Don't Drink the Tea. Think With the WE.
Dec
2011
9

Corporate Fraud Is Alive and Well in Major League Baseball



The Security and Exchange Commission is investigating Major League Baseball’s Miami Marlins (formerly the Florida Marlins) and the deal they made with the city and county to fund a new baseball stadium in Little Havana.

Little Havana was asked to foot 80 percent of the $634 million bill for the the deal, completed in March. It was so unpopular among taxpayers that it lead to the recall of Miami-Dade Mayor Carlos Alvarez. According to The Washington Post, “SEC subpoenas to the city and Miami-Dade County are seeking a long list of documents and records, including those involving meetings and communications between government officials and executives with the Marlins and Major League Baseball.”

Marlins owner Jeffrey Loria has been prone to wolfcries of brokedom as of late. Allowing his team to fall apart while investing little, Loria claioms that low attendance in their old stadium left him unable to make the amount of money needed to operate the club at full capacity.

This myth was busted, however, by deadspin.com which revealed that the club made close to $33 million in profit in the two years the team worked out the details of their new stadium deal. This is the exact kind of illicit, top down, mega-money behavior that is at the root of America’s current repulsion at “the 1%.” The comparison was apparent to Yahoo Sports writer Jeff Passan as well. Reporting that the Marlins really weren’t broke at all, he wrote:

The swindlers who run the Florida Marlins got exposed Monday. They are as bad as anyone on Wall Street, scheming, misleading and ultimately sticking taxpayers with a multibillion-dollar tab. Corporate fraud is alive and well in Major League Baseball.

The SEC seems to agree. They have demanded that records pertaining to the stadium deal be forked over by the team, city and county. From the Miami Herald,

The subpoenas focus heavily on the Marlins, requesting communications to and from team executives, documentation that might show the team’s ability to pay for or contribute to the financing of the stadium, and information on any meetings involving not only Loria and Selig, but also team President David Samson and former Major League Baseball president and chief operating officer Robert DuPuy. DuPuy was instrumental at the latter end of the hard-fought deal.

The decision to build a new stadium was controversial in south Florida and had many vocal critics at the time of negotiations, including auto magnate Norman Braman. The argument has been made that the city bent to meet the demands of a millionaire owner who was threatening to otherwise move his team. This hardly sounds like fair negotiations.

No matter the scenario, the taxpayers of Miami-Dade County seem to have gotten hoodwinked, per the Herald piece:

The 37,000-seat, retractable-roof stadium ended up being a top-heavy deal for the county, put on the hook for $347 million in construction bonds, a $35 million loan to the Marlins, and $12 million for incidentals such as road repairs. The city’s end of the deal is $94 million worth of parking garages, $13 million toward construction, and $12 million for other improvements.

The county will have to dish out more than $2 billion over 40 years to pay back the principal and interest on the bonds, which were sold under poor market conditions.

The ballclub — which receives virtually all revenues, from concessions to ticket sales for everything from ballgames to soccer matches to concerts — was required only to spend $120 million at the end of construction, on top of repaying the loan to the county in $2 million yearly installments that would serve as rent.

To avoid a tax bill, the county was deeded the footprint of the stadium from the city, and is the property’s owner.

Loria is used to being portrayed as the bad guy. The lifelong art dealer’s name is still a borderline curse word in Canada where, as owner of the Montreal Expos, he worked on the deal that sold the team to Major League Baseball, a partnership that ended with the Expos moving to Washington, DC and becoming the Nationals. One of the main reasons he decided to sell the team is because the provincial government refused to pay for Loria to build…you guessed it…a new stadium, Labatt Park. Premier Lucien Bouchard said that he couldn’t support using taxpayer dollars to build ballparks when the province was being forced to shut down hospitals. When he didn’t get his new stadium, Loria sold the team and used the money he got to buy the Marlins.

And now Floridians are in the midst of Loria’s ruthless, bottom-lining approach.

The costs of the new stadium are likely to burden taxpayers for many years to come. The new stadium is also not likely to improve the Marlins’ low attendance (the Marlins averaged 19,007 last season). The city will have to hire a full-time lawyer to deal with this SEC investigation and the other two the city is currently facing. There are not many winners in this situation other than Jeffrey Loria who gets to decorate a lovely new cash cow that could break Little Havana’s back.

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