Sports and the Law: Marlins Stadium Subsidy Might Violate State Constitution
The 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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Truthfully, the Marlins should just pack it up, sell off their assets and reassign their players. They suck, and there is no hope in the immediate future.
isn't loria the owner of the Philadelphia Eagles?
The Marlins had the lowest average home attendance in MLB for the past two seasons. I'm sure the problem is with the stadium and not the AAA-quality team they've been fielding recently.
http://sports.espn.go.com/mlb/attendance
so the payroll is less than $25 mil...I think that he gets MORE than that from revenue sharing.
If that's the case, he makes money before he ever sells a ticket or a hot dog or beer. Basically, the City/County are financing the investment of a smart businessman who has no intention of spending his own money to win.
Why win, when you can make money losing...and it will probably cost money to win.
some quick internet 'research' shows that the Marlins got $55 mil from revenue sharing in 2006. Essentially, Loria is pocketing about $30 mil per year by having such a cheap (and crappy)team.
Can't blame him, if you can't win...why not get rich losing.
Eagles owner is Lurie.
Marlies owner is Loria.
South Florida SHOULD be a good baseball market though and the Marlins may have a cheap owner, but they have very good management. Lets not forget they won 2 world series in the last 10 seasons... thats better than.... everyone except the Yankees and Red Sox? Not too shabby.
Wow. It's like real reporting here. And on sports. What gives?
I don't see anyone complaining about how the Red Sox winning the world series TWICE violated the US Constitution (sujecting Americans near and far to cruel and unusual punishment), so what's the big deal about the new stadium? The Marlins are the future Yankees of the NL. Just wait.
There's a simply solution to this problem - eliminate the antitrust exemption for baseball and require them to act on a competitive level. Further, instead of creating other leagues, baseball should devolve power of the minor leagues to those entities and have a mass culling of the rosters. Let the minor league system already in place become the feeder leagues and then institute promotion and relegation. This would ensure competition and put a stop to teams exploiting cities in this manner - instead of buying a team from another city (at huge cost to the taxpayer), the city would already have a team. At that point, securing good ownership and fielding a winning team would be the only obstacle between any city and MLB.
The coddling of American sports leagues by Congress is one of the more disgusting elements of American law.
See Libertarian Party v. State of Wisconsin, 199 Wis.2d 790, 546 N.W.2d 424(1996) for similar arguments challenging the Brewer's stadium.
1:25/1:28: There are other costs to running a franchise than player salaries. I don't disagree with you that he's probably making significant amounts of money, but subtracting player salaries from revenue received through revenue sharing is probably a pretty bad indication of how much.
Yankees Stadium is not being privately financed by any means Lat. Check out the Village Voice's reporting on this issue and the law firms involved.
haha... pubic financing
2:32 - good point, there are many operating costs that people are overlooking claiming that he is pocketing $30 mil. still though, there is no doubt that loria is a douche owner who runs his team for a profit - not to win. as a mets fan i hate the yankees. even looking at our big payroll ($120 mil-ish), it is absolutely ridiculous that the yankees have a payroll of over $200 mil. BUT, i have always said, you've gotta tip your hat to george steinbrenner, who, while sitting on a gold mine, runs his team into the red year after year because he wants to win and doesn't care about making money.
"2 most productive players?" Cabrera, yes. Willis, no. They still have Hanley Ramirez who is a top 5-10 in all of MLB talent. He was WAY MORE productive than Willis last year.
Sports and the Law: Marc Edelman's Grainy Clipart Logo Violates My Eyes
Dontrelle Willis wasn't in the top half of the Marlins' players for the past few years. He sucks.
you know it was a good post when the only negative comment is about the clipart...Welcome Marc Edelman! Keep up the sports law posts!
The legal argument has no merit since the County will own the stadium and the Marlins will be renting it. Also, the attendance argument is getting old since the Marlins have one of the highest TV and radio ratings in the country. The problem is the stadium and the location. With the stadium now being further within the county the attendance will improve.
Comparing the Marlins' situation to the Yankees while pointing out that the Yankees are building a privately financed stadium is hogwash.
The Marlins are in a situation similar to about a half dozen MLB teams.
They don't earn significant revenue because of their current lease and play in the most awful dump in the Big Leagues, not to mention it's in the middle of nowhere in a crummy neighborhood.
The Marlins certainly are not hopeless and the product they put on the field does have the potential of winning another title in the next 5 years or so.
The Yankees are NOT privately financing their stadium. The SF Giants are the only team to have done that.
Most people posting have no clue what they are talking about. The revenue sharing they get doesent just go to paying the team payroll, but all other employee's, the criminal lease deal they have at dolphins stadium, and the millions in travel expenses and other texpenses. Loria IS NOT making any significant profit from this team. To even compare the marlins to the yankee's storied franchise is shameful (oh and by the way do some research cuz the yanks aint even privetly financing you douche bag!) The stadium is horrible and the weather is unpredictable, plus witha stadium that seats 75,000 whats the need to buy season tickets, or even single game tickets in advanced if you know plenty of seats will always be available at game time. A 36,000 seat retractable roof stadium in the heart of miami WILL bring fans out, WILL be a sucess, and WILL be a gem in this city.