LANCASTER — Baseball lore comes rich with statistics. So consider this simple math about the Lancaster JetHawks Class A minor league baseball team, which moved this winter from Riverside into a brand-new, city-owned stadium here.
The JetHawks play their first road game Thursday, and their home opener April 16. But without a pitch being thrown, the franchise has already jumped at least 50% in value to $3 million.
Last year, they were the Riverside Pilots, a team that finished last in attendance in the California League, drawing 56,601 fans--or 820 fans per game--in a 3,000-seat stadium with no liquor license and no profit.
In Lancaster, the JetHawks' home is a new 4,500-seat stadium that costs the city $9.5 million to build. There's a 10-year lease, a liquor license, a baseball-hungry desert community that's bought up 1,700 season tickets and all 12 luxury boxes, and a waiting list to buy ads on the JetHawks' outfield fence. The team figures it can easily draw more than 210,000 fans to 70 home games this year.
"I'd be crazy if I said the value of the franchise hasn't gone up. But we have no desire to sell. I love this," said Matt Ellis, 27, part-owner and the JetHawks' general manager. The "we" includes his father, Michael, part-owner and club president. "And I don't want to lose money. This is my livelihood," Matt Ellis said.
But for all the enthusiasm about being in Lancaster, it is a gamble. "We've got the highest lease in the league," Ellis says. The JetHawks owe the city $300,000 in rent annually for 10 years, plus $150,000 this year for maintenance costs. "We have to do at least 3,000 [fans] per game" to break even.
Steve Pastorino, general manager of the rival High Desert Mavericks, says of the Lancaster rental contract: "I don't think many teams would have taken that deal five years ago. And I'm not sure many cities would take anything less than that these days."
In the desert town of Adelanto where the Mavericks play in a $6.5-million stadium the city built in 1990, Pastorino's team drew 146,355 fans last year, yet it paid the city a mere $71,435 in rent. Dave Crandall, the city's special projects manager, read the Mavericks' lease carefully when he came on the job, trying to find a loophole. "It's a beautiful golden contract" for the team, he said. "We're locked into it till 2010."
Now cities with new minor league stadiums cut shrewder deals and some in the game believe the city of Lancaster's rent terms may become a benchmark. In Rancho Cucamonga, the hometown Quakes broke their own California League attendance record last year by drawing 446,146 fans. They also paid the city more than $600,000. The Quakes pay $50,000 in rent, plus 6% to 15% of their concessions (excluding liquor) after their first $1 million, and half the parking.
Ellis says it's fair for Lancaster to take in a hefty rent guarantee for providing a new stadium. "The worst thing is we have to work for it. We're not going to make money snapping our fingers."
The way the JetHawks will make money is to draw more than 3,000 per game. In the minor leagues the key is food and fannies: About 40% of a team's revenue is from tickets, 40% from food and souvenirs, the rest from advertising and radio deals. If the JetHawks do really well, Ellis won't have to share any ticket or concessions income with the city.
And certainly making a profit would be a change for this team.
In 1988, Jack Patton and friends paid $450,000 to buy a San Diego Padres minor league club in Reno. The city-owned stadium was shared with local amateur teams, the field so jagged its nickname was "Astro rock" and the Padres told Patton, "We can't send major league prospects there who keep taking a ground ball between the eyes."
So Patton moved to Riverside where the infield was smooth and signed on as a Seattle Mariners farm club. But the stadium's neighbors would not approve a liquor license--costing Patton $100,000 a year in sales--and fan interest in Riverside was steady and dismal, with the Pilots finishing last in league attendance their first two seasons even though the team had a winning record.
Tired of losing money, in late 1994 Patton sold the team for about $2 million--and finally turned a profit in the process--to the Ellises, who own 35%, and Horn Chen, a mercurial bamboo importer from Chicago who owns the remaining 65%. (Chen also owns nine minor league hockey teams and the Ottawa Rough Riders of the Canadian Football League.)
Owning a minor league team isn't a get-rich-quick scheme anymore. Even a well-run team can only hope to turn a 5% to 10% profit, and not many teams do that.
In fact, while prices for minor league baseball teams have soared in the past decade, so has the risk because typically the profits come only when a team owner sells out, not from actually operating the team.