The Real Math: Who Owes Whom?

Posted on Categories Public, Sports & Law, Student Contributor

A photo of the mascot for the Florida Marlins baseball team, a man dressed in a foam costume with a fish head and wearing a baseball jersey.The start of Spring can mean one of two things. For some people, Spring can mean the weather will finally get warmer, or they will be going on a vacation. However, for baseball fans, Spring means the beginning of a new season on the road to October. Players head out to Spring Training, where they showcase to their fans the excitement of heading towards the 162-game season. Nevertheless, with the beginning of baseball season means the off-season has concluded and controversies start to surface in the media. Whether it was a favorite player being traded or a new ownership of a team, the possibilities of controversies are endless. In this particular situation, the county of Miami-Dade in Florida is filing suit against Miami Marlins (former owner) and Marlins TeamCo, LLC (the new owner of the Miami Marlins). The county of Miami-Dade is filing suit against the Marlins for refusal to pay the five percent equity payment that the Marlins promised to pay when they sold the Marlins to the Bruce Sherman-Derek Jeter group.

$1.2 Billion Dollars. That number represents the dollar amount that Jeffrey Loria sold the Miami Marlins to the Bruce Sherman-Derek Jeter group for in October of 2017, even though he only purchased the team for $158.5 million.  How much did the county of Miami-Dade receive from this transaction? Zero dollars. The real question in this case is why should the county of Miami-Dade receive any type of monetary relief from this transaction.

During the season of 2009, times were tense between the Miami Marlins and the city of Miami. The owner at the time, Jeffrey Loria, was making statements that he wanted to move the Marlins out of Miami and into a new market unless a new stadium was built. However, Loria claimed that since profits were decreasing, the team could not build a new stadium without the help of public funding. The county of Miami-Dade provided approximately $389 million towards the construction of the stadium, and the city of Miami agreed to provide approximately twenty-five million dollars and the land for the stadium. Besides providing public-funding, the county of Miami-Dade and Jeffrey Loria came into an agreement. The agreement stated that Jeffrey Loria would keep the Marlins in the Miami market for a specified period of time, and if he did then the county would provide public funding. However, if Jeffrey Loria sold the team within that specified period of time, then the team would have to make an equity payment to the county of Miami-Dade.

Jeffrey Loria sold the team within year six of the operational phase of the project, which meant that the owner of the team would have to pay an equity payment of five percent. The contract stated that the Marlins were to have independent accountants provide the county a reasonably detailed calculation of how much to receive for the equity payment. The calculation would take into account the assumed value, net proceeds, and any other calculations that the Marlins used to determine the amount payable. After all the calculations, the county of Miami-Dade received a notice of valuation that the five percent equity of the $1.2 billion-dollar transaction was zero dollars. The county of Miami-Dade is claiming this valuation is nothing more than a false valuation and violates the False Claims Act and the Florida Deceptive and Unfair Trade Practices Act. The county of Miami-Dade is also bringing suit for breach of contract, breach of implied covenant of good faith in fair dealing, and declaratory and injunctive relief.

What happens next in a situation like this one? Does the county stop providing public-funds to an upcoming venue? Or does it think more strategically about the wording of a contract? In my opinion, this is a valuable learning opportunity for any city or county around the United States. For one thing, this type of controversy could deter government public funding for any new entertainment venues. What happens then? Do teams have to rely on private funding for any type of upgrades? The sports and entertainment industry is one that will always have a place in society. People need a way to destress from a forty-hour work week, whether it’s watching a baseball game or even attending a Beyonce concert that they have been planning for a year. The question we really have to ask ourselves is do we let the misfortunes of an individual such as Jeffrey Loria interrupt future expenditures of improving the market in that county, or do we learn from the opportunity while still fighting for the monetary relief sought knowing it can be an endless legal battle.

In reality, who owes whom? The answer only time will be able to tell us.

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