The Empire keeps striking back

Please forgive all the grammatical and sloppy errors you might have seen in the Miami Herald over these past few weeks. There is a reason they ran a picture of UNC coach Roy Williams when they were in fact referring to the NFL receiver. [In a stroke of politically correct luck, the coach is old and white, whereas the player is young and black, so no one had to be suspended for a lack sensitivity in confusing the two].

The reason for the recent upheaval is that the Herald has been pulling an all hands on deck assault on local government’s plans to partner with the Marlins and build a new facility for the MLB team. The weeks long attacks continued today with an article which compares the stadium deal in Miami with stadium deals in other cities.

A little experiment. I’d like to illustrate how bias against the stadium deal would have affected the presentation of the article. By merely ‘re-editing’ the actual article, I can create a positive story about the stadium deal without changing any of the facts. I’ll note any ‘additions’, things I’ve added, in bold. The actual Herald article is copied at the end of the post.

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Florida Marlins stadium deal better than most for county, among smaller market MLB teams

The Florida Marlins stadium deal coming up for final showdown votes Friday — would have the public responsible for a lower percentage of the planned construction costs than stadiums built this decade in Cincinnati, Houston, Milwaukee, Pittsburgh and Washington, a Miami Herald analysis found. Important to note that the public’s percentage could possibly drop even further, given that the Marlins are responsible for any construction cost overruns as per the agreement.

Bob Starky, who consults for Major League Baseball on stadium deals, reviewed the newspaper’s findings. ”The most difficult thing to do with these deals is compare them,” he said.

For example, fourteen Major League stadiums have been built, or begun, since 2000. The average public contribution for construction of those stadiums has been 44 percent, the newspaper found. Under the proposed Miami deal, the Marlins would rank ninth of the 14 in the percentage of construction costs borne by the team, the newspaper found.

However, those figures include the New York stadiums, worth nearly $2 billion, include no upfront public payments — but the city is investing nearly $400 million in infrastructure surrounding the ballparks.

Further, in some cases teams were willing to put up more of their own money because they own the property adjacent to their new stadiums and would profit from the development of restaurants and shopping. San Diego, Detroit and St. Louis fall into that category, Starky said.

Stadium deals are complex financial transactions that can be difficult to compare. Some involve outright gifts of public land, which can be hard to value, some involve taxpayer-funded infrastructure that benefits the team and the public, and almost all involve varying degrees of low-interest financing subsidized by government agencies.

Those factors make it impossible to draw an across the board, apples to apples, comparison of every financial variable.

However, it did make sense to compare the initial stadium construction agreements to the other smaller market teams, rather than have our analysis skewed by including large market teams like the Yankees and the Giants, or even smaller market teams with historically high revenues, like the Cardinals.

The Herald analysis of those deals shows cities that drove the hardest bargains often did so after putting stadium deals to a public vote, or after politicians dismissed threats from team owners to move.

Voters in St. Louis refused to finance a stadium for the venerable Cardinals, so team owners raised 88 percent of the construction money themselves, relying on a county loan for the rest. Such are the perks of having a team owner which is a major American corporation–Anheuser-Busch–and whom has been St Louis’ largest employer for more than century.

In San Francisco, where voters rejected four ballot measures that would have committed public funds to a new Giants stadium, a local grocery magnate built a spectacular waterfront park with money from Silicon Valley investors and deep-pocketed fans. Obviously, no such legendary industries are available to tap into in the South Florida market.

“We really would have preferred if the public had taken the risk instead of us,” said Peter Magowan, who bought the Giants after the failed ballot measures. “But voters had spoken in unmistakable terms to us a number of times.”

The San Diego Padres opened their new stadium in 2005, built with 67 percent public funds, slightly less than in Miami. But the team promptly collected $60 million in naming rights, which significantly reduced the team’s net contribution percentage.

As part of the San Diego deal, the team owner invested $300 million to help develop the neighborhood surrounding the stadium. There is no such requirement for the Marlins to invest in Little Havana. However, Little Havana today is a far cry from the real estate market surrounding Petco Stadium 10 years ago. Condo construction was booming in the area, which is why the city had to resort to eminent domain to clear out homeowners who were in the way of the planned redevelopment. No such upheaval efforts are necessary in the Little Havana neighborhood, which has long been accustomed to having a towering neighbor. From Little Havana’s perspective, Kareem Abdul-Jabbar just sub-leased to Yao Ming.

After noting how local taxpayers concerns had derailed stadium efforts in St Louis, San Francisco and Minnesota, the Marlins and local leaders carefully avoided a public referendum by structuring the deal so most of the public money comes from hotel bed taxes paid primarily by tourists.

Under the proposed Marlins deal, outright public gifts would cover $361 million of the $515 million stadium construction. The Marlins would pay $119 million and get another $35 million loan from the county, to be repaid in escalating annual installments.

The Marlins will not have to buy land: The county will host them rent free for 35 years on the site in Little Havana, which is assessed at $16 million by the county appraiser. The county will own the stadium, so the Marlins won’t pay property tax.

So-called bed taxes will cover $311 million of the total $515 million cost.

But revenue from the bed tax has been severely compromised by the global recession, raising questions about whether the county would have to dip into the general fund, which pays for a wide range of services, including police and garbage collection.

Public money also paid the estimated $10 million cost of demolishing the Orange Bowl, which had occupied the site, and will cover an estimated $24 million in infrastructure work.

Other cities have constructed finances differently. In 2004, the Washington, D.C., council voted to cover all $600 million of construction costs for the Nationals. But, Washington also shares significantly in the team’s proceeds.

To help cover the city’s roughly $35 million annual construction loan payments, the Nationals pay an average rent of $5.5 million a year. The city also collects tax on tickets and merchandise at the stadium; their share came to $12.5 million in 2008. Taxes on businesses and utilities cover the rest of D.C.’s annual loan payment.

Marlins President David Samson said up until six months ago, he offered the county the exact same deal that D.C. received.

But county officials say they’re better off with Marlins owner Jeffrey Loria spending $154 million toward construction costs than creating dedicated revenue sources for the stadium.

“Washington, D.C., is all public money, it’s taxes imposed on users of the stadium,” County Manager George Burgess said. “We have not created any new tax or fee, or raised any, for the financing.”

Robert A. DuPuy, president of Major League Baseball, said of Loria: “This is an owner who is reaching in his own pocket in a market that, frankly, is unproven.”

Other variables to consider. The city of San Diego is able to pay off its debt with proceeds from other events at the stadium, including concerts, soccer matches and motocross races. The city makes more than $1 million per year through such events, said Tim Moore, the city’s ballpark administrator.

Under the Marlins’ pending deal, all revenue from the first 10 non-baseball events at the stadium each year would go to the team. After that, the county would get half the profits, but the money must be spent on capital improvements at the park — another benefit to the Marlins.

“Wow, the Marlins negotiated a good deal,” Moore said. Actually, the residents of San Diego don’t think Mr Moore negotiated much of a deal either. There is much anger over the fact that the Padres are being sold and the city will not realize any of those revenues, even though the team’s value has been significantly boosted by the stadium. Something which Miami’s local governments have addressed in their agreements.

In Milwaukee, emotions are still raw even though the stadium opened eight years ago and the Brewers made the playoffs in 2008.

“You’re gonna get ripped off, lookout,” Wisconsin state Sen. Michael G. Ellis said last week. “Bud Selig is on the way; hold on to your wallet.”

Selig, now the commissioner of Major League Baseball, owned the Brewers when stadium negotiations began in Milwaukee in the early 1990s.

The initial conversations involved Selig paying for his own stadium, said Ellis, who was majority leader of the state Senate during key votes. Through relentless lobbying, “the worm turned,” Ellis said, and the public wound up footing 78 percent of the bill.

Selig got the site he wanted, in a remote location where the team wouldn’t have to compete with other restaurants and businesses.

The Miami deal sounds familiar, Ellis said. “So it’s a self-contained unit? They get the revenue and they don’t pay property taxes? It’s the same modus operandi as they used up here.”

Former Wisconsin Gov. Tommy Thompson, who went on to serve in President George W. Bush’s Cabinet, was originally a strong supporter of the Brewers’ deal. ”It couldn’t have happened without me,” Thompson said in an interview last week.

But as the deal progressed, Thompson soured. The Seligs, he said, “were going to contribute a lot more money and a lot more support, and they just kept pulling back, all during construction.”

Thompson said if he were a Miami politician, he would not vote until he saw signed, enforceable contracts for every aspect of the deal. He would insist the Marlins prove they have the financial wherewithal to live up to their end of the deal.

Contracts for stadium construction and operation are written, but not signed. The Marlins have fought for years to keep their finances private, and so far have not offered public proof they can cover their share of the construction costs.

Marlins President Samson said he expects to approach lenders in the next 18 months, and that “the banks are comfortable today” with lending money to Major League baseball teams. “People want to own that paper because they know there are revenue streams that never go away,” he said.

Selig could not be reached for comment.

City and county commissioners will cast votes on five separate stadium contracts on Friday, the final votes in the franchise’s decade-long quest for a permanent home.

Passage could come down to a one-vote swing, as the County Commission must approve two contracts — for construction and management — by a 2-1 majority because the Marlins hired contractors without formal bid, requiring a bid waiver.

MLB’s DuPuy added that the Marlins might be better off somewhere else if a stadium deal can’t be hammered out. “Anyplace is better than Miami without a ballpark,” DuPuy said.

In an unguarded–but not inaccurate assessment based on the Miami Herald’s findings–Miami-Dade Mayor Carlos Alvarez commented after his State of the County speech on Tuesday. “It’s probably not the best deal that has ever been worked out between a community and a team.” But he insisted it’s better than most and comes at a time the region is thirsting for a public works jolt.

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Actual Miami Herald article – Florida Marlins stadium deal better than most for team

Posted on Wed, Feb. 11, 2009

BY JACK DOLAN AND CHARLES RABIN

The Florida Marlins stadium deal coming up for final showdown votes Friday — where the public would foot 70 percent of the construction bill and share none of the revenue — would be among the more generous to a team owner this decade, a Miami Herald analysis found.

Fourteen Major League stadiums have been built, or begun, since 2000. The average public contribution for construction of those stadiums has been 44 percent, the newspaper found.

Under the proposed Miami deal, the Marlins would rank ninth of the 14 in the percentage of construction costs borne by the team, the newspaper found.

”It’s probably not the best deal that has ever been worked out between a community and a team,” Miami-Dade Mayor Carlos Alvarez said after his State of the County speech on Tuesday.

But he insisted it’s better than most and comes at a time the region is thirsting for a public works jolt, adding: “At some point, negotiations have to stop.”

The Herald examined public records, reviewed media reports and spoke with city and county officials across the country to create its list, showing:

• The public paid a higher percentage for construction costs for stadiums in Cincinnati, Pittsburgh and Milwaukee. Taxpayers in Washington and Houston also paid more initially, but will recoup much of their investment through generous revenue sharing with the teams.

• Team owners are on the hook for a greater share of construction costs in Minneapolis, San Diego, Philadelphia, Detroit, St. Louis, New York — with stadiums for both the Mets and Yankees — and San Francisco. The New York stadiums, worth nearly $2 billion, include no upfront public payments — but the city is investing nearly $400 million in infrastructure surrounding the ballparks.

Those factors make it impossible to draw an across the board, apples to apples, comparison of every financial variable.

However, the initial stadium construction agreements are generally comparable, typically setting the tone for how generous local governments are going to be to the team over the multidecade life of the deal.

Voters in St. Louis refused to finance a stadium for the venerable Cardinals, so team owners raised 88 percent of the construction money themselves, relying on a county loan for the rest.

”We really would have preferred if the public had taken the risk instead of us,” said Peter Magowan, who bought the Giants after the failed ballot measures. “But voters had spoken in unmistakable terms to us a number of times.”

In Miami, the Marlins and local leaders carefully avoided a public referendum by structuring the deal so most of the public money comes from hotel bed taxes paid primarily by tourists.

Bob Starky, who consults for Major League Baseball on stadium deals, reviewed the newspaper’s findings.

”The most difficult thing to do with these deals is compare them,” he said.

Starky questioned how fair it is to compare the Marlins to large market teams like the Yankees and the Giants, or even smaller market teams with historically high revenues, like the Cardinals.

”They can put more toward the ballpark than Miami, or Minnesota or Pittsburgh,” Starky said, “just like some people can afford to buy a bigger house.”

In some cases, teams were willing to put up more of their own money because they own the property adjacent to their new stadiums and would profit from the development of restaurants and shopping. San Diego, Detroit and St. Louis fall into that category, Starky said.

So-called bed taxes will cover $311 million of the total $515 million cost.

Public money also paid the estimated $10 million cost of demolishing the Orange Bowl, which had occupied the site, and will cover an estimated $24 million in infrastructure work.

Marlins President David Samson said up until six months ago, he offered the county the exact same deal that D.C. received.

But county officials say they’re better off with Marlins owner Jeffrey Loria spending $154 million toward construction costs than creating dedicated revenue sources for the stadium.

”Washington, D.C., is all public money, it’s taxes imposed on users of the stadium,” County Manager George Burgess said. “We have not created any new tax or fee, or raised any, for the financing.”

Robert A. DuPuy, president of Major League Baseball, said of Loria: “This is an owner who is reaching in his own pocket in a market that, frankly, is unproven.”

The San Diego Padres opened their new stadium in 2005, built with 67 percent public funds, slightly less than in Miami.

As part of the deal, the team owner invested $300 million to help develop the neighborhood surrounding the stadium. There is no such requirement for the Marlins to invest in Little Havana.

The city of San Diego is able to pay off its debt with proceeds from other events at the stadium, including concerts, soccer matches and motocross races. The city makes more than $1 million per year through such events, said Tim Moore, the city’s ballpark administrator.

”Wow, the Marlins negotiated a good deal,” Moore said.

In Milwaukee, emotions are still raw even though the stadium opened eight years ago and the Brewers made the playoffs in 2008.

”You’re gonna get ripped off, lookout,” Wisconsin state Sen. Michael G. Ellis said last week. “Bud Selig is on the way; hold on to your wallet.”

Selig, now the commissioner of Major League Baseball, owned the Brewers when stadium negotiations began in Milwaukee in the early 1990s.

The initial conversations involved Selig paying for his own stadium, said Ellis, who was majority leader of the state Senate during key votes. Through relentless lobbying, ”the worm turned,” Ellis said, and the public wound up footing 78 percent of the bill.

Selig got the site he wanted, in a remote location where the team wouldn’t have to compete with other restaurants and businesses.

The Miami deal sounds familiar, Ellis said. “So it’s a self-contained unit? They get the revenue and they don’t pay property taxes? It’s the same modus operandi as they used up here.”

But as the deal progressed, Thompson soured. The Seligs, he said, “were going to contribute a lot more money and a lot more support, and they just kept pulling back, all during construction.”

Marlins President Samson said he expects to approach lenders in the next 18 months, and that ”the banks are comfortable today” with lending money to Major League baseball teams. ”People want to own that paper because they know there are revenue streams that never go away,” he said.

Selig could not be reached for comment.

City and county commissioners will cast votes on five separate stadium contracts on Friday, the final votes in the franchise’s decade-long quest for a permanent home.

MLB’s DuPuy added that the Marlins might be better off somewhere else if a stadium deal can’t be hammered out. ”Anyplace is better than Miami without a ballpark,” DuPuy said.
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