True Costs Of A Stadium Soar Questions Multiply Faster
Written by Michael Lewis on February 14, 2008
By Michael Lewis
County commissioners have given administrators and Florida Marlins officials two more weeks to cement a stadium deal or forget about it. Forgetfulness in this case would be a public asset.
Set aside the poor policy of using more than half a billion public dollars to build a stadium and hand it to a profitable company so that it can earn vastly more. Set it aside only because officials are hell-bent on a giveaway for whatever specious reasons.
But if they refuse to consider far wiser uses of funds that could actually create added jobs and expand our local economy — which a stadium would not do — perhaps they will at least seek the least-costly giveaway.
That they cannot possibly do in the next two weeks.
An agreement among county officials, City of Miami officials and the Florida Marlins doesn’t yet exist. When commissioners do receive it, they should take weeks to digest it, question it and question in detail those who drew it.
Every time county government has rushed to a vote on a big project it has cost taxpayers big-time.
Take the vote on the performing arts center. Commissioners guaranteed that not a penny of taxes would go to operate the center — but the promise was oral. The contract in writing ignored that. That omission cost taxpayers tens of millions.
So assuming commissioners are dead set on a giveaway, at least they should ask what the true cost is. And they cannot heed the negotiators’ $525 million figure. They’ll need experts to sift details.
They’ll find that no cost is assigned to the Orange Bowl site that will house the ballpark. But experts value the land at about $28 million.
They’ll discover that in the deal the Marlins demand free office space within two miles of the stadium — most likely the Brickell area — that would cost government $6 million-plus over the agreement’s life. It’s not in the $525 million total.
The Marlins also want more than $6 million in tax breaks. If they don’t pay the taxes, either government goes short or, more likely, the rest of us pay for them. That’s not in the $525 million, either.
About $1 billion to finance bonds to fund the stadium isn’t included either. Nor are costs to issue the bonds, reserve money or fund interest during construction.
Also not tallied is the infrastructure to support the stadium. The last draft agreement in late January noted that "The County and City are also responsible for providing Public Infrastructure at no cost to the team."
Infrastructure needs noted in the agreement include relocating utilities, closing some streets and relocating others. Miami commissioners should demand a list of these streets, where they’d be moved and what that would mean to a neighborhood — as well as how much the city would pay.
A note in the January draft would also require government to implement by April 2011 all recommendations of a city-ordered September 2007 transportation and parking study by HNTB. Any realistic transportation scheme should require rail transportation to a stadium or a lot of highway feeder roads. The full recommendations, and their ultimate costs, are vital components before government signs a stadium deal.
The package also calls for free parking for Marlins players, coaches and top executives in a government-funded garage for the agreement’s life. At market rates for top reserved parking, that’s about $3 million free to the team.
We can’t total the added costs with mammoth unknowns like transportation. But certainly $1 billion bond financing is huge, and we’ve just put price tags on $43 million more. Just how high above $525 million is government prepared to go in its giveaway?
Also hidden but real is opportunity cost. What else could be done with the Orange Bowl site or with government funds that could uplift the neighborhood, the city and the county? Certainly better uses abound for both land and funds that would multiply their value.
Beyond all this, commissioners must see details of other agreements that will link to the general agreement they’ll be handed to approve. Unfortunately, there’s no plan for them to see those other agreements before they vote.
The accord on which commissioners are to vote calls for a further construction administration agreement listing the features a stadium is to have. Will there be luxury bars and restaurants? A convention and meeting center? Retail shops? Office space? An amusement park? Commissioners aren’t due to learn that until after they agree to build the stadium — but they should know now.
Also due later is an assurance agreement in which the Marlins, who are to manage construction and development of the public’s stadium, guarantee their payment and performance. They’ll agree to pay construction overruns, which will be the trick of the century for a team that hasn’t been able to repay its loan from Major League Baseball to buy the franchise years ago.
Viewing the weasel-wording of that agreement is going to be worth the price of admission — but commissioners won’t get that chance until they’ve already voted to go forward on the stadium. And the city and county governments must pay the Marlins $5 million each if they vote to go forward but pull out once they see full details.
Also due later are stadium plans. The latest draft deal says the city and county will get just 10 days to approve plans once they’re drawn — which will be after government has voted to go forward.
Also yet to come is the contract under which the Marlins would manage the county’s stadium. The team’s representatives are to set all prices for all events, including all non-baseball events except 12 days when the city and county get to use the stadium — but those 12 days cannot come within five days of a baseball game, and the Marlins get first choice on non-baseball uses for every day of the year.
The Marlins also get to make all contracts for other uses of the stadium 272 days of the year and keep the revenues from all those uses even though the county would own the stadium.
Stop a moment and ask this: what businessperson who has not been committed to an asylum would dream of signing this deal? It’s far worse than the county’s contract at AmericanAirlines Arena that gives the county a slice of income above a point that somehow never has been reached and never will be — leaving the county without a penny of return.
The only real payback the ballpark contract gives the public is two free private suites and 22 box seats at each Marlins game — a seat for each commissioner, mayor and manager, plus private suites for their handlers and financial supporters.
On the other hand, maybe that’s the reason to sign. It’s rotten policy at far too high a cost with no ceiling in sight, but at least our public officials would be amply cared for.
If the stadium belongs to the public, officials wouldn’t even have to list their free seats as gifts. Going to games would just become part of the job. And the public would pay for that, too. Advertisement