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Unfair Trade Advantage: Marlins Stadium, Public Extortion (Part 2 of 4)

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Unfair Trade Advantage: Marlins Stadium, Public Extortion (Part 2 of 4)

by Robert Whiting (April 2008)

The special treatment MLB teams receive can clearly be seen in the recent case of the Florida Marlins. The Florida Marlins are a baseball club that has had to play in an outdoor stadium in Miami, Marlins Stadium (also home to the NFL Miami Dolphins). For years, they endured daily afternoon rains and withering 100 degree heat. Marlins stadium was the hottest ballpark in the majors and Marlins attendance the lowest in the MLB. Marlins executives repeatedly asked for a new ballpark, to be paid for by the city. But the Miami Municipal government dragged its feet. Finally, the Marlins threatened to move to another city, and lo and behold, the city, faced with the prospect of losing the team, its identity as an MLB city, and possibly, accompanying tourist revenue, relented and voted to fund and build a brand new stadium, one with air conditioning and a retractable roof.

The turning point appeared to be when Robert DuPuy, the portly, congenial president and chief operating officer of the MLB appeared before a joint meeting of the Miami City and Dade County Commissions one evening this past February and declared "I just want you to know that if you decide not to make a decision tonight that will be the death knell of baseball in Miami. We are out of time."

Rarely has the stadium extortion threat appeared in the public record so clearly. And rarely has it been so immediately effective. By the end of that day, the Mayor of Miami had dropped his previous long-held opposition to taxpayers funding a new stadium and instead made an impassioned speech to keep the Marlins in Miami. The respective commissions voted to approve new taxes on Miami residents and tourists, to be used to construct the new stadium. Neither the residents nor the tourists were allowed to vote on this stadium subsidy.

The details of this sweetheart deal are as follows: Read carefully. The cost of the stadium--which is slated to have 37,000 seats, including 3,000 club seats and 60 suites as well as a retractable roof and which is scheduled to open for the 2011 season -- is estimated at $525 million. The city and the county will pay $347 million, all but $50 million to be derived from tourist-tax revenues. The city will also build and fund an on-site 6,000-space parking lot at an additional approximate cost of $94 million. The Marlins' contribution is set at $155 million. That's about 30% of the total, which DuPuy estimates to be at the "high end of the amount an MLB normally contributes toward the construction of a stadium".

However, the team will get $120 million of their expenditure via city-guaranteed loans and another $35 million directly from the county, which is to be paid back through yearly rent payments of $2.3 million. That averages out to $2,700 per game (or about one-tenth of what the Yomiuri Giants pay to use the Tokyo Dome).

The stadium will be "owned" by the county government. However, as in most MLB stadium deals, the notion of 'ownership' is misleading. Although most of the costs are borne by the municipal and country governments, the Marlins will, nonetheless, get to pocket most of the revenue from the park -- including money from regular admission, club seat and suite tickets, as well revenue from concessions and parking (a privilege NPB teams seldom have) and, of course, media profits. In return, they are required to change their name to the Miami Marlins and agree not to move for the next 35 years (This is the sort of agreement that MLB teams have made and broken with regularity over the years, with no penalties levied.)

Not everyone in Miami was ecstatic about this new deal. In fact, several leading Miami citizens spoke openly against it. A leading businessman filed a law suit against it, demanding that a referendum be put before the citizenry. But letting the voters decide how their tax dollars are spent is such a novel idea that nothing will probably come of the lawsuit, especially when the Miami government has coffers full of money to fight and delay such a suit.

The upshot of this is that Miami has joined the long list of cities and counties that have caved into stadium extortion, enriching baseball owners at public expense. The Marlins are now valued at around $250 million. But Marlins owner Jeffrey Loria, who bought the team in 2001, will no doubt be able to sell them for at least twice that much after the new ballpark opens, should he choose to do so. Buying and selling a baseball team is still one of the easiest ways to make money in the United States -- for wealthy, "connected", people that is.

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