Florida Pilot

A compendium of random thoughts from a former Washington Beltway insider who is now having a lot more fun flying small airplanes in Central Florida.

Friday, November 25, 2005

making baseball team owners rich

And now another baseball owner is threatening to leave for greener ($$$) pastures. In Miami, Marlins team owner Jeffrey Loria has apparently been unsuccessful in obtaining a public subsidy of $300 million plus which, if the experience of other citites is typical, would end up being substantially more.

Two large local newspapers, the Sun-Sentinel and Herald, seem to see nothing wrong with huge public subsidies for baseball. But let's take a closer look at what is going on here.

What is apparent is that Loria made a business decsion when he agreed to buy the Marlins and, in retrospect, it may have been a poor one. He purchased the team subject to a stadium lease that does not provide him with as much of the ancillary financial perks (parking, concession revenues, luxury box revenue in excess of the ticket value, etc.). It is these perks, typically not even shown on the books of the baseball team itself, that make the baseball business immensely popular for the owners. Let's take parking, for example. It costs $9 to park at a Marlins game. While this is not as high as the charge at some venues, it is clear that it is 80-90% profit.

One has to assume that either Loria was smart enough to reflect the conditions of the stadium lease in what he paid for the team and was, essentially gambling that the taxpayers would pay for a new stadium in which he could get a better deal or he was very naive and overpaid for what he got. In either case, he is apparently expecting taxpayers to make him a fortune as they have in Baltimore, Washington DC, Pittsburgh, and other cities that have spent hugh amounts of taxpayer money on stadiums. In the case of Washington, the sweet deal negotiated for public subsidy of the team increased the value of the franchise by a cool $330 million!

I hope that the political leaders of southern Florida decide not to subsidize a new professional baseball stadium. Will the Marlins head for greener pastures? Probably but it will be no real loss to the south Florida area.


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