We have also encountered some difficulties:
1. Pittsfield’s status in a professional league in 2005 is still uncertain. Frank Boulton, the CEO of the Atlantic League, has promised us a franchise in a to-be-formed short season division, but it is now looking increasingly unlikely that the division will be formed in time for the 2005 season. Miles Wolff, Commissioner of the Northeast League, will probably accept Pittsfield as an eighth team in his league if he needs an eighth team, but he is currently negotiating for the Aces (the league’s road team) to settle in Ottawa. If neither league is available for 2005, we are considering forming a new league, but it may not be achievable before 2006.
2. We wanted Pittsfield’s own team to be majority-owned by Pittsfield residents, but to date, only about 2% of the money subscribed has come from Pittsfield (although most of the individual investors, of whom there are more than 80 signed up, are local). That has hurt us in our quest for large out-of-town investors, who properly expect to see some leadership from local businesses and individuals who stand to gain the most from a revitalized Wahconah Park.
3. The carpenters’ union bid protest, which was filed in June, has spooked potential investors, and threatens to cost us investors who have already subscribed. Until then, we had quickly signed up most of the $1.2 million that is circled today (out of $2.8 million that we were seeking). Since then, very little new money has been pledged.
Since the bid protest has also cost us the time we needed to begin (and complete) major construction before Opening Day 2005, we have formulated a plan to go forward with the $1.2 already pledged ($950,000 new money, $250,000 already spent), and then “bootstrap” the rest of the construction from profits over the next several years, if 2005 fan attendance warrants the investment. Tentatively, we would use $500,000 to build the new food court, double the size of the women’s restrooms within the existing grandstand, remove the cinderblock “goiters” (home and visitor clubhouses), install a temporary trailer beyond the left outfield fence for the visiting team, rehab a home clubhouse within the existing grandstand, and use the remaining $450,000 for working capital.
However, all of this depends on the City’s response to the Attorney General’s opinion. In response to the bid protest, the A.G.’s office said, in effect, that if the Wahconah Park license agreement remains unchanged, they would side with the carpenter’s union and require any work done at the ballpark to be done in accordance with the public bid law. Notwithstanding the fact that no work done by any previous tenants at the ballpark has been in accordance with that law, notwithstanding the fact that the public bid law was written to protect taxpayer dollars from corrupt practices by public officials and that only private investor dollars are at stake here, the A.G.’s office does not want to set a bad precedent.
No one is claiming that Wahconah Park, Inc. is a sham corporation set up by the City to circumvent the public bid law, but the A.G. is concerned that certain features of our license agreement, if left unchanged, would send the wrong signal to other communities if he decided to let us do the construction as the private entity that we actually are. However, his opinion has given us a clear set of guideposts for getting us treated as a private enterprise, rather than a project subject to the City’s direction:
1. The initial term of our license agreement is very short-term, expiring in October 2005. The A.G. strongly suggests a minimum of 15 years.
2. The license agreement requires (italics in the original opinion) Wahconah Park, Inc. to make an investment in the City’s asset. The A.G. implies that the requirement be eliminated.
We will blow our budget and lose our investors if we are required to go forward as if we were a public entity. Therefore, we see only two options: take our loss and go home, or modify the license agreement. That is where you come in. We are requesting a revised agreement that will cost the City nothing:
1. Instead of being automatically renewable annually based on performance criteria, the agreement will be long-term (and renewable) but cancellable at any time based on non-performance of the same criteria. We would still be held to our commitment to maintain the ballpark entirely at our expense, to provide professional baseball, and to continue to make the Park available for other community uses.
2. Instead of requiring Wahconah Park, Inc. to make a $1.5 million investment in the ballpark by Opening Day 2005 (or any other amount by any other deadline), the agreement will permit (but not require) WPI to make any investments it chooses, subject only to the same regulatory oversight that would apply to any private entity in the business of serving the public. Ironically, eliminating this investment requirement is the only way to ensure that we will be able to invest anything.
We want to stress that we are pro-union. Jim Bouton belongs to four unions and helped to organize one of them. Weeks before the hearing in the A.G.’s office, we met with the carpenters’ union rep and asked him to provide names of recommended firms to have on our bid list. He was not willing to accept assurances that contractors would be chosen from a level playing field and wanted special consideration given to union workers. We would rather use local firms and workers, without regard to whether they are union or not.
Contrary to the carpenters’ claim, we did not hire Allegrone as general contractor. They were retained to provide some pre-construction services, and with a view to using them as construction manager. All pieces of the actual work, which had not even been fully defined, were to be subject to competitive bid, with union shops included in all bid lists. The delay caused by the protest has cancelled our major construction for this year, and we have released Allegrone to pursue other clients and projects.
With respect to the scaled-down work that we are now proposing to do before Opening Day 2005, we pledge to review bids from as many union (and non-union) shops as are interested in bidding, and to give preference to union shops where bids are similar.
Even with a revised license agreement, which is an absolute prerequisite for our moving forward, success will not come easily. We must average almost 1,900 fans at 60 home games to break even. Our goal is 4,000. If we can do that, or even 3,000, we will be looking to complete our construction plan at the ballpark, including 1,200 additional seats over a new home team clubhouse and public restrooms. And if Wahconah Park is a success, we will be back to you with even more ambitious proposals for Pittsfield, because we will have proved to the capital markets that “tapping private capital for the public good” can be profitable for private investors while starting a “virtuous cycle” of investment and jobs.
I look forward to responding to your questions and comments. Please feel free to contact me by e-mail, or directly by phone at 413-XXX-XXXX.
Sincerely,
Chip Elitzer
OCTOBER 7, 2004
Chip’s Email Thanking Investors
Dear Investors-in-Waiting,
Well, it was a good show while it lasted. If you live in the Berkshires, you’ve already heard the news, and if you don’t, this may still be news.
Yesterday, shortly after noon, Jim Bouton, President of Wahconah Park, Inc., issued the following press release:
My partners and I announce regretfully that we have withdrawn our plan to renovate Wahconah Park and bring professional baseball back to Pittsfield, MA. It is clear that we no longer have the necessary support of the City officials who on January 13, 2004, invited us to return with a proposal we had originally made in 2001, a proposal that was substantially improved by our current plan.
We don’t want to stand in the way of other opportunities for the City regarding baseball, and we will ask both independent leagues to consider favorably any other Wahconah-based proposals which may come their way.
Jim and I woke up yesterday morning and realized that notwithstanding a new Parks Commission and a new City Council, and especially in spite of a new Mayor who truly wished the best for our project and who wanted us to succeed, the dysfunctional political culture of Pittsfield that permits the selfish motives of a
few to dash the hopes of the many had once again prevailed.
We are grateful, at least, that the only money lost in this venture has been our own. We could not, in good conscience, take yours. We were prepared to execute our ambitious plans for Wahconah Park, Inc. and (with full disclosure, of course) have you bear the business risks alongside of us. After adding in the ongoing political risks as we now understand them, we determined that the total risks this venture faced were unacceptably high.
Thank you for your support. We know that for most and maybe all of you, your decision to invest was not based simply on a financial calculation of private gain, but on a sense of public good. Whether your love was principally for a grand old ballpark, or for Pittsfield, or for baseball, thank you for that love.
Sincerely,
Chip
Cash Flow Summary of Wahconah Park, Inc.
CASH IN Beginning to End (March to Oct. 2004) Related to July 3rd game2
Cash contributed by Bouton, Elitzer, & Margenau $225,7291 $47,065
Ticket Sales for July 3 and Sept. 4 games 44,933 29,590
Concession Coupon Sales 54,643 41,422
Sponsorships & Ad Signage Sales 25,191 13,840
TOTAL CASH IN: $350,496 $131,917
CASH OUT
Payments to food & drink concessionaires (including $4,647 to PHS booster clubs for food for July 3, and $4,278 to UNICO for both games)
34,382
27,075
T-shirt and souvenir inventory, plus sales commissions to Tim’s Sports Zone
16,982
13,612
Berkshire Fireworks
5,000
5,000
Booster Clubs (PHS Baseball, PHS Girls Soccer, St. Joe’s Baseball, and Taconic Baseball), which supplied 100 volunteers for July 3 game
2,000
2,000
Payroll for September 4 game3
1,819
Classical Tents (tents, tables, and chairs)
4,913
3,026
Yankee Septic Services (toilet facilities)
2,468
Hillies uniforms and equipment
13,606
11,142
Costume rentals and actors
2,385
2,100
Hartford team bus to both Wahconah Park games
1,500
750
Hillies team bus to Hartford game
625
Callahan Sign Co. (manufacture & installation of out-field advertising banners)
6,358
2,688
Design fees (posters, tickets, programs, uniform logos, ballpark colors, ad banners)
10,810
5,435
Printing of tickets and Wahconah Park Times
3,124
2,041
City of Pittsfield (Parks Dept. labor, phone, plus electric for month of field lights for youth baseball)
5,309
2,669
Liability insurance
3,975
140
Wiring repair of Wahconah Park sound system
450
Miscellaneous game day expenses
2,525
1,103
Newspaper and radio ads (Berkshire Eagle, Pittsfield Gazette, WBRK, Albany Times-Union)
7,893 2,545
Don Lagueux Painting (grandstand exterior)
9,184 9,184
Berkshire Production Resources (construction, painting and installation of scoreboards and signs)
13,270 12,770
Miscellaneous carpentry
700 550
Allegrone Construction Co. (removal of old concession sheds, installation of expanded perimeter chain-link fence, install new electrical and plumbing outlets for restroom trailer, new gate for overflow parking, fill ruts in parking area, scaffolding for scoreboard operators, dumpsters, snow fence, working with architects, engineers, and prospective subcontractors to refine and price ballpark renovation)
35,019 25,019
S-K Design Group (parking plan for July 3, design plans and get permits and approvals for environmental, zoning, and traffic/parking matters)
55,660 600
Clark & Green, Architects (Great Barrington)
60,222
Hill Engineers (Dalton)
13,800
Jonathan Baum, Esq. (Great Barrington) for corporate and SEC filings related to public stock offering
17,446
Printing costs related to financing
3,296
Office supplies, phone, travel/meeting expenses
3,548
Dave Southard benefit
1,537
Teen Night at Wahconah Park sponsorship
100
Berkshire Chamber of Commerce membership
235
Boston attorney in bid protest matters
5,000
Smith, Watson & Co. (accountants)
1,178
Resort Maps (“Best of the Berkshires”)
445
Berkshire Anthenaeum (authentication of the 1791 “Broken Window Bylaw”)
1,580
TOTAL CASH OUT: $350,496 $131,917
NOTES:
(1) Net cash contributed was reduced from an anticipated amount of $250,000 due to Allegrone’s voluntary and generous cancellation of their final $9,400 balance, Jonathan Baum’s refusal to bill for any legal work subsequent to the amended prospectus of 8/9/04 (about $10,000 worth) and a partial insurance premium refund of $5,564.
(2) No expenses in this column would have been incurred without the July 3rd televised game. Originally capitalized and then written off (when WPI was forced to withdraw), even the minor construction and painting improvements to Wahconah Park would have been deferred until after the public stock offering.
(3) Game day payroll doesn’t include the Hillies players and coaches, who were all talented amateurs. Interestingly, professional minor league ballplayers make barely more than nothing. During the 2004 season, the average player salary in the Northeast League (former home of Jonathan Fleisig’s Berkshire Black Bears) worked out to less than $40 per game. Each of the Hillies, during his short three-game series, did better than that, receiving approximately $150 in personal goods and services (cap, vintage ball, glove, drawstring duffel, logo sweatshirt, pre-game breakfast, and a family picnic).
The Hillies did get something, however, that few professional minor league teams ever receive: live national TV coverage.
Geographical Breakdown of Investors
Pittsfield: Investors who reside or have a principal business in Pittsfield
Berkshires: Investors whose principal residence is in the Berkshires but not in Pittsfield
2nd home: Investors who have a vacation home in the Berkshires
MA: Investors residing in Massachusetts, but not in the Berkshires
NY: Investors residing in New York
CT: Investors residing in Connecticut
NJ: One investor who resides in New Jersey
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