Anyone who has attended a baseball game is familiar with the lyrics.
"Take me out to the ball game..."
This baseball story starts with that song, as well.
If you went to a Harrisburg Senators game on Harrisburg's City Island anytime from 1998 to 2007, a $1 from every ticket you bought was supposed to go the City of Harrisburg.
But a CBS 21 News investigation has uncovered that money - which should have been paid to the City on a yearly basis - never made it to the City of Harrisburg. The CBS 21 News investigation took more than seven months; mainly because CBS 21 News was up against a very good curveball pitcher - Harrisburg Mayor Stephen R. Reed.
When the City of Harrisburg bought the team in 1996, to prevent the club from moving away from Harrisburg, it set up a for-profit corporation to run the team called Harrisburg Civic Baseball Club, Inc (HCBC).
During our investigation, however, Reed claimed the team wasn't owned by the City then.
"Both Major and Minor League Baseball was adamant; government cannot own a franchise," Reed told CBS 21 News Sports Director Jason Bristol in May.
Bristol found that interesting; consider that when the city put the team up for sale, the City noted the Senators were "city-owned" in a new release. A business entity filing with the Pennsylvania Department of State lists HCBC's registered office address as 10 North Second Street - the address of Harrisburg's City Government Center.
In addition, a 2005 loan and security agreement between the Redevelopment Authority of the City of Harrisburg and the HCBC states the City "owns 100% of the stock in HCBC."
HCBC also paid rent to the City to use the city-owned stadium on City Island; and the $1 per ticket payments are listed in a 1998 lease agreement between the City and Harrisburg Civic Baseball.
CBS 21 News went looking for answers; to see if those $1 per ticket payments had ever been received by the City.
A Right to Know request filed with the City of Harrisburg returned nothing but rent or lease payments from HCBC.
When asked why there was no record of any $1 per ticket payments, Reed initially told Bristol that Harrisburg Civic Baseball had used some of that ticket money to directly make debt service payments on stadium improvement bonds -with the city's approval.
"On several years, the Harrisburg Senators actually made direct payments towards paying the debt service on the stadium bonds, so the city wouldn't have to make those payments," Reed told Bristol in May. "They may have spent the ticket money on that."
Bristol filed a request to inspect the receipts from those debt service payments or any documents that gave HCBC authorization or consent to make the payments.
The City's response? No such paperwork existed.
Reed later admitted he was mistaken; HCBC had not made the debt service payments.
Reed made a similar statement in 2007 to the Patriot-News. In a prepared statement released on May 21, 2007 - and provided to Bristol three days after this report originally aired - Reed writes that "the franchise has been making the payments on the debt service related to the stadium improvement bonds so that the City would not have to; those annual payments are $668,851 for series A-1 and $618,988 for Series A-2, or a total amortization payment for $1,287,839. That (sic) which was to be paid to the City as ticket fees, plus the interest earnings on the bond proceeds themselves, are how the devt service payments had been made, relieving the City's general fund from paying a penny."
After another encounter with Reed regarding HCBC, the Mayor handed Bristol a typed letter, outlining all the money the city received while Civic Baseball ran the team, including $1 per ticket payments totaling more than $1.6 million ($1,623,674). Bristol asked Reed if there was any other paper work - receipts, invoices, pay orders, anything - to prove the City had received the money.
Reed said the paperwork did exist.
But a separate Right to Know request filed with the City of Harrisburg during this investigation revealed nothing. The response from the City said "there were no payments made."
How could a City-owned corporation not live up to its own agreement with the City?
"Civic Baseball - the Harrisburg Senators - lost money," said Dan Miller, the City's next controller and current City Council Vice President.
Miller says HCBC didn't have the money to make those payments. He provided CBS 21 News with Harrisburg Civic Baseball Club's audited financial statements - prepared by HCBC's own accountant, Klacik & Associates - from 1996-2006. The audited statements show the Harrisburg Senators lost, on average $328,000 per year while the team was run by Harrisburg Civic Baseball.
Furthermore, a balance sheet from the 2006 financial statement shows a liability of $1,312,056 - money owed to the City and believed to be that $1 per ticket money.
Miller is convinced the message ultimately came from the top - look the other way. "The reason (the ticket payments) weren't paid wasn't due to an inefficient system," explained Miller. "It was more to do with a wink and a nod and whatever the current administration wanted to do and not what was good business sense."
By the way, the City sold the team Mayor Reed told Bristol the City didn't own in 2007. A group led by Michael Reinsdorf purchased the club for a little more than $13 million. Reed also reiterated to Bristol that the City's "stock-holder interest has been satisfied."
"The City made out very well, being the owner of the baseball franchise," Reed told Bristol in a separate interview back in May.
CBS 21 News has uncovered that Mayor Reed also benefited.
While the city was owed all that ticket money and the Harrisburg Senators were bleeding red, Reed still accepted $22,878.98 from HCBC to travel across the country. Reed voluntarily disclosed the payments on his Statement of Financial Interest forms from 2005-2009, which are on file at the City Government Center.
Reed led groups to Cooperstown, New York, for the Baseball Hall of Fame induction ceremonies. He traveled to Florida to inquire about sports memorabilia for a National Sports Hall of Fame project that never materialized. He also attended several baseball winter meetings, in locales like Anaheim, California; Dallas, Texas; and Las Vegas, Nevada.
"If you're that actively involved...," Bristol started to ask Reed about his involvement with Harrisburg Civic Baseball Club, Inc. in May.
"Jason, you are not characterizing that correctly," Reed replied.
"The only time that I would ever go," he continued, "is If there was an interest affecting the City of Harrisburg and our professional baseball team and our stadium."
After reviewing post-registration lists from two separate winter meetings, CBS 21 News believes Reed was the only out-of-town mayor to attend those conferences.
However, his administration had no problem going to court to recover other debts.
After examining reports compiled by the Law Bureau of the City of Harrisburg, CBS 21 News found the City tried to recover $64,000 in un-paid utilities from owners of a small business; as well as $12,000 in another case. The City even tried to recover $1200 in back taxes from another person.
And the City did all of this while it was owed more than a million bucks by its own baseball team.
How does this baseball story end?
This game may not be over.
Miller believes Mayor-elect Linda Thompson can appoint a new chairman of HCBC to replace Greg Martini, the current chair, or she could simply disband the corporation. Miller said he inquired about shutting down HCBC previously; but his suggestion was met with resistance by the current administration.
Thompson did not return a email seeking comment. The last listed legal counsel for HCBC, Andy Giorgione, did not return a phone call from CBS 21 News.
Bristol has been told the sole reason why HCBC still exists is because it holds the bonds that are helping pay for the renovation of Metro Bank Park.
When the City sold the team to Reinsdorf, $775,000 retained by Harrisburg Civic Baseball for taxes, costs, and "retention for additional cost," according to a sales settlement sheet compiled by Milt Lopus Associates and provided to CBS 21 News by Miller.
The settlement sheet states the purchase price as $13.25 million and also lists a net purchase price of $11.815 million. There is no mention of either the $1,312,056 (liability) previously owed to the City of Harrisburg or the $1,623,674 figure that was typed on a sheet of paper and handed to Bristol by Reed.
As for the $775,000, how much of that is left?
CBS 21 News has reported HCBC provided a $40,000 loan to The National Sports Hall of Fame and its President/CEO, John Levenda, who, incidentally, is also a board member of HCBC.
Miller doesn't know the exact amount left, either. But he believes the next administration is entitled to whatever money Harrisburg Civic Baseball Club, Inc. has remaining.
"Those assets are city assets," Miller said, when asked if the City could resort to legal action to recover any money leftover.
"We don't need to sue them."
Story updated 11/21/2009 to reflect debt service payments information.
