Things Are Very Wrong In This Hillsboro Hops Debacle

The Real Story is a Column by Dirk Knudsen. It contains information and opinions. It asks questions and, when available, provides answers. It is your option to read or not to read! But be prepared to be informed.

Something is really wrong here in Hillsboro tonight.  Across the valley to the North of my historic home, the Hillsboro Hops have just dropped another game to the Everett Aquasox, going down 6 to 10.  It was Star Wars Night and the Friday Night game with perfect weather- the Fireworks were loud and brilliant.  The crowd on this night was big with all the fanfare, which will help them raise their season Average a bit, but the attendance is at a near-all-time low.  This season the Hops have managed just over 1,800 fans per home game. If things do not change, this would be one of their worst seasons ever for wins/losses and attendance.  

There are 30 games left this season at the Ron Tonkin Stadium, which the people of Hillsboro built for the team for $15,500,000 about ten years ago.  The “Tonk,” as it is known, is a stadium that seats 4,500 fans and has 3,534 seats.   It turns out that the people of Hillsboro and the Metro area are not that interested in Minor League Baseball nowadays.  According to the Hops Wikipedia Page, the 2022 season attracted 150,000 fans. That was their best year ever and the comeback year after the worldwide pandemic. What has happened this year?  Why is the attendance down?

Maybe the fact the team is in last place in the Northwest League with a 2023 record of 24 wins and 42 losses.  But there seems to be more going on here than that.  Nobody markets as well as the Hops do.  They have a game night idea or scheme for fun and creative outings at every home game.  The “Tonk” is a fantastic venue for Minor League Ball.  So we do not believe this is a management or marketing issue. No, I think the City of Hillsboro and the Hops are finding out the hard way that Hillsboro and the surrounding Cities are not baseball central. 

That is unsurprising in a valley dominated by computer jobs and tech families- maybe sports like baseball can not draw big numbers from the populous.  I think this is a true statement that is playing out.  Oddly enough, the wooden baseball bat collegiate team, the Portland Pickles, is outpacing the Hops fan attendance, the Minor League affiliate of the Arizona Diamondbacks, by over 400 fans per game by our numbers.  According to the West Coast Leagues statistics, the Pickles average 2,250 Fans per game. Portland is a bigger city, so maybe this makes sense.  But if that is true, why aren’t those same fans coming out to Hillsboro?  Serious questions that seem to have no apparent answers- but the City and the Hillsboro Hops might want to tackle them before they move ahead with this looking 150 Million dollar gamble to build a new stadium..

science rules

join the party at https://t.co/77FXGSbNBq for games all weekend & next week! pic.twitter.com/rDMVvxBlrN

— Portland Pickles (@picklesbaseball) June 24, 2023

Let’s Catch Up On The Major Points Of This Story:

• The Hillsboro Hops, as a Minor League affiliate of the Arizona Diamondbacks, need to upgrade certain facilities by the end of 2025 to meet guidelines laid down by the MLB.  These standards include security items, home, visiting club facilities, field playability, corporate skyboxes, and maintenance. Failure to comply would mean fines or losing the Hops to another City- something that was threatened at the recent neighborhood meeting to discuss the new stadium.
• The Ron Tonkin baseball stadium that is the HOPS current home is on the Gordon Faber Recreational Complex, which the City of Hillsboro Parks Department runs with oversight by the Hillsboro Parks and Recreation Commission.
• The City of Hillsboro began considering the needed upgrades in 2021-2022.  Estimates came to the City staff late in 2022 that upgrading the “Tonk” would cost 160,000,000 dollars.  There are no bids or cost estimates online or in the record, so this number seems high – almost constructed to make this path impossible. 
• The people of Hillsboro paid $15,500,000 10 years ago and built the “Tonk” which holds 4,500 people, 200%+ more fans than the Hops can attract on an average night – proven with ten years of factual data as seen here.
• How in the hell could the remodel of a beautiful baseball facility cost 1000% (One Thousand Percent) more than the costs to build the entire stadium just ten years ago?  Unless the City received several bids for the upgrades, the number seems constructed to get the desired outcome.
• That desired outcome showed itself late last year but became a reality in March of this year.  Without consulting the Parks and Recreation Committee, the Hillsboro staff and City Council entered into a contract to remove 3 beautiful softball/baseball fields. They announced that the City of Hillsboro would commit $18,000,000 in Transient Lodging Tax Revenues as a gift to the Hillsboro Hops organization.
• The City and the Hops showed budgets designed to convince us that the remodel was $160 Million and that the new stadium would only be $120,000,000.  The problem is that the new stadium will sit on 8-10 acres of land owned by the people of Hillsboro.  That land, effectively given to the Hops through a super long exclusive use agreement, is valued as high as 18,000,000 dollars and was not shown in the new stadium budget.  Neither were the costs of finding new land, replacing three state-of-the-art fields, and parking/bathrooms/dugouts/food service/amenities equal to what the people of Hillsboro enjoy now.  Let’s say that is another $10 to $15 Million, and really it appears to be more like $20,000,000.
• With the land and field replacement costs, the new Hops Stadium will come in more accurately at $150 Million.  That, I believe, is not hard to prove.
• If We are accurate, there is no reason to ruin the Gordon Faber Recreation Complex by removing three fields that are highly used.  Once those fields are gone, this seven-field world-class tournament-capable facility will be down to 4 fields.  The economic benefits of big tournaments rival or exceed the benefits that the HOPS bring to Hillsboro.  The City never commissioned a study of what we are losing by tearing these fields out, and the HOPS are unwilling to share as of yet the Eco-NW study they commissioned to review the benefits of their new stadium.

• 

• The Hops sought $25 Million in State of Oregon Funds, which they were counting on.  That and the City commitment of $18M would have put $43 Million of the needed budget in their hands.  Leaving them about $75 Million to fund the deal and get the dirt moving. The word is that the State of Oregon will not help, at least not now.  
• The Hops must now find upwards of $100 Million to build this new stadium.  Below I will make the case for why that is unlikely.
• The Hops and the City of Hillsboro are working out the terms of an agreement that will give the Hops ownership exclusive rights of the stadium for the long term – 50 to 100 years is not out of the question.
• The Hops will seek to hold 12-20 Concerts a year which could attract 7,000 people at each event.  On those days, the people of Hillsboro will likely lose the use of the entire facility because the site can not hold more than 7,000 people with the associated cars.
• At this time, the City has no set plan to replace the lost fields and no idea of who is paying for them to be rebuilt or where they will be put.
• Despite the objections of the former director of Parks in Hillsboro and former and current Parks Commissioners, the City Council and staff are full speed ahead.
• The negotiations with the Hops and the terms being reached are being done secretly out of the public eye- and some of the terms we have seen to be highly questionable. Terms like this one:

So the Hops must retain their fearless leader, or the deal is off.  This arrangement is not only odd but seems just abnormally one-sided.  Not surprising, however, based on promotional photos of City Staff and Mr. Wombacher and the fact that some of our Councilors, our Mayor, and others have season tickets to the Hops games.

• Here is a copy of the City and the Hops’ current agreement.  Short Season – Hops_Cost_Allocation_Agreeement_March_2023 .
• Section G of the agreement states; “The Parties estimate that the new ballpark will cost potentially up to $120 million and that the City
  will contribute $18 million to the new ballpark. The Parties intend for Licensee to pay the remaining cost through private financing and/or grants from other entities. ”  The $120 Million number is inaccurate because it does not provide cost allocation for the replacement of the lost fields, nor does it work out who will pay that.  One could claim that the entire agreement is voidable or that the City of Hillsboro has backed us all into a financial corner.  The Hops do not have to help cover these costs.  I am unsure why such a critical error was made unless it was done intentionally.  Someone should audit these numbers and the process with a higher pay grade than me.  It is pretty surprising to me personally that our standing City Council (a diverse and bright group) stood for any of this- unless they were scared into it or the details were so murky they could not see the forest for the trees.  Here is a diagram as shown in the PowerPoint presented by the City earlier this year.

• You can see that in the first column above (Ron Tonkin Remodel), the City of Hillsboro was going to give the HOPS $10,000,000 in lodging tax and loan the Hops $30,000,000.  Thank GOD that the City and the people of Hillsboro are no longer under the weight of a loan like that.  The facts are the Hillsboro HOPS have not demonstrated the ability to pay even a fraction of that sort of debt payment.
• Under the New Stadium column above, it is shown with the double asterisk that the $120,000,000 does not include any value for the land being taken when our youth/rec fields #4,5,6 are ripped out – which I mentioned above is valued at up to $18,000,000.  There is no allocation for rebuilding those three fields, a cost of upwards of $20,000,000 if we build like-kind replacements.
• The City and the HOPS are already moving ahead with a grading permit and a land use application even with no proof that the HOPS can afford to do this.  The push is to break ground, grade out, and remove those three fields.  But a land use approval should be issued first, which will happen soon.
• The land use application in a preliminary form has been sent in for review.  When it becomes official a two-week period for comment will begin.  Anyone wishing to comment about this new stadium and who is on the record with a salient argument will have the right to appeal this process which could put this new stadium concept at risk.  We will report more on this next week.
• The biggest issue we see for the approval of the new project is the issue created by the fact that the new stadium can seat 7,000-7,500 hundred people.  Any event at the new stadium that would reach that number would effectively and legally max out the occupancy/parking permit for the entire complex.  Potentially then, this new stadium could shut down all other activities at the Gordon Faber Recreation Complex.
• There is NO PARKING being added to the Gordon Faber with this new project- yet it will raise the seating capacity of the current facility from 12,100 (football stadium 7,600 = The Tonk = 4,500) to 19,500.  That is an increase of 61%.
• The Traffic Planning was done 11 or 12 years ago, and US 26, Cornelius Pass, Brookwood, and all streets in that area have had a very significant increase in traffic during that time.  It is unreasonable to proceed with this plan without a new traffic study- yet no such study is being required.  Honestly, this seems unlike any development project I have ever seen- traffic planning is almost always required.

Time to Talk Money

You will find this financing statement for the hops project on the City of Hillsboro website.   Please read this and remember this statement by our City.  If this project goes forward as planned, I will be surprised if this does not change.  I think we as a City are going to be asked to do much, much more.  Maybe even all of Washington County will be asked to help pay for this project.  Time will tell.  Have a look.

Ok, so let’s work a little math here.  I just looked at buying a ticket to the game today on the HOPS website.  Tickets are $52 per game behind home plate. They are $25 a game along 1st and 3rd baselines and $8 to sit or stand in the grass berm in the back.  So let’s say the ticket prices average $25 per seat.

$25 per ticket X 1,800 fans average = $45,000 in ticket sales per home game.

Now let’s say you buy a beer/coke and Dog- there is another $20.  Maybe 30% of that is profit. So we can toss on another $7.50 in revenue for that.

A game day revenue from a HOPS fan may generate $32.50 for the team.  That means the potential revenue from the games with the current fan base is maybe $58,500.  Take 66 home games, and the HOPS can earn about $3,861,000 annually in revenue.  That might be wild speculation, but I do not think so.  I was in Sports for decades, and know the numbers.   

1,800 Fans Average =  $3,861,000 a year in Revenue

Double the Fan Base –

3,600 Fans Average = $7,722,000 a year in Revenue

OK- so the new stadium will have “12-20” concert events a year, according to written documents and the statements of manager Wombacher.  WHat can those concerts bring in as far as revenue?  According to KOIN News and the Eco-NW Study, which the Herald can not obtain a copy of, the concerts and events could generate significant revenues.

“Using the average ticket price from Edgefield and an estimate of how many people would attend 12 concerts at the new ballpark, researchers predict the new stadium could earn $4,137,455 in annual gross box office ticket sales.”  https://www.koin.com/local/washington-county/new-hillsboro-hops-venue-will-bring-big-bucks-to-washington-county-economists-say/

Ok, so let’s add that to the revenues the HOPS can earn off these events.

Income From Ticket Sales to HOPS Games = $3.8 to $7.6 Million a Year

Income from Concerts & Events at 12 events = $4.13 Million. Let’s add $2.7 Million assuming the HOPS go up to 20 events $6.7 Million

Total Gross Revenue from Baseball and Non-Baseball =  $7.93 Million to $14 Million.

This is gross revenue and does not account for staff and overhead.

How can this work?

Here is where I have to wonder what is happening.  The HOPS are now faced with coming up with 100 Million Dollars.  Equity partners want money and big returns.  Do you know what the debt payment on a $100,000,000 loan would look like with commercial interest and bond rates running 8-10% in annual interest?  Partners are going to want a 6-10% return at a minimum.  The debt service alone would be $8 to $10 Million dollars a year.  That is more than they can earn in net revenue .  But I would love for them to prove me wrong- I probably am.  But if I am not we can expect to get the stadium back, perhaps after a long drawn out legal battle.  Worse yet we could be asked to come up with Millions to keep the team solvent or in Hillsboro.  That is the threat right now- either we tear up these fields, give them $18 Million, and a long term good guy lease, or they move the team- that is the facts.  Quid Pro Quo- and it was threatened in a public setting.

Something is not right here.  Maybe the Arizona Diamondbacks will pay the negative cash flow?  Based on what I have read, that is unlikely.  According to MiLB at this website , a Minor League baseball team has a total value of $3 Million to 25 Million dollars.

The Hillsboro HOPS is one of the lowest-attended teams in Minor League baseball.  That would mean their value is at the lower end.

This is all just my opinion based on facts and information I have researched; I do not see how this can work.  And I can not understand why our City officials are pushing us in this direction.

The HOPS are not the only Minor League Team in Oregon.

In Eugene, the Emeralds, who play in the Hops league, also need a new stadium.  The team and the State of Oregon are prepared to put in about 18 Million dollars of the project costs, which are expected to be $60-$80 Million.  The rest would have to be paid for by the people of Lane County, who would have control of the facility when the Emeralds are not playing. This is a far different approach than the one Hillsboro is taking.  The Lane Events Center would be home to the Emeralds. Rather than the team building the facility and having exclusive use, the County and the people of Eugene would build it and run it for the public benefit and keep the income from the facility.  This approach allows the public to control the outcomes and decide what revenues the Emeralds will pay yearly.  Staying in control seems essential to the people of Lane County, which seems a more prudent and responsible approach.  Hillsboro is playing high-stakes poker, letting a private for-profit corporation set up camp on one of our parks and reap all the income for decades.

Here in the Eugene Emerald Stadium Budget, we see a $9.48 Million item for the land being used for the stadium.  We also see a 10 Million dollar allocation for replacing the lost livestock facility.  Hillsboro did not provide a cost allocation for either in the 120 Million dollar budget they presented.  The Emeralds new Stadium is planned to be owned by Lane County and its people.  It will be used as a significant draw for the benefit of the County- and the people will be in control of every contract and every event.

Here is a photo of the new Emeralds Stadium.  It still has a 43 Million dollar gap in funding to be figured out, but like the HOPS, the stadium is substantial and designed for Multi-Use.  This facility will cost about $30-$40 Million less than HOPS stadium when all costs are figured in-, and that is hard to account for on our end.

Will we see a shift in the current position in Hillsboro?  Why would the City not want to own the new Stadium on behalf of the people of Hillsboro and lease it to the HOPS in a similar fashion that we do now?

There does not appear to be enough money for this project to advance- but time will tell.  If the HOPS can find $100 Million dollars for their current business model, they are pretty amazing salespeople.  And damn it, that mascot Barley is sure cute and a whole lot of fun!

Conclusion–  Transparency is not really present in Hillsboro.  We don’t know what is being discussed or what is happening in City Hall or within the HOPS organization.  But we do know it is all full steam ahead.  Many of us sure wish our City Council would have required these decisions and this process to be handled by the Parks Commission, where significant decisions have been stewarded for years here in Hillsboro.  They do a great job on that Commission, and, sadly, they are not being sought for oversight or council on this major project.  This is perhaps the most significant public project the City has ever undertaken.

Private executive sessions, non-disclosure agreements, secret economic studies that will not be released, and a constant PR Machine by the HOPS have made all of this just so murky and hard to watch.  What will be will be.

I like baseball and will pay to watch a couple of games a year.  I think the HOPS are a fun team and have enjoyed games there. But I will never put a private for profit baseball team, that could leave our town anytime, take precendent over our children, our people, or our financial well being as a City.  These are all my opinions – and I already know I will be sent nasty messages, tweets, and comments.  That is fine-  if the truth hurts or any discourse upsets you, let’s talk.  I want the turth and the murky waters to be clear and open for meaningful communication; and I am most certainly not alone!

Will the City and Hops work this out?  Will we give up a lot more than we are getting in value?  Do we even need or want baseball in Hillsboro at these costs?  After all Hillsboro is used to having the upper hand in business negotiations.  We are more on the tail end of this thing, reacting to what the HOPS are asking for.  Will we end up being asked to build the stadium like Lane County is doing for the Emeralds?  So many questions, and yet we head full speed into a wall trying to get the grading permit to tear those fields out and go past that point of no return.

Now it is your turn- Weigh In And Share Your Thoughts.