Florida Marlins under fire over financial discrepancies
There has been much scrutiny of last week’s leaked financial statements of six Major League clubs, but it is the Florida Marlins who have really come under the spotlight.
The Marlins were publicly rebuked by Major League Baseball and the players’ union back in January over concerns that revenue sharing payments received by the team were not going towards increasing the side’s payroll.
Following this slap on the wrist, the Marlins agreed that they would work to increase payroll in the coming three seasons, seemingly bringing the matter to a close. However, the disclosure of these documents is proving to be a real inconvenience to Marlins executives, who are coming under heavy fire over the discrepancies between their public statements, and what was being booked on the -until-now private -balance sheet.
The records show that the Marlins, over the course of 2008-09, made a profit of almost $50m. During that period, the team received $92m in revenue sharing payments from MLB, whilst spending less than $75m on player salaries.
That essentially means that before the team sold a single ticket for Sun Life Stadium, they had already managed to pocket a near-$20m profit on the revenue sharing payments -money that they are obliged to spend for the purpose of improving the team. Despite protestations from the club that some of the money is going towards player development, many of the larger teams are unhappy at this confirmation of what they had already suspected.
Though bothersome, the baseball impact of these revelations is a relatively simple public relations issue for the Marlins to solve. What has become more troublesome is their new stadium development in Miami’s Little Havana district.
Intimations of a potential relocation have surrounded the Marlins for a number of years, fuelled by the club themselves, and by MLB Commissioner Bud Selig, unless a new stadium deal was completed. In 2008, Miami-Dade County agreed to fund the majority of a new ballpark complex. With a total cost of $634m, the County is borrowing $409m to provide the majority of funding for the development, with the Marlins contributing just $155m.
In response to speculation over finances, team president David Samson has consistently denied that the team has been making significant profits. His line has been that the revenue sharing payments simply allow the Marlins to break even. This was a key plank in their negotiations with Miami-Dade officials; that they did not have the money to fund a new stadium, and without significant financial assistance from the County, they would have to seriously consider relocation.
Miami-Dade officials repeatedly requested access to financial statements from the team, but were rebuffed on each occasion. Yet, despite never seeing such information, they still agreed to the funding package. Now, elected officials and taxpayers -who did not have the opportunity to vote on the funding proposals in a referendum -are growing increasingly angry as details of the deal are analysed.
When all of the loans taken out are finally paid off, over a period of 40 years, the estimated cost to Miami-Dade taxpayers is expected to reach an eye-watering $2.4bn. Meanwhile, once the Marlins move into the new stadium, they will be reaping almost all the benefits of increased revenues from ticket sales and in-stadium concessions, with very little going back to the county.
Compounding the situation is the revelation in the leaked documents that $16m was taken out of the club by owner Jeffrey Loria -a multi-millionaire art dealer -during the 2008-2009 period. Samson’s claims that this money was a repayment of a loan that Loria had extended to the club are unlikely to attract much sympathy from either fans or Miami-Dade residents.
With a number of local officials -some clearly implying that the Marlins lied to them -now looking at ways of redressing the balance of liability between the county and the club over the new stadium, this is a story which doesn’t look likely to go away quickly for the Marlins.