dollar matter of keeping the stadium up to par over the long haul, according to county documents and interviews with principals in the deal.

The Braves initially offered to sign only a 15-year lease. Gwinnett countered that the agreement had to run for 30 years because construction would be financed with 30-year bonds. The Braves relented to a 30-year lease, with provisions that the county fund all capital improvements needed over time and that the Braves have an escape clause if the stadium were to deteriorate significantly.

That means the county will be on the hook not just for paying off the debt, but also for future costs to keep Braves minor leaguers in the stadium beyond 2023.

"One of the things the Braves were real sensitive about was not finding themselves, 20 years down the road, in a situation like in Richmond," said Gwinnett County Commissioner Bert Nasuti, a driving force behind the deal.

Said Braves executive vice president Mike Plant: "One thing you learn in this business pretty quickly is that ... you need to make sure that 10-15 years down the road you don't have any regrets that the facility isn't being kept up to the standards of the day you walked in."

The agreement requires Gwinnett County, which will own the stadium, to pay for all capital maintenance, improvements and repairs. An attachment to the agreement provides a long list of examples of Gwinnett's responsibilities — everything from seats to scoreboards, from structural components to repainting.

The deal requires the county to maintain a minimum balance of $500,000 in a capital maintenance fund, with the amount to increase over time. Because all revenue Gwinnett receives from the stadium and a new rental-car tax likely will go toward paying off the $33 million the county will borrow to build the ballpark, the county probably will have to find the capital-fund money elsewhere. County Administrator Jock Connell said that, if not from excess revenue, it could come from Gwinnett Convention & Visitors Bureau funds.

Moreover, the agreement makes clear that the $500,000 minimum balance is not a cap on the county's annual obligation to keep up the stadium.

There is no cap, nor at this point a detailed projection of what the costs might be over time. The Braves will submit an annual list of proposed expenditures, subject to county approval.

"There are years you won't spend a lot and years you will spend more than $500,000," the Braves' Plant said.

Nasuti, the Gwinnett commissioner, said he is comfortable with the county's obligation.

"We are a pay-as-you-go county," Nasuti said. "Gwinnett puts a larger percentage of its budget toward capital improvements than most counties. ... You can't do a project this big with zero risk, but if Gwinnett is going to do minor-league baseball it cannot get better than doing it with the Atlanta Braves."

At Turner Field, a much larger facility, the Braves contribute $1 million to $1.5 million per year into a capital fund administered by the Atlanta-Fulton County Recreation Authority. In Gwinnett, the Braves will not contribute to such a fund.

The team will pay Gwinnett $250,000 in annual rent (to be adjusted for inflation in later years) plus $1 per ticket sold, all of which is to go toward the bond debt. The Braves will have control of the stadium except for 10 days per year, when the county can use it for other events.

The Braves and Gwinnett signed a "term sheet" in January, outlining their agreement. That document is to be the basis of a definitive contract, which is still being hammered out.

Gwinnett and Braves officials said the definitive contract likely will include forecasts of capital costs over the stadium's first 10 years or so. Such costs escalate as a stadium ages, and the five-page term sheet anticipates that, devoting more space to capital maintenance than any other issue.

It states: "Gwinnett acknowledges that the ... Capital Maintenance Fund ... to ensure that the stadium remains a high quality venue for Braves baseball is a material inducement to the Braves' decision to enter into this agreement."

The deal then gives the Braves the option of terminating at any point after the 2023 season if the team and the county "are unable to reach agreement . . . with respect to any item to be included within Capital Maintenance and Repairs . . . and which is material to the operation of the stadium or otherwise unreasonably interferes" with use of the stadium.

Both sides say the wording is intended to give the Braves an escape only in a worst-case scenario.

"It's just to make sure that if the stadium wasn't being kept up to a standard and started falling into disrepair, there's an out," the Braves' Plant said. "I don't see that happening, but in this day and age, you need to protect yourself."

Gwinnett Arena general manager Preston Williams, the county's liaison on the stadium, said the out-clause "has got to be refined more in the long-form agreement with the Braves [as to] what the implications are."

Connell, the county administrator, said the long-form contract must be completed before Gwinnett can borrow the money for construction. Williams said that contract is "weeks away."

The out clause, Connell said, cannot transform the agreement into something seen as less than a 30-year commitment.

"The sets of lawyers looking at this — we wouldn't be able to issue 30-year bonds if it were a 15- or 20-year agreement," Connell said.

If the Braves were to opt out after 15 years, Gwinnett could be in a bind. Under Major League Baseball rules, the Braves could block any team affiliated with another MLB organization from moving into Gwinnett.

"A 15-year out clause is not abnormal," said J.C. Bradbury, a Kennesaw State University sports economist who has been a critic of the Gwinnett deal. "But it certainly is problematic for Gwinnett in this case because basically you have a stadium that serves one and only one tenant."


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