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Symbiosis Finds The Baseball Diamond

One dim memory I have from sixth grade biology is that of the oxpecker, a small bird that sits on the back of the rhinoceros. Normally a dominating and irascible beast, the rhino tolerates the oxpecker because the bird does something the rhino cannot do for herself: relieve her of all the troublesome insects that worry her neck, back and hindquarters. As most sixth graders know, this relationship is an example of symbiosis, or the cooperation of two organisms to their mutual benefit. One company that has developed a symbiotic relationship with several California cities is Big League Dreams, a Mira Loma-based concern that operates publicly owned ball fields for youth sports and amateur athletics. The company is 38% owned by William E. Simon & Sons, the investment firm headed by Republican gubernatorial candidate Bill Simon Jr. The facilities are large complexes that cover anywhere from 25 to 105 acres apiece. They feature baseball and softball fields designed to resemble, on a miniature scale, the nostalgic wooden-bleacher baseball parks of yesteryear, such as Boston's Fenway Park or Chicago's Wrigley Field. So far, Cathedral City and Mira Loma, both in Riverside County, have built Big League Dreams facilities, while new complexes are under construction in Chino Hills (San Bernardino County), Redding (Shasta County) and, most recently, in Redlands (San Bernardino). General Manager Rick Odekirk claims two more California cities are about to approve deals with his company, which has marketed itself to municipalities aggressively for several years. "We are clearly the most popular sports-club development company in America, by quite a distance," Odekirk crowed during a recent interview, adding that the company has "quite a long list of cities requesting our presence." For Redlands, the primary benefits would be "being able to supply our residents with a nice-quality facility for softball and other things that we don't really have here," said Ron Mutter, the city's public works director. "We turn a lot of teams away." Beyond nostalgia, Big League Dreams has a design formula for its franchises. Each complex basically consists of a ring of baseball and softball diamonds, including "replicas" of historic baseball parks, arranged around a central "hub" consisting of an enclosed basketball court on one side and a clubhouse with a restaurant on the other. Individual cities can expand the menu of sports facilities, depending on the land available, to soccer fields, beach volleyball, tennis courts and skateboard parks. Big League's business model is designed with equal care. Cities can lease the city-owned facilities to the company, which assumes all the risk and all the upside. In the case of Redlands, however, the city wanted some of the upside, as well, and entered into a revenue-sharing agreement last December with the private company. At first glance, such an arrangement may seem unremarkable: After all, many cities routinely contract with private operators to run city-owned concert halls and sports stadiums. What is remarkable about the deal between Redlands and Big League Dreams is the intricate interdependency between the public entity and the sports club operator. To understand the symbiotic ingenuity of the Big League Dreams business model, let us take a closer look at the Redlands deal. The city plans to build the $7 million, 23-acre facility entirely on public land, using public money, including a $5.25 million grant from the state and revenues from a local development impact fee. Big League Dreams supplies the basic design concept, but otherwise stays out of the construction process. By doing so, the company avoids what are the most difficult aspects of real estate development: land assembly, entitlement and construction finance. When construction is finished next year, the company will have a facility that was built to its specifications and a 40-year contract to operate it. At that point, the city becomes almost a passive partner. But that is acceptable to the city because it expects to make money as revenues grow. Redlands will pay a one-time $300,000 licensing fee to Big League, plus an additional $300,000 annual operations fee for the next 40 years for maintenance. Additionally, the city will pay the company an "incentive fee" that is due if Big League Dreams achieves revenue goals. The incentive fee ranges from $2,203 in Year 3 to $445,527 by Year 40. On its own account, the city expects net income (that is, after expenses and fees) to start at $126,512 by Year 3 and rise impressively to $1.19 million by Year 40. While that is not a huge sum, it does equal the amount of sales tax revenue the city would receive from a medium-sized retailer. These revenues will not be achieved by squeezing fees out of a captive public, according to Big League Dreams' Odekirk. He contends that people will pay no more to rent softball diamonds at the sports complex than they otherwise would have paid to the local parks and rec department to rent a publicly operated field. Instead, most revenues come from fees paid by adult softball teams and from corporate sponsorships for both youth sports and softball teams. Big League Dreams even employs full-time fundraisers to elicit sponsorships from local businesses and corporations. The city does what it does best— financing and building public works projects — while the private company does it what does best — running and promoting a business. Assuming that Big League Dreams can make its numbers, the deal works well for both sides. I do not pretend to understand the risks, although the popularity of youth sports and amateur athletics suggests that sports clubs have a market. If the risks are tolerable — and for the foreseeable future they may be — then the civic rhinoceros of Redlands may be content to carry this little bird on its back.
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