A project of 1 billion
Stephen Bronfman’s group is asking for a financial contribution of up to a few hundred million dollars from the Quebec government for its project of around 1 billion dollars, which includes the construction of a new baseball stadium in Peel Basin, has been told Print.
Since February 2021, Claridge, Mr. Bronfman’s investment company, and Groupe Baseball Montréal, the group of businessmen led by Mr. Bronfman who want to bring a baseball team back to Montreal, have requested a financial contribution from Quebec as part of the baseball stadium project at Peel Basin. Mr Bronfman’s group has never publicly stated how much money they are asking for.
Montreal Baseball Group declined to comment.
According to our information, the Montreal Baseball Group would not have sent a single request with a precise figure to the Government of Quebec. Rather, the two parties discuss several scenarios for financial contribution. Almost all of these scenarios amount to at least one hundred million dollars. For example, one of the scenarios mentioned represents a contribution of approximately $ 300 million for Quebec.
The Legault government, which is studying the request, has not yet made a decision. For several months, Quebec has been open to the idea of making a financial contribution, but at zero cost to Quebec taxpayers.
“If there was a baseball team in Quebec early tomorrow, the players would pay taxes in Quebec, taxes we would not have [sans équipe]. So if we take a portion of this tax revenue there and then give it to a company that brings us this company, everyone is a winner. […] We need to make sure that Quebec will receive more spin-offs, therefore real tax revenue, than the amount of aid that will be given to [cette] business, with the premiere in Quebec, François Legault, in March. He repeated essentially the same words last month in an interview with TVA Sports.
According to our information, Quebec in its calculations takes into account the extra tax revenue generated by money coming from outside Quebec (such as player taxes or QST for US tourists who come to watch a match), and shares financial spin-offs, especially from abroad.
Since the spring of 2019, Bronfman and his group have planned to move the Rays from Tampa Bay to Montreal in shared custody. Under this plan, the team was to play half of its home games in Tampa Bay and the other half in Montreal. Rays owner Stuart Sternberg agrees with the plan. He also wanted to retain a significant (or even majority) stake in the team. Rays has a valid lease in Tampa Bay until 2027.
This timeshare team concept is unique: there is no common professional sports team between two cities in North America.
In order for this project to be realized, MM must. Sternberg and Bronfman said a new stadium must be built in each of the two cities. No stadium will be built without the assurance that a team will play there – at least half the season. The project must also obtain approval from the major league baseball and the players’ association.
In Tampa Bay, the Rays spoke publicly in mid-November about a scenario in which local governments would pay about 50% for a new stadium in Florida. The Rays are willing to pay around $ 350 million for their new stadium valued at $ 700 million.
Grants and loans
According to our information, the project was sent by Mr. Bronfman worth 1 billion dollars. This sum includes both the cost of building a baseball stadium and other infrastructure in the neighborhood, close to the stadium.
Mr Bronfman’s group, which has not published information on the financing of his project so far, has never revealed the figure.
In the latest public estimate, in 2013, a study commissioned in part by Bronfman estimated the cost of building a new stadium (36,000 seats) at $ 500 million. If we take inflation into account, we will reach 585 million in 2021 for the stadium alone.
According to our information, if Quebec goes ahead with its financial contribution, it is considering one part in grants and another part in the form of conditional repayment loans (often called “forgiving loans”).
For the grants, the money will be paid to Mr. Bronfman’s group without any other conditions than the team coming to Montreal. For loans with conditional repayment, the money will eventually be converted, in whole or in part, into a grant, provided that the project meets the parameters for tax / financial benefits that the two parties have agreed on.
More details in the beginning of 2022?
Before making a final decision, Quebec wants to ensure that the Peel Basin baseball stadium project, partially funded by public funds, receives adequate social acceptance in Montreal and Quebec.
In early 2022, perhaps as early as January, Mr. Bronfman’s group plans to make a public outing to provide more details about their project. This is the plan right now, but nothing is set in stone.
The last time Mr. Bronfman’s group gave details about the project was in October 2019, when it was presented during the consultation on the future of the Peel Basin area organized by the Office de Consultation publique de Montréal (OCPM).
In addition to the baseball stadium, the Montreal Baseball Group indicated that it wanted to develop:
- “A green area, a park within the park, accessible to the population, open and inclusive, and whose development will allow more social partners to serve their clients better”;
- specialized rooms such as a sports medicine clinic, a community rehabilitation center, an interpretation center for the history of the district, a room for the Panthéon des sports du Québec;
- room for community organizations.
In its report published in March 2020, OCPM concludes that a new consultation is needed for this “very controversial” stadium project, which should be analyzed “on the basis of a more developed project”. The president of OCPM at the time, Dominique Ollivier, is now number two in the Plante administration (she is president of the executive committee).
Mr Bronfman’s group must also meet with the mayor of Montreal, Valérie Plante, before Christmas, the office told Mayor Plante. This will be their first meeting since the re-election of Valérie Plante.
The land sought after by Mr. Bronfman’s group belongs to the federal government (Canada Lands Company), but the City of Montreal also has a right of first refusal – a kind of veto – over this land. She must therefore in practice agree that the baseball stadium project in Peel Basin will see the light of day.
Awaiting Major League Baseball decision
For the project of a timeshare baseball team between Tampa Bay and Montreal to continue, agreement is needed between major league baseball and the players’ association. Earlier in November, Tampa Bay Rays owner Stuart Sternberg presented his plans for a timeshare team to the Major League Baseball executive committee. For the project to see the light of day, it must be approved by this committee, then by all the owners of major baseball. The committee did not vote on the project at this meeting. Commissioner Rob Manfred indicated that there were other more pressing issues on the agenda. Sternberg believes he can get a decision from Major League Baseball in the coming months. Major League Baseball has been locked since 1eh December. This is the first labor dispute in baseball in the Major League since 1994.
The calculation of Quebec
If the Legault government moves forward, it plans to make a contribution equal to the provincial tax revenue generated by the project on money coming from abroad (such as player taxes or QST on the expenses of US tourists who came to Montreal for baseball), as well as a percentage of the financial ripple effects generated by the project, especially on money coming from abroad.
According to our information, Quebec is considering four factors in particular to assess the impact of the project:
- taxes paid in Quebec by Expos-Rays players;
- the tax revenue, for Quebec, generated by the construction of the stadium (a study conducted by the Chamber of Commerce of Metropolitan Montreal estimated this amount at 55.6 million in 2013; this gives 65 million in 2021 dollars with inflation);
- Quebec tax revenues (such as QST) generated by tourists from outside Quebec who come to Montreal to watch the Expos-Rays games;
- a percentage of the project’s economic ripple effects, especially those coming from foreign tourists who come to Montreal to watch baseball games.
Quebec has not decided on which horizon they will calculate the tax benefits of the project. In March last year, Prime Minister François Legault talked about a five-year horizon.
Under the tax rules, future Expos-Rays players will pay around $ 4.25 million in Quebec tax per year, according to estimates by Print (assuming a salary of CAN 75 million for the team; Rays was CAN 71 million at the start of the 2021 season).
And in 25 years?
For Quebec, Expos-Rays players will generate approximately $ 106 million in tax revenue over 25 years (without taking into account wage growth), according to estimates by Print. By using an annual inflation of 3% of salary, we arrive at tax revenues of 155 million over 25 years, according to the calculations of Print.
A 2013 study funded by the Chamber of Commerce of Metropolitan Montreal, Claridge and other business people estimated the Quebec player tax at $ 9.8 million per year for a full-time team. For a timeshare team, this figure will be reduced to 4.9 million per year in Quebec taxes – thus essentially the same result as the calculations of Print (4.25 million / year).
Since 2013, Mr. Bronfman’s group has not publicly quantified its estimate of the economic and tax benefits of its baseball team project.
In practice, the vast majority of a large baseball team’s $ 75 million salary is paid from revenues from domestic major baseball broadcasting rights, primarily U.S. broadcasting rights. The company Ernst & Young, which conducted the 2013 study for the Chamber of Commerce and Business People, estimates that each baseball team in major leagues in 2014 received at least $ 60 million as a share of the revenue from national broadcasting contracts.