All The Marlins Stadium Giveaway News Thats Fit To Print
Written by Michael Lewis on October 8, 2009
By Michael Lewis
The architect of Miami-Dade County’s $3 billion Florida Marlins stadium giveaway is seething at a New York Times report that pinpoints some of the boondoggle’s worst aspects.
The article "took unwarranted editorial liberties and omitted important facts about our decision," County Manager George Burgess wrote in a letter to reporter Ken Belson that he copied to the paper’s top executives, county and city executives and elected officials and, of course, the Marlins.
The article, headed "In Lean Times, Miami Pays Most of Cost for New Ballpark," pointed out that the deal proceeded in the depths of the recession and that in return for the county and City of Miami covering three-quarters of the stadium costs they "will receive no new revenue from the park, and the team can keep all the money from the 50 luxury suites, concessions and advertising, as well as from naming rights, which alone could generate more than $100 million."
The Sept. 21 article also noted that county officials "dismiss concerns that the general fund, which pays for public services like police and schools, will have to be tapped if hotel taxes come up short."
It also pointed out that by rushing the deal the county paid almost a full percentage point more in bond interest than if it had waited a few months — meaning, though the article didn’t say so, hundreds of millions in added costs.
And it noted that taxpayers overwhelmingly opposed the deal, while business leaders wanted to use the money to expand the Miami Beach Convention Center, which is actually a revenue generator.
There was more. You’ve read most of it here. But this was coming from The New York Times, a respected national voice that was now on the case too.
Wrote Mr. Burgess in objection, "… I can’t help but feel disheartened that the Times’ readers were left wanting a few simple facts that would have given them a full set of tools to draw their own sound conclusions."
Don’t fall off your chair, but I agree with Mr. Burgess. Times readers didn’t get all the facts to draw their own conclusions.
But then, neither did county commissioners get "a full set of tools" from Mr. Burgess, who over more than six hours preceding the final vote in the stadium sellout failed time and again to keep his own promise to reveal the bottom-line cost.
Only days after the vote did he admit that commissioners had never gotten the facts from him that would have told them shockingly that stadium bonds they voted on that night issued will cost $2.4 billion to repay, with more bonds still to come certain to bring the deal to about $3 billion.
The New York Times’ Mr. Belson never mentioned $2.4 billion or $3 billion, but then, neither did County Manager Burgess.
Just as Mr. Belson never mentioned that one $91 million bond issue will require county repayments of more than $118 million per year for six consecutive years near the end of their life in an onerous balloon that will put future generations at risk. Mr. Burgess has yet to mention that either.
In Mr. Burgess’s "unwarranted editorial liberties" category, note that the New York Times article says Norman Braman’s lawsuit to block the stadium failed. In fact, the case remains on appeal. Should he win, it could cost the county tens of millions to repay the Marlins for their stadium costs to date.
But then, I doubt that pointing this out is what Mr. Burgess was seeking, any more than he would be likely to mention that while the article says the Marlins have agreed to cover stadium cost overruns, they might not be able to.
In fact, the Marlins agreed to cover only overruns not caused by government, so any overrun claim would probably wind up in the courts.
But beyond that is the serious question of how much the Marlins could cover. Nobody in the county has seen their financials, so nobody knows what they could really pay.
In one of the worst aspects of the lopsided deal, the county and the City of Miami must prove they could repay stadium bonds but the other party, the team, must show nothing to anyone.
All that is known is that the team was deep in debt, owing millions to Major League Baseball that it could not repay. This deal gives current owners, whoever they may be (because the public doesn’t know), something to sell to a deep-pocket buyer, but government has no hint what’s in present owners’ pockets.
Furthermore, by contract none of the owners is personally liable for a penny, no matter what. We can look only to a debtor team.
And while the county is to get a small slice of profits if the team is sold within seven years after the stadium opens, the contract would allow present owners to sell 99% of the team, keep their title as operators and pay the county nothing.
Plus, the contract has significant kicker: If art dealer Jeffrey Loria, who’s widely considered the owner although he by no means owns the entire team, should die before a sale, by contract the county would get not a penny. It’s his life insurance policy.
Mr. Burgess astoundingly takes Mr. Belson to task for saying that backers claimed the stadium could create 2,700 jobs and $300 million in economic output. "…we have downplayed any expectations that the new stadium will produce notable economic benefit once it opens…," Mr. Burgess wrote in rebuttal.
That will surprise commissioners, who thought they were being asked to vote for a multi-decade economic generator. Of course there is no such generator, as Mr. Burgess willingly admits now that the deal is done, but that isn’t how commissioners heard the pitch. Economic benefits were heavily stressed.
Under the category of important facts omitted, Mr. Burgess probably wouldn’t mention it, but the county’s contract with the Marlins gives Major League Baseball the right at its sole discretion to override almost every facet — including the vital part about the team remaining in Miami until the stadium is paid off.
When Major League Baseball says it’s time, the franchise can move and the county will pay up to $200 million a year to make good on stadium bonds that your children and grandchildren will rue — and pay.
And, if tourist tax revenues don’t grow to a highly optimistic tune every year for the next 40 years, we’ll be paying higher and higher property tax bills to cover the stadium bonds.
Because while Mr. Burgess’s letter calls the county’s estimated tourist tax revenue projections to fund the bonds markedly conservative, county-paid agencies rating the bonds see the projections as anything but.
Standard & Poor’s says "the back-loaded debt service schedule requires revenue growth to continue at a strong compound pace of 3%-5% beginning in 2011 without interruption for 40 years, which we believe is unlikely." So much for that conservative structure, Mr. Burgess, and so much for not touching general revenues, as commissioners were promised.
The Times article also failed to mention that the county will not get a penny from any baseball tickets at its own stadium and only a pittance from non-baseball events, which the Marlins will control. Plus, the team’s tiny annual rent won’t come to the county either — it’s counted as part of the team’s construction "contribution."
The New York Times article missed a lot more relevant facts that condemn this deal, most of which we’ve listed before, but we doubt they’re what Mr. Burgess was calling for when he complained about "important omitted facts."
He just wishes all the legitimate objections to a giveaway would vanish.
Aren’t those fact-seeking journalists annoying? Advertisement