By Ty Kovatch, Chief of Staff
After nearly 18 months of discussions and several intense weeks of negotiations with prospective Major League Soccer franchise owner Merritt Paulson, Commissioner Leonard and Mayor Adams have agreed to present a proposed agreement that represents a great opportunity for Portland in a challenging time --under terms that shelter the City from any downside risk on its investment.
Whether you are a fan of soccer and baseball or not, there is much to be gained for the City from this effort. The addition of a major professional soccer franchise in "Soccer City USA" will not only showcase Portland on the international soccer stage, it will drive economic activity in and around the stadium on gamedays, create nearly 300 permanent jobs, as well as generate tourism dollars that will enter our local economy through our hotels, restaurants and downtown retailers. Beyond the 25 regular season games each season, the renovated stadium facility will attract international matches that will draw tourism dollars from avid fans who will travel great distances to see their favorite international team on American soil. Aside from those more tangible benefits, the addition of another major sports franchise in Portland will result in much greater national and international media exposure, and enhance the positive activity options in our community.
The AAA baseball stadium that is contemplated by the deal would be constructed in the Rose Quarter near the Rose Garden Arena. With the new stadium in place offering a better fan experience than the current arrangement at PGE Park, it is projected that the Beavers will increase attendance and draw 6000-8000 fans from around the region per game over 72 games each season to the Rose Quarter. Further, the stadium would be situated in a non-residential area, which would enable the facility to be utilized as an outdoor concert facility. Adding that level of activity to the Rose Quarter during the summer and fall months will dramatically enhance the viability of businesses in the district who have historically failed as a result of limited activity when basketball season is over. For years the vision for the Rose Quarter has been to develop a vibrant "entertainment district" and many believe the addition of the Portland Beavers in the Rose Quarter will be the anchor that makes that vision a reality.
Finally, it should not be lost in the discussion that a major component of this deal is a nearly $65 million private investment being made by Merritt Paulson, who is not simply another entrepreneur, but someone who has made Portland his home and who has worked hard as the owner of the Portland Timbers and Portland Beavers franchises to demonstrate his commitment to our community. The unique features of this agreement that protect the City's basic services using personal guarantees from Mr. Paulson are virtually unprecedented in similar deals around the United States.
The proposal would fund $37 million in improvements to PGE Park as well as the construction of a new ~8000 seat AAA baseball stadium at a cost of approximately $52 million with any increase in costs being the responsibility of Merritt Paulson.
The major deal points are as follows:
Tax Increment Funds: The City of Portland will provide roughly $33.5 million in Urban Renewal Tax Increment dollars from the Convention Center Urban Renewal Area and the yet-to-be-created West Side Urban Renewal Area.
AAA/MLS Ticket Tax: Merritt Paulson agrees to a 7% ticket surcharge at PGE Park and the AAA baseball stadium which, in concert with other revenues derived from other spectator ticket sales will be used to pay the debt on $31 million for the two facilities.
Paulson Personally Guarantees Revenues: Merritt Paulson agrees to personally guarantee the revenues necessary to support the $31 million in debt on the two facilites, which protects the City's General Fund from any liability in the deal. That means that in the event of a failure of one of the franchises or any shortfall in revenues, Mr. Paulson will be responsible to pay the necessary rents and other projected revenues to the City anyway.
Paulson Cash Contribution: Merritt Paulson will pay approximately $40 million to purchase the MLS franchise and he agrees to pay $12.5 million into the stadium construction.
Other non-City resource: Another $11 million would come from a variety of sources that are being pursued by Mr. Paulson (Player income taxes, tax exempt bond authority, additional surcharge etc.) but if he is unsuccessful, he will be responsible to cover this amount of the stadium costs.
Cost Overruns: The City's liability for cost overruns are limited to $2.5 million. Merritt Paulson will be responsible for any amount above that.
The construct of this agreement achieves all of the conditions outlined in the MLS/AAA Task Force's unanimous recommendation to support bringing MLS to Portland. With the resources identified and the public's interests protected, the last remaining uncertainty for the City in this agreement is whether a majority of the City Council will vote to send the proposal to Major League Soccer.
The City Council will hear this issue at 9:30AM on Wednesday, March 11 at City Hall, and public testimony will be taken at the hearing, followed by a vote on the issue.