Loose Ends Need Careful Tying In Lopsided Ballpark Deal
Written by Michael Lewis on March 17, 2005
By Michael Lewis
A planned county-owned ballpark at which the Florida Marlins would pay rent sounds like a business deal – bad business, but business.
Unfortunately, it’s worse than bad.
Miami-Dade County would do better to build a stadium and hand it to the Marlins for 30 years in return for an upfront payment equal to future rent. At least that way, the Marlins would pay upkeep and taxes.
As it is, the Marlins get off cheap – for at most $30 million from whatever source they’ll use a stadium for at least 30 years, paying about a third the rent they pay at Dolphins Stadium but pocketing multiple revenue streams they don’t now get.
By calling the stadium county-owned, the Marlins even obligate Miami-Dade for $15 million and the City of Miami for $7.5 million in repairs and maintenance of the team’s choosing.
The Marlins could use the stadium and an adjacent parking garage for all but 18 days a year. They could stage whatever programs they want – the memorandum that is moving this deal forward doesn’t address that. And the Marlins would keep every penny from every event except, maybe, for some parking fees. The memo doesn’t spell that out, either.
Let’s recap. If this tenuous deal comes together – the Legislature and Major League Baseball have yet to come aboard, and both are crucial – the county is to own this baby. The Marlins would use it all year and keep all the money, paying an annual rent that’s about a third of what they pay today for 81 baseball dates only – quadruple the use for a third the price. The property is to come off the tax rolls after the Marlins force out residents and tear down 55 buildings.
While the county would own something it nonetheless could not control, it also could not control construction. That is also to be handed to the Marlins, whose principal owner is a New York art dealer.
The county oversees multiple construction contracts all the time. What major public buildings have the Marlins built?
Not only do the Marlins lack expertise, they lack wherewithal if they should underestimate costs. Think of American Airlines, which is managing construction of a $500 million airport terminal that, while not finished, is already more than triple that figure and may hit $2 billion. Financially shaky American has leaned on the county to cover overruns. Compared with the Marlins, American is a construction wizard and financial powerhouse.
The county asked the Marlins for a letter of credit to cover a shortfall. The team couldn’t get one.
If alarm bells aren’t ringing now, they never will.
So the county asked the Marlins to get Major League Baseball to cover the first $10 million in overruns and then demanded a lien on the team to cover added overruns.
If it gets the league’s commitment, the county is a wizard.
As for the lien, it would come behind $50 million in other Marlins debt, including about $30 million that probably dates to the team’s purchase. Marlins owners had to get a $38 million loan from other teams because they didn’t have the capital. The rest of that $50 million is set aside so the Marlins can borrow to pay for construction overruns. If overruns exceed that cushion, the county would have to take over the team for nonpayment.
That’s the most unlikely scenario in this whole unlikely business. Imagine commissioners voting to take over a money-losing team that is so in debt that it cannot afford to pay for construction.
And if the county did try to take the team, imagine how many years it could be in court as the county paid the Marlins’ bills. Imagine commissioners meeting a $52 million payroll during four years just for the first baseman.
This deal has more loose ends than a football team. It says that if owners sell the Marlins, the county would get a share of the profits – but it doesn’t spell out what share.
It doesn’t discuss whether the county could veto the name of its own stadium. While the Marlins would get all naming-rights money, it would be prudent to be certain that the name wasn’t embarrassing – a convicted felon’s, for example.
Neither does the contract mention government control over parking or concession prices at its own stadium. A private owner has a right to highway robbery, but should that extend to a tenant in a county facility?
And should government use eminent domain to evict residents for the benefit of a private firm? A stadium is hardly a public need, but the team can threaten a county taking of land if owners don’t sell at the Marlins’ price – a price, by the way, that will then be financed by government.
County Manager George Burgess, who supports this lopsided deal as the best he can get, squirms when asked if he’s comfortable with this use of eminent domain. He says a public investment in land near the Orange Bowl isn’t really a bad idea and perhaps owners will be happy to sell and move out. Besides, he says, renters would get relocation assistance. But he never said it’s a good use of county powers.
In fact, as an architect of this deal, he takes pains to point out that many loose ends remain to be tied up.
One is when the Florida Marlins would become the Miami Marlins. The memo of understanding says it will happen but doesn’t spell out if it’s the day a deal is signed or when a stadium opens years later.
Another is what happens if partners who have been at odds with principal Jeffrey Loria should gain control of the team. Those minority owners, Mr. Burgess said, have never been discussed. Nor, he said, has any effort succeeded to get Major League Baseball to agree that it would not abolish the team as it has threatened, leaving the county paying for a vacant stadium.
This whole bad deal is an effort to bail out the Marlins from their own bad deal when they ceded most revenues to Dolphins Stadium owner H. Wayne Huizenga. Now they want public cash to bail them out.
Yet the county didn’t look at the Marlins’ current terms as a basis for structuring a new deal, says Tax Collector Ian Yorty. Instead, it’s trying for a deal that will make the Marlins economically viable.
Still, everyone is aware of the mess the Marlins have made.
"They’re big boys," Mr. Yorty said. "They know what they’re getting into."
Perhaps the Marlins do know, but does the county? Top Front Page About Miami Today Put Your Message in Miami Today Contact Miami Today © Copyright 2005 Miami Today designed and produced by Green Dot Advertising and Marketing