RailRiders, Negotiations and Expertise

Keeping the home team at home in Scranton/Wilkes-Barre, Pennsylvania

You know who this year’s champion baseball team is, right? Yes, it’s the Scranton/Wilkes-Barre RailRiders. The RailRiders beat Georgia’s Gwinnett Braves three-games-to-one to capture their second International League title.

Baseball is one of the most popular summer activities for families in Scranton and neighboring Wilkes-Barre. As the Triple-A affiliate of the New York Yankees, northeastern Pennsylvania residents have seen some of today’s top major league talent showcase their skills on its field. And the team is a valued member of the community, maintaining a full-time staff of 30 employees and supporting such local charities as the Ronald McDonald House of Scranton and the Boys and Girls Club.

But despite the RailRiders’ illustrious history, there was a time when the future of minor league baseball in Scranton was at risk. Without a commitment to a new stadium from Lackawanna County, which owned the team, the RailRiders would have to seek greener pastures.

The county’s solution was to sell the team, use the funds to rehabilitate the stadium, then lease the stadium to the new franchise owners. But neither county officials nor team owners had the expertise to negotiate the process of sale, renovation and lease. They decided to issue a request for proposal in hopes of finding a knowledgeable consultant.

When the bids were in, my firm, the former Resnick, Amsterdam, Leshner, got the contract. Experience and expertise won the day. Since 1986 we have provided accounting, tax and business consulting to more than 60 minor league teams – that on top of my experience as an owner-operator of two minor league clubs.

There was a long list of complicated issues to work through, such as the team’s contribution to the cost of construction. It took four years and a lot of expertise. You had to be familiar with all of baseball’s rules about buying and selling franchises and leasing stadiums and the rules that govern minor league baseball operations. Everything had to be substantiated with forecasts and cash flow analyses.

Part of the value of our experience is the relationships we’ve built over the years. Do you have a legal problem? We probably know a law firm that has dealt with baseball issues. We put the advisory team together from our vast baseball network – lawyer, architect, stadium construction experts, field maintenance experts – that guided the county through the lengthy and complicated process of evaluating the facility, rehabilitating the stadium, selling the franchise and negotiating the lease that would keep the franchise in Lackawanna County for at least the next 30 years.

What we offer minor league club owners is a unique combination of financial and operations expertise. Even the traditional accounting services, auditing financial statements and preparing taxes, have to be addressed from a position of understanding the business – how to improve cash flow, reduce the tax burden and maximize the value of the franchise. We touch all the bases, from filing the ticket reports required by Major League Baseball to the due diligence involved in buying or selling a club.

Over the years we’ve seen how all the numbers need to work for the different affiliated franchises in different types of markets. We come in knowing their business and can recognize immediately their challenges and opportunities. That’s really important, because if your advisors don’t understand this business it can cost you a lot of time and money. And nobody has any fun losing money.

About the Author(s)
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.