State experts think PawSox owners can likely cover share of new stadium

(Photo: WPRI)

PROVIDENCE, R.I. (WPRI) – Two state officials who reviewed confidential financial information about the Pawtucket Red Sox said Monday they think the team’s owners can afford their share of a proposed new ballpark, even though the club lost money on paper in the last two years.

Dennis Hoyle, the state’s auditor general, and Jesse Saglio, head of investments at the R.I. Commerce Corporation, both offered their opinions in letters sent to House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio. Legislators are debating whether to provide taxpayer support for the proposed $83-million stadium.

The PawSox have been unwilling to release their profit and loss numbers publicly, but agreed to share the information with Hoyle and Saglio if they each signed a nondisclosure agreement. They were allowed to provide summaries of what they saw in the letters released Monday.

Both Hoyle and Saglio described the team’s financial condition as “stable,” mirroring language used by PawSox Chairman Larry Lucchino, who in October described the ballclub as “a small, stable, but declining business.”

The letters were published ahead of Thursday’s scheduled Senate Finance Committee hearing, where the panel is expected to unveil a report on the stadium proposal and revised legislation. Ruggerio has indicated he hopes the Senate will vote on the plan earlier next year, while Mattiello has been noncommittal.

Hoyle’s letter, the more detailed of the two, said the PawSox lost money in 2015 and 2016, but noted a significant factor driving that was “goodwill,” an accounting term for the excess value of the original purchase price that shows up on financial statements as a non-cash expense. The team’s cash flow in both years was positive, he said, and its operating revenue and expenses were “consistent” year to year.

The PawSox have committed to paying for $45 million of the ballpark’s cost plus any construction overruns. Hoyle said team officials told him they expect to fund their portion through borrowing or new capital infusions by the club’s wealthy owners. He said the team’s ability to meet its obligations “would be largely dependent upon the generation of additional revenues from increased attendance at games and the potential sale of ‘naming rights’ under a multi-year agreement.”

Similarly, Saglio wrote in his letter that covering the PawSox’s share of the ballpark costs “would require additional cash flow … beyond what the team currently achieves.” He said the amount envisioned “appears to be supportable” by the team’s “operating assumptions and its anticipated attendance increase.”

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook