The Red Sox and the Boston Redevelopment Authority have reached a $7.3 million contract extension granting the baseball club air rights over Lansdowne Street and permission to close part of Yawkey Way on game days for as long as the team plays at Fenway Park.
The Sox first leased the public property in 2003 and have paid an average of $183,000 annually to the BRA over 11 seasons, but that agreement expires this year. The new deal is not a lease but rather a sale of the Lansdowne air rights and of a limited easement on Yawkey Way. Under the agreement, the team will make 10 annual payments of about $734,000 over the next decade. After that, it will no longer have to make payments to the BRA.
The Red Sox used the air space over Lansdowne to construct the popular Green Monster seating section atop the left field wall, and turned the portion of Yawkey that abuts the ballpark into a ticket gate and outdoor food court. Together, use of those streets generates more than $6 million in annual revenue for the team.
The agreement amounts to a compromise in which each side achieved one of its chief objectives: BRA director Peter Meade said two years ago that he would insist on higher payments when the contract came up for renewal; the Red Sox opened negotiations last fall by submitting a letter to the redevelopment agency seeking permanent access to the streets.
Red Sox president Larry Lucchino called the deal a “public-private partnership’’ that benefits both parties.
The agreement is expected to receive final approval from the BRA’s board of directors next Thursday. It does not give the city a percentage of the money the Red Sox make from Lansdowne Street and Yawkey Way — something Meade wanted.
Meade said he ultimately decided revenue sharing was not in the best interest of the BRA or taxpayers.
“We felt that we benefitted more from a predictable revenue stream,’’ he said, noting that under revenue sharing, the city would suffer if ticket and concession sales were to decline.
Beyond concerns about revenue, the original street deal came under scrutiny from the Office of the Inspector General following a 2011 report by the Globe and the Northeastern University Initiative for Investigative Reporting. Gregory W. Sullivan, the inspector general at the time, wrote a letter to the BRA arguing that a license to use the public streets should be subject to open bidding to ensure the best deal for taxpayers.
In May, a businessman from Everett told the BRA he was interested in securing Yawkey Way concession rights.
Sullivan also questioned whether the BRA, which is technically independent of city government, could legitimately claim authority over the streets. The agency took the strip of Yawkey and the air space over Lansdowne by eminent domain and licensed the parcels to the Red Sox, citing a state law that gives municipal redevelopment bodies the power to “carry out demonstrations for the prevention and elimination of slums and urban blight.’’
Sullivan later told the Globe the blight designation “strains any semblance of credulity,’’ and said it could expose the BRA to a lawsuit like the one it faced in 2002. An independent baseball program vendor, who stood to lose his sales post on Yawkey Way, challenged the eminent domain taking in court
, but dropped the action a few months later, saying the cost was prohibitive.
BRA officials contended Friday that it would be difficult to solicit bids for a license on Yawkey and Lansdowne because the Red Sox, as an abutting property owner, would have to consent to use of the streets by another party. Prior to the 2003 season, the Sox routinely granted permission for the city to license independent food vendors on Yawkey Way, but Lucchino said the club would not be willing to do that now.
Dot Joyce, a spokeswoman for Boston Mayor Thomas M. Menino, said the Red Sox’s food court generates more money for the city through payments to the BRA than the nominal fees paid by independent vendors.
The redevelopment authority also acknowledged the neighborhood around Fenway Park does not appear blighted now, but pointed to an evaluation made by the state Legislature in 2000 which declared the area surrounding the ballpark to be an “economic development area,’’ which is defined as a “blighted open area or any decadent area.’’
A one-time blight designation is sufficient for an eminent domain taking, Meade said.
The Red Sox entered negotiations with the BRA hoping to preserve the pricing structure of the original contract, according to correspondence between the club and the agency that the Globe obtained through a public records request. A low fee was reasonable, the team argued, because John W. Henry’s ownership group paid $56.7 million in property, sales, and meals taxes over the course of a decade — with its tax obligation rising over time along with revenue.
Henry is currently in the process of closing a deal to buy the Globe and its related properties from The New York Times Co. for $70 million.
In addition, the Red Sox said the organization has spent $285 million upgrading Fenway Park. Privately funded improvements — including the Monster seats section and the Yawkey Way food court — have saved taxpayers money, the team suggested. It reasoned that unlike Henry and his partners, the team’s previous owners wanted to build a new stadium that would have called for partial funding by the public.
Still, the club has enjoyed significant public help in maintaining 101-year-old Fenway Park. Public records show the Red Sox have received $47.7 million in tax credits from the Massachusetts Historical Commission, and the National Park service estimates Fenway’s listing on the National Register of Historic Places brought another $45.4 million in tax breaks.
Lucchino said Friday that by restoring and upgrading Fenway Park, the organization has encouraged other businesses to invest in the neighborhood. By the BRA’s measure, private, non-institutional investment there has added up to $2.2 billion since the Red Sox began work on the park in 2002.
Lucchino said the Yawkey Way and Lansdowne Street deal is “fundamental’’ to the team’s ability to stay at Fenway.
“It’s unlikely that if we were not able to make the kind of improvements that these two projects represent that we would have found a viable way to stay there,’’ he said.