Hartman, San Antonio disagree on Toyota Field valuation

Toyota Field expansion

Negotiations between San Antonio Scorpions owner Gordon Hartman and city/county officials are stalled as the two side are far apart on a Toyota Field valuation.

The sale of Toyota Field is a key part of the plan to bring MLS to San Antonio. The NASL facility would need to be expanded in order to meet MLS standards, and Hartman’s current plan is to sell Toyota Field and use public money to expand the stadium. With the stadium expanded, Hartman can then credibly approach investors to raise capital to cover the $100 million MLS expansion fee and additional money for operating costs.

Nice plan, but it’s already running into roadblocks, as the city/county and Hartman disagree on the valuation of Toyota Field. City/county officials say the stadium is only worth $14 million; Hartman is asking for $30 million. The city/county valuation is based on current Toyota Field revenue; Hartman’s is based on a comparison with similar MLS facilities.

This is a common fallacy amongst business sellers: they often valuate based on potential, not actual worth. Potentially Toyota Field will be worth more once tens of millions are put into an expansion, and Hartman wants to financially benefit from the expansion without actually putting the money (and taking the risk) into the expansion.

And then there’s the whole issue of MLS. Potentially the stadium will be worth more after an expansion and the presence of an MLS team. But there’s no MLS team, and there won’t be an MLS team until there’s a solid plan to expand Toyota Field.

Despite the wide variation in valuations, talks are continuing. From the San Antonio Express-News:

“It’s still going to take a while to work through,” [Precinct 3 commissioner Kevin] Wolff said. “I’m not sure that we’re so far apart that there won’t be a deal. But this is not by any stretch of the imagination easy to do. We’ve looked at this with the city and county going half and half. We essentially gave the marching orders to Mike Sculley that he can go into these negotiations and (tell Hartman) here’s your top price.”…

“Capital projects are coming in left and right,” said the source, speaking on condition of anonymity. “Do you want to take a lot of that money and put it into a second-tier soccer stadium? And, once you get to that point, there’s absolutely, positively no guarantee you’re going to get MLS. That’s the whole dilemma.”

Said Wolff, “I told him you’re in a Catch-22. We, the city and the county, we want to know we’re getting an MLS team if we buy the stadium. But you can’t sell an MLS team to investors unless you’ve got a stadium.”

Also involved in the discussions: Spurs Sports and Entertainment, which reportedly holds rights to a USL franchise in the San Antonio area. Conceivably, the NBA San Antonio Spurs could invest and run a USL team out of Toyota Field immediately; keeping an NASL team isn’t really a factor in MLS expansion.

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