Did The Marlins Kill Publicly-Financed Ballparks?

No.

The Marlins didn’t kill publicly-financed ballparks. Or arenas. Or stadiums. Not in Florida. Not anywhere. Sure, the Marlins’ fire-sale trade with the Blue Jays — which came less than a year after the opening of the publicly-financed Marlins Ballpark — won’t help the cause of those seeking public monies to build new sports facilities. But teams will continue to seek public financing and municipalities will continue to say yes.

Why?

Because the Marlins’ swindling of the Miami-Dade taxpayers is nothing new. It’s simply the latest example of public officials falling prey to threats that a city’s team will leave and fancy reports prepared by team consultants that say a new ballpark will bring jobs, tax revenue and economic development — despite study after study that shows those claims hardly ever are true.

Indeed, that’s exactly what the Marlins said when trying to convince Miami-Dade officials about the benefits of a new ballpark in Miami’s Little Havana neighborhood. But as the Miami New Times showed in 2011, as the ballpark was under construction, the Marlins’ claims turned out to be — how to say this nicely? — false.

Spend just a bit of time reading Neil deMause’s excellent blog (and book by the same time) Field of Schemes or the research of Harvard Professor Judith Grant Long. You’ll find countless examples of ballparks or stadiums or arenas built with public money on the promise that a city or a county would see big economic benefits. And despite those unrealized gains, demands keep coming and funds keep flowing.

Two Major League Baseball teams are desperate for new ballparks: the A’s and the Rays. We’ve covered the A’s situation extensively in recent weeks (here and here). The issue there is not public funding, as the A’s intend to construct a new ballpark with private financing (although the city of San Jose voted to sell public land to the A’s at a below-market price). The A’s move and plans for a new ballpark are being stymied by their cross-bay rival Giants, which claim territorial rights to San Jose and Santa Clara County. And one of the reasons the Giants are fighting so fiercely to keep the A’s out of San Jose is that San Francisco carries significant annual debt, the result of building the first privately-financed ballpark in decades.

And then there are the Rays. The timing of the Marlins’ sell-off couldn’t have been any worse for the Rays. Today, the Greater Tampa and St. Petersburg Chambers of Commerce issued a long-awaited report detailing how Hillsborough County (where Tampa is located) or Pinellas County (where St. Petersburg is located) could raise $400 million in public funds needed to build a new ballpark, with the Rays kicking in $150 million of private funds. The Baseball Stadium Finance Caucus proposed slightly different plans for the two counties, but each plan contains a mix of redevelopment money, a car-rental tax and an increase in existing hotel taxes. Since the Rays are currently located in Pinellas, that county could also re-direct funds it already uses for Tropicana Field.

It’s unclear from public accounts whether the Baseball Stadium Finance Caucus made any claims about whether a publicly-funded ballpark would create jobs, spur economic development or be a financial gain  for the counties financially. That may be, in part, because the Caucus’ report side-steps the biggest issue: location. The Rays are locked in a long-term lease with St. Petersburg for Tropicana Field and the city has been unwilling to amend the lease to allow the Rays to move.

In some ways, I can envision a scenario where the absurdity of the Miami-Dade-Marlins situation works to the benefit of the Rays in the future. As chronicled in Jonah Keri’s book The Extra 2%Rays owner Stu Sternberg and his team built a perennial contender in the American League East by shunning the old way of running a baseball franchise and, instead, have leveraged every resource to take advantage of undervalued aspects of the team — on and off the field. Where Marlins owner Jeffrey Loria has been greedy and undisciplined, Sternberg has been careful and calculated. Perhaps public officials in the Tampa-St. Petersburg area think Sternburg can be trusted in ways that Loria cannot?

Miami-Dade taxpayers spent $500 million on a new ballpark for the Marlins. Less than a year after the park opened, the team’s owner unloaded more than $100 million in contracts. There’s absolutely nothing Miami-Dade taxpayers or officials can do about it.

And therein lies the the core problem with publicly-financed sports facilities. Even if the economics make sense — even if the bonds and the sales tax hikes and the tourists taxes and the redevelopment funds pay for the new ballpark without gutting other public resources — it’s still an extraordinary expenditure of public funds for the benefit of a privately held sports team. And after the ballpark is built, the municipality has no control over the team’s decision-making. No control over payroll. No control over free-agent signings. No control over trades. No control over coaching changes. No control over attendance. No control over TV ratings. No control over the team’s on-field performance.

Public officials should think about that the next time they’re asked to pony up hundreds of millions of dollars for a new ballpark because the team is so important to the city.




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Wendy's baseball writing has also been published by Sports on Earth. ESPN.com, SB Nation, The Score, Bay Area Sports Guy, The Classical and San Francisco Magazine. Wendy practiced law for 18 years before beginning her writing career. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.


46 Responses to “Did The Marlins Kill Publicly-Financed Ballparks?”

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  1. Robbie G. says:

    How about Bud Selig seizes all of the Marlins’ assets (i.e., its players, mostly), re-distributes them via some sort of draft, dares Jeffrey Loria to take some form of legal action, and MLB lets the Rays move into Miami’s fancy new stadium? I realize there are all sorts of problems with this plan but I have to say that I would be more than okay with it.

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    • David says:

      You propose that the chief agent of the interests of MLB’s owners, step in and punish an owner seeking to enrich himself in a time honored fashion? Owners have been playing this game for years. The only reason McCourt had to go is that he was actually devaluing his franchise. Loria most certainly did not do that. Whatever dent this makes in ticket sales is more than ofset by payroll savings. And, there’s a nice new publicly funded stadium to boot!

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      • Mike K. says:

        That’s not quite right. The Dodgers’ value was never in doubt. (In fact the franchise turned out to be more valuable than anyone imagined.) The problem was that McCourt was siphoning off so much revenue, the business became insolvent.

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    • Baltar says:

      I share your fantasy.

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    • ausmax says:

      Tampa Bay and Miami are farther apart geographically than New York and Boston. How would you feel about the Yankees moving to Fenway?

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      • B N says:

        While obviously that wouldn’t be a good idea. Apples and oranges, for a variety of reasons:

        1. History – The Sox and the Yankees have been in place for a hundred years. The Florida teams have been there less than a generation.

        2. Fanbase – The total fanbase for the Rays plus the Marlins is dwarfed by that of either of those northeastern franchises. By some opinions, the lack of attendance for the Rays is BECAUSE of their stadium placement.

        3. Traffic – While Boston and New York are not that far apart, it takes forever to get between them during any reasonable hour of the day. By comparison, inter-city driving in Florida is a breeze. ;)

        Obviously, however, it makes no sense to transplant the two Florida teams and make them rebuild their fanbases in a new city. The Rays should just commandeer Miami’s public funding contributions and make a new stadium in their area. :)

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    • JKB says:

      As a NE Tampa, Hillsborough County resident and Rays fan that already has to drive 1 hour SW to see the Rays, Miami is the opposite direction from what I was hoping! It takes about as long for me to drive to the Trop as it does to drive to Disney World. Put them in Tampa or Lake Buena Vista.

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  2. bkgeneral says:

    I have always wondered why Government entities that finance public works, like stadiums don’t place more restrictions on the Franchises. In my business, I received Government grants for expansion of my business, with the caveat that I needed to hit certain milestones for job creation. If I had failed I would have been forced to pay back a portion of the grant.

    Why not require that a Franchise that receives what ends up being a grant to finance stadiums hit certain milestones, both in payroll level and winning on the field. I assume most of these teams have sweetheart lease deals as part of the financing agreement. Why not mandate that teams must remain in the upper X percentile of payroll for a predetermined number of years. In addition team performance must be at a level determined to be acceptable. Not below 45% for an also predetermined time frame, for example.

    As a small business owner I received only a small fraction of the money professional teams are receiving. In exchange for this, I agreed to hit milestones determined by the Government so as to make the investment worth it. This also ensures that the tax money paid for by the people is used wisely Logically an entity receiving 100X the money should be held to more stringent milestones.

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    • odditie says:

      Because at the end of the day the other community that wants the team won’t hold them to that. They will make a better offer and the team will threaten to walk away from the city and the law makers will have to try to get re-elected as the guy that played hard ball with the sports team and made them leave.

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    • Baltar says:

      Your business is the first one I’ve ever heard of that has been held to account for its agreement with a government. In the Cincinnati area especially, business’s are stolen from other cities and towns with tax favors all the time in return for agreements to meet employment numbers which are never achieved, and they are never penalized.
      Perhaps not coincidentally, Hamilton County (Cincinnati) followed the customary process outlined by Wendy to “keep” both the Reds and Bengals with two different stadiums. Any resulting economic benefits are dubious at best, and the County is now reneging on agreements to refund $21M per year to taxpayers. Instead, the taxpayers will get $0.
      When will they ever learn, oh, when will they ever learn.

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    • Kevin says:

      Because government wants the rent-seeking. Put franchises on the hook for money, and you find ways to sink your teeth into them. No, you won’t get the entire team to pitch into your re-election effort, but you get tons of free press, great photo ops about how much you care about the community, the attempt to bring good middle class jobs to the city, yada yada yada.

      Putting too many strings on it, like someone else said, and you cause people to go elsewhere, where someone a lot less principled and idealistic exists.

      The public might not benefit from these things, but the politician sure as heck does.

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  3. odditie says:

    I think of public funding of ballparks much like I think of gambling at a casino. For those of us that don’t do it we see it as you lose thus you lose money thus you did bad so why would you do that. For those that gamble though it isn’t a money making scheme, it is a life enhancer. It is entertainment.

    A ballpark isn’t some money making scheme for a city/county, it is a life enhancer for the community and until alternative city/counties stop offering to fund them the owners will continue to have the ability to sell them to the current community because they enjoy having them around. The community may “lose” because it loses money, but it gains a life enhancer and that’s why I’ll continue to sympathize with them.

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    • Radivel says:

      There is a prestige attached to a city that has a major league team of some sort as well. Cities without teams don’t get noticed, talked about, and can’t develop an additional feeling of personal involvement if there is nothing there to be involved with. In the Marlins case, they just do a very good job of ignoring that last bit altogether.

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      • Joe R says:

        San Jose, CA and Austin, TX are both fast growing cities w/out MLB teams.

        Heck, Austin doesn’t have any major pro sports (if you don’t count the NBDL and the Texas Longhorns…ba dum ching).

        Anyway, the prestige brings the sports market, not vice versa. If you wanted to start a business, are you really electing Detroit, MI over Austin, TX, or even Omaha, NE? Yes, these are cherry picked examples, as MLB is in markets like Boston, NYC, Dallas, Houston, Washington DC, Seattle, and other good, growing spots, but you get the point.

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      • odditie says:

        But to Radivel’s point, there is a growing connection with the community when a team is there. Just because you wouldn’t bring a business to Detroit doesn’t mean the Tigers fans didn’t have a sense of community spirit when the Tigers were in the world series. It is an identifying mark to the area and to lose that is much more costly to a community then to just not have it.

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      • Joe R says:

        Hence my comment further down on the page pitching for reincorporation.

        In my opinion, teams that move cities are no longer the same organization. They should be treated as such, and have the same bureaucracy to gain admittance to the league. That’s so some crazy, neurotic billionaire doesn’t buy the Tigers, decide Detroit sucks, and try to haul the team to Austin unless he gets a sweet deal on the backs of taxpayers. While MLB isn’t as blatant in their desire to treat fans as a revenue stream as the NFL, they still need to do more to protect not just fans, but communities. This whole Marlins fiasco is MLB’s fault, for creating the incentive, and now hundreds of thousands of people who have no interest in the Marlins will be paying up.

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      • odditie says:

        Yeah, unlike some sports in baseball the system can have you both profitable and a loser. That is a big problem.

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      • snoop LION says:

        trust me, odditie is right, especially overseas the most the US cities that have big sports teams are known.

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      • Antonio bananas says:

        Correlation doesn’t equal causation though. Are the cities known because they have a sports team, or because they’re big and have been big for a while, which is why they have a sports team.

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      • Radivel says:

        I feel like I’m replying to myself, but I’m replying to Joe R. I’m fairly geographically knowledgeable as far as a random person goes, and I will say that as a Canadian, when I think of “places in Texas”, I think Dallas, Ft. Worth, San Antonio and Houston as major centers.
        Austin may be growing by leaps and bounds, but I never considered that as a “major league” worthy location until you just mentioned it, because of all the times I’ve read about future locations for pro sports franchises, Austin wasn’t discussed and doesn’t have a team already. I just don’t think of it. Really, would anyone know where Green Bay was if there were no Packers?

        TLDR: To an observer, having a team makes a city seem important. Places without them get mentioned FAR less.

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      • Jay Stevens says:

        I don’t buy the idea that sports teams enhance a city’s profile or reputation. All the studies done on the economic impact of a major sports arena on the local economy show zilch, zero, nada growth because of them. Stadiums don’t do anything for cities. Period. The idea that sports teams create “intagibles” for cities — reputation, prestige — on this site should be recognized for the poor logic it is.

        Miami just lost $2 billion on its stadium, money that would have been far better invested in sidewalks, parks, schools, and other infrastructure that actually does improve local economies.

        I’d like to think this would be the end of publicly funded stadiums, but too many people are suckers.

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  4. Nicholas says:

    Is there any way for Marlins fans (however many there are left) to support the team while not giving any avoidable money to Loria? Marlins games on MLB.tv are blacked out in-market, correct? Otherwise they could buy MLB.tv packages and watch games at home instead of going to the stadium. Presumably the Marlins get a smaller cut of that money than they do from ticket sales.

    There has to be some way for fans to hurt an owner like Loria in the only spot on their body where they feel pain (the wallet), without abandoning the poor players who have the misfortune to play for that team.

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    • chuckb says:

      They should just refuse to support the team. As soon as Loria’s forced to trade Stanton, they’ll be a 60 win team (at best). Fans will then not show up to support a team that loses 2 out of 3 and whose owner doesn’t care enough to improve the team. It’ll hit Loria right in the pocketbook.

      The fact that free agents are going to refuse to sign with the Marlins in the future also commits them to futility as long as Loria’s the owner. They’ll be able to receive less for the players like Stanton that they trade.

      Loria traded long term success for short term dollars and the money he’s going to make this year won’t last that long.

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      • Steve says:

        This idea that no free agent will sign with Miami is ridiculous. Players like money. Players like to play. Some of those players will chose Miami money and play there. Will it be a factor for many? Possibly… but some will come.

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      • Krog says:

        Due to revenue sharing, however, Loria will still make millions regardless of how many fans show up to the ballpark. Loria has found the perfect way to cheat the system.

        Fans not showing up might help a bit, but it’s up to the other owners and the player’s union to force Loria out.

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  5. Mr Punch says:

    The peculiar situation of the Rays is that the franchise exists because of the stadium. The Trop was built, and then the city (or region or whatever) went shopping for a team (Indians, White Sox, Giants) until MLB finally gave them one. It’s not like Tampa/St. Pete would have been next on anyone’s list otherwise. In my view, the Rays should have to continue to play in the Trop until Tampa grows into a real major league city where investing in a new ballpark makes economic sense.

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  6. chuckb says:

    I was desperately hoping that the first word of your thread would be YES but deep down, I knew differently. Publicly financed stadiums are an abomination and I wish that taxpayers would stop being bamboozled by these owners.

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  7. mike wants wins says:

    This is just an obvious example….the Twins are doing the same thing so far, just less obviously. Take out Mauers deal, and that payroll is barely bigger than the dome days. Wait until Morneau leaves, and the payroll drops even more. Maybe they will surprise us all, and sign legit players for real money this off-season, but that is not what they did last year.

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    • j6takish says:

      Hardly the same. The Twins have had a payroll near 100mm for a few years and were a competitive team until recently. The Twins problems stem from inept management that spends 100mm on number 5 starters and light hitting middle infielders while refusing to draft high upside kids

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      • Krog says:

        There is a lot of goodwill stored up in places like Minnesota and Houston where owners/management put a competitive team on the field for a long time. Even though the teams are bad right now, fans feel like the team is at least trying to win. This is a lot different from Miami, where it is clear that the owner is just trying to earn as much profit as possible without regard for the fans of the team.

        It will be interesting to see how Minnesota fans react to a dry spell, however. The Twins owner is both incredibly rich and incredibly cheap with player payroll. If they don’t increase spending or start winning soon, we might hear some discontent from Minnesota fans who payed for that new ballpark.

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      • mike wants wins says:

        Like I said, it is just less obvious in MN. Their payroll outside Mauer and Morneau last year was less than $60MM, closer to $50MM. Does that sound like a team trying to win to you?

        It would be interesting to see all the payroll numbers if you took out the 1-2 stars in each city, and if that was any indication of success or not…..

        MN cut payroll last year, and they are unlikely to raise it this year. They are likely to deal Span and probably Morneau soon. Even if they don’t deal Morneau, will they sign a FA that makes that much money?

        Richest owners in baseball for a reason, they know how to make money.

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  8. Joe R says:

    Hah, anyone who learns anything about economics knows that public financing for stadiums is often a money sink. For politicians, it’s expedient and makes them look proactive, and people don’t notice how bad the deal was until it’s time to pay the piper. And frankly, these multi-millionaire (even multi-billionaire) owners are smarter than these politicians. There’s a reason why one elected to dive into the business world (and many of these guys took some calculated risks to get super-wealthy), and another decided to stumble into a field where they only have to worry about being better than the other guy interviewing for the job every 2 years.

    Even my super-Keynesian friends who will argue the utility of public works projects for economic development will not bother touch the ballpark argument. It’s a loser. At least a road, for example, can do things like increase economic activity in the surrounding towns and alleviate traffic in congested areas (reducing commute times / adding more productive work hours).

    My personal solution is to add new rules to the climate, aka reincorporation. If a team wants to move, they first have to get it approved by the commissioner and a two-thirds majority. Then, after the new franchise is established, all current player contracts are voided. They can transfer the contract to the new team if they’d like, but they’re under no obligation. It’s insane to think that a collection of average guys making $40K/yr should collectively pony up for an owner worth $500M+, and we need a better system in place to curb the Loria’s of the world.

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  9. dustygator says:

    Public funding for sports facilities is a terrible deal most of the time but can make sense. If you believe in the public economics idea of a public good (in case of a team/stadium would be the ability to talk about said team at the water cooler, or celebrate in the streets when they win) than it makes sense for a municipality to contribute some amount to the construction of a new stadium. However that sum (~$100 million for a decent sized city like Pittsburgh) is smaller than what cities actually fork up.

    See
    “The Value of Public Goods Generated by a Major League Sports Team
    The CVM Approach”
    Johnson, Groothuis & Whitehead
    Journal of Sports Economics

    http://jse.sagepub.com/content/2/1/6.abstract

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    • Joe R says:

      The vast majority of citizens don’t have any stake in that public good, though. Most people are apathetic to the presence of sports in town.

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    • B N says:

      I won’t deny that sports teams provide positive public good. However, that is VASTLY different than being a good investment. I mean, here are some other investments with positive payoffs:
      – Certain variants of video poker, with perfect play
      – Collecting cans and other metals out of waste bins
      – Putting money in a standard savings account.

      Indeed, these can all be profitable. However, they’re still horrible investments relative to other options. They take forever to accumulate much benefit and lock up resources (time/money) that could be used on vastly better investments.

      A good benchmark for a public investment should be something like investing in an improved school. After all, everybody likes great schools but no one wants to pay for them. So for every $100m you put into a sports stadium, you have to ask: “Will this give a better return than investing $100m into twenty new magnet schools?” The answer is likely no. I’m not even convinced that putting $100m into a new stadium is a better investment than putting that money into youth athletics programs.

      Heck, the return on investment for a publicly financed stadium is probably less than the benefit of paying down the principle on outstanding debts. That should mean no public financing, if politicians had any money sense.

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  10. FFFFan says:

    Politicians will continue to do what garners the most votes. If a team leaves, a political opponent will blame all bad that happens on the decision to let them leave.

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  11. Kazinski says:

    Publicly funded stadiums are one of the oldest functions of government. Did the gladiators privately fund the Colosseum?

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  12. soladoras says:

    “Nobody spends somebody else’s money as wisely as he spends his own”

    Ultimately it doesn’t matter that everyone knows that publicly financed stadiums are a money pit for the taxpayer. This isn’t a knowledge problem this is a public choice problem due to the incentives of the political decision making process.

    The benefits of subsidizing these type of projects are highly concentrated, and the costs are widely dispersed. The ownership group of the team and the surrounding business and property owners benefit enormously, while the cost to individual taxpayers is typically only a few dollars. Now guess which interest group in this dynamic has a bigger vested interest in the outcome of the political decision making regarding public financing stadiums, and will therefore expend more resources to influence the decisions of the local politicians.

    Again, this is not a knowledge problem. Politicians make decisions based on the political incentives they face, not the fiscal and financial incentives—because it’s not their money. Politicians bear the negative political costs of their decisions, not the negative fiscal costs. This is why “electing the right people” is not a solution, as the incentives remain the same. Furthermore, the existence of these incentives attract the type of unsavory characters most likely to waste money for political gain.

    The only real way to address the problem is to not allow the political decision making process to determine and dole out such valuable benefits in the first place, which amount to robbing Peter to pay Paul.

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    • FJ says:

      I’m curious,how you would not allow the political decision process this ability and still get things that people would want (like police, fire, streets, education, etc.).

      This is a pretty bad scam on the residents of Miami, and I hope that at least the mayor can be brought up on corruption charges. Though, unfortunately, the contribution sizes for the other players in the game don’t seem to be prosecutable….

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  13. phillr says:

    There is no justification for using tax payer money to finance a private stadium. If one buys into the idea that tax payer money should be used for government planned economic development, its hard to argue for a stadium over a research university, business incubator, etc.

    Its theft.

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    • B N says:

      This. If you want overall ROI, go give grants to the top 2% of grant applications that the NSF rejects (the NSF only accepts about 1 or 2% of grant applications). Many of those applications are from some of the most brilliant researchers in the nation and the potential ROI is high (e.g. a study leading to a 1% decrease in heart disease regionally would probably pay for more than a dozen studies).

      Or, just blow money on a stadium that the private sector would have built on its own. Yah, let’s just do that. It’s trendy.

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  14. It’s really a slap in the face to any business owner to have public money directed to one hand over the hand of another. Not to mention the inevitability of prices rising in different parts of the city (immediately and over time) for consumers because of it. Let the market decide what the best use for 500 million dollars is. If you can’t find private investors, or you can’t get people interested, it’s probably best just to put in some sweat equity or start making new plans.

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  15. Justin Smoaked Cheese says:

    Go Oklahoma Supersonics! Go to hell I mean…

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