See no *EBIT, hear no EBIT, definitely speak no EBIT

Why would local government officials testify in a trial [or deposition] under oath and say things which no one believes? An article by Sarah Talalay from the Sun-Sentinel, describes testimony in the Braman trial yesterday:

Miami-Dade County Manager George Burgess admitted in Miami-Dade Circuit Court on Wednesday he has never asked for or seen the Florida Marlins’ financial statements or any proof the team can meet its obligations to finance a $515 million ballpark. 

It follows a similar admission by Miami-Dade County Mayor Carlos Alvarez during an earlier deposition. An article by Paul Brinkman from the South Florida Business Journal, describes his testimony:

Alvarez’s taped statements said he never saw financial statements for the Marlins before approving public funding for the stadium, and that he had no guarantees the Marlins could pay for cost overruns, as required. Alvarez also said in the recording that he never asked why the county couldn’t keep naming rights for the stadium, which were assigned to the Marlins, or why the county couldn’t retain scheduling at the stadium when the Marlins’ season ends.

The questions and answers are designed to lead casual observers to conclude that the respondent is either lying or incompetent. How could they not inform themselves of such basic information?

Braman’s lawyers know that MLB’s veil of secrecy would prohibit the sharing of financial statements exactly for this reason – lawsuits against any one of their 30 franchises could open the door to reveal financial data which involves all of MLB. For example, if the Marlins financials were made public, the amount of Central revenues which is derived from external sources and distributed evenly among all the teams [currently estimated at $40 million annually] would be disclosed etc.

Now there are many other documents and testing which could satisfy the County’s concerns about the Marlins financial viability, not the least of which is the credibility of the MLB brand in wanting to avoid one of it’s franchises leaving a local community holding their debt. The ultimate guarantee in these cases is the potential sale of all or a part of the franchise to raise funds, as Huizinga did recently with the Dolphins.

Braman lawyers question the Marlins financial viability, but would oppose the stadium irrespective of the Marlins finances. In fact, a case can be made that their opposition would be even more strenuous if the Marlins admitted to their profitability. On the Marlins side, they have been very profitable in the past 3 yeras, but have pretended otherwise to solicit public funds for the stadium. Nothing is what it appears.

I recently saw the movie Disclosure, directed by the great Barry Levinson. I wonder if the County manger is getting anonymous emails late at night which say, ‘nothing is what it appears, solve the problem.’ The main problem with the stadium deal is the coming cost overruns in the construction, which the Marlins are supposed to pay, but with which there is much [earned] concern that the Marlins will avoid doing so at all costs – based on legalities, not financial solvency.

Braman and the local governments may be sitting at different tables at this trial, but their incentives – getting a better deal for taxpayers – are more aligned with each other than with the Marlins ownership & MLB. I hope the leverage this trial is granting them will allow the government to get stronger and more concrete language in the agreement regarding the likely construction costs overruns.

*EBIT = Earnings before interest and taxes. Also called operating profits.

About Jorge Costales

- Cuban Exile [veni] - Raised in Miami [vidi] - American Citizen [vici]
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