Wednesday, April 22, 2009

Two-Sided Risk and the (Portland) Paulson Plan

Merritt Paulson is obviously weary of sounding like he is threatening the city so, in his opinion piece today in the O, he very carefully makes a point that I have mused about before: without this deal to bring MLS and build a new baseball park, will the city be considerably worse off then it is today?

People who criticize the deal seem to assume that Paulson (or a new owner) can afford business as usual, but I am not at all sure that is true. Beavers crowds are paltry and Timbers crowds are not much better - are these franchises viable in the long run as tenants of PGE park? I doubt it. The Beavers are probably going to need to move anyway and the Timbers are not going to service the debt to PGE park. Without a permanent tenant in PGE park, the city is on the hook for all of the past debt. So while the risk of doing the deal has been discussed ad-nauseum, the risk of not doing a deal seems pretty high as well.

The risk to the servicing of the existing debt exists in either scenario, the appropriate question is: is it higher or lower with the plan? This is the story I wish the The Oregonian would cover.

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