Hidden Costs Giveaways Top List Of 32 Added Stadium Pitfalls
Written by Michael Lewis on February 12, 2009
By Michael Lewis
True cost of a Florida Marlins stadium is hundreds of millions more than the $515 million that county officials cited in unveiling contracts two weeks ago.
And those added hundreds of millions don’t include interest our taxes would pay, which alone could surpass $1 billion.
Nor do the extra hundreds of millions include potential cost overruns.
These are among 32 key flaws beyond a fistful we outlined last week in a contract package that Miami and Miami-Dade commissioners are being asked to approve Friday.
Let’s list the pitfalls, starting with hidden costs that exceed the listed $347.5 million from the county, $13.5 million from the city and $154 million from the team:
1. Government wants a $150 million Metromover link to the stadium. The city put it in a federal stimulus request. If the feds don’t pay, you will.
2. Over the life of the deal, Miami-Dade will have to pay an untallied $26.25 million into a capital fund and the City of Miami $8.75 million.
3. City and County shares of construction have each risen $500,000, cutting the team’s by $1 million, since the parties approved the plan’s outline last winter.
4. Altering roads, water and sewer lines, electric wires and so forth outside the stadium, which city officials estimated last year at less than $10 million, is now to cost the city and county $24 million. That’s not part of the $515 million.
5. The Marlins chose without competitive bids a firm to make those infrastructure changes and build the stadium. It will control the job. If its out-of-stadium costs exceed $24 million, the city and county must cover all overruns.
6. If construction materials aren’t sales tax free, government would have to reimburse the Marlins for the tax, now estimated at $4.4 million.
7. To pay the Marlins’ $154 million share, the county is to immediately lend the team $35 million interest free on which the team can collect interest until construction nears its end, now scheduled as September 2011. Only then is any team funding due. Meanwhile, the city and county will fill the construction account — and as a huge gift, the Marlins get to keep all the interest from that account, too. So interest from your money will pay part of their share.
8. The contract says the county may have to amend its rapidly tightening budget to put added funds into the deal to meet its obligations — each and every year, if necessary.
9. The county and the city must each add $1.75 million to make the stadium environmentally friendly.
10. Both governments are also required to pay unspecified amounts for signs near the stadium.
11. Not included in the $515 million, either, is the Orange Bowl site that the city handed to the county for Marlins’ use for 50 years. It’s worth well over $10 million.
12. By contract, the Marlins will count as part of their $154 million share various stadium designs they have paid for and — get this — money they have spent for years lobbying us to build them a ballpark. You, dear taxpayer, are paying the Marlins untold millions to lobby you into a giveaway. How does it feel?
13. If construction costs run over, the Marlins are to pay because they control the work. They’ll have a $20 million line of credit for that. But in a county where airport work ran over by billions and an arts center by hundreds of millions, $20 million is a small overrun. The team is admittedly poor, so where would more money come from? (Hint: Can you spell taxpayers?)
14. The contract does in fact allow government to place a lien on the team if it doesn’t pay up, but that lien would come after most other parties’ claims on any assets, including Major League Baseball, to which the team owes perhaps $35 million today.
15. Even a lien, like everything in this one-sided deal, is controlled by Major League Baseball, which alone can decide who controls the team. Can you imagine the league letting the mayor decide who pitches tomorrow?
16. Although it’s not figured into the $515 million for construction, the deal requires Miami to provide parking, estimated at $94 million. But the 6,000 spaces touted last winter have been trimmed to a minimum 5,500 now — and season ticketholders are due to get them.
17. Well, that’s not exactly true. The best 250 spaces go to the Marlins themselves, free, to use not only for games or during baseball season but 24 hours a day, 365 days a year, even during city and county stadium events. That’s a gift to the team of more than $915,000, based on the price at which the city will wholesale spaces.
18. The Marlins have contracted to buy the other game-day parking spaces from the city at $10.03 each and the resell them to fans. Bet on paying $20 to $25 to park, versus $10 or less at Dolphin Stadium now. That’s one public "benefit" of a new stadium.
19. For events other than baseball, the city by contract must give those spaces to the Marlins free to sell to the public. The team pays only for garage workers.
20. The Marlins would also control advertising and promotion in the city’s garage. They’d sell the ads and get half the money, although they’d invest not a penny in the garage themselves.
21. One more garage insult: if you’re late to a game or if you’re leaving early, you won’t catch the score as you walk to or from your car. The Marlins are barring the city from showing baseball on TV there.
22. The whole purpose of this deal, of course, is to hand the Marlins free money. So it’s no surprise that they’re to get all cash for naming rights at your stadium, dear taxpayer. Revenue from those rights should fund the entire team "contribution" to this deal. Everything else is gravy for the Marlins.
23. That gravy includes all revenues from stadium tickets, advertising, concessions, luxury suites, souvenirs, media rights and more. Taxpayers just get to pay for it all.
24. While the Marlins get all naming rights cash, the county and city are required to use the sponsor’s name in connection with any community events there and in publicity. Forget freedom of speech.
25. Only the county mayor or manager and the city manager, not elected officials, can act on changes that could involve hundreds of millions in added stadium costs, and even they will get just days to act. They get 10 days to object to team changes in public infrastructure outside the stadium, 10 days to object to team changes in stadium design (did you really think those drawings the Marlins have shown around are the final version?) and three days on team equipment leases of over $7.5 million — and no voice at all on leases below $7.5 million.
26. Contracts specify that the construction schedule will change and that government has no say in that unless changes would cause the city or county to pay overrun costs. Even then, government gets just 10 days to object. And though the Marlins run construction of a county-owned stadium, there’s absolutely no penalty no matter how late construction runs. Think how many years late the airport and performing arts center were.
27. One fact about the construction schedule is certain: it will run late in the day. The contract specifies 12-hour workdays, plus weekends, plus even longer hours during concrete pours. Pity the Little Havana neighbors residing for years in a construction zone.
28. The contract requires the city and county to lobby the state for a stadium sales tax rebate — a rebate the Legislature has rejected time and time again.
29. Speaking of taxes, the deal is rigged so that the Marlins get every penny of income tax benefits from depreciable assets, no matter if government really spent the money. You can’t do that yourself or you go to jail.
30. Not only is the stadium land being handed to the Marlins, but the team also controls how the city uses its own nearby land remaining from the old Orange Bowl. Rules are so tight that the city can’t allow free food near game time or a fast food restaurant or beer garden at all. Not a penny will escape the Marlins.
31. The city wants to build a soccer stadium nearby, but the contract prevents it from even breaking ground until two years after the ballpark is finished, and the Marlins would even control soccer game dates and times.
32. Finally, when you attend ballgames, get set to shell out big. The cheapest Marlins ticket now is $9, but the first year at the new stadium the cheapest 1,000 jump to $15 — and the latest deal calls for exactly 1,000 standing room spots. A family of four could stand through a full game and pay only $125 to $150, including parking and snacks. Other tickets will cost far more — and the cheapest seat jumps annually, to $18.44 by the seventh year. Thank goodness the new ballpark is meant for everyone.
Clearly team attorneys drafted this deal, handing the team all the cards. City and county managers were told they had to make a deal, and the Marlins took advantage of them again and again.
Over a 12-day span we asked for county officials who "masterminded" this giveaway to comment on some of these points — indeed, at the administration’s request we submitted many in writing — but nobody would answer on the record.
County Manager George Burgess, the stadium quarterback, left town the day after he unveiled this massive deal and was not available to comment for 12 days, too late to answer.
Everyone is entitled to vacation, but leaving nobody who could talk when the vote is this week is suspect. What were they afraid of — these 32 points and more we didn’t have room to print?
The Marlins have long said they needed a stadium because landlord H. Wayne Huizenga wanted them out. But he just sold Dolphin Stadium to Steve Ross, who is smart enough to cut the Marlins a deal to allow them to stay there profitably.
Since there’s now no fear of losing baseball, commissioners on Friday can reject this giveaway and make smarter uses of public funds to create economic engines during a recession rather than line team owners’ pockets.
There’s no need to knuckle under to the team’s pitch when relief is warming up.
Meanwhile, nobody has yet spotted a fatal flaw in the stadium contracts that could cause legal problems down the road. It’s still lurking there, waiting to ensnare taxpayers in the future.
We’re still offering a pair opening day 2012 Marlins tickets at Dolphins Stadium for the first one to spot what the lawyers and government officials missed — something nobody intended.
We’ll keep the contest open another week, waiting for your sharp eyes to spot this flaw — not the giveaways to the Marlins, but a clear drafting error.