The Miami Dolphins reported earning about $25 million a year in operating profits in recent years, but debt payments and other costs tied to Sun Life Stadium led to a series of recorded losses and slim profits.
Two consultants hired by Miami-Dade County to review the team’s finances concluded the Dolphins could not afford to finance a planned $350 million renovation of Sun Life Stadium without outside money. But the consultant’s report also offers a look into the books of the region’s most storied sports franchise.
As the Dolphins load up their payroll with pricey free agents in the offseason, the team predicts a rough year for the bottom line: An operating profit of $25 million last year is projected to swing a $14 million loss by the spring of 2014, according to documents released late Tuesday by the Miami-Dade County mayor’s office.
That would be the lone operating loss in owner Stephen Ross’ tenure, but overall cash losses are projected to approach $70 million by March 2014.
“It’s payroll,” and other costs, CEO Mike Dee said Wednesday after County Commissioners endorsed sending a plan to voters to raise hotel taxes to pay for part of the renovation. “We’ve been operating at a loss. Those numbers speak for themselves.”
Wednesday’s debate among commissioners touched on a point that has inflamed critics of the stadium deal: a team owned by a billionaire asking for tax dollars to improve his NFL franchise. Ross, with an estimated net worth of about $4 billion, did not attend the meeting but the deal requires him to personally guarantee repaying the county up to $120 million in 30 years and another $120 million if a renovated stadium does not attract a minimum number of major sporting events, including Super Bowls.
The financial information released late Tuesday night also shows the team receiving about $90 million worth of cash infusions since 2008 — money Dee said came from Ross to subsidize losses.
As part of the negotiations, the Dolphins needed to prove to Mayor Carlos Gimenez’s staff that the team itself could not afford a significant renovation without government help.
Both consultants spoke at Wednesday’s hearing and said the Dolphins alone cannot afford the renovation. “The Dolphins need help,” said Carl Hirsch, of Stafford Sports, a Medford, N.J., firm that specializes in sports finance.
All of the team’s financial numbers released by the county appear in a one-page summary, so the information lacks the kind of details needed for more than a cursory examination of the team’s profitability.
The numbers do appear to show the impact of the Dolphins’ estimated $380 million debt, the third-largest in the NFL, according to Forbes. Interest payments hit $17 million in the 2011-12 season, helping push net profits to a narrow $1.8 million gain. The next year swung to an overall loss of $4.3 million. Debt costs remained about the same but the team recorded a capital expense of $5 million, more than double from the prior year.
The summary also shows $50 million in capital infusions in 2008 and 2009, shortly after Ross paid $1 billion for the team in a series of transactions with then-owner H. Wayne Huizenga. The summary also shows a projected capital payment by Ross of $42 million this year.
Dee said the money is to make up for a projected $41 million cash shortfall for the year, brought on by the operating loss.
The requirement to review the Dolphins’ financial statements touched on a backlash against the 2009 decision to build the Marlins a new baseball park, which the team said would allow it to remain a viable franchise in Miami. When internal financial documents leaked showing operating profits for the team, political leaders fumed and the issue still resonated Wednesday .
“We appreciate your opening up your books and your financials ... after the bad taste that was left from the past,” Rebeca Sosa, chairwoman of the commission, told Dee during the meeting.