When Stephen Ross wanted Miami-Dade to help fund stadium renovations in 2013, the Miami Dolphins owner ran full-page ads that slammed public financing for Marlins Park and declared “just because we did a bad deal doesn’t mean we should oppose a good deal.”
Ross eventually won some financial help from the county for Hard Rock Stadium, and his strategy may look familiar as David Beckham and partners rev up their own campaign to win government approval of a Major League Soccer stadium: Tout the upside of the proposed stadium plan, and contrast it with the unpopular deal Miami and Miami-Dade cut with the Marlins roughly 10 years ago.
“The Marlins deal is a terrible deal for our community,” Jorge Mas, Beckham’s lead partner, told Miami commissioners last week as Beckham sat in a folding chair in the front row of City Hall. “The first thing that I said is we are not going to do anything like that.”
City commissioners will reconvene Wednesday to weigh the Beckham pitch: Let the partners rip up a 130-acre city golf course to build a 25,000-seat stadium, mall and office park with new soccer fields. The complex would be called “Miami Freedom Park,” and the Beckham group would rent the Melreese golf course from the city while paying to turn the rest of the property into a traditional park that would be free for the public to enjoy.
While the terms aren’t final, the latest offer from Mas has the soccer venture paying rent or sharing revenue with the city. And the deal would only happen if Miami voters this fall approve allowing final negotiations to begin without competitive bidding.
Here’s a breakdown of some of the top elements of the proposed Beckham deal with Miami and how it compares to the other stadium agreements:
Miami-Dade voters in 1996 approved using public land and county dollars for a new home for the Miami Heat on the downtown waterfront. The 2009 city and county agreements to build Marlins Park and the surrounding parking garages did not go to voters. When Ross ran his 2013 ads slamming the Marlins deal, he was pursuing a new hotel tax to fund stadium improvements that would have been subject to a referendum. But that effort fizzled in the state Legislature, prompting him to abandon that financing plan in favor of a more modest assistance package approved by county commissioners in 2014.
The Beckham partnership is seeking a city referendum in November to change the Miami charter to allow a one-time exclusion to competitive bidding rules that would let the administration negotiate a final stadium deal for soccer. That agreement would then need approval from four out of five city commissioners to take effect.
When the Beckham group was planning on a stadium on nine acres in Overtown, the deal required approval by the County Commission only to sell the soccer venture three acres of land for $9 million in a no-bid transaction. Miami-Dade commissioners approved the sale in 2017, but the Beckham group has only paid a $500,000 down payment toward the purchase.
When it was headed for Overtown, the Beckham group would have owned Miami-Dade’s first pro stadium built on private land. But with that deal on the back burner, the Major League Soccer venture will join the other three stadiums in occupying public land.
No stadium deal in Miami-Dade has offered a team so much land. The Beckham group would control enough property on Melreese, a city park, to build acres of retail, office and hotel. It also is the only stadium deal to require ripping up a public golf course.
When Joe Robbie owned the Dolphins, he struck a deal with Dade County in the 1980s to lease his stadium’s site for a nominal yearly amount. That deal remains intact today, but the Dolphins own some surrounding property outright. Miami-Dade contributed land downtown for the Heat’s AmericanAirlines Arena, and Marlins Park rose on county-owned land where the Orange Bowl once stood.
The city of Miami was the longtime owner of the Orange Bowl stadium property, but transferred the real estate to Miami-Dade as part of the agreement to use tax dollars to fund most of the nearly $600 million Marlins Park complex.
It never came to be, but the original deal for what’s now Hard Rock Stadium allowed the Dolphins to build a commercial complex on county land around the new arena. The Heat briefly tried to develop county land behind the arena that had been promised as a park, and Miami controls the leases for retail areas on the first floor of the parking garages that surround Marlins Park.
The Beckham plan for Melreese has such a large commercial component that it promises to dwarf the stadium itself. With 1 million square feet of retail and office space, “Miami Freedom Park” would be one of the largest shopping destinations in Miami. That’s expected to generate about $250 million in sales each year, while the Beckham group forecasts just over $40 million in spending from the stadium itself. About 750 hotel rooms and an office park with an additional 400,000 square feet of leasable area would generate about $34 million in revenue, according to forecasts the Beckham group submitted to Miami.
The 2009 Marlins deal did not end the practice of local governments subsidizing operations for wealthy team owners. But the ballpark deal made it much tougher to negotiate them.
Miami-Dade agreed to pay the Heat about $6 million a year out of hotel taxes as part of the original 1996 agreement to move the team from the Miami Arena to its new waterfront home in downtown Miami. Heat owner Micky Arison agreed to fund construction of the new $240 million area, then get paid back out of dollars that otherwise would have gone back to taxpayers under a revenue-sharing agreement with the county.
That deal ended up generating less than $300,000 after 14 years, and Miami-Dade agreed to scrap it in 2014 for new terms. The updated deal lowered the subsidy in the short term while increasing it in later years to the Heat. In return, the team agreed to pay for more improvements in the county-owned arena and to stay in the downtown location through 2040 — 10 years longer than in the original deal.
The Dolphins got their first local subsidy deal in 2014. Miami-Dade Mayor Carlos Gimenez negotiated both agreements that year, while also juggling talks with the Beckham group that ultimately failed to secure a stadium site at PortMiami for the soccer venture.
Gimenez opposed the Marlins deal as a county commissioner and came to office in part thanks to backlash against the ballpark financing, which helped oust his predecessor, Carlos Alvarez, in a 2011 recall. On Tuesday, Gimenez said the Marlins deal still looms over almost all government agreements.
“It’s always there in the forefront,” he said. “It doesn’t mean that every deal is bad. Every deal has to stand on its own two feet.”
The 2014 Dolphins deal required Ross to use private dollars for a stadium renovation, adding the canopy and other improvements the team says were worth close to $500 million. In exchange, Miami-Dade agreed to pay the Dolphins up to $5 million a year in available hotel taxes as bonuses for large events recruited to the stadium, such as the Super Bowl ($4 million) and an international soccer match ($750,000). Miami-Dade has exercised the option to delay payments on the 20-year deal, and it can withhold the money if hotel revenues fall below forecasts.
That deal remains a work in progress. In late 2017, Miami-Dade agreed to lock in a $1 million payment per year in exchange for Ross building new facilities outside the stadium for the Miami Open tennis tournament. Now the county is ready to tweak it again. Gimenez said Tuesday he would propose to the commission raising the cap to roughly $6 million in exchange for the Dolphins moving their training facility to Miami Gardens from Broward County.
While the Marlins don’t receive operating subsidies, the team’s ballpark eats up the most government dollars thanks to the financing deal that created it. In 2009, Miami-Dade agreed to cover about $370 million of the $550 million construction tab for what would be a county-owned ballpark. The Marlins contributed $150 million, including a $35 million loan from the county that the team is paying off with yearly payments. Miami paid about $100 million, mostly for the parking garages outside the ballpark.
Approved during the depths of a global financial crisis that began in 2008, the Marlins deal prompted Miami-Dade to borrow the money on unfavorable terms on Wall Street. The result: paying off the debt is expensive, with a single $91 million set of bonds costing more than $1 billion to retire.
RENT and REVENUE SHARING
The Marlins did agree to share 5 percent of certain sales proceeds if Loria sold the team before the spring of 2018, but the former owner has since told Miami and Miami-Dade he owes them nothing from his $1.2 billion sale to Derek Jeter and partners in the fall of 2017. He claims the original deal allowed enough exemptions to let him post a paper loss on the transaction; both governments are suing to collect.
The Heat’s profit-sharing deal yielded so little the county ended it (the team does pay $1 million a year to the county’s parks department as an offset to its annual subsidy from Miami-Dade). Profit-sharing was never a factor in the Dolphins deals.
By contrast, the Beckham group would pay Miami every year. It initially offered a flat rent rate of at least $3.6 million a year, a figure that has come under fire from critics for being too low given the site’s proximity to the busy 836 expressway and Miami International Airport.
When Mas and Beckham failed to win city approval for the November referendum last week, the swing vote was Commissioner Ken Russell. He said he wanted the city to get 5 percent of the revenue from the development, and Mas said this week he would agree to some form of a percentage payment. Deal documents posted Tuesday evening ahead of the vote would give the city at least $3.6 million a year, or, if it’s higher, a 5 percent share of the rent from the soccer complex outside of the stadium. Mas also agreed to pay the city a 1 percent share of the proceeds if the Beckham group sold the lease to other owners.
Mas has agreed to pay property taxes each year to all levels of local government, and his forecast estimates the annual bills should top $10 million. While Miami-Dade owns the land under Hard Rock Stadium, the Dolphins pay about $4 million a year in property taxes for the facility itself. Add in taxes for surrounding properties and higher bills once the value of the renovations kicks in fully, and the team says its tax bill approaches $7 million.
As tenants in county facilities, the Heat and the Marlins do not pay property taxes.