Big Profits For Dolphins In Stadium Upgrade So Let Them Pay
Written by Michael Lewis on January 20, 2011
By Michael Lewis
In a year in which Florida leaders vow no new taxes, Rep. Erik Fresen has audaciously filed a bill calling for "an additional tax" to benefit the Miami Dolphins.
That’s as audacious as Miami-Dade Mayor Carlos Alvarez offering what he called "a no tax increase" budget that actually raised tax rates this year more than 14%.
For his audacity in dipping into our pockets in a deep recession while giving his own staff large raises, Mayor Alvarez stands March 15 before the recall election firing squad of outraged taxpayers.
Rep. Fresen also stands before the court of public opinion, where to date not a word of support has been uttered for his intended tax grab of hundreds of millions of dollars.
Unfortunately, there’s also little criticism. Business groups so far have failed to attack this Dolphins bill because team owners have shielded themselves, wrapping a gift to a billionaire in a double protective coat.
First, they branded their tax grab of up to $225 million plus interest as a bid to retain sporadic Super Bowl visits. Without a roof, better lighting and 3,500 luxury seats that the public funds in a privately owned stadium, they say, Super Bowls are in jeopardy.
Second, they found a vital beneficiary that could legitimately use tourist taxes. That cause is the publicly owned, nonprofit Miami Beach Convention Center, which generates non-stop benefits to this county.
The Fresen bill would allow the smaller slice of his new tax to upgrade the center. The bill specifies the center would get less than sports, but not how much less.
Dividing the pot would be the Miami-Dade County Commission, the same thoughtful body that rubberstamped Mayor Alvarez’s double-digit tax hike and $3 billion giveaway to the Florida Marlins for yet another stadium during the worst recession in our lifetimes.
You can bet the Dolphins will give the commission a lot of love if the bill passes in Tallahassee.
And since this Special Tax Relief Act for the Benefit of the Owners of the Miami Dolphins, as the bill should be titled, would hit only Miami-Dade and Broward counties, other legislators won’t feel wrath at home if lobbyists maneuver them to pass it.
Convention center funding is vital. But nothing but politics, Dolphins lobbying and weakness in business groups connects the center and the Dolphins. The center should stand alone. It’s a vital, justified use of tourist taxes.
The billionaire owner of the for-profit-stadium, conversely, can fund his upgrade without tapping the public purse and profit handsomely doing so. It’s just so much more handsome if he lets us pay for upgrades that most companies make themselves.
The improvements not only might get us an additional Super Bowl game each decade, which is nice for us, but they definitely would make rich team owners even richer, which is quite nice for them.
None of us can see Dolphins financial documents, any more than we did as the Marlins clipped us for $3 billion under false colors in 2009. But the profitability of a stadium upgrade is clear.
The team says the job costs $225 million. Owners are willing to put in something but won’t yet say how much.
If we estimate $60 million from owners, $165 million plus interest over 30 years would be taxpayers’ share — maybe $500 million total public cost, depending on interest costs.
For its money, the public would get Super Bowls we’ve always had, college bowl games we have now, Dolphins games we have now and a sweet smile from the team. No gain for $500 million.
What would team owners get? All present games, plus a covered site for hundreds of days of use for other events, plus upgrades to plant and equipment, all for $60 million.
What financial gains might owners make for that pittance?
This issue’s profile of Mike Walker of the Miami Heat shows how vital are non-sports events for another pro team in a venue that’s still handed a $6.4 million annual tax subsidy. Expect from the Dolphins anything from rock shows to tractor pulls or massive meetings.
Upgrading also increases Dolphins franchise value by at least the $225 million capital spending.
Now add 3,500 luxury field seats. If tickets there cost $150 — tops now is $120 — and rose 3% a year, in 10 annual games over 30 years the team would collect $381 million from those seats.
Ratchet up those prices 5% a year and owners would collect $678 million from 3,500 seats just at 10 games. It’s not all profit, but it’s a lot to play with for spending $60 million — or $225 million, for that matter.
Then factor in concessions, naming rights, advertising, parking, souvenirs and other revenue, all of which would rise with a roof and new seats and in none of which would the public share.
Combined, it’s a no-brainer for owners do the improvements themselves. Profits would be impressive indeed.
But in pro sports, why spend a penny when public officials will fall all over themselves to do it for you? Then profits would be phenomenal.
Moreover, if Dolphins owners want to tap more public cash — they now get a $2 million annual sales tax rebate that former owner H. Wayne Huizenga pushed through for them — it’s readily available.
The Beacon Council administers job and capital investment funds for the county and state that any business can get for proper expansions. A $225 million investment that creates proven jobs should quality.
The rub is that this money might be in the low hundreds of thousands to build real jobs, not hundreds of millions to create nothing more than what we already have.
We need to seek another bill to aid the convention center alone, offer the Dolphins current job-creation benefits they qualify for, and let the team make impressive profits by funding the whole expansion itself.