More on the Miami Marlins Mess .... In Terms of Stadium Subsidies

http://sports-law.blogspot.com/          More on the Miami Marlins Mess .... In Terms of Stadium Subsidies

Earlier today, Warren Zola posted an excellent blog entry about how Miami Marlins owner Jeffrey Loria has attempted to trade five of the team's highest paid players to the Toronto Blue Jays, and why Commissioner Selig should possibly get involved to stop this.  As he astutely pointed out, the trade is in many ways more troublesome by the fact it comes just one year after the Marlins opened a new, publicly funded stadium.

I have repeatedly criticized Miami Dade County for handing the Marlins ownership $357 Million in taxpayer money without any strings attached (my 2008 law review article on the issue is here).  The thrust of my argument was that the $357 Million subsidy provided "more pork to the fattest pig in town,"  and that team-owner Jeffrey Loria's promise to begin investing in players upon receiving the stadium would be short-lived.

Unfortunately, these fears have proved accurate.  The Marlins have once again traded away their players and have left the city with one of the lowest payrolls in baseball -- even after receiving huge public subsidies.  Most likely, ownership will next seek to sell the team at a huge profit -- not because Marlins brand equity has increased, but because the owners now control a highly lucrative public asset in their publicly-funded stadium.

It is not difficult to understand why some residents of Miami-Dade County may have wanted a new stadium for their baseball team.  The old one was past its prime.  However, a more sensible approach, if feasible, would have been for the city to have bought the team (this would have likely cost no more than $500-600 Million), rather than purchased an asset for Mr. Loria at nearly this cost and simply handed it over to an owner as a 'gift'. 

In the traditional business setting, when investors put money into a business they demand both a share of the business's profits and some level of control.  Astoundingly, Miami-Dade County neither asked nor received either.  The result: clearly bad for both fans and taxpayers.

Moreover, the Marlins mess is not only bad for baseball fans and taxpayers.  In the long run, it may also hurt the lobbying efforts of Major League baseball's other 29 teams.  While many municipalities have historically provided public subsidies to their baseball teams, the mockery that Jeffrey Loria has now made out of sports stadium subsidies may finally be enough to make some communities skeptical of theses giving gifts, without strings, to team owners.   In other words, if there is ever going to be a counter-movement against sports stadium subsidies, the Marlins stadium deal currently stands as a bold, Exhibit A.

* * *

For a more in-depth view of the issues surrounding sports stadium subsidies, please see the following resources

1. Sports & the City: How to Curb Professional Sports Teams' Demands for Free Public Stadiums (Rutgers Journal of Law & Public Policy, 2008).

2. How to Curb Professional Sports' Bargaining Power vis-a-vis the American City (Virginia Sports & Entertainment Law Journal, 2003).

3. The House that Taxpayers Built: Exploring the Rise in Publicly Funded Baseball Stadiums from 1953 Through the Present (Villanova Sports & Ent. Law Journal, 2009).

-- Posted by Marc Edelman @ 11/14/2012 03:00:00 PM -- Comments (0) -- Post a Comment

 
The Commissioner's Authority: 2012 Edition

In an unabashed fire sale, the Miami Marlins have agreed to trade virtually every player making significant money to the Toronto Blue Jays in exchange for younger, and cheaper, talent.  Making the 1,500-mile trip north from Miami to Toronto, along with $160 million in committed salary, is any good will Marlins team owner Jeffrey Loria has generated since purchasing the team.  The outstanding question is whether this action will trigger MLB Commissioner Bud Selig to respond and veto this trade.

While teams have the right to trade salaries for potential, as illustrated by the blockbuster Red Sox / Dodgers trade this past August, this maneuver by the Marlins feels entirely different.  Under the rubric of full disclosure, I’m a Red Sox fan and was thrilled the Dodgers don’t have an accountant on staff to realize they assumed $250 million in payroll.

Despite only being around for a decade, salary dumps have already marred the Marlins’ short franchise history.  Following the 1997 and 2003 seasons the Marlins ripped apart their team by unloading virtually all of their assets as well, but those trades followed world championships and had a different feel.  This time around there doesn’t even appear to be the pretense of improving the talent on the field.

In the past year, Loria manipulated the city of Miami to contribute $360 million of public funds into the construction of their $515 million ballpark, traded away a National League Rookie of the Year and three time All-Star in Hanley Ramirez, and fired the fiery and Fidel Castro loving manager Ozzie Guillen.  Yet none of these maneuvers seem as offensive as the latest move to enhance the team’s bottom line.  Statements of exasperation and frustration are emanating from executives from around the league as well as from the Marlins’ players left behind.

The question is whether commissioner Bud Selig will invoke his legal right to protect the “best interests of the game” and quash this trade.  If he does, he has legal precedent behind him.  In 1976 Charles Finley, owner of the Oakland Athletics, tried to sell three of his teams stars—Vida Blue, Rollie Fingers, and Joe Rudi—to the Boston Red Sox for $3.5 million.  Bowie Kuhn, the MLB commissioner at the time, struck down the deal because it was “not in the best interests of baseball.”  Despite a legal challenge by the MLBPA’s Executive Director Marvin Miller, Kuhn’s legal right to block the trade was upheld in the seminal Finley v Kuhn decision.

More recently, in December of 2011 the NBA’s commissioner David Stern vetoed a proposed trade of Chris Paul by the New Orleans Hornets to the Los Angeles Lakers.  While the facts were slightly different because the NBA owned the Hornets at the time Stern rejected a trade based on what he felt was best for the league—and every owner outside of Los Angeles hailed this decision.

Has the recent trade by the Marlins reached the level of absurdity forcing Selig to take action?  If MLB does veto this trade, has it met the threshold necessary for a Commissioner to successfully invoke “the best interest of the game” defense under law?  Stay tuned.