Marlins trade is a baseball tragedy, and Bud Selig deserves his share of blame
JEFF PASSAN - Yahoo Sports
The conspiracy lives. It lives in Miami, where they're destroying baseball, just like they did in another city before. It lives in the hands of Jeffrey Loria and David Samson, the owner and president of the Marlins, the con artists who pilfered Miami's money before moving on to its dignity. And it lives especially with Bud Selig, the commissioner of baseball who's letting it all happen again, because he's part and parcel to it.
By now, in the fallout of a trade nuclear even by Marlins standards, Samson and Loria have been marked radioactive. To dump $181 million in salary like they did Tuesday – to trade Jose Reyes, Mark Buehrle, Josh Johnson, John Buck and Emilio Bonifacio to Toronto for a few prospects, a bad-attitude shortstop and a backup catcher – was galling even by their standards. And these were two men who for years lied about their finances, lied about their intentions, lied all to get Miami to build them a $634 million ballpark that was supposed to end this wretched cycle of turning a major league franchise into a swap meet.
And yet all this time, throughout the lies, the SEC investigation, the embarrassing payrolls, the pocketing of revenue-sharing dollars, the cries from the players' union and the gem of a stadium with all those empty seats, not a word from the commissioner. Not a lamentation that by the time the balloon payments on the stadium hit, Miami taxpayers will owe more than $2.4 billion. Not a sign that he intends to protect the sport from the cretins within. And not a chance, unless public outrage on the matter changes his thinking, that he'll use his best-interests-of-baseball clause to keep Jeffrey Loria and David Samson from murdering another baseball market.
This is not some Roswell, black-helicopter, second-shooter conspiracy. This is very real. This is three rich, powerful men getting together and using their influence and business acumen to affect dealings that hurt the sport and help their bank balances. This is an insult to those who care about baseball. And we know this all because this isn't the first time it's happened.
"This action is filed by the victims of a conspiracy to eliminate major league baseball in Montreal," begins a lawsuit filed July 16, 2002, by the former owners of the Montreal Expos. Among the defendants: Jeffrey Loria, David Samson and Bud Selig.
In the 45-page complaint, the plaintiffs alleged a litany of claims against the three, including that they had broken laws under the Racketeering Influenced and Corrupt Organizations Act (RICO), which the government originally intended for mobsters. Loria, Samson and Selig were just that to Montreal, according to the complaint: They systematically devised plans to kill baseball in the city, all so they could move the franchise and profit accordingly.
Selig, the complaint stated, "had secretly determined that major league baseball in Montreal should be eliminated" and went along with Loria's plan to stop televising games and broadcasting them on radio in English. Samson ended complementary tickets for sponsors. And through a variety of cash calls, on which the minority owners refused to act because they disagreed with the franchise's direction, Loria nearly quadrupled his stake in the franchise, allowing him to pull off the deal that eventually netted him the Marlins.
MLB bought the Expos for $120 million and gave Loria a $38.5 million interest-free loan. Loria, in turn, purchased the Marlins for $158.5 million. And the Marlins' owner, John Henry, led a consortium to obtain the Boston Red Sox. It was good-ol'-boys glad-handing at its finest, and the consequences for the Expos were dire.
While Loria inherited a Marlins team that would win the 2003 World Series, MLB was sabotaging the Expos worse than the lawsuit imagined. The league sent the Expos to San Juan, Puerto Rico, for 22 "home" games. Nonetheless, they were tied for the wild-card lead on Aug. 28. MLB then refused to allow the Expos any September call-ups, leaving them wildly short-handed compared to their opponents and exacerbating their fade.
In November 2004, an arbitration panel ruled in favor of Loria, Samson and Selig, saying the plaintiffs' "sense of betrayal, even if justified, doesn't amount to fraud." That, of course, did nothing to allay their greatest fear coming true six weeks earlier.
On the final day of the 2004 season, Selig announced the Expos would move to Washington, D.C.________________________________________
The job of a commissioner in professional sports is, ostensibly, to look out for the sport's welfare. In ousting Frank McCourt from owning the Los Angeles Dodgers, the perception was that Selig did just that. McCourt took a proud Dodgers franchise and turned it into a chop shop. Never mind that Selig himself blessed McCourt's ownership; at least he understood that charlatans like McCourt were bad for baseball.
The truth is more like this: Selig saw in McCourt someone dangerous and reckless with baseball's most prized possession, local television rights. McCourt was willing to pawn them off for an under-market price to help cover his debts. Selig refused to let the Dodgers set the market low, fought like hellll to make sure that didn't happen, won that fight, watched the Dodgers sell for $2.15 billion and is watching them turn into the West Coast Yankees.
What he'll never say is that Jeffrey Loria is a far worse owner than Frank McCourt on his divorcingest day. He is the Voltron of awful owners. Like McCourt, Loria didn't have a whole lot of money; he bought his controlling stake in the Expos for $75 million Canadian, around $67 million U.S. at the time. Like Rachel Phelps in "Major League," Loria did everything possible to destroy his franchise in an effort to move it. Like Dan Snyder, he allowed his megalomania to influence personnel decisions. And like nobody else, he hoarded massive checks from MLB while passing along the bill for the stadium to the taxpayers.
The Marlins can claim the money comes from tourism-tax dollars. Truth is, Miami-Dade County moved general-use monies from property taxes to free up the tourist cash. This is the dirtiest secret of Selig's two decades as commissioner: The "golden era" of which he so often brags came off the taxpayer's teat.
Of the 21 stadiums built since Camden Yards started the boom in 1992, the San Francisco Giants' AT&T Park is the only one privately funded. Baseball's business plan depended on new stadiums with sweetheart deals filling the coffers of ownership groups lucky enough to leverage politicians or voters into signing off on them. Cities signed deal after dreadful deal, few worse than the Marlins', who paid for less than 20 percent of the stadium, received a $35 million interest-free loan to help and used $2.5 million more of public money to fund seizures.
Despite Loria and Samson's protestations otherwise, this was always the endgame of their stadium gambit. Selig saw the Marlins' audited finances every year. He knew they were lying. He went along with it anyway. That's how he does business. He protects his friends. It's why Fred Wilpon still owns the Mets. It's why Frank McCourt doesn't own the Dodgers.
It's why Jeffrey Loria will again be allowed to skate, even though this trade abandons all pretenses of competitiveness that he and Samson swore were guaranteed upon the construction of a new stadium. They spent last offseason recruiting the best free agents, and among Reyes, Buehrle and Heath Bell, they convinced some of them to join this new era in Miami, with a fresh name, fresh colors, a fresh start. The refusal to include a no-trade clause was organizational policy, not a big, bright warning sign that these swindlers would be franchise-slaughtering recidivists at the first sign of strife.
And it came immediately. Fans didn't show up, and whether it was because Loria and Samson's actions throughout the years whittled the base to nothing or the team was awful or a combination, it foretold a messy sell-off. First went Hanley Ramirez. Then Anibal Sanchez. And now the rest of them. "Alright, I'm pissed off!!! Plain & Simple," tweeted one of the leftovers, star outfielder Giancarlo Stanton, and, well, he has every right to be. After opening last season with a $101.6 million payroll, the Marlins owe $19.6 million to their four players past arbitration. The rest are kids. Some with a couple years of service. A few with one season. Most with less than a year. This is not just going young. This is going pre-school.
Gone is any chance that Stanton – or anyone who cares about winning, frankly – will commit long-term to the Marlins, which means the payrolls will remain skinflint and the influx of shared money – now topping $100 million annually for the poorest franchises – will make the Marlins all the richer, increase their franchise value beyond the $450 million Forbes estimates. There are players desperate enough for a job, for a paycheck, who will take their money, dirty though it may be. MLB still allows Loria and Samson a roster with 25 spots to fill, after all.
How, after 13 years of desecrating two franchises, Loria and Samson continue to exist as owners rests squarely on Selig. He is supposed to be the gatekeeper, the protector, the guardian. And instead, he chooses to be the co-conspirator in the biggest fraud baseball knows. This conspiracy is real. It's very real. And it's embarrassing that it's happening all over.
Marlins’ profits came at taxpayer expense
The swindlers who run the Florida Marlins got exposed Monday. They are as bad as anyone on Wall Street, scheming, misleading and ultimately sticking taxpayers with a multibillion-dollar tab. Corporate fraud is alive and well in Major League Baseball.
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.
Most harrowing is the takeaway that baseball’s biggest welfare case could have funded a much greater portion of the ballpark. In 2009, when the Marlins started spending some of their profits on their portion of the stadium, they still had an operating income of $11.1 million. The team fought to conceal the $48.9 million in profits over the last two years because the revelation would have prompted county commissioners to insist the team provide more funding. Loria, an art dealer with a net worth of hundreds of millions, wouldn’t stand for that. He wanted as much public funding as possible – money that could’ve gone toward education or to save some of the 1,200 jobs the county is cutting this year.
Surely Samson was joking when he called the leak of the Marlins documents and those of five other teams “a crime.” No, the real misdeed occurred when the head of a professional sports franchise misled the public in order to secure money that wasn’t his. When Forbes in 2007 reported the Marlins had the highest operating income in baseball, Samson denied the team profited, saying: “Very often the mistake that’s made is they look at revenue sharing numbers and the team’s payroll and take the difference and see profit without looking at our expenses.”
Well, now we have a look, and it’s clear what happened: The Marlins loaded money into their coffers and held hostage a city afraid of losing a team, then leveraged it into a sweetheart deal like so many teams across baseball during the stadium boom of the last 20 years.
“It’s not that teams need new stadiums, either,” said Neil deMause, whose book “Field of Schemes” blew the lid off ballpark boondoggles. “They need new revenues. It’s really just a bailout. It would be cheaper to just give the teams the money. But then it would just look like a handout. The stadiums have become part of the business model for teams.”
Not nearly enough credit goes to the proliferation of new stadiums for turning the game into a $6 billion-plus business. In case after case, teams built stadiums with a majority of the funding from public sources and today keep nearly all of the profits generated from games. Commissioner Bud Selig traveled city to city, the pied piper of ballparks, urging voters or city councils or whoever held the checkbook to do the right thing. Always left unsaid was his implication: Or else. However idle the threat, it almost always worked.
And it’s still working. Even if Miami isn’t exactly a baseball town – the Marlins are behind the Dolphins and Heat in popularity – Samson believes the new stadium on the old Orange Bowl site will expand the team’s season-ticket base from around 5,000 to 15,000 or 20,000. If-you-build-it-they-will-come is nothing more than a myth, proven false by Pittsburgh and Washington and Cincinnati.
It matters not how sparkling the new stadium is, though the embellishments on the Marlins’ only add to the ridiculousness of the whole project. Guess which of the following is not true:
a. The Marlins procured $5.3 million in funding from the county’s Art in Public Places department and gave $2.5 million of it to pop artist Red Grooms, who will design a piece with pelicans and seagulls and bright colors and abstract shapes and, best of all, animatronic marlins that celebrate home runs.
b. Billy the Marlin will hold nightly karaoke sessions in left field.
c. Behind the catcher will be 58 feet worth of reef-fish-stuffed aquariums built into the backstop.
Marlins team president David Samson listens to closing arguments during a 2008 lawsuit challenging a $3 billion public works financing plan that includes money for a new ballpark.
Sadly, $2.4 billion is not enough to buy mascot sing-alongs.It is enough to stink. In the annals of bad stadium deals, it’s among the most odious, right alongside the Washington Nationals’ extraction of $611 million from the D.C. city council to get Nationals Park built. The team spent $20 million on a parking garage and pays $5.5 million a year in rent. So desperate was Washington to become the landing spot for the Montreal Expos, it ignored reality – there were no other legitimate options for MLB – and vastly overpaid.
Such sentiments are echoed when looking at the Marlins’ deal. One of the county’s loans is particularly egregious. According to the Miami Herald, J.P. Morgan gave a $91 million note – $80 million of which will go toward construction – that from 2041-47 will cost $118 million per year. In all, the county will spend $1.2 billion to pay off $91 million.
One of the county commissioners who voted against the funding, Katy Sorenson, told the Herald: “It is very expensive money.” The county is banking on inflation making $118 million a relative pittance by the 2040s, by which time Hanley Ramirez(notes) will be social security age.
It’s entirely possible – and quite probable – that the Marlins profited more than $91 million in the three years leading up to the county commissioners’ passing the stadium plan in ’08, even with their games at Sun Life Stadium, supposedly the only thing holding the team back from being able to spend on payroll. The inclination to keep salaries at pathetic levels – a dozen players around baseball each made more in 2006 than the entire Marlins team – went unchecked until last offseason, when MLB finally reprimanded the Marlins for purloining too much of the $75 million or so in revenue sharing and Central Fund monies they receive annually.
It was nothing more than a slap on the wrist. MLB knew the Marlins were saving their money to pay off their stadium debt, which, though prudent, does not support Samson’s contention Monday that “we could have had [Miguel] Cabrera but no ballpark.” That’s more propaganda, more truth-stretching. With the new revenue streams, the Marlins could have kept Cabrera. They essentially sandbagged half a decade worth of games by using their money to cover their $155 million on the stadium’s construction, $35 million of which will be rent payments and some of which likely will be subsidized by naming rights.
Every cent from inside the stadium will end up on the Marlins’ balance sheets. Come 2012, they’ll be free to reap their revenue-sharing, Central Fund and ballpark profits while the county prays enough tourism-tax dollars pour in to help pay off the loans.
“[Owners] simply don’t tell the truth about the finances,” deMause said. “Or if they do, it’s in such a narrow way.”
Take a January 2008 luncheon Tampa Bay Rays president Matt Silverman spoke at in St. Petersburg. According to the St. Petersburg Times, in front of a crowd of businesspeople, Silverman declared: “We’re cash-flow negative.”
The Deadspin documents show the Rays were anything but in the red. In fiscal 2007, which had ended exactly 26 days before Silverman spoke, the Rays’ operating income was $21.7 million. And, if Silverman cares to quibble, the Rays listed $37,626 on the line of “cash and cash equivalents.” While in 2008 the Rays’ earnings dropped to $14,202,206, they didn’t have any kind of a cash-flow problem: Their cash and cash equivalents were $32,521,742.
It brings to mind the famous quote from Paul Beeston, the former president of MLB who now runs the Toronto Blue Jays: “Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss, and I can get every national accounting firm to agree with me.”
The truth of big business is ugly, and while a peek inside baseball’s sausage factory is fascinating, it’s also sobering. A 37,000-seat, baseball-only stadium is going up in Little Havana right now, and the team that procured it systematically hid the truth from the people whose money they’re using to build it.
During the county commissioners’ stadium tete-a-tetes with the Marlins, they asked time and again for the team to release its financial statements. It was only fair, right? The county was willing to pledge billions of dollars. It deserved to know who would reap the bounty.
The Marlins never budged. They kept everything a secret and set themselves up for a bountiful future and had the gall to grow angry when documents surfaced that should’ve been made public in the first place. They were shown for the swindlers they are.
Unfortunately, it was $2.4 billion too late.
Marlins execs funneled cash to themselves
Florida Marlins president David Samson has perfected the art of doublespeak. Even after the mushroom cloud settled over the disclosure of financial statements that showed he and Marlins owner Jeffrey Loria are indeed duplicitous, Samson couldn’t help himself. Lies are simply part of how the Marlins do business.
The latest came during Samson’s weekly radio appearance on The Dan LeBatard Show in Miami, during which he addressed Deadspin’s publication of the Marlins’ balance sheet. What Samson said was so provably false that it was akin to a 3-year-old trying to hide his peas under a pile of mashed potatoes.
“Jeffrey Loria did not put a dollar in his pocket,” Samson said.
So programmed is that statement in Samson’s head, he keeps repeating it, like a robot with a shorted circuit. He’s right. Jeffrey Loria did not put a dollar in his pocket.
He put millions.
On Page 34 of the documents, under the heading Note Y, is a transaction called “Management Fee.” A corporation named Double Play Company is listed as the Marlins’ managing general partner. The partner is paid a yearly sum. For the two years the documents cover, the fees were $2.6 million and $2.8 million. In 2009, the documents say, the fee was raised to $3.2 million.
Records from the Florida Division of Corporations show Double Play’s CEO is Jeffrey Loria. Its president is David Samson.
Of the six teams whose documents were leaked, only the Marlins have a management fee listed in their operating expenses.
Earlier in the balance sheet, under Note L, is a one-paragraph section called “Related Party Promissory Note.” It explains that the managing general partner made a number of loans to the team at 1.5 percent to 1.75 percent above the London Interbank Offered Rate – a particularly high interest rate for the current lending climate, according to two accountants who reviewed the Marlins’ financials. Over the past two years, the loans have paid Double Play $1.83 million and $1.19 million, respectively.
While the financial records of Double Play are unavailable because it is a private company, at least $8.42 million went to the managing general partner in the past two years. Though the documents do not show that Loria has taken a direct distribution of money as owner, it is undeniable that he plundered the team’s coffers as it received nearly $500 million in public funding for a new stadium and more than $75 million in revenue sharing from MLB.
Samson did not reply to a request for comment.
The ugliness of the ballpark debt was apparent long before the documents surfaced. To help fund the $634 million stadium complex, Miami-Dade County commissioners voted to secure more than $400 million in loans, most of which are loaded with balloon payments. The worst is a $91 million loan that will take $1.2 billion to pay off. By 2049, the county will have spent $2.4 billion to cover its portion of the stadium.
The anti-Marlins groundswell in South Florida continued Thursday when Miami mayor Tomas Regalado asked the city attorney to look into renegotiating a $100 million parking-facility contract for the stadium complex. Political backlash was a given after the Marlins’ refusal to release their financial records during the push for the new stadium.
For years, the Marlins cried poverty. Loria threatened to move the team from Florida. Despite several sources claiming the Marlins raked in money — Forbes’ annual valuations for the Marlins have proven extremely close to reality, and Miami-area accountant Jorge Costales has written incisively about Marlins finances — the county commissioners voted in December 2007 to pay for more than three-quarters of the stadium due open in 2012.
Samson claimed on LeBatard’s show that the tax dollars will come from tourism money devoted to sports and convention complexes. That is only half-true. To free the tourism-tax dollars, the county shifted general-use monies from property taxes to pay other debt. Take from one hand, give to the other and buy an owner worth hundreds of millions of dollars a new toy from which he reaps damnnn near every cent, all with the money of hardworking citizens.
This was avoidable, of course, had the county commissioners refused to approve a deal until they saw the Marlins’ financial statements. The management fee was an obvious red flag. How could Loria and Samson say they didn’t have enough money for a stadium when they were paying themselves? The loan was another red flag. Such revelations almost certainly would have given the commissioners pause about offering the breadth of public financing they did.
Loria refused transparency. He is an excellent businessman, and he knew the repercussions. In the end, the Marlins hoodwinked local politicians so caught up in the excitement of keeping the team in Miami, they forgot with whom they were dealing. When hundreds of millions of dollars are involved in anything, people are going to lie, and Loria and Samson made statement after misleading statement and got away with it.
“I never go back to regret what I do because I make decisions based on the information provided to me, my conscience and what is best for those I represent,” said Rebeca Sosa, one of the nine county commissioners who voted for the stadium funding against four opponents — including Regalado, now the mayor. “The situation and information I have today in my hand is different than the one I had before.
“I still support the Marlins stadium.”
How Sosa, or any commissioner who voted yes, could stand by a potential $2.4 billion of debt with a clear conscience is difficult to fathom. The Marlins are up to their old tricks, still pussyfooting their way around the facts. All those years the team had the lowest payroll in baseball, Samson claimed money went to hidden costs in running a ballclub. One of them, he told Sun-Sentinel columnist Dave Hyde, was marketing.
“Eight figures,” Samson said. He told The Miami Herald it was among the most in baseball.
In 2008, the Marlins spent $9.8 million on marketing, according to their balance sheet. The Tampa Bay Rays spent $23 million, the Pittsburgh Pirates $17.1 million, the Texas Rangers $16 million and the Los Angeles Angels $10 million. The only team to budget less among the six whose financials were leaked was the Seattle Mariners, whom the Marlins outspent by $11,000.
This isn’t a white lie here, a fib there. It is systemic. Marlins mislead, public follows. The balance sheet was a gift to Miami-Dade County taxpayers who deserve – and have deserved since the “yes” vote – to know how the team they were endowing is run.
The poor, poor Marlins had an operating profit of $48.9 million in 2008 and 2009, including $11.1 million last year, when they increased payroll and started paying off their stadium debt. Loria has already doubled his money on the Marlins – he bought the team for $158.5 million, including a $38.5 million interest-free loan, and it’s now worth $317 million, according to Forbes’ valuations – and the revenue streams from the new stadium should only increase that figure. A county hemorrhaging jobs funneled tax money to fund a stadium for a team with a reckless disregard for its community’s welfare.
The politicians can pursue recourse, and the fans can bellow, and it doesn’t change the reality that a $91 million loan to the county will take 39 years and $1.2 billion to pay off, and that Jeffrey Loria still owns the Florida Marlins with David Samson as his president, and that the retractable-roof stadium, the one that’s 40 percent done, was built on lies that never seem to end.