The Miami Marlins' Marlins Park may be a beautiful place to catch a game, but with the team's slashing of payroll, it is quickly becoming an expensive disaster for the city of Miami, proving its many detractors right after all.
The premise behind the city of Miami and Miami-Dade county getting behind public funding for the Miami Marlins' brand new, publicly funded stadium was that the Fish would then have the revenue necessary to compete on a more equal level with the rest of the teams in baseball. Indeed, owner Jeffrey Loria proclaimed that this would be a new start for the franchise and a "new way" for it to do business thanks to the backing of the stadium's financial boons.
But just one year after the stadium was opened, the Marlins' roster looks decimated in the wake of several trades, and as a result, attendance is expected to be way down in 2013 and for the foreseeable future. With the team likely to play poorly, it seems like a decent time to remind everyone that the Marlins are still having most of their stadium publicly funded while still receiving almost 100 percent of the revenue from the park.
For starers, the stadium’s financing scheme means there will be some $3 billion in interest expenses on the construction loans that will be paid by city and county taxpayers. Worse for taxpayers there is no incentive for Loria to put a good team on the field because the city and county must pay the bondholders regardless of how the team performs. Moreover, a small but quirky part of the bond financing has turned a $91 million loan into a $1.2 billion liability for taxpayers. And to add insult to injury the Marlins are nickel-and-diming taxpayers over capital repair costs.
Those numbers all look very large, and they all look very bad for a city and county that are not exactly thriving with cash in the bank. The Marlins will continue to receive all of the revenue from their games, no matter how the team performs or how many fans show up as a result. But the city and county are still on the hook for upwards of billions of future dollars for a park that was supposed to attract eyes and economy.
Consider that the team is already struggling to fill out the rental areas underneath the parking garages that the team wanted to deem "The Shops at Marlins Park." Add this to the Marlins' likely decrease in attendance in the coming years thanks to the actions of Loria. The effect of thousands of fans who are suddenly not showing up to this area of Little Havana on a semi-nightly basis and dropping good money on local businesses and Marlins ventures alike, and you can see how the county might be benefiting even less from the new ballpark than they initially expected. If the Marlins are drawing 18,000 a night or less as they have done in the past, how likely are new businesses to settle into those vacant slots underneath the parking garage or around the West Plaza?
Nevertheless, the city and county will still owe a ton on those loans taken out to assist the Fish, and while Loria and company may not be raking in the profits they would like, they certainly cannot be doing as poorly as the city is in this deal. And given the trend of new stadiums and bad teams, the worse may be yet to come.
Bad omen for taxpayers: Loria is slashing the team’s payroll by at least $50 million this season due to disappointing attendance and revenue at the new ballpark. But the NewYork Mets–who have cut payroll because of their high debt–have shown that will likely make things worse. The Mets attendance and revenue have been declining over the past two years and Standard & Poor’s recently lowered the rating on the bonds to Citi Field to two levels below investment grade.
The bonds that the Marlins got are graded at AA-, which is far better than what the Mets' bonds were when they were put on the market. And, perhaps more importantly, the bonds mentioned by the Mets are not the same as those issued to Miami-Dade, as the county's ability to pay the bonds may be less tied to the team's performance than those of the Mets'. Still, it is hard to believe that the county is so rich that it can continue to support this kind of massive debt at a higher-than-average interest rate, especially when one of its few stadium incomes (parking) is also expected to decrease in coming years.
All of this is to say that the Marlins, as have many other teams in the past and many more teams in the future, received a generous deal to fund an almost exclusively private stadium by public funding. But because of the team's performances and actions, the deal the city and county struck is looking more and more toxic for taxpayers of the area.