Thursday, January 24, 2013

The stadium deal

As you may recall, there are two parts to the proposed deal: the legislation to allow the Dolphins to recoup $3 million a year in state subsidies (which they introduced as legislation a week or so ago), and the proposal to increase the hotel tax to 7%.

The latter took a step forward when Miami-Dade county voted yesterday to side with the Dolphins, and they will propose the legislation to make it happen.  Crafty by the Dolphins, but no certainty.

But it also means that the county should work in good faith on the deal until the legislation is approved - or fails.

There was (predictably) a lot of talk about the Marlins stadium and semantics about how it was different.  The Dolphins again said they'd open their books (but weren't asked to; nice bluff).  And there was some discussion about how the county to the north (Broward) wasn't a part of this, and one commissioner suggested the Dolphins move their training facility back to Miami-Dade (it was discounted).  Other notable comments: He'll pay for half himself (and there are reports that at least part of that money will come from the NFL's development fund, which is a 0% loan).  And he guarantees that the Dolphins will stay here for 20 more years, as long as he owns the team (the specific wording makes it easy to see how a 70+ year old man could simply sell the team and the new owner could move it).

But there was one item that caught my attention: the Dolphins say they are carrying a debt of about $210 million.  Which made me pause "say what?"  They are profitable.  They have been existence for a long time in the same stadium. What gives?

Before that, let me set the context.  Apparently one of the commissioners asked why Mr. Ross couldn't fund it himself.  The reason given was that the NFL has bylaws about the debt load a team can carry.  And being valued at just over $1 billion, the amount is around 17%.

(and now to the part about the debt...this is my understanding of it, and it may not be 100% accurate, and some things I may be assuming...but hopefully it provides some context for the reader)

So how is a debt possible?  Well, as I read it (here), it turns out that Joe Robbie was able to finagle a bond sale by the county in 1985, from which he got $90 million to fund stadium construction at 0% interest.  So that's about half of the amount.

The remainder, which I can't find a specific reference to, was another bond at a low interest rate, related back to the "retrofitting" of the stadium to accommodate baseball, in about 1991.  Again, the county created a bond and sold it to various banks. a low interest rate, it makes some financial sense for the owner of the stadium to pay it back slowly.  Wouldn't you?  I can't fault him for that.

The point is that the owner is already taking advantage of bond money, and state money.  Perhaps the commissioners could have required him to pay off his debt load first. 

And while I don't claim to know the bylaws of the NFL, I have to imagine that there is wiggle room since he owns the stadium, the team, and other properties unrelated to the NFL. 

It all seems strange to me, and I just wish someone would do some good investigative reporting and follow the money....

And one more thing that I noticed: the plans they revealed for upgrades appear to be the same as the ones prepared 18 months ago.  At that time, the price tag was $250 million.  Now its $400 million.  Where did the additional $150 million come from?

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