Is Jeffrey Loria the Worst Owner in Sports?
Now that the 2013 baseball season is under way, let’s take a moment to commemorate the first anniversary of one of the biggest shakedowns in the history of the game -- and the con artist who pulled it off: Jeffrey Loria.
One year ago, the owner of the Miami Marlins relaunched his franchise with a cast of new stars, a colorful new manager, a cable-TV reality show and -- most notably -- a shiny new taxpayer-funded stadium, which Loria liked to describe as an homage to Richard Meier and Joan Miro.
Where are the Marlins today? The stars are all gone, unloaded in an offseason fire sale to the Toronto Blue Jays. So, too, is the manager, Ozzie Guillen, who survived some impolitic comments but not his team’s 69-win season. (Between their feeble lineup and cut-rate pitching staff, the Marlins will be lucky to win that many in 2013.) Even Showtime has moved on to bigger fish.
All that remains is Marlins Park, its undulating white surfaces, mechanized Red Grooms sculpture and tropical aquariums now mocking the residents of Miami-Dade County who paid $500 million for its construction. Think of the ballpark as a post-modernist monument to a pretentious former art dealer -- and to the unending scam that is modern stadium financing.
The economics here are pretty basic. In short, the system is rigged. Sports leagues control the supply of franchises. And their finances aren’t a matter of public record.
This means that owners such as Loria can threaten to move if they don’t get what they want from their respective municipalities. That’s precisely what Loria did in 2006: “San Antonio is a very viable market, and they’re very serious,” he said. “Read my lips: They’re serious.”
It also means that owners can mislead the public about their financial condition. Loria did that, too. He pleaded hardship for years -- until Deadspin got its hands on documents revealing that he was pocketing a healthy chunk of the money distributed to the franchise by the league. The Marlins’s share of pooled national revenue and luxury tax dollars -- intended to go toward making the team better -- were in fact going toward making its owner richer.
Not that any of this mattered. In the end, Loria got his money and his stadium.
It is, of course, absurd that public money is being lavished on private entities without any requirement of demonstrated need. And it’s by no means just the Marlins. Carolina Panthers owner Jerry Richardson has been demanding more than $200 million to renovate his football team’s stadium, even as leaked internal documents show that the Panthers turned a $112 million profit in 2010 and 2011. Asked why his flush team shouldn’t cover the costs, Richardson answered with almost refreshing candor: NFL franchises “are so coveted, they don’t have to pay,” he said. “There are only 32.”
For that matter, the Marlins’s neighbors, the Miami Dolphins, are looking for a couple hundred million dollars in public subsidies to refurbish their privately owned stadium. And why not? As Dolphins Chief Executive Officer Mike Dees explained: “Just because somebody is wealthy enough doesn’t mean he should invest money in a way that is unwise.”
Dees is right about one thing: Investing money in a stadium is unwise. Study after study has demonstrated that sports teams have very little economic impact on their communities. Unfortunately, too many feckless local officials either refuse to accept this truism or are afraid of being blamed for driving away the hometown team.
So what’s to be done? Don’t bother looking to the leagues. The commissioners work for the owners; they’re never going to intervene.
It would at least be more difficult for politicians to hand over stadium subsidies if sports teams were compelled to open their books to the states, counties or cities with which they aspire to do business. If nothing else, the public would know that it is getting fleeced.
Or here’s another thought, inspired by the sports economist Andy Schwarz: All stadium deals should include equity stakes. In exchange for an investment in a stadium, a city should get a percentage of the team. If private entities want a public subsidy, they should be forced to share the upside, not just the downside.
In the case of the Marlins, that upside is considerable. The franchise may be an unmitigated disaster baseball-wise, and Loria is now about as popular in Miami as Fidel Castro. As a business proposition, though, the Marlins are doing just fine, despite what Loria may say.
During the offseason, he was back to his old poor-mouthing ways, explaining how that Blue Jays trade -- a lopsided, 12-player deal that slashed $160 million from the Marlins’s payroll -- was a matter of economic necessity. Yet Forbes magazine now values the team at $520 million -- 16 percent more than it was worth a year ago. (This hasn’t stopped Loria from threatening to sue two disgruntled longtime season-ticket holders who want new seats.)
Marlins Park is only partly responsible for the increase in the team’s value. It was largely a result of rising revenue from the league, revenue that will continue to grow when a new national TV deal -- worth more than twice the existing one -- goes into effect in 2014. That contract will last through the 2021 season.
Start saving now, Miami. By then, Loria will be looking to renovate.
(Jonathan Mahler is a sports columnist for Bloomberg View. He is the author of the best-selling “Ladies and Gentlemen, the Bronx Is Burning” and “Death Comes to Happy Valley.” The opinions expressed are his own.)
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