Dont Sign Blank Check Now For Incomplete Stadium Deal
Written by Michael Lewis on January 4, 2008
By Michael Lewis
Credit Miami-Dade County Commission Chairman Bruno Barreiro for delaying a baseball stadium vote until terms are final and commissioners know every detail.
The rush to a Dec. 20 vote was needless. Commissioners were being asked to approve an incomplete deal they hadn’t seen.
Mr. Barreiro wisely demanded more time — wisely because signing a general agreement to proceed would cost taxpayers a $10 million penalty if the county and the Marlins later disagreed on any of multiple related contracts that still aren’t written.
No responsible leader could permit that. Never put yourself in a $10 million hole before you nail down an entire deal, because that gives the other side leverage to back you into corner after corner, step after step of the way.
And steps there are. County Manager George Burgess notes at least four more contracts are needed with the Marlins.
These include an agreement to keep the team here, a deal to let the Marlins manage construction of a county-owned stadium, a parking pact with the team and the City of Miami, and an agreement on stadium operation and management.
If you think that’s complicated, when the county went down the stadium road in 2005 the deal would have required seven added contracts — which indicates that the four Mr. Burgess noted in a memo to commissioners might not be the whole enchilada.
But last time, there was no penalty if the deal failed because the sides couldn’t agree on all terms. That was reasonable and prudent. Putting yourself in a $10 million bind before going down the road step by step has pitfalls galore. If the devil is in the details, this is a devilish methodology indeed.
So when Mr. Barreiro wrote that the commission shouldn’t vote until the county, city, Marlins and Major League Baseball "finalize negotiations," he was dead right.
Unfortunately, he only delayed a vote two weeks, until Jan. 10. No way will details in the main Baseball Stadium Agreement and the four or more related agreements be final by then. That will certainly take months — well worth the wait, so commissioners can know what they’re voting on.
Commissioners must not be hurried because the Marlins say they’re running out of time before their lease at Dolphin Stadium runs out in 2011. That’s a great negotiating ploy for them — sign now and decide details later. It can, however, also be a great negotiating tool for the county if it doesn’t vote now, encouraging the Marlins to take what we offer. The county loses all leverage the minute it votes to proceed.
Unfortunately, the county often rushes into agreements that prove monumentally costly to taxpayers, like billions of overruns at Miami International Airport’s North Terminal when American Airlines hustled a deal, or hundreds of millions in overruns at the Carnival Center for the Performing Arts. Don’t add a ballpark to the disaster list.
The issue is not a stadium but putting the deal on the backs of taxpayers who will wind up paying far more than the advertised $525 million while the Marlins wouldn’t have a penny on the table that they don’t borrow.
How much more than $525 million? That’s the first question commissioners must ask before approving a future that has more unknowns than the bureau of missing persons.
We do know that the $525 million doesn’t include about $28 million in Orange Bowl land. That’s a gift from City of Miami taxpayers, not the county.
But think about true county costs, including $1 billion-plus in bond financing. Someone ought to tell commissioners just how much that might be.
Or construction overruns, like at the airport and performing arts center. The agreement would require the Marlins to fund only up to $20 million in overruns, but the overrun at the airport was billions — and that overrun is still overrunning. After the first $20 million, dear reader, it’s on your back.
Worse, like at the airport and arts center, someone else will be in charge. American Airlines, which flies well, wasn’t a construction pilot. Neither was it wise to let civic volunteers steer the early days of arts center development.
The Marlins are better at grounders than groundbreakings, and while they can control baseball payrolls well by trading away costly stars, getting the cheapest construction team might not result in the lowest total cost.
The Burgess memo cites more county costs, including bond issuance, reserves, funded interest cost during construction and more. Again, commissioners must demand numbers for each of these and add them to the stadium cost.
Another cost is future improvements. The county, the city and the Marlins must pay $500,000 a year each for the Marlins to use to fix up the stadium. In the 2005 failed agreement, the Marlins were to pay half.
In fact, the commission should demand an item-by-item comparison between this deal and the one that didn’t get done. The Marlins have won better terms on almost every item.
For example, the city and the county could use the stadium just 12 days combined under this agreement. The 2005 deal was 16 days.
The old proposal called for a county lien on the team if the Marlins overran construction costs. That safeguard has also disappeared.
Commissioners must also ask whether this is really a county-owned stadium if the Marlins control everything and pocket all the money for perhaps 40 years, or is calling it county-owned just a way to keep it off the tax rolls? Would it be better to just hand the stadium to the Marlins and at least get them to pay taxes?
I say "perhaps 40 years" because it’s unclear just how long the Marlins would use the stadium under this sweetheart contract, or indeed how long they would be required to remain in Miami. Commissioners must know those details before they vote.
Another key missing detail: Other than 12 days of use by the city and county, Mr. Burgess’s memo doesn’t state who gets to use the stadium, and for what, when the team isn’t playing one of its 81 home games. That leaves 272 days a year for someone to use the stadium and pocket the receipts. Who is that someone to be?
Also unclear is county control over the name. The county must at least get a veto over what name goes on a county building that taxpayers are funding. Some names should be barred. When the county has no control, we get a Carnival Center for the Performing Arts that doesn’t mention what community it’s in.
But the biggest unknown is the economy. State and local governments nationally are chopping costs to prepare for the worst, just as the county ramps up for colossal spending. It’s beyond county control if state voters choose to limit local taxation, which could put the county in a tremendous cash bind while it’s spending big on a stadium.
The bottom line: Mr. Barreiro was wise to delay until commissioners see vital details. But they won’t know them Jan. 10, either — if only because all sides haven’t yet agreed on them.
Love a stadium or hate it, commissioners cannot know nearly enough to vote intelligently or responsibly next week. A vote for a stadium then is a blank check on taxpayers’ wallets. Even the biggest stadium supporter must responsibly say "not now — tell me everything first." Anything else is an open-ended giveaway.