Posted July 1, 200915 yr Could this unforseen shortfall in the bond sale, affect whet we are going to do with the trading deadline ? Will this make us sellers even if we are this close ? And could Loria order a $ 6 million reduction in payroll for next year to make up the difference ? Will this make the getting rid of Uggla all the more necessary ? He makes $ 5.5 million and getting rid of him, could make that money up in one shot.
July 1, 200915 yr Everything was resolved at 1:10 am (this morning) Go to the New Ballpark web cam (you can find it by clicking on "ballpark' on the Marlins site) and you will see there is work going on. June 30, 2009 Marlins Stadium Update No. $6.2 million (UPDATED 1:10 AM) > Posted by Sarah Talalay on June 30, 2009 11:39 PM Miami-Dade County fell short by $6.2 million in its effort to sell bonds for a new Marlins ballpark Tuesday, but site preparation work is expected to begin Wednesday morning at the former location of the Orange Bowl. Although the shortfall in the bond sale threw the ballpark deal into disarray for several hours Tuesday night and into early Wednesday, the deal appeared to be back on track, after the Marlins agreed to fill the gap should the dollars be needed to complete the 37,000-seat retractable roof ballpark. The commission debated from about 7 to 9 p.m. and then what was meant to be a 45-minute break stretched on for three and a half hours. The commission finally returned at 12:30 a.m. Wednesday and voted 9-3 for changes that will allow the deal to move forward. Commissioners approved three items, including agreeing to a higher interest rate on the some of the bonds and adjusting the county's commitment to the project to $341 million down from $347 million. Earlier in the evening, County Manager George Burgess told commissioners the county had planned to sell $306 million in bonds, but fell short by about $6.2 million and a portion of the bonds were set at a higher interest rate than the county had expected. That means the county?s commitment to payments will remain the same, but the gap needed filling. Neither the county, nor city were willing to step up, Burgess said. ?At end of the day, we?re extraordinarily close,? Burgess told commissioners. ?We?ve had conversations with the team. My ask of them was, ?If we?re short, are you prepared to be able to cover the difference??? Marlins President David Samson insisted the team would -- and the public would not be asked to put more into the deal. ?We made a commitment in March," Samson said. "That commitment was there would be a certain amount of money the public would be committing and not one dollar more.? Worried construction workers would not be able to begin working, Samson said the team would cover any additional costs. ?If this building costs $515 million, the team will put in what?s required,? Samson said. ?If it costs $512 million that is what the team will do.? You can see equipment on the site via the team?s ballpark webcam. A formal ground-breaking is scheduled on July 18. Not to get too technical here, but while the bonds backed by the professional sports franchise facilities tax portion of the hotel tax were sold at a lower interest rate than anticipated, those backed by the Convention Development portion of the hotel tax were set at a higher rate. The ?blended rate? of the two taxes fell within the county?s 7.5 percent cap, but the commission needed to sign off on the higher cap of 8.2 percent for the CDT-backed bonds. Some commissioners worried about encumbering more taxpayer dollars, tapping into the county?s general fund if hotel dollars fall short during the life of the deal, and continuing to adjust a deal that has dogged them for years, but may finally result in a ground-breaking in a few weeks. Commissioner Sally Heyman wanted Samson to agree to cover the $6 million shortfall rather than agreeing to cover any additional costs. Commissioner Katy Sorenson worried the county didn?t bargain hard enough while the deal was being negotiated. ?We can see clearly the Marlins have more to give and clearly have had more to give all along and it?s an example of why we can see this isn?t such a great deal for our constituents,? Sorenson said.
July 2, 200915 yr Author Still could this $ 6million they spent, affect the team on the field ? Will this make it less likely they go out to get a bullpen arm ?
July 2, 200915 yr Author You're kidding right? No, not kidding. I know that the owner is not capable of spending a lot of money, and I wasn't sure if that extra 6 million would take away their ability to improve the team. Does it alter the plans at all ?
July 2, 200915 yr You're kidding right? No, not kidding. I know that the owner is not capable capable but not willing of spending a lot of money, and I wasn't sure if that extra 6 million would take away their ability to improve the team. Does it alter the plans at all ? Fixed that for you.
July 3, 200915 yr You're kidding right? I was thinking along the same lines. The guy basically saved the stadium and people want more. NOW. Kinda like when it was disclosed he gave $$$ to his alma mater. "He coulda spent that on us!!" Higher payroll makes for better TV.
July 3, 200915 yr The guy basically saved the stadium You are exactly and precisely right. People have NO IDEA of how close to ABSOLUTE AND TOTAL FAILURE the stadium bond issue was. In fact, the bond sale WAS a failure until Loria stepped up. He obviously told the underwriters he would buy the shortfall (when he knew it would only be $6 million) long before it became an issue that had to be voted on by the idiots on the various government bodies needed to rubber-stamp it. Normally, bond issues like this one would be vastly over-subscribed and buyers would be allocated a fraction of what they wanted. Bid-to-cover ratios of 200% or 300% aren't unusual on quality issues. At 200%, you get half of what you wanted to buy, assuming that you're not bidding based on interest rate. This offering FAILED to attract enough bidders to even cover the amount they wanted to sell. Had demand been even 10% lower, the $6 million shortfall would have been a $36 million shortfall and Loria would have said "forget it" and the underwriters would have pulled the deal entirely. Can you say no bond sale and NO STADIUM? This deal got done by less than the skin on your teeth and no one should ever criticize Loria's financial decisions or commitment to baseball in Florida and winning again. It was done at a nasty interest rate (up to 8.2%, a rate beyond junk,) not unexpected for low-grade merchandise. Good thing it got done when it did, the environment isn't going to get any better anytime soon. I wouldn't be at all surprised to see the bonds in default some years down the road, based on Miami hotel taxes as they are. Not my problem, I wasn't dumb enough to buy any of the bonds. and people want more. NOW. Kinda like when it was disclosed he gave $ to his alma mater. "He coulda spent that on us!!" Funny how some people think every baseball owner has unlimited funds.
July 3, 200915 yr You're kidding right? I was thinking along the same lines. The guy basically saved the stadium and people want more. NOW. Kinda like when it was disclosed he gave $$ to his alma mater. "He coulda spent that on us!!" Higher payroll makes for better TV. No he didn't say he wanted more or anything like that. He asked a legit question. That 6 million has to come from somewhere. He asked where it was coming from.
July 4, 200915 yr You're kidding right? I was thinking along the same lines. The guy basically saved the stadium and people want more. NOW. Kinda like when it was disclosed he gave $$ to his alma mater. "He coulda spent that on us!!" Higher payroll makes for better TV. No he didn't say he wanted more or anything like that. He asked a legit question. That 6 million has to come from somewhere. He asked where it was coming from. It's coming from Loria. And this person is worried that it means a lower payroll. So yea, I would say my analysis was right on.
July 4, 200915 yr The guy basically saved the stadium You are exactly and precisely right. People have NO IDEA of how close to ABSOLUTE AND TOTAL FAILURE the stadium bond issue was. In fact, the bond sale WAS a failure until Loria stepped up. He obviously told the underwriters he would buy the shortfall (when he knew it would only be $6 million) long before it became an issue that had to be voted on by the idiots on the various government bodies needed to rubber-stamp it. Normally, bond issues like this one would be vastly over-subscribed and buyers would be allocated a fraction of what they wanted. Bid-to-cover ratios of 200% or 300% aren't unusual on quality issues. At 200%, you get half of what you wanted to buy, assuming that you're not bidding based on interest rate. This offering FAILED to attract enough bidders to even cover the amount they wanted to sell. Had demand been even 10% lower, the $6 million shortfall would have been a $36 million shortfall and Loria would have said "forget it" and the underwriters would have pulled the deal entirely. Can you say no bond sale and NO STADIUM? This deal got done by less than the skin on your teeth and no one should ever criticize Loria's financial decisions or commitment to baseball in Florida and winning again. It was done at a nasty interest rate (up to 8.2%, a rate beyond junk,) not unexpected for low-grade merchandise. Good thing it got done when it did, the environment isn't going to get any better anytime soon. I wouldn't be at all surprised to see the bonds in default some years down the road, based on Miami hotel taxes as they are. Not my problem, I wasn't dumb enough to buy any of the bonds. and people want more. NOW. Kinda like when it was disclosed he gave $ to his alma mater. "He coulda spent that on us!!" Funny how some people think every baseball owner has unlimited funds. Damn shame "should" and "will" are two different things. And thanks for the somewhat detailed insight into bond sales. I found it very interesting.
July 4, 200915 yr :thumbup Merrill Lynch and JP Morgan were the lead underwriters on this deal. What I found absolutely shocking wasn't that it was undersubscribed, it was that they left the deal dangling over a piddling $6 million. What we don't know is how much of the total issue was taken by Merrill and Morgan into their own inventory for later resale. Maybe none. Maybe a lot. I suspect little to none, that is, they merely took orders from those institutions and individuals in whom they had scared up some interest. What is clear is that they were absolutely unwilling to take that last little chunk of $6 mill off the table. $6 mill is pocket change in the muni bond underwriting biz and the fact that the lead underwriters (or any other bank that participated) wouldn't take it speaks volumes about how poor retail demand was perceived to be by Merrill and Morgan and others. I'm VERY glad it got done. I sure wouldn't want to be the next team to try to tap the muni market for stadium funding.
July 5, 200915 yr Author You're kidding right? I was thinking along the same lines. The guy basically saved the stadium and people want more. NOW. Kinda like when it was disclosed he gave $$ to his alma mater. "He coulda spent that on us!!" Higher payroll makes for better TV. No he didn't say he wanted more or anything like that. He asked a legit question. That 6 million has to come from somewhere. He asked where it was coming from. Exactly it was a legitiamte question. Loria from what I understand does not have the money that Steinbrenner has so that is a lot of money for him to put out of his pocket. They keep on saying that they need to keep the payroll low to build the stadium and I was asking because this was $ 6 million that he wasn't expecting to pay. Why were the bonds tough to sell and why was the interest rate so high ? Was this done in NY ? Maybe it was Mets or Yankee fans not buying them ?
July 5, 200915 yr Author You're kidding right? I was thinking along the same lines. The guy basically saved the stadium and people want more. NOW. Kinda like when it was disclosed he gave $$ to his alma mater. "He coulda spent that on us!!" Higher payroll makes for better TV. No he didn't say he wanted more or anything like that. He asked a legit question. That 6 million has to come from somewhere. He asked where it was coming from. It's coming from Loria. And this person is worried that it means a lower payroll. So yea, I would say my analysis was right on. No I wasn't worried about lower payroll, I am still worried about the $ 6 million being spent on the stadium instead of the team when we could use more players for the playoff run. I am worried that it means we wouldn't make a deal, or deal Uggla solely for not much in return because his pay is close to $ 6 million, and that way it wouldn't wreck the budget for this year.
July 5, 200915 yr Why were the bonds tough to sell and why was the interest rate so high ? Was this done in NY ? Maybe it was Mets or Yankee fans not buying them ? The bonds were a tough sale because of the financial environment in general and because of the risk of future default in particular. These bonds were "junk" quality, meaning very high-risk. Not for widows and orphans. Most of the buying probably came out of NY because that's where most of the money is, NY being the center of the financial world and home to major operations of most major financial institutions. It has nothing to do with fans, the typical fan of any team doesn't even know what a municipal bond is, never mind owned any or ever had any reason to even consider owning any. Munis are generally purchased by high-income individuals and institutions that cater to them because the interest paid on the bonds is exempt from federal income taxation. It's probably true that this presented an unexpected need for investment cash to Loria. I suppose it's possible that they considered that the offering might not go well and budgeted for it. The Yankees may spill more than $6 mill before breakfast, but here it's a significant chunk of change. What effect, if any, it has on future plans and spending remains to be seen.
July 5, 200915 yr It was only one tranche that was problematic, most of the offering was oversubscribed. And the answer is a resounding NO. First of all the *money* people refer to when they talk about the team's contribution is put into the deal LAST and second it is a p*sshole in the snow compared to what will be spent marketing 37,000 seats and skyboxes over the next two and a half years. It falls into the chump change category and won't be missed in the slightest. Besides baseball operations $$$ are separate and apart from the (LLC or limited partnership I forget at this moment it is they formed in Delaware) entity involved in the stadium deal.
July 6, 200915 yr Author Thanks for the explaination ... and Marlins2003. I am not really into the financial side of baseball or high-finance, I'm just more of your everyday fan, and wanted to know if there would be problem by spending that $ 6 million that wasn't expected.
July 6, 200915 yr Exactly it was a legitiamte question. Loria from what I understand does not have the money that Steinbrenner has so that is a lot of money for him to put out of his pocket. They keep on saying that they need to keep the payroll low to build the stadium and I was asking because this was $ 6 million that he wasn't expecting to pay. The millionaire owner that works to improve his otherwise hopeless team is better than the billionaire owner that works merely to improve their profits.
July 6, 200915 yr It was only one tranche that was problematic, most of the offering was oversubscribed. I haven't been able to find any of the gory details anywhere. Got a link to any of that?
July 6, 200915 yr Thanks for the explaination ... and Marlins2003. I am not really into the financial side of baseball or high-finance, I'm just more of your everyday fan, and wanted to know if there would be problem by spending that $ 6 million that wasn't expected. They have always said $$$ will be spent according to what is being brought in. Season ticket sales spiked (according to my sales rep) after the stadium deal was done and the new pond was marketed. Another spike is expected when ground is broke. And it is expected to climb as construction continues. I fully expect payroll to go up more than what the board experts are predicting for next year and to continue until we are middle of the road. I think we hit that mark before 2012. Besides....No matter what happens, a small payroll is far better than no payroll. Which is what would have happened had Loria not stepped up.
July 6, 200915 yr It was only one tranche that was problematic, most of the offering was oversubscribed. And the answer is a resounding NO. First of all the *money* people refer to when they talk about the team's contribution is put into the deal LAST and second it is a p*sshole in the snow compared to what will be spent marketing 37,000 seats and skyboxes over the next two and a half years. It falls into the chump change category and won't be missed in the slightest. Besides baseball operations $$$ are separate and apart from the (LLC or limited partnership I forget at this moment it is they formed in Delaware) entity involved in the stadium deal. Thats for the explanation on why this $6 million won't shouldnt cause a reduction in payroll. I think the concern some of us have is that this history of this team has allowed for the smallest cracks to cause major unintended consequences. Good to hear this shouldn't cause them.
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