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July 09, 2009
Calculating the true cost of the Marlins stadium
From yesterday's Miami Herald:
As Miami-Dade County commissioners worked late into the night to finalize financing for the Florida Marlins stadium last week, Commissioner Katy Sorenson posed a simple question: What's the total cost of financing going to be?
If you're a regular reader of this site (or the book Field of Schemes), you already know: That is not a simple question. When you're talking about future payments, there are about a million ways to dice the numbers: You can just add them all up (the nominal cost), which is misleading because much of the cost won't be paid for decades — it's like saying you own a $2 million house because that's the total of all your mortgage payments. Or you can discount the future payments by some percentage — but what discount rate to use is more art than science.
The Herald, though, punts all this and goes with the nominal cost:
With bonds issued last week in New York, the total cost is finally in black and white: $2.4 billion, spread over 40 years, to repay $409 million in bonds that will primarily, though not exclusively, cover stadium construction.
Even if the cost isn't really $2.4 billion, though, it's likely a good bit higher than $409 million, because as the Herald reports, the county had to resort to some pretty dubious bond terms to finance a stadium in this economic climate. The bulk of the stadium debt carries a hefty 6.4% interest rate; the remaining $91 million carries an even heftier 8.17% rate, and will be paid off entirely with balloon payments between 2038 and 2046. "This is the sort of financing you do when you cannot afford it," financier Leo Guzman told the Herald. Sounds like somebody should have listened to the stick figures.
And this is exactly what Santa Clara is in for if we take out bonds for a stadium for the 49ers. And the Marlins article does not address how the bonds are to be paid for.
Posted by Chris on July 9, 2009 08:19 PM
The County Commission meeting was priceless theatre. After the standard 30 minute Miami recess of 2+ hours the Commissioners returned to question the city attorney and city manager on the record about the new deal. Chairman Moss insisted that all questions be directed "through the chair" which resulted in high comedy as the punch drunk politicians struggled to remember Moss's instruction as they posed their questions.
Rebeca Sosa had her questions completely disregarded after she failed to stipulate them "through the chair".
$2.4 billion buys you a lot of good government and if there's anything left over, perhaps a pair of platform shoes for David Samson.
Posted by Thomas on July 9, 2009 11:08 PM
"This is the sort of financing you do when you cannot afford it," financier Leo Guzman told the Herald."
Then WHY DO IT?
Why do the people of these cities and states not hold their elected representatives feet to the fire?
The fact is despite relative success (World Series wins for a very young organization in '97 & '03) the attendance simply does not mandate subsidizing the cost for a new stadium..
But if the Marlins had a new stadium, the people would fill the place!...Yeah? Tell that to the Washington Nationals...
Posted by Daniel M on July 10, 2009 11:52 AM
"This is the sort of financing you do when you cannot afford it," financier Leo Guzman told the Herald."
Then WHY DO IT?
Why do the people of these cities and states not hold their elected representatives feet to the fire?
The fact is despite relative success (World Series wins for a very young organization in '97 & '03) the attendance simply does not mandate subsidizing the cost for a new stadium..
But if the Marlins had a new stadium, the people would fill the place!...Yeah? Tell that to the Washington Nationals...
Posted by Daniel M on July 10, 2009 11:53 AM
Sarasota commissioners have been trying to tie up a deal to fill Ed Smith. Cincinatti left, Boston was next, now it's the Orioles. We started Citizens for Responsible Government and have been activly trying to stop the use of public funds for a private company (MLB). It is amazing the lengths our elected offficial have gone to, until they realized they are being watched and will be held accountable. It's also scary the number of people who (innocently enough) believe the hard sell by government. What an economic impact it will have on the community,jobs, national attention, blah, blah, blah. Our commissioners won't even hear a second opinion from Phil Porter, an economics prof. They would rather pay the sports and leisure guys $30,000 to to get the figures they desrie. God help us!
Posted by Carolann on July 11, 2009 11:38 AM
Sarasota commissioners have been trying to tie up a deal to fill Ed Smith. Cincinatti left, Boston was next, now it's the Orioles. We started Citizens for Responsible Government and have been activly trying to stop the use of public funds for a private company (MLB). It is amazing the lengths our elected offficial have gone to, until they realized they are being watched and will be held accountable. It's also scary the number of people who (innocently enough) believe the hard sell by government. What an economic impact it will have on the community,jobs, national attention, blah, blah, blah. Our commissioners won't even hear a second opinion from Phil Porter, an economics prof. They would rather pay the sports and leisure guys $30,000 to to get the figures they desrie. God help us!
Posted by Carolann on July 11, 2009 11:38 AM
How come San Francisco's baseball stadium was built with private funds and other teams can't?
I guess Montreal didn't want to fall into this kind of crap of using public money to build a downtown ballpark and knowing you'll always have to sell of your star players once they become free agents. Seems like Toronto are shopping Roy Halladay around and I can't wait to see what happens in Tampa when their young stars become free agents? I also feel for fans in Pittsburgh, they have a beautiful stadium and yet it is never full and can you blame them? They had to get rid of Jason Bay geez. What has happened to MLB since that Idiot Bud "The used car salesman" Selig took over?
Posted by JP on July 11, 2009 03:23 PM