Taxpayers Finance Miami Marlins Christmas List

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Nobody has been on a holiday shopping spree in America that matches the newly renamed Miami Marlins baseball team.  In just a few weeks the Marlins have inked three free-agent deals, committing about $191 million in payroll for batting champion Jose Reyes, reliever extraordinaire Heath Bell, and perfect-gamer Mark Buehrle. Practically every story on these deals notes that the Marlins, whose entire payroll was a scant $29 million just a few years ago, have been stocking up in the hopes of filling a glitzy, new $645 million domed stadium with fans.

But the Marlins would likely have been unable to afford this holiday-season splurge were it not that the taxpayers of South Florida financed three-quarters of the team's new stadium, largely against their will. The entire stadium affair, details of which are under investigation by the Securities and Exchange Commission, is a startling lesson in the way that politicians star-struck by pro sports and team owners continue to tap the public treasury, often against the wishes of the public itself. More such deals are in the works.

The Marlins have suffered for years from among the worst attendance in Major League Baseball, blamed on everything from the scorching Miami summer heat and uncomfortable humidity to the fact that so many local baseball fans migrated from somewhere else and remain loyal to their former teams. The team has threatened to leave the area numerous times, complaining that the rent deal they had at Dolphins Stadium, where they received no revenues from concessions, was a money-loser, though a leaked financial statement showed that the Marlins actually earned $33 million over 2008 and 2009.

To keep a team that few fans were clamoring for, Miami city and county officials pushed through one of the more lucrative stadium financing deals in recent memory. In return for some $500 million in financing, local government gets no revenues from the park, while the team receives monies from 50 luxury suites, parking, concessions and stadium advertising. Team lawyers apparently even inserted unnoticed into the deal language which makes the city of Miami responsible for $1.2 million in property taxes on the parking garages built along with the stadium.

Officials attempted to justify the financing based on projections that the stadium would generate $300 million in economic activity and create 2,700 permanent jobs. But few actual sports facilities built with taxpayer money have ever lived up to the inflated forecasts that their supporters produce, in large part because, as economists Roger Noll and Andrew Zimbalist point out in their book Sports, Jobs and Taxes, team revenues are "trivial compared with the economic activity in even the smallest major league city."

These forecasts turn out so rosy because they often assume that revenues spent at sports facilities are incremental dollars that consumers wouldn't otherwise part with if the teams didn't exist. That assumes that if you can't take in a professional baseball game your only alternative is to sit home twiddling your thumbs. And such rosy forecasts often fail to take into account the economic activity sacrificed to taxes that cities and states enact to finance these facilities.

Miami-Dade County bankrolled the stadium construction with bonds backed by local tourism taxes that critics wanted spent elsewhere at a time of fiscal stress. To complete the bond deals in a tough market, county officials had to pledge they would step in and use revenues from their general fund to pay back bondholders if hotel taxes slump. That's an uncomfortable pledge given the fiscal squeeze in South Florida. To close a $239 million budget deficit this year, the county eliminated 1,000 jobs and wrung concessions on pay and benefits from local workers, including police and fire, even as the Marlins prepared to dangle tens of millions in front of marquee names like Reyes and Bell.

Officials went ahead with the deal even though a South Florida poll in 2008 showed that a majority of residents were against a publicly financed stadium. Anger at the transaction has been so intense that earlier this year reformers mounted a recall election against Miami-Dade Mayor Carlos Alvarez, who did the stadium deal. Voters kicked Alvarez out of office in a landslide, with 88 percent voting for recall, but by then it was too late to stop the stadium financing.

Something far more serious may be afoot now that the SEC is investigating the circumstances of the bond offerings. Although the SEC doesn't say what it's looking for, some critics say the stadium deal is foul-smelling given that the county and city were so anxious to give the team, which refused to release details of its own financial condition, so much public money in the midst of the worst fiscal meltdown for states and cities in decades.

Still, we haven't seen the end of professional teams coming to officials demanding new stadiums. Since 1993, according to Vanderbilt economist John Vrooman, governments around America anted up about $5.6 billion to help NFL owners build a new generation of 25 stadiums replete with cash-generating luxury boxes and premium seats.

To compete with this new generation of sports facilities, NFL owners in Atlanta and Minnesota are now angling for new subsidized stadiums themselves. The San Francisco 49ers, meanwhile, are close to a deal with the city of Santa Clara for a proposed $1 billion stadium to be built with borrowed money, including some $400 million supplied by a new city stadium authority. Baseball's Tampa Rays are also in the hunt for a government funded stadium, though their attendance record isn't much better than the Marlins'.

In other words, Christmas can come at any time of the year for some of other biggest sports franchises, with local politicians forcing taxpayers to play Santa.


Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute

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