RailCats contract with the city unlike one found 'anywhere else'

2013-08-11T00:00:00Z RailCats contract with the city unlike one found 'anywhere else'Hillary Smith hillary.smith@nwi.com, (219) 933-3233 nwitimes.com

GARY | The city of Gary's contract with the RailCats franchise is unlike one found in most cities with minor league teams, said Bo Kemp, a senior adviser to Mayor Karen Freeman-Wilson.

"You can’t get this deal anywhere else," Kemp said, "That’s not (team owner) Pat Salvi’s fault. He bought the team the way the contract was written. We have to put ourselves together, the city and the team, so that we can make adjustments that benefit both the city and the team. It’s still going to take a little growth to get there."

The deal was written in 2001 when Scott King was the mayor of Gary and the city was attracting a baseball team to the downtown corridor. Writing an attractive contract that put a hefty burden on the city allowed that to happen. Salvi bought the team in 2008 with the contract in place.

The contract requires the team to pay $150,000 to the city for the first 150,000 fans in paid attendance that walk through the gates each year and an additional $1.25 after 150,000 and up to 200,000. Kemp said that the city has never received more than the $150,000 because paid attendance differs from announced attendance, which has not dipped below 151,000 since 2005.

The paid attendance and announced attendance differ because of the formula created for announced attendance, which includes tickets that are a part of sponsorship deals or tickets that are given for high grade performance in schools.

After the initial $150,000 the city of Gary has routinely paid up to $300,000 in overhead and maintenance to the team, including for for the groundskeeper salary and upkeep to the stadium.

For instance, when carpet is replaced to the stadium, the burden in part falls to the city, though the decision to replace the carpet came from the ownership group.

"As an example, you take a minor league team like Newark (N.J.), the stadium is owned by the public entity, but the city is not going to cover operational costs for the team," Kemp said. "It’s like a company coming in and saying, 'I’m going to lease from you this building that you have, you have the responsibility for upkeep because I’m leasing it, but I’ve got 100 percent overhead and you’re going to cover 10 percent of that overhead for me to stay in business and I’m going to determine what that overhead is. Whatever it is, you’ve got 10 percent period, no matter what it is, that’s at my discretion.'"

In the last year, the city and team leaders have negotiated to reduce that budget by 30 percent to $200,000. Kemp added he believes none of the maintenance costs or repairs that Salvi and the team incurred were indiscriminate.

The reductions have come in some maintenance costs and using sponsorships to replace what had previously come at a higher price. In addition, the RailCats have assumed responsibility for the groundskeeper's salary.

"I’ve looked at areas where we’ve kind of done a lot ourselves, where we’d have to rely on outside vendors, to bring in electricians or bring in HVAC people. We’ve really done a lot of that ourselves, our staff has really pitched in," said RailCats president and general manager Kevin Spudic. "Cleaning service, we’ve done that ourselves, so we’ve saved on a lot of things that have cost the city a lot of money in the past. Maintenance, overall servicing of a lot of things, we’ve done in house, working with partners of ours or vendors of ours, like landscaping out here.

"In the past (what) we’ve paid to do, or the city has paid for, we’ve looked to partners or sponsors to help us with that, maybe give us some bushes to put for landscaping. We’ve worked creatively with our partners to do that stuff. We have a great partner in U.S. Steel and they’ve been a great advocate and partner to help us out as much as they can. Whether supplying people if we’ve needed help with projects, or fork lifts or different things that cost us money, we try to outsource to save us or the city money."

The contract also allows for the stadium naming rights contract with U.S. Steel to be a part of the RailCats' revenue, because it covers signage and sponsorship of the team. The naming rights contract is not with the city.

Kemp, Salvi and the team are working to help reduce costs while the city is hoping to renegotiate the contract that extends through 2017. Next on the list of renovations the city is in line to pay for is a new scoreboard, replacing the one that was constructed in 2003 with a state-of-the-art video board. A new video board could help create a revenue stream with commercials between innings, Spudic said.

Also on the list of upgrades that both the city and team would like to see are new seating brackets, as those installed 10 years ago were plastic, though metal was originally ordered.

Finally, both sides would like a new playing surface, as the field has seen 11 seasons of baseball and 11 harsh Northwest Indiana weather changes.

"We are, as the city, about one to two years away from being able to do and make investments in the stadium that the team wants that won’t make a difference on the outside appearance, but will make a positive operational impact," Kemp said. "We have to get our house in order first before we can make those impacts. The most important investment needed is a new scoreboard."

The contract allows for the city to make money off of the team, but it would be very difficult, Kemp said.

"Theoretically, if you sold out every game, the city could make money," Kemp said. "The contract was not written for the city to make money, the contract was written to attract a team."

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