Despite Legislative Defeat Dolphins Will Upgrade Stadium
Written by Michael Lewis on May 9, 2013
By Michael Lewis
Fearless football forecast: Despite a last-minute Tallahassee defeat, the Dolphins will soon upgrade Sun Life Stadium. Owners won’t let a deal elude them.
Had the legislature on Friday OK’d funds and also let Miami-Dade vote to raise a mainland hotel tax, and had the governor concurred, the Dolphins would have battled a Miami Marlins backlash to win tax money.
While the public overwhelmingly opposed stadium funding after the Marlins’ nearly $3 billion tax raid of 2009, that might not have defeated the Dolphins.
A now-cancelled May 14 vote would have been on a single issue. Those who voted would have felt strongly. Those seeking jobs or super bowls would have had far more incentive to turn out than people opposed to giving a multi-billionaire hundreds of millions of tax dollars.
People favoring an added tax thought they would get something vital without paying anything themselves, lending added incentive Ð or so it seems. We’ll never know for sure.
The Dolphins ran a good $10 million campaign Ð if not exactly the truth, the whole truth and nothing but the truth. They paid top players at all positions, from lobbyists to big names who fronted for them and a Madrid soccer star who spoke out.
The hurry-up offense using deadlines of a legislative session and selection of the next two super bowl sites was skillful. The mail blitz of flyers was overwhelming.
Studied selection of jobs and super bowls as reasons to upgrade a privately owned stadium and statements that tourists would fund it all were appealing if disingenuous.
Every stadium project here has overstated benefits and ignored true costs. The Dolphins just did it better.
Still, they were dead right when they hammered home one key point in a fight to entice voters who never voted: this was not the Marlins deal, the worst Miami-Dade County ever engineered.
Mayor Carlos Gimenez won significant concessions from the Dolphins in negotiations that were not window dressing.
First, owners had to permit a public vote and pay almost $5 million for it. Then they had to repay a fraction of county aid in 30 years, probably about 30% after inflation and opportunity cost. Penalty clauses were insurance.
It was as good a deal as taxpayers were going to get to make a team owner to do what he wanted to do anyway using tax money.
It neutralized some opponents by agreeing that one-quarter of added mainland hotel taxes would promote tourism. That softened the impact of a tax hike that would have set total mainland hotel taxes 27% higher than Broward’s.
The Dolphins’ game plan moving forward is unknown, but the objective isn’t.
The aim is fewer seats, each priced higher because of lower supply. Fewer seats mean fewer TV blackouts for not selling enough tickets, thereby raising TV revenues, a win-win.
Luring super bowls isn’t the reason for a revamp. Those games are big for fans and tourist spending but not for the team. President Mike Dee has said the team doesn’t get a penny from either super bowls or college championships. For super bowls, he said, the Dolphins pay the league.
Sure, there’s pride. But the goal line is the money.
Dolphins owner Stephen Ross, who has spent a lifetime amassing $4.4 billion via deals, won’t give up. He has multiple routes Ð plans B and C and probably D were set before the legislature shot down plan A.
He said he wouldn’t use only his own money for the full upgrade. But he has borrowing power, and interest rates sit so low that if an upgrade makes financial sense he can borrow every penny.
He had committed to cover the majority of a $389 million upgrade even if he got government aid. A couple of years ago he was pushing a $225 million version; he has now committed that much. So Mr. Ross could do the job that he sought two years ago without another dime Ð unless he’s been pledging not his own but league money.
Another option would be county aid that didn’t involve higher tourist tax so it could bypass the legislature. He could pay back the county in full in 30 years Ð when the 72-year-old Mr. Ross might not still head the team.
Or, he could return to the legislature in 10 months. Mr. Ross said after the vote that he would fight legislative opponents, and he has the money to help bring change there.
Or think strategic private partnerships. Firms joined government to dig and run a Port Miami tunnel. Why not to build and operate a football/ soccer/ events site? Or a university multi-event site with football and more? Mr. Ross could creatively engineer this. Deals are his business.
None of these could lure the 50th or 51st super bowls. Sites will be named this month. But the team’s aim is not super bowls. Bowl games were carrots to lure government cash fast.
Unlike Marlins’ threats to leave if they didn’t get a stadium Ð threats team President David Samson later told business leaders were contrived Ð Mr. Ross is keeping the Dolphins here.
Only he and his team know if it makes business sense to upgrade without public aid. Even if it does, it makes more sense with hundreds of millions from taxes. So he might stall and try again for public funds first.
The Dolphins say they’re losing money. But we haven’t seen financials from their related corporations. The stadium is separate. We don’t know if there are more.
We do know that the Marlins had four corporations in their stadium deal. And when H. Wayne Huizenga owned the Dolphins, the Marlins and the stadium, he shuffled funds among empires so that he could show one was losing money while the others all profited.
This means the public can’t find out which stadium deal makes the most profit. But one way or another Mr. Ross will do quite well. You don’t get to $4.4 billion by being a patsy.
Whatever the path to the best deal, he’ll take it. If that means a return to the legislature and the county, he’ll do it. But we are going to get bowl games, soccer events and more.
Bet big that the Dolphins will profit by improving the stadium, if only because it increases the franchise value by more than the cost. Real estate investors work on asset value. The stadium, like any other investment, will one day be sold.