Sports and the Law: Marlins Stadium Subsidy Might Violate State Constitution

Sports and the Law 3 Above the Law blog.jpgThe thirteen commissioners of Miami-Dade County are expected on Thursday to approve a proposal to spend $347 million in taxpayer money to build a new 37,000-seat, retractable roof stadium for the Florida Marlins. This proposal would not only provide a huge subsidy to the team’s much maligned owner, Jeffrey Loria, but it also might violate the Florida Constitution.
According to published reports, the Marlins stadium proposal would require Miami-Dade County to contribute roughly two-thirds of the cost for the new stadium, with the city of Miami contributing roughly 3% ($10 million), and Marlins owner Jeffrey Loria contributing 30% ($155 million). According to Miami Today, Mr. Loria would then be allowed to sell the stadium’s naming rights to a third party, expected to fetch him more than $155 million.
A number of Miami-Dade County residents are unhappy about the idea of publicly funding a new stadium for Mr. Loria, who has never invested much of his own money in the Marlins ball club. Recently, on December 5, 2007, Mr. Loria traded away the Marlins’ two most productive players, Miguel Cabrera and Dontrelle Willis — a move that reduced team payroll to less than $25 million, the lowest in Major League Baseball. For purposes of comparison, the New York Yankees projected 2008 payroll is $213 million. The Yankees, incidentally, are privately financing their new stadium.
Read more, after the jump.

Many economists believe the only reason that counties including Miami-Dade publicly finance sports stadiums is fear of losing their team to another city. Historically, absent threats of forming a rival league, Major League Baseball (“MLB”) has maintained fewer teams than there are municipalities that can economically sustain them. As a result, owners such as Jeffrey Loria are able to credibly threaten to relocate their team if host cities do not submit to their funding demands. As explained by former Washington D.C. mayor Sharon Pratt Kelly, “[t]he mayors of American cities are confronted with a prisoner’s dilemma of sorts. If no mayor succumbs to the demands of a franchise shopping for a new home then the team will stay where they are. This, however, is unlikely to happen because if Mayor A is not willing to pay the price, Mayor B may think it is advantageous to open up the city’s wallet. Then to protect his or her interest, Mayor A often ends up paying the demand price.”
In the case of the Marlins, the officious “Mayor B” is Las Vegas’s flamboyant Oscar Goodman, who has been courting an MLB team for years.
With this type of situation in mind, scholars as well as both federal and state legislators have long debated how to prevent sports clubs from demanding subsidies from American cities (PDF). Congress, for instance, has considered many bills to prevent team owners from relocating if denied pubic financing. Most notably, in 1999, Arlen Specter (R-Pennsylvania) proposed the Stadium Financing and Franchise Relocation Act (S.952), which, if passed, would have required MLB and National Football League owners to fund at least 75% of their stadium costs with private money. S.952, however, was never passed.
The Florida Constitution, meanwhile, includes its own language that may prevent Florida’s municipalities from subsidizing stadiums. Article VII, Section 10 of the Florida Constitution states that “[n]either the state nor any county … shall become a joint owner with, or stockholder of, or give, lend or use its taxing power or credit to aid any corporation, association, partnership or person.” In addition, Article VII, Section 9 prevents Florida’s counties from levying taxes for anything other than “municipal purposes.” The Supreme Court of Florida, in Brandes v. City of Deerfield Beach (1966), held that building a professional baseball stadium is not a municipal purpose.
Nevertheless, Florida’s municipalities continue to regularly subsidize sports facilities without much of a legal challenge. Perhaps because enforcing Brandes’s narrow interpretation of “municipal purposes” would lead to Florida losing most, if not all, of its professional sports teams, no current court would likely adopt this interpretation.
With that said, however, Florida residents are generally more hostile toward Jeffrey Loria than they are toward most of their state’s other sports owners. Consequently, both Thursday’s vote in Miami-Dade County and the public reaction to the vote’s results are worthy of close attention.
Presuming that the Miami-Dade County commissioners approve the proposed $347 million in public financing for a Marlins new stadium, it will be interesting to see if any anti-stadium litigation follows.
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Marc Edelman is an attorney, business consultant, published author and professor, whose focus is on the fields of sports business and law. You can read his full bio by clicking here, and you can reach him by email by clicking here.

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