Cactus League Playing Catch-Up as Taxes Fall Short Amid Growth

March 11, 2012
The Arizona Republic
Peter Corbett

Arizona’s Cactus League got a boost last week when the San Diego Padres and Seattle Mariners renewed 20-year lease agreements to play at the Peoria Sports Complex through 2034.

But the deal, which hinged on $48 million in facility improvements, did not hide the league’s ongoing difficulty in paying for rapid expansion from eight to 15 teams over the past decade.

The Arizona Sports and Tourism Authority is short $165 million needed to pay for stadium improvements because tourism-tax revenue declined sharply during the recession. And no solution to the funding shortfall has emerged.

That leaves Glendale and Goodyear on the hook for $63 million and $43 million in stadium costs, respectively, that city leaders had expected would be paid by the Arizona Sports and Tourism Authority.

“It won’t hit its goals before it sunsets in 2031,” Cactus League Association President Brad Curtis said of the regional sports authority. “A lot of things have changed and we’re looking for new funding sources.”

Spring baseball has never been more popular in the Valley, with 10 stadiums, 15 teams and about 230 games that attracted a record 1.59 million fans last year. But luring five teams from Florida and two from Tucson has left the host cities with tens of millions of dollars in bills to pay.

Meanwhile, the authority has deferred payments and told Glendale and Goodyear it cannot meet its previous commitment by 2031, when the municipal corporation ceases collecting tourism taxes and funneling them to the Cactus League.

Tourism tax funds league

Proposition 302 created the authority in 2000 to build and operate the University of Phoenix Stadium, fund $205 million in Cactus League facilities and pay for tourism marketing and youth-sports facilities. The authority collects a 1 percent hotel tax and 3.25 percent tax on rental cars in Maricopa County.

The authority’s tourism-tax revenue peaked in 2007 at $24 million, fell to $20.7 million in 2010 and should hit $22.2 million by the end of this fiscal year, said Tom Sadler, authority president.

“We are recovering, but it’s a slow process,” he said.

Cactus League stakeholders agree that new revenue streams are needed to maintain the long-term viability of spring baseball in Arizona. Cactus League visitors generate an estimated $350 million for the state’s economy, according to a league study.

But with a tentative economic recovery and tourism taxes just now starting to pick up, no one is saying just what that solution might be.

“I don’t see anything changing for two years,” said Curtis, adding that he is working through some options but is not yet ready to disclose his ideas.

Sadler was also hesitant to offer specifics.

“I don’t want to be elusive, but we have talked about some of the low-hanging fruit of extending (the tax) and then dismissed it,” he said.

Meantime, the Cactus League is working to foster more cooperation between teams and host cities to enhance marketing and fill seats leaguewide, said Robert Johnson, a political consultant and Cactus League advocate.

“We have about 2.5 million seats in 10 stadiums over 30 days,” he said of the spring schedule. “We leave about 900,000 seats at the box office. Let’s sell those first.”

That would generate significant new revenue from ticket, concession and souvenir sales, Johnson said.

Teams split on surcharge

League ties were strained two years ago when Mesa pushed state lawmakers to approve a ticket surcharge to help pay for a new Chicago Cubs stadium. Other teams and cities objected, and Mesa instead turned to its residents to approve $84 million in ballpark funding.

The Cubs are scheduled to move to a new stadium near Riverview Park, just east of the Loop 101 and Loop 202 freeway interchange, in 2014.

Meanwhile, the Oakland Athletics are considering a move from Phoenix Municipal Stadium to Mesa’s Hohokam Stadium to replace the Cubs.

Phoenix also could lose the Milwaukee Brewers, who might leave the Maryvale Baseball Park after their contract expires this year.

The authority has $46 million to pay for renovation of five stadiums over the next decade. That includes $6.7 million for Maryvale, $11.2 million for Peoria, $3.7 million for Phoenix Muni, $8.2 million for Hohokam and $16.5 million for Surprise Stadium.

That money is due to be paid out before Glendale and Goodyear are reimbursed for their stadium projects.

The authority’s board will have to decide what will happen with money earmarked for Maryvale, Phoenix Muni and Hohokam if teams relocate, Sadler said.