Convert interest in running marine stadium into formal bids
Written by Michael Lewis on January 24, 2017
Interest by four big-name operators in running a restored Miami Marine Stadium is exciting. But it’s a long road from inquiries to actually running the site.
Before the city requests proposals – a process that should end before construction begins – the city itself must make key decisions that will in turn shape the request for an operator.
Mayor Tomás Regalado told Miami Today two weeks ago that the Miami Heat, Miami Dolphins, Live Nation and SMG have all asked about running the restored stadium. Operators of the Heat in particular, he said, have asked a number of times.
These candidates all are highly reputable. All but the Dolphins already operate government-owned facilities in Miami-Dade County. None is the kind of fly-by-night operator that plagued failed city-owned waterfront deals in past years.
With such good candidates, the city should get expressions of formal interest that actually put something on paper.
So, what should the city want on that paper?
The mayor told us the city would maintain the stadium – using income from a lease with nearby marina operators – much as government maintains AmericanAirlines Arena and Marlins Stadium. He also mentioned a ticket surcharge on patrons. He didn’t cite any payment from stadium operators. The benefit seems to be that the city itself wouldn’t lose money on operations as it will on maintenance and restoration.
That means taxpayers would fund the $45 million restoration and the operator would get a free ride to generate as much profit as possible from ticket sales, concessions, subleases, sponsorships, advertising, naming rights, parking revenues and any other revenue streams.
That’s similar to the baseball stadium deal with the Marlins – the public builds and maintains a site and the operator gets all the revenues. It’s a poor model of public risks and operator rewards.
We trust that city officials’ formal request for an operator will read far differently. Whether through a flat fee or revenue sharing, the stadium operator ought to pay part of costs to both renovate the stadium and maintain it. The high-level interest by potential bidders should obviate any free ride for the operator of premium Virginia Key city-owned land.
The second decision is the length of a lease. A short term offers maximum flexibility to both sides but provides the least insurance to the city that taxpayers won’t have to run the stadium if it isn’t profitable, as it wasn’t when the city ran it until it closed in 1992.
Another key decision is what uses the city will allow. An operator with free rein would pay more to use the site than one restricted to powerboat races or concerts. A site that may also be used for meetings, conventions, consumer shows, trade shows, weddings, or a dining venue like the city’s Jungle Island would be more profitable because a good operator would keep the venue active as many days and hours as it could.
A corollary decision is what else the city will make available to the stadium operator. The flex park surrounding the stadium on three sides has room for parking, tents, trade shows, concessions – in fact, whatever the contract allows. The city’s rowing club that the Miami Boat Show used last year is adjacent. The more flexibility, the higher the return and the more the city should get.
Finally, the city should resurrect a proposal that Mayor Regalado himself made years ago: create a foundation to fund stadium needs. The stadium operator could be required to pay a fixed amount to that foundation each year, with an addition from rising receipts – not profits, but all receipts – divided equally between the foundation and the city’s general fund, to benefit all taxpayers.
One thing the city need not do is force an operator to hire from nearby nor pay wages above what the operator pays elsewhere in the region. Artificially high wages would make a stadium deal far less attractive, and Key Biscayne residents certainly don’t need special offers of jobs.
But there is a need to work with Key Biscayne. That need is not in law – it’s totally the city’s decision – but to keep from overwhelming the only roadway to the island. A concert in a 5,000-seat venue is reasonable; an event on the grounds of 35,000 people who would all arrive and depart in a narrow time window might not be. The city should be a good neighbor.
These decisions will affect not just an operator but exactly how to restore the stadium. Boat races differ from concerts or conventions. Numbers of attendees and types of events make a difference.
Those are valid reasons to sign up the operator in advance. Another reason is to protect taxpayers. The shape of a request for operators, including all financial aspects, will determine who will bid.
Without a sensible bid it’s foolhardy to restore the stadium unless the city finds independent, guaranteed revenues to fund everything that an operator would. If nobody will bid enough to run a great bayfront site, the whole basis of restoration will be in doubt.
Informal expressions of interest are heartening. Now is the time for the city to turn them into a concrete proposal that can go to voters for their required approval first, conditional upon studies now being made about whether the decayed stadium can actually be restored.
Then, with an operator approved and a formal go-ahead on construction, the city can borrow the $45 million to restore the stadium with full assurance that the job can be done at that price and that, after 25 years, guaranteed users await a finished stadium.