A Billionaire Corporate Welfare Cheat?

Sportswriter Jeff Passan describes evidence indicating that billionaire Miami Marlins owner Jeff Loria may have lied about the team’s finances in order to secure massive public subsidies for the construction of the Marlins’ new stadium [HT: VC reader Eric Robinson]:

A look at the leak of the Marlins’ financial information to Deadspin confirmed the long-held belief that the team takes a healthy chunk of MLB-distributed money for profit. Owner Jeffrey Loria and president David Samson for years have contended the Marlins break even financially, the centerpiece fiscal argument that resulted in local governments gifting them a new stadium that will cost generations of taxpayers an estimated $2.4 billion. They said they had no money to do it alone and intimated they would have to move the team without public assistance.

In fact, documents show, the Marlins could have paid for a significant amount of the new stadium’s construction themselves and still turned an annual operating profit. Instead, they cried poor to con feckless politicians that sold out their constituents.

The ugliness of the Marlins’ ballpark situation is already apparent, and the building doesn’t open for another 18 months. Somehow a team that listed its operating income as a healthy $37.8 million in 2008 alone swung a deal in which it would pay only $155 million of the $634 million stadium complex. Meanwhile, Miami-Dade County agreed – without the consent of taxpayers – to take $409 million in loans loaded with balloon payments and long grace periods. By 2049, when the debt is due, the county will have paid billions.

More on the Marlins stadium subsidies from Matt Welch here.

Even if the Marlins’ financial state were as tenuous as Loria claimed, it still would not justify massive government subsidies for a new stadium. Stadium subsidies almost never create benefits for the community that come even close to offsetting the huge costs. Professional baseball is a large-scale industry that can and should pay for its own stadiums. The fact that MLB franchises sell for hundreds of millions of dollars whenever one comes up for sale suggests that the industry is considerably more profitable than subsidy-seeking owners would have us believe. But if team owners find they aren’t making a profit, they should cut costs and work to become more efficient, just like any other business. For example, they could limit costs by adopting a salary cap, as have the NBA, National Football League, and the National Hockey League.

In fairness to Loria and the Marlins, they might have been able to secure massive government subsidies even without lying about their profits. The New York Yankees are the most lucrative franchise in baseball. But that didn’t prevent them from raking in hundreds of millions of dollars in government subsidies for the new Yankee Stadium that opened last year. If Passan’s figures are correct, the Marlins’ stadium subsidies may actually surpass the record set by the Yankees. As a Red Sox fan, I am reluctant to admit it. But the Marlins may have outdone baseball’s Evil Empire in feeding at the public trough.

As regular VC readers know, I love baseball. But those taxpayers who don’t share my interest in the sport should not be forced to subsidize it. It is long past time to make billionaire sports team owners pay for their own stadiums.