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Marlins should look at private financing.


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Handouts? Try private financing for stadium

 

By Charles Elmore, Palm Beach Post Staff Writer

Wednesday, April 7, 2004

 

MIAMI GARDENS -- The opening-day crowd at Pro Player Stadium was never bigger -- 55,315 -- but comfortingly, some things stayed the same Tuesday. It wouldn't be opening day in Florida without the Marlins passing the hat for a few hundred million dollars from the public for a new stadium.

 

The new deadline for complying with this request/demand, in case it has slipped from under your family's refrigerator magnet, is May 1. (Forget the previous deadline of March 15 or else.)

 

"We'll have to pursue ways to fill the gap," Marlins President David Samson said Tuesday. "We remain confident that everything will work out. But we need a facility to be competitive. Losing upwards of $20 million a year just won't do it."

 

There are many things that owner Jeffrey Loria and Samson have done right. They have proved themselves remarkably adept marketers and maximizers of player payroll.

 

But by inertia, they're heading down the same dangerous road as previous owners who put the franchise in jeopardy, with threats that corroded fan trust.

 

After so many years of this, virtually no one believes the Marlins are going anywhere if the Florida legislature fails to come up with $60 million by May 1. The Marlins say that would help bridge a gap of at least $115 million to build a $325 million stadium. (Sign of desperation: The Marlins are giving up insistence on a ballpark roof.)

 

Here's why: Baseball already has one team (Montreal) it cannot place in a new home. It is having trouble enough finding one suitor city willing to pay for a stadium, let alone two cities.

 

Next, league contraction is off the table as an option through 2006, by agreement with the players union. Beyond that, Samson promises Loria is committed to staying in South Florida and not selling the team.

 

What the Marlins cannot explain is how baseball magically will go away in South Florida under these circumstances. Spontaneous combustion?

 

Even if attendance were to turn sour again, there's no way Major League Baseball is in a hurry to abandon this TV market. West Palm Beach and Miami combine to form the nation's seventh-largest market, just behind Boston.

 

Yet there is hope for Loria and Samson. This is an opportunity for a bold financial move of the caliber that rightly made them the toast of the sports world last year.

 

After their May 1 deadline comes and goes, the World Series champion Florida Marlins should stop asking for further government handouts for a stadium and do what San Francisco did -- finance a stadium privately. Interest rates are low. They will have a bigger head start than the Giants did.

 

San Francisco's redevelopment agency contributed $15 million. Sponsor naming rights went for $50 million. Charter-seat licenses brought in $40 million. Concession rights and sponsorships accounted for another $44 million. That left $170 million, which the Giants borrowed. They made enough on advertising inside the ballpark alone to cover the debt service, team executives claimed in interviews.

 

The Marlins say they can build a stadium with a retractable roof for $325 million.

 

"The $73 million in still on the table," Miami-Dade County Mayor Alex Penelas said Tuesday.

 

Have the Marlins ever talked about bridging the gap through private financing?

 

"I guess all those options are available," Penelas said.

 

Just before the Marlins took the field, Jeff Conine squinted through the pain of a sinus infection at a question: Does it seem odd that this franchise always returns to this same spot -- under the dark cloud of the stadium issues, its finances in question from opening day, no matter the joy of a World Series championship or a record opening-day crowd?

 

"Seem odd?" Conine said. "Sure it seems odd. You would think something would get done and we could all just stop talking about it."

 

The Marlins can wait for the state and the city to get it together, and do this again next year. Or they can take control themselves.

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well, I don't really see that happening. Loria doesn't have that much money to begin with so for him to pretty much assume the entire cost of the stadium would be hell on our payroll. One thing that I did think of that may make up a smaller gap is to add a "stadium service charge" to all Marlins things sold at the stadium. In that way, an extra $15-$20 million could be raised through sales of tickets, merchandise, etc. Unlikely, but when you see the Marlins obviously wanting the stadium to the point that they are willing to settle for less than they need, nothing is out of the question...

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OK, let's see here -

 

The Marlins claim they can get $2MM a year from the state thru the sales tax rebate. That implies that taxable revenues are about $31MM.

 

So, I agree with TS - simply raise prices by 6.5% (to taxable revenue of $33MM) for everything and ta-da, there's your money.

 

I for one wouldn't mind paying an extra 6.5% for TShirts and tix if I knew it was to build the structure we need.

 

The challenge is to close the rest of the gap - private financing would have to help out (Bacardis & Estefans, are you listening?)

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Have you ever compared souvenir prices at the stadium with other retailers off-site? The mark-up is already substantial. Trying to get people to pay 30 bucks for a T-Shirt is a little unreasonable.

They're already paying $25, but what I'm saying is why not add $2 dollars to the shirts, $2 dollars to the tickets, a dollar to the programs, etc. Small mark-ups here and there add up over the course of the season. Think, if we get around 20k for weekday games and 35-40k for weekend games, we'll easily be able to get around $20-30 million through these modest markups...

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How about instead of donations and higher souvenir/tix prices the FO gets their act together, puts a muzzle on Samson, hires some professionals to do the job for them on a PR and financial level, and gets the damn thing done?

 

THis has dragged on way to long, and as the article alluded to, an attitude of apathy is starting to develope among people in SoFla regarding the stadium issue et. al.

 

And as far as the Fish now not wanting a roof.... Isn't this a little counterintuitive? Building a ballpark without a roof doesn't solve long-term issues unless someone is forecasting a 20-30 year nuclear winter to happen in the next couple of years. Attendence will suck again and people won't go out to a ballpark, new or otherwise, when it's 678,000 degrees out.

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Look, if everybody were to atleast chip in $200(at the most), it would take about 300,000 people in order to reach $60 million dollars. And if the Marlins were to offer up some sort of future incentive for doing this(Discount on season tickets, a place where they can honor you for helping out in the new stadium somewhere, etc).

 

 

However the problem with that is that there aren't 300,000 people who can give $200 to help this team build a stadium and its obvious that our state goverment doesn't give a damn about this team or anyone else here who follows this team religiously, so Loria and Samson are going to need to get creative and follow what they did in San Francisco. They can get close to the $60 million needed by find someone for naming rights, and if they can get the current holders of the Sky boxes to buy them in the new stadium, then they should have enough money to go. But Loria and Samson have to realize that and if they are serious about keeping this team here, they'll do whatever is necessary to get this team a new stadium.

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Guest Moneyball

i think the marlins should pay instead of $137,000,000 they should pay instead of 4.5 mil the marlins will be paying over 30 years they should pay 8 mil that would fill the gap. plus 8 mil a year in 30 years will be nothing.

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FSU has around their fountain at Westcott a brick pathway. These bricks are for sale to graduates, for $300 a piece. It has your name, degree, and whatever else you can fit on their. They have sold quite a few. This could be another creative way to generate extra cash - have a part of the new stadium named with donors on it. Maybe a serious of bricks, call it Founder's Path or something on the way to games or along the outfield wall. Somewhere where people could go and point out their names. Any fan would do this, for a small price like $200. You can even charge more for bigger bricks or something. People would feel more apart of the team as well. Be more committed as fans. Help develop tradition. I dont think you can get 300,000 donors, but if you got 10,000 that is a very nice start (we have 8,500 season ticket holders right now...).

 

Other than that, I dont see why the franchise couldnt get private financiing. It wouldnt be Loria's wealth/credit that would be examined, it would be the franchise's financial potential that would generate the loan. This franchise could very easily get such a loan and if not, MLB could see to it.

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FSU has around their fountain at Westcott a brick pathway. These bricks are for sale to graduates, for $300 a piece. It has your name, degree, and whatever else you can fit on their. They have sold quite a few. This could be another creative way to generate extra cash - have a part of the new stadium named with donors on it. Maybe a serious of bricks, call it Founder's Path or something on the way to games or along the outfield wall. Somewhere where people could go and point out their names. Any fan would do this, for a small price like $200. You can even charge more for bigger bricks or something. People would feel more apart of the team as well. Be more committed as fans. Help develop tradition. I dont think you can get 300,000 donors, but if you got 10,000 that is a very nice start (we have 8,500 season ticket holders right now...).

 

Other than that, I dont see why the franchise couldnt get private financiing. It wouldnt be Loria's wealth/credit that would be examined, it would be the franchise's financial potential that would generate the loan. This franchise could very easily get such a loan and if not, MLB could see to it.

 

excellent idea, I'm up for it. Where do I send my $300? Call the Front Office!

 

Maybe charge more for bricks at the entrance or something?

 

"Marlins Stadium" - the ballpark built by the fans

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Has anyone even considered car washes and bake sales??? These type of things work wonders for the local high school teams.

 

Or how about selling M&M's and gift wrap??? The kids in my neighborhood are always hitting me up for some type of fund raiser.

 

;)

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FSU has around their fountain at Westcott a brick pathway. These bricks are for sale to graduates, for $300 a piece. It has your name, degree, and whatever else you can fit on their. They have sold quite a few. This could be another creative way to generate extra cash - have a part of the new stadium named with donors on it. Maybe a serious of bricks, call it Founder's Path or something on the way to games or along the outfield wall. Somewhere where people could go and point out their names. Any fan would do this, for a small price like $200. You can even charge more for bigger bricks or something. People would feel more apart of the team as well. Be more committed as fans. Help develop tradition. I dont think you can get 300,000 donors, but if you got 10,000 that is a very nice start (we have 8,500 season ticket holders right now...).

 

Other than that, I dont see why the franchise couldnt get private financiing. It wouldnt be Loria's wealth/credit that would be examined, it would be the franchise's financial potential that would generate the loan. This franchise could very easily get such a loan and if not, MLB could see to it.

If I'm not mistaken Pittsburgh and San Fran did a modified version of this in the form of "seat licenses." The concept was a modified season ticket sale where a holder was locked in for a long period in exchange for their name being placed on either the seat (?) or a wall. Not sure on the specifics, but I'm all for something like it. However, a big brick walk-up would only look pretty in a downtown setting, so I'm not sure how it would look at the OB (which is where I feel we're going to end up)...

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There are two problems with a privately financed stadium, and those are Loria's credit (and value of the franchise, and possible value of the stadium) that he can borrow against. Another is the debt service that will hamper the club's finances much like the Giants who don't spend much than us. More likely because of the amount Loria would have to borrow and the small amount he could get from selling naming and concession rights the Marlins would ahve their own stadium but not be in better financial shape for atleast a decade. Now, Loria is the best owner we've had. A thousand times better than that the crook (Huizenga) or the back-stabber (Henry), but that's awfully large risk to ask a man to risk his very name and his wealth and tie him to a position where he wouldn't turn a profit for years.

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There are two problems with a privately financed stadium, and those are Loria's credit (and value of the franchise, and possible value of the stadium) that he can borrow against. Another is the debt service that will hamper the club's finances much like the Giants who don't spend much than us. More likely because of the amount Loria would have to borrow and the small amount he could get from selling naming and concession rights the Marlins would ahve their own stadium but not be in better financial shape for atleast a decade. Now, Loria is the best owner we've had. A thousand times better than that the crook (Huizenga) or the back-stabber (Henry), but that's awfully large risk to ask a man to risk his very name and his wealth and tie him to a position where he wouldn't turn a profit for years.

I am not totally sure about that. There is a $137M put up by the team, $73M put up by the County. That leaves $115M to bridge the gap. Naming rights could get you $40-60M, I believe. That leaves $75-55M left to finance. The Marlins are looking for that $60M rebate - which is broken down to $2M per year for 30 years. They possibly wont get it this year, but they could get it next year. So if anything, as it stands, private financing for the stadium would be very minimal at this point. That wont be as tough to overcome as the Giants situation would be. As far as I can tell anyway.

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I am not totally sure about that. There is a $137M put up by the team, $73M put up by the County. That leaves $115M to bridge the gap. Naming rights could get you $40-60M, I believe. That leaves $75-55M left to finance. The Marlins are looking for that $60M rebate - which is broken down to $2M per year for 30 years. They possibly wont get it this year, but they could get it next year. So if anything, as it stands, private financing for the stadium would be very minimal at this point. That wont be as tough to overcome as the Giants situation would be. As far as I can tell anyway.

Your making some wrong assumptions. That $137M that the Marlins are allegedly "putting up" is actually being taken out of the future revenues of the team. The team does not have $137M cash in hand. Naming rights would be included in that $137M, as would be suite revenue and other revenue streams of the team.

 

Second, a private financing deal would only make sense if your investor sees a feasible return. Private financing would hamper the future revenues of the team. The reason why the lease terms are so onerous on Pro Player Stadium is because Huizenga, as the successor-in-interest to Joe Robbie, is still paying off the loans to build the place. I know that a lot of you here weren't even conceived when PPS was built, but Joe Robbie mortgaged everything to build that park. The Dolphins were used as collateral! All the money from the suites and club seats go to pay the debt for constructing that park. The reason the Dolphins don't cry poverty is because the NFL gives each team a nice fat check from their $2B TV deal, which pretty much covers all of the payroll (and that is helped with a salary cap in football -- that counters Cape Fish's earlier claim elsewhere that the NFL was the most "backwards run league"!). So with a large influx of cash from TV, the Dolphins don't need to make too much out of PPS. However, once the "mortgage" on PPS is paid off, the Dolphins seek to make a windfall off the park.

 

If Loria were to do what Joe Robbie did, the team would still be strapped for cash. Instead of having limited revenue from PPS now, they would have to divert all revenue from the new park to pay for the debt service and the team would be in the same boat, but with a shiny new stadium. That's why a private-public partnership must be sought!

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I am not totally sure about that. There is a $137M put up by the team, $73M put up by the County. That leaves $115M to bridge the gap. Naming rights could get you $40-60M, I believe. That leaves $75-55M left to finance. The Marlins are looking for that $60M rebate - which is broken down to $2M per year for 30 years. They possibly wont get it this year, but they could get it next year. So if anything, as it stands, private financing for the stadium would be very minimal at this point. That wont be as tough to overcome as the Giants situation would be. As far as I can tell anyway.

Your making some wrong assumptions. That $137M that the Marlins are allegedly "putting up" is actually being taken out of the future revenues of the team. The team does not have $137M cash in hand. Naming rights would be included in that $137M, as would be suite revenue and other revenue streams of the team.

 

Second, a private financing deal would only make sense if your investor sees a feasible return. Private financing would hamper the future revenues of the team. The reason why the lease terms are so onerous on Pro Player Stadium is because Huizenga, as the successor-in-interest to Joe Robbie, is still paying off the loans to build the place. I know that a lot of you here weren't even conceived when PPS was built, but Joe Robbie mortgaged everything to build that park. The Dolphins were used as collateral! All the money from the suites and club seats go to pay the debt for constructing that park. The reason the Dolphins don't cry poverty is because the NFL gives each team a nice fat check from their $2B TV deal, which pretty much covers all of the payroll (and that is helped with a salary cap in football -- that counters Cape Fish's earlier claim elsewhere that the NFL was the most "backwards run league"!). So with a large influx of cash from TV, the Dolphins don't need to make too much out of PPS. However, once the "mortgage" on PPS is paid off, the Dolphins seek to make a windfall off the park.

 

If Loria were to do what Joe Robbie did, the team would still be strapped for cash. Instead of having limited revenue from PPS now, they would have to divert all revenue from the new park to pay for the debt service and the team would be in the same boat, but with a shiny new stadium. That's why a private-public partnership must be sought! True, but the financing situation would be much less than that of Joe Robbie's efforts, which are greatly detailed and understood even among us young (I was 10 in 1987). H-bomb bought the team because the Robbies couldnt afford it anymore. Huizenga also used the Marlins to absorb costs of the Dolphins - in fact used them as a scapegoat which is why he sold them.

 

The Marlins themselves in their own stadium would have no problem paying it. If private financing were sought for the whole difference, the $115M, it would be financed for a long time. Paying it off is not so much an issue as how much it would cut into the revenue of this team. At this point, it makes MORE fiscal sense to build your own stadium, and finance it yourself, than it does to stay at JRS under the terms negotiated by the venomous Huizenga.

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