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March 24, 2009
Marlins win final stadium approval (kinda)
After a long, long day of hearings that included two stadium opponents being hauled off in handcuffs for shouting "Good jobs, no stadium!" the Miami-Dade Commission voted 9-4 to approve the Florida Marlins' $634 million stadium deal, with no amendments. Following Thursday's Miami City Commission vote, this gives final approval to the team's stadium plan, 12 years, three owners, and several hundred million dollars in cost increases after it was first proposed. Construction is expected to begin this summer, and be completed in time for the 2012 season.
...unless. There is still one final hurdle remaining for the plan: If the city or county isn't able to sell stadium bonds by July 1, either party can back away from the deal. It's a bit unclear what constitutes "unable" in this scenario — even in this economic turmoil, it should be possible to sell bonds if you jack up the interest rate enough — but it's conceivable a government entity could back away from the deal if it proves too rich for their blood: Previous projections have shown that hotel-tax revenues would likely fall well short of paying off the county's stadium bonds, and county manager George Burgess was forced to resort yesterday to assuming hotel spending will leap 15% in 2011 to make the numbers work out.
In all likelihood, though, yesterday's vote means the bagel slicer will become a reality, and the team will in three years' time become the Miami Marlins. If so, how does this deal stack up against previous stadium deals? Let's recap the numbers:
- The county will now put in a whopping $359 million for stadium construction and roads and utilities, mostly from tourist taxes. While the Marlins argued that tourist-tax money legally can't be used for anything other than tourism projects, the way the county got these funds for the stadium in the first place was by funneling off new tax money to pay for what the tourist taxes had been previously pledged to — meaning the cost will ultimately come out of the county's general fund.
- The city puts up $119 million, mostly to build parking garages for the team.
- The Marlins kick in $155 in private funds, a good chunk of which will likely come from the sale of naming rights, assuming there are still any corporations left to buy naming rights in the future.
- The team pays cost overruns on the stadium itself, taxpayers cover overruns on everything else, including the garages.
- The team gets all revenues from the stadium itself, paying only $35 million in rent (part of its $155 million contribution). The city will receive revenue from parking at the new garages, and the Marlins have agreed to purchase some of the spots up-front for resale.
So the public puts up almost exactly three-quarters of the cost, and the team gets virtually all of the revenues. That's not quite as bad as the Washington Nationals deal, but it's in the same, er, ballpark, especially when you consider that virtually all of the spending at the Marlins' new home will be cannibalized from existing spending elsewhere in Miami-Dade County — unless you really believe that more people will schedule summer vacations to Florida so that they can see the Marlins play.
Miami residents, in the end, will be paying a high, high price to free themselves from the team's constant move threats and get to watch ballgames without fear of getting rained on. Now that the deed is done, you have to hope that at least more fans will actually use the place than turned out to be the case in D.C., or this could be another boondoggle for the ages.
There is a good chance, Miami is not going to support the Marlins, and this could be like the Carnival Center For The Performing Arts white elephant ($473 million). On the other hand, the reality is something had to be done with the Orange Bowl property, we have seen what happened with Hialeah Park since 2001 (NOTHING except being listed on the 11 most endangered places list), and even that, has baby flamingos, this would be one big hole in the ground.
Posted by Januz on March 24, 2009 01:07 PM
This caught my eye in the hotel tax article. What in the world is being paid for other than a stadium, and interest? 2.1 billion for a stadium?
In those plans, the stadium bonds would cost $2.1 billion to repay over 40 years, rather than the $1.9 billion cost forecast in the current plan. The higher interest expense lets Miami-Dade keep payments lower in early years, allowing more time for the hotel market to recover.
It's all interest, I believe. If you push stuff off into a balloon payment at the end, the nominal payment goes way up, though the present value, if you're doing it right, remains the same.
Another way of putting it: It's $2.1 billion, but mostly in the Martian New Dollars we'll be using in 2049.
Posted by Neil on March 24, 2009 02:03 PM
Too damn bad. The deal is done. The Marlins are staying put in South Florida. Deal with it.
Posted by local on March 24, 2009 04:30 PM
...and then there was one, the Oakland Athletics. But hiding and stirring in the bushes are the Tampa Bay Rays, Toronto Blue Jays, Chicago Cubs, Los Angeles Dodgers, and maybe even the Boston Red Sox.
The Generation of Mega Dollar taxpayer supported (?) taj mahals for baseball is nearing an end, but a few more remain to be erected. And one, maybe two MLB clubs will relocate within a decade if they do not get theirs where they reside now. This website will continue to have plenty of both juicy and disgusting content on the baseball side for years to come/
George, I disagree with you, as far as baseball is concerned. The Dodgers have a plan to upgrade Dodger Stadium, and it should not be controversial. Note the following: www.sportsbusinessdaily.com/article/120350 - 32k - Nor will the Blue Jays be looking for something soon. Here is why: In February 2005, Rogers Communications, the owner of the Blue Jays, bought the stadium for $25 million.www.ballparks.com/baseball/american/skydom.htm - 15k. The Tampa Bay Rays might be the next team after the A's, but they will be stuck in the dome for another decade or so.
Posted by Januz on March 24, 2009 11:05 PM
Dear Neil:
Great posts. I read Field of Schemes back in 2002. I am glad to see that you are still actively writing on sports stadium subsidies.
I recently published a law review article on this topic, which both opens and closes with a discussion of the Marlins stadium deal. The piece is available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1308254
If you have a chance, please give it a look. However, make sure to see footnotes 21, 23 and 32. Each cite directly to the original version of your book.
All the best.
Marc Edelman
The mayors, of Dade County and Miami , are crooks, the city commissioners who voted for this are crooked also. All objective experts say this will provide a net of zero full-time jobs here. Some claim 300 jobs, but when you examine the figures its actually zero jobs, because you lose whatever jobs WOULD have been gained if you had spent that same amount on schools, roads, protecting our groundwater supply, and other things that the local governments are SUPPOSED to be doing. Thousands of jobs would have been created if the $2.2 billion over 40 years was spent on these useful things.
And the local financial situation will get worse over the next 18 months, because people are starting to fight their pre-Bush-Economic-Collapse property evaluations, which are still high, so the city and county can get more taxes. As people whose houses were worth $400,000 before Bush collapsed the economy win their appeals and get their house revalued at the true rate of $260,000 or whatever, the property tax revenues will also collapse. Then people will see that they cannot afford this big gift to the Marlins, becuase the govt won't even be able to afford schools next year.