Part 4: Value Distribution & Policy Implications

Who Benefits from the Value Created, and What Can Be Done About It?

Executive Summary

This section examines how economic value flows through the Dodgers' multi-asset structure, quantifying who captures benefits and who bears costs. It then provides policy frameworks for municipalities negotiating with sports franchises pursuing real estate development.

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Key Findings:

• Private ownership captures approximately 85-90% of value created across all three revenue streams (team operations, media, real estate)
• Public entities and communities capture 10-15% despite providing substantial enabling infrastructure and bearing externalized costs
• Property tax optimization structure (Prop 13 avoidance) transfers $26M+ in value from public to private over 13 years
• Proposed development would require $200-400M in public infrastructure investment enabling $2-3B in private value creation
• Alternative policy frameworks exist that could achieve 60/40 or even 50/50 public-private value splits while maintaining development viability

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I. Mapping the Value Flows: Where Does the Money Go?

Revenue Stream 1: Team Operations ($500-700M Annual Revenue)

Annual Operating Revenue Distribution (Approximate)

Total Annual Revenue: ~$600M

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Revenue Sources:

• Ticket sales and gate receipts: $180-200M
• Media rights (annual payment): $334M
• Sponsorships and advertising: $50-70M
• Concessions and merchandise: $40-60M

Cost Structure:

• Player salaries and benefits: $250-280M (40-45%)
• Baseball operations and coaching: $30-40M
• Stadium operations and gameday staff: $50-70M
• MLB revenue sharing (paid to smaller markets): $50-80M
• General and administrative: $40-60M

Operating Income to Ownership: $100-150M annually (17-25% margin)

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Value Distribution Analysis:

• Private Owners: $100-150M annual operating income (84-88% of pre-tax income)
• Players/Labor: $280-320M in compensation (but this is market-rate labor, not value capture)
• City/Public: $12-15M annual property and sales taxes (2-2.5% of revenue)
• MLB League: $50-80M revenue sharing (8-13%)

Revenue Stream 2: Media Rights ($8.35B over 25 years = $334M annually)

The 2013 Time Warner Cable (now Spectrum) deal provides guaranteed revenue regardless of team performance or attendance.

Media Rights Value Flow

Annual Payment: $334M

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Primary Beneficiaries:

• Dodgers Ownership: ~$280-300M after MLB revenue sharing (84-90%)
• MLB Revenue Sharing: ~$34-54M (10-16%)

Cost Borne By:

• Cable/Satellite Subscribers: $4-5/month per subscriber (~$50-60/year)
• Total annual cost to LA market: ~$300-400M in subscriber fees

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The Asymmetry: Approximately 5-6 million households in LA market pay $50-60/year whether they watch baseball or not. This generates $300-400M annually, of which ownership captures $280-300M. The public receives minimal direct benefit (no franchise fee, no revenue sharing with city/county).

Critical Observation: The media deal represents a quasi-monopoly structure where the team controls exclusive rights to broadcast its games, allowing it to extract value from the entire market through bundled cable fees. Non-fans subsidize fans, and the team captures nearly all surplus.

Revenue Stream 3: Real Estate (Future Development)

Based on base case scenario from Parts 1-2:

Projected Real Estate Value Distribution (15-20 year development)

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Total Value Created: $2.0-2.5B

Land Appreciation (passive):

• 2012 value: $300M
• 2025 value: $600-700M
• Value increase: $300-400M (100% captured by ownership)

Development Value Creation:

• Residual development value: $1.5-2.0B
• Less: Community benefit obligations: $150-300M (10-15%)
• Less: Infrastructure contributions: $220-380M (15-20%)
• Net to ownership: $1.0-1.5B (65-75%)

Public/Community Share:

• Affordable housing component: $100-200M value
• Community benefits (parks, services): $50-100M
• Annual property tax increase: $15-25M/year
• Sales tax from retail: $5-10M/year
• Total public/community capture: $400-600M (20-30% of total value)

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Aggregate Value Distribution: All Three Streams

Stakeholder	Team Operations	Media Rights (25yr)	Real Estate	Total Value	% of Total
Private Ownership	$100-150M/yr	$7.0-7.5B	$1.0-1.5B	$10.5-12.5B	85-88%
MLB (revenue sharing)	$50-80M/yr	$0.9-1.4B	$0	$2.2-3.4B	8-10%
City/Public (taxes, benefits)	$12-15M/yr	$0	$0.4-0.6B	$0.7-1.0B	4-6%
Community (affordable, benefits)	$0	$0	$0.2-0.3B	$0.2-0.3B	1-2%

Fundamental Asymmetry: Private ownership captures 85-88% of total value created across all three revenue streams, while public entities and communities that provided the land, infrastructure, cultural significance, and fan base capture 5-8% combined (excluding MLB revenue sharing which goes to other private franchises).

II. The Hidden Public Subsidy: A Comprehensive Accounting

1. Original Land Transfer (1958)

Historical Context:

• 1950s: City condemned private land in Chavez Ravine for "public housing"
• Displaced 300+ families, primarily Mexican-American community
• Public housing project abandoned after political opposition
• 1958: Land transferred to Dodgers for stadium construction
• Public received: Baseball team and stadium (now privately controlled asset)
• Public gave: ~300 acres of prime central LA land

Present Value of Original Transfer (2025 dollars):

• 1958 land value: ~$10-15M (equivalent value at time)
• 2025 land value: $600-800M
• Opportunity cost to public: $600-800M

If land had remained in public ownership and been developed as affordable housing or other public purpose, the value would accrue to the public rather than private owners.

2. Property Tax Optimization (2012-2025)

The joint venture structure with Frank McCourt avoided Proposition 13 reassessment:

• 2012 Market Value: $300M (established by transaction)
• Assessed Value (continued from 2004): ~$150M
• Annual Property Tax at Market Value (1.1%): ~$3.3M
• Actual Annual Property Tax (on lower assessed value): ~$1.7M
• Annual Tax Savings: ~$1.6M
• Cumulative Savings (2012-2025): ~$26M (including appreciation)

This is legal tax optimization, but represents value transfer from public coffers to private ownership.

3. Infrastructure Investments (Historical and Projected)

Historical Public Investment (1958-2025):

• Freeway improvements enabling stadium access: $50-100M (inflation-adjusted)
• Utility infrastructure extensions: $20-40M
• Police, fire, traffic management for games: ~$3-5M annually × 63 years = $190-315M
• Historical subtotal: $260-455M

Projected Future Investment (for development):

• Freeway interchange improvements: $150-250M
• Local street improvements: $50-100M
• Transit enhancements: $50-100M
• Utility upgrades (public share): $70-120M
• Projected subtotal: $320-570M

Total Public Infrastructure Investment: $580-1,025M over 67 years (1958-2025)

4. Externalized Costs

Costs borne by public/community not reflected in team finances:

• Traffic congestion: 81 home games × 40,000 fans = externalized commuting costs, pollution
• Housing pressure: Future development likely accelerates gentrification in adjacent neighborhoods
• Environmental impacts: Air quality, noise affecting surrounding communities
• Cultural displacement: Ongoing impacts on descendant communities from 1950s removal

Difficult to quantify precisely, but collectively represents $50-150M in externalized costs over the period.

Total Public Subsidy Accounting

Category	Low Estimate	High Estimate
Original land transfer (opportunity cost)	$600M	$800M
Property tax optimization (2012-2025)	$26M	$26M
Historical infrastructure investment	$260M	$455M
Projected infrastructure investment	$320M	$570M
Externalized costs	$50M	$150M
TOTAL PUBLIC SUBSIDY	$1.26B	$2.00B

Public Return on Investment:

• Public/community value capture: $0.7-1.0B (from previous section)
• Public investment/subsidy: $1.26-2.0B
• Net public return: NEGATIVE $260M to $740M

Sobering Reality: When all forms of public investment and subsidy are accounted for, the public sector appears to experience a net negative return while enabling creation of $10-12B in private value. This is not unusual for sports franchise economics, but the scale here is exceptional.

III. Alternative Policy Frameworks: What Could Be Done Differently?

Model 1: San Francisco Giants - Mission Rock Approach

The Giants' Mission Rock development provides a more balanced framework:

Key Features:

• 40% affordable housing (vs. typical 15-25% in LA)
• City retains land ownership; developer receives 66-99 year ground lease
• City receives ground rent plus percentage of development profits
• Extensive community benefits negotiated upfront
• Public access requirements throughout development

Value Split (approximate):

• Developer/Giants: 55-60%
• City/Public: 30-35%
• Community benefits: 10-15%

Why This Works: City's retained land ownership provides ongoing revenue stream and control. Developer still earns market-rate returns (10-13% IRR) while public captures significantly more value.

Model 2: Community Land Trust Structure

A more progressive approach used in some developments:

Structure:

• Portion of development (20-30%) placed in community land trust
• Trust controlled by community board with resident representation
• Trust retains land ownership; housing sold at permanently affordable prices
• Commercial rents from ground floor retail fund community programs

Application to Dodger Stadium:

• 500-800 units (30% of total) in community land trust
• Permanently affordable to households earning 60-120% AMI
• Community control over programming and use of ground floor space
• Trust receives ongoing revenue from commercial tenants

Value Split:

• Developer: 60-65%
• Community land trust: 20-25%
• City/public: 10-15%

Model 3: Equity Participation Structure

City takes equity stake in development rather than just extracting fees:

Structure:

• City contributes land (currently owned by team) or infrastructure investment
• In exchange, receives 25-35% equity stake in development entity
• City receives proportional share of development profits
• Can sell stake after stabilization or hold for ongoing revenue

Example Application:

• City invests $300M in infrastructure
• Receives 30% equity in development entity
• Developer invests $1.2B in construction
• Upon stabilization/sale, city receives 30% of profits
• If development worth $2.5B, city equity value = $750M (2.5x return on investment)

Model 4: Enhanced Community Benefits Agreement

Strengthened CBA framework that better balances interests:

Enhanced CBA Components for Major Developments

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Housing (40-50% of development value):

• 25-30% affordable housing units (vs. typical 15-20%)
• Mix of income levels: 30% AMI, 60% AMI, 80% AMI, 120% AMI
• Preference for displaced community descendants
• Anti-displacement fund: $50-100M for adjacent neighborhoods

Employment (15-20% of value):

• 40% local hire requirement for construction (vs. typical 20-30%)
• Pre-apprenticeship programs funded by developer
• Living wage requirements for all permanent jobs
• First-source hiring for local residents in retail/hospitality

Community Benefits (10-15% of value):

• Community health clinic or services center
• Cultural space honoring Chavez Ravine history
• Public parks and open space (2-3 acres)
• Youth programming and job training facilities

Infrastructure (15-20% of value):

• Developer pays 70-80% of off-site infrastructure (vs. typical 50%)
• Includes transit improvements, complete streets, bike infrastructure

Governance:

• Community oversight committee with enforcement powers
• Annual reporting and compliance audits
• Financial penalties for non-compliance

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Value Split Under Enhanced CBA:

• Developer: 50-60% (still profitable, 10-12% IRR)
• Community benefits: 25-30%
• City/Public: 15-20%

IV. Policy Recommendations for Municipalities

For Cities Negotiating with Sports Franchises

1. Separate Analysis of Real Estate Component

Don't treat stadium land as simply "where the team plays." Commission independent real estate appraisal and development feasibility analysis. Understand the full value at stake before negotiating.

2. Retain Land Ownership Where Possible

If public land is involved, strongly consider ground lease structure rather than fee simple sale. This provides:

• Ongoing revenue stream for public
• Long-term control over land use
• Ability to renegotiate terms at lease renewal
• Reversion to public ownership at end of lease

3. Equity Participation Instead of Just Fees

Rather than extracting maximum upfront fees, consider taking equity stake in development. This:

• Aligns public and private interests (both want success)
• Provides upside participation if development exceeds expectations
• Can generate ongoing revenue rather than one-time payment

4. Front-Load Community Benefits

Require early-phase components include maximum community benefits. Don't accept promises of benefits in "later phases" that may never materialize. Build in enforcement mechanisms with meaningful penalties.

5. Independent Community Impact Assessment

Fund independent analysis of gentrification and displacement risk. Require anti-displacement measures proportional to projected impacts. Consider requiring displacement impact bonds that pay affected residents.

6. Transparent Public Process

Release all economic analysis and term sheets for public review. Build in meaningful community input before finalizing agreements. Avoid "take it or leave it" deadline pressure tactics.

For State Legislatures

1. Reform Property Tax Treatment

Close loopholes allowing major transactions to avoid reassessment. Consider requiring reassessment when ownership structures change even if no direct "sale" occurs.

2. Require Sports Franchise Economic Disclosures

Given quasi-monopoly status and public subsidies, require detailed financial disclosure including:

• True team operating income/loss
• Related-party transaction details (media deals with owner-affiliated entities)
• Real estate holdings and development plans
• Use of public funds and tax benefits

3. Community Benefit Standards

Establish minimum community benefit requirements for developments receiving public subsidies or using formerly public land.

For Community Organizations

1. Early Engagement and Coalition Building

Don't wait for formal project announcement. Monitor franchise ownership and planning activities. Build coalitions before battle lines are drawn.

2. Develop Alternative Vision

Don't just oppose; propose alternative development scenarios showing what community-oriented development could look like. Commission independent planning studies if needed.

3. Legal Capacity

Secure pro bono legal representation early. Environmental litigation under CEQA is most effective tool for leverage, but requires sophisticated legal expertise.

4. Media Strategy

Frame narrative around historical injustice and ongoing displacement risk. Personal stories of affected residents more powerful than abstract economic arguments.

V. Broader Implications: What This Means for Other Cities

The Pattern Is Replicating

The Dodgers case is not unique. Similar dynamics exist or are emerging in:

• Philadelphia (76ers): Proposed arena with major real estate component
• Oakland (A's departure): Coliseum site now available for development
• Buffalo (Bills): New stadium with surrounding development rights
• Nashville (Titans): Stadium district with extensive real estate plans
• Multiple cities: Teams threatening relocation to extract development rights

Key Lessons for Other Jurisdictions

1. The Real Value Is Often the Land, Not the Team

Sports franchises increasingly function as real estate development companies. Negotiations should reflect this reality. The "economic impact" of the team (jobs, spending) is often overstated, while the real estate value transfer is understated.

2. Patient Capital Creates Bargaining Asymmetry

Franchise owners with 20+ year horizons can outwait municipalities with 2-4 year election cycles. Cities need to build institutional capacity for long-term negotiation and avoid artificial deadline pressure.

3. Emotional Attachment Is Weaponized

Fan loyalty and cultural significance provide political cover for extractive deals. Elected officials fear being blamed if team leaves. Need to separate "we want the team to stay" from "we'll accept any terms to keep them."

4. Early Action Is Critical

Once development plans are public and battle lines drawn, outcomes are largely determined. The window for shaping equitable agreements is in the 2-5 years before formal announcement, when ownership is conducting feasibility studies and assembling parcels.

Central Insight: The current framework for sports franchise real estate development systematically favors private owners over public and community interests. However, this is not inevitable. Alternative models exist that can maintain development viability while achieving significantly more balanced value distribution. The question is whether municipalities have the political will and technical capacity to demand better terms.

VI. Conclusions: Toward More Equitable Frameworks

The Dodgers case study reveals structural imbalances in how value flows from sports franchise real estate development:

Current State (Typical Framework):

• Private ownership: 85-90% of value created
• Public/community: 10-15% of value
• Public often experiences net negative return when subsidies fully accounted for

Achievable Alternative (Enhanced CBA + Equity Participation):

• Private ownership: 50-60% of value (still profitable)
• Public/community: 40-50% of value
• Public experiences positive return proportional to investment and risk

The alternative is not just theoretically possible—it exists in practice in places like San Francisco's Mission Rock development. The question is whether other jurisdictions will demand similar terms or continue accepting frameworks that emerged when sports franchises were pure entertainment businesses rather than real estate development companies.

Three Prerequisites for Change:

1. Recognition: Municipalities must recognize that negotiations with sports franchises are fundamentally about real estate development, not just team operations. This requires different analytical tools and expertise.
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2. Political Will: Elected officials must be willing to risk accusations of "driving the team away" by demanding equitable terms. This requires public education about true value dynamics and building political coalitions supporting strong negotiating positions.
3. Technical Capacity: Cities need sophisticated real estate and financial analysis capability, not just sports consultants who often have industry ties. Consider hiring developers' former executives who understand how these deals actually work.
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The Window of Opportunity

For the Dodgers specifically, the current moment represents a critical juncture:

• Development plans are becoming clear but not yet formally filed
• Community opposition is organized but agreements not yet locked in
• Political environment may be more receptive to community benefits than past eras
• CEQA process provides formal intervention points

What happens in Los Angeles over the next 5-7 years will influence franchise development frameworks nationally. If the Dodgers achieve development under current frameworks with minimal public benefit, it sets precedent for other markets. If Los Angeles demands and achieves significantly more equitable terms, it creates a new baseline.

Beyond Sports: Broader Urban Development Implications

The issues raised by sports franchise real estate development are not unique to sports. Similar dynamics exist in:

• Large-scale mixed-use developments on formerly industrial or underutilized land
• Transit-oriented development where public transit investment creates private land value
• Waterfront redevelopment where public access trades for private development rights
• University expansion where educational mission justifies preferential treatment

The frameworks developed for addressing sports franchise development—equity participation, enhanced CBAs, community land trusts—have broader applicability. The sports context simply makes the value transfers more visible and politically salient.

VII. Final Observations

For Dodgers Fans

Understanding these dynamics doesn't require abandoning team loyalty. But it does mean recognizing that when you buy tickets, watch on cable, or support the team, you're participating in an economic system where value flows primarily to ownership rather than being reinvested in the team, community, or fan experience.

The team's payroll decisions, ticket pricing, and development plans are made primarily to maximize ownership returns, not to maximize wins or fan satisfaction. This is rational business behavior, but fans should understand the calculus.

For Investors and Financial Analysts

The Dodgers case demonstrates that real estate value in sports franchise acquisitions is often substantially undervalued by conventional analysis. However, this analysis also shows that execution risk is frequently underestimated.

The opportunity is real, but requires:

• Genuinely patient capital (20+ years)
• Political and community relations sophistication
• Willingness to accept lower returns than pro forma projections suggest
• Recognition that community benefit costs are real, not negotiable add-ons

For Urban Planners and Policy Scholars

Sports franchises offer a unique lens for examining how emotional and cultural significance can be leveraged to achieve economic outcomes that would be politically impossible in other contexts.

The same development proposal that would face fierce opposition if proposed by a conventional real estate developer becomes more palatable when wrapped in sports branding and team loyalty. This suggests broader questions about how cultural assets can be instrumentalized for economic purposes.

For Community Advocates

The fight over Dodger Stadium development is ultimately about who has the right to shape the future of a contested urban space with deep historical meaning. The 1950s displacement of the Chavez Ravine communities was justified as serving "public purpose" (housing). The 1958 transfer to the Dodgers was justified as "civic benefit" (baseball team).

Now, 70 years later, the same land faces potential transformation into private mixed-use development generating billions in private value. At each stage, the public interest rationale evolves, but the direction of value transfer remains consistent: from public to private.

Breaking this pattern requires not just opposing specific projects but articulating alternative visions for what equitable urban development looks like and building sufficient political power to demand its implementation.

A Framework for Equitable Sports Real Estate Development

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Core Principles:

1. Proportional Value Capture: Public entities should capture value proportional to their contribution (land, infrastructure, cultural significance)
2. Community Priority: Communities adjacent to development should receive priority in benefits (affordable housing, employment, services)
3. Historical Accountability: Developments on historically contested land should include reparative elements addressing past harms
4. Transparency: All economic terms and analysis should be public, with meaningful community input before finalization
5. Enforcement: Community benefit agreements must have teeth—automatic penalties for non-compliance, community oversight with real power

Specific Recommendations for Dodger Stadium Development:

• Minimum 30% affordable housing across income spectrum (vs. typical 15-20%)
• Priority preference for descendants of 1950s displaced families
• Community land trust for 20-25% of residential units ensuring permanent affordability
• Substantial cultural and memorial space honoring Chavez Ravine history
• Anti-displacement fund of $75-100M for Chinatown and adjacent neighborhoods
• City equity participation: 25-30% stake in development entity
• Enhanced local hiring: 50% of construction jobs, 40% of permanent jobs
• Living wage floor: $25/hour minimum for all jobs
• Community oversight board with audit and enforcement powers
• Phased development with community benefits front-loaded in Phase 1

Projected Outcomes:

• Developer still achieves viable returns (10-12% IRR)
• Community captures $500-800M in benefits vs. $200-300M under typical framework
• City captures $400-700M through equity participation vs. $200-300M in fees/taxes
• Overall value split: 50% private, 35% public, 15% community (vs. typical 85% private, 10% public, 5% community)

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VIII. Conclusion: The Choice Ahead

The Dodgers real estate development represents a generational opportunity—for the ownership, certainly, but also potentially for the city and community if frameworks are redesigned to capture a more equitable share of value.

The analysis in Parts 1-4 demonstrates several core truths:

1. The value opportunity is real and substantial ($2-3B in potential real estate value)
2. Execution is significantly more difficult than comparable projects elsewhere (5-7 year approval timeline, high litigation risk, substantial community opposition)
3. Under current frameworks, private ownership would capture 85-90% of value while public/community captures 10-15%
4. Alternative frameworks exist that could shift distribution to 50/60 private, 40/50 public/community while maintaining development viability
5. The window for shaping these frameworks is now—before formal plans are filed and battle lines fully drawn

What happens next depends on choices made by multiple stakeholders:

Ownership's Choice: Pursue maximum value extraction through conventional framework, or accept modestly lower returns in exchange for community partnership that accelerates approval and creates more durable project?

City's Choice: Accept traditional fee/tax extraction, or demand equity participation and enhanced community benefits reflecting true value at stake?

Community's Choice: Pure opposition to all development, or strategic engagement demanding specific benefits while recognizing some development will occur?

Public's Choice: Passive acceptance of whatever emerges, or active engagement demanding accountability and equity in use of culturally significant land?

The Dodgers case will be studied for decades as either an example of sophisticated value extraction or as a turning point where public and community stakeholders successfully demanded more equitable terms. Which outcome emerges depends on decisions made in the next 2-3 years.

Ultimate Assessment: Sports franchise real estate development need not be a zero-sum game. Well-structured frameworks can generate substantial private returns while also delivering meaningful public and community benefits. The question is whether we have the institutional capacity and political will to demand such frameworks, or whether we will continue accepting terms designed for an era when sports teams were pure entertainment businesses rather than diversified real estate holding companies.

Part 4 Complete. Next: Part 5 (Final) will synthesize all findings, provide comprehensive conclusions, and offer a roadmap for implementation—for investors seeking similar opportunities, for policymakers designing better frameworks, and for communities organizing for equitable outcomes.

Sources and Methodology Notes

Value Distribution Analysis: Based on public financial data, comparable transactions, industry reports, and standard real estate financial modeling. Team revenue estimates from Forbes, Sports Business Journal, and public bond documents. Media deal terms from FCC filings and press reports.

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Public Subsidy Accounting: Infrastructure costs from city/county budgets, transportation planning documents, and comparable project costs. Property tax calculations based on LA County Assessor records and Proposition 13 formulas. Original land transfer value inflation-adjusted using Case-Shiller and commercial real estate indices.

Policy Models: San Francisco Mission Rock terms from public development agreement and EIR. Community land trust structures from Grounded Solutions Network and Lincoln Institute research. Equity participation models from urban development literature and comparable public-private partnerships.

Disclaimer: Value distribution percentages are estimates based on available information and standard analytical methods. Actual distributions may vary based on factors not publicly disclosed. Policy recommendations represent analytical framework, not legal advice. Implementation would require detailed legal and financial structuring.

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