Monday, November 14, 2005

DC To MLB: Screw You

Is $6 million a year too much? That's the question that remains. And that's the question that's holding everything up. DC wants $6 million in guaranteed rent payments from DC because Wall Street has demanded it in order for the city to receive a favorable interest rates on the bonds it's going to use to pay for the stadium. MLB, predicatably, says no.

The payments would amount to $180 million over the life of the lease, a fairly small price to pay for the nearly 2/3 of a BILLION dollars that MLB is receiving. Take the net present value of that money, and it's even less. DC is completely right in holding out. MLB is clearly in the wrong here.

One of the issues surrounding the lease payments is what happens in case of disaster. MLB doesn't want to be stuck paying payments on an unusable stadium when Mr. Terrorist leaves a suitcase nuke under his seat. This, to me, is a smoke screen. There's a company who'll insure anything, and you've gotta think that the payments for this are relatively low. Essentially MLB is holding out for pennies on a hundred-million dollar deal. Typical.

Why is MLB doing this? Greed. They want to extract every last dollar out of the city so as to maximize their return from the potential ownership groups. And the new ownership groups are happy to have the keys turned over to them, with as little expense possible. With the $450 price tag, each ownership group is going to be leveraged to the hilt. They won't own the team, their banks will. Much of the revenue the stadium generates will go right to the banks.

Our friends at Nats Triple Play had a good take on this. TP says screw 'em. Since the ownership situation can't be decided in the next few weeks, which are central to the offseason plans, who cares when we get an owner.

For the duration of the negotiations Bud Selig has wielded the ownership question like a stick, using it to beat back all attempts to reconsider the stadium legislation or make substantial alterations to the lease. But now he may have overplayed his hand. As Frank Robinson noted, the Nationals have already been handicapped in free agency and for the 2006 season by not having owners in place to establish a budget and direction for the team. The good news is though that the damage has already been done. Now it really is no detriment to the team to not have an owner by Thanksgiving, or Christmas, or Valentine's Day, or whatever other arbitrary date Bob DuPuy announces next. So D.C. should hold the line, demand that MLB guarantee the rent and stonewall whatever other asinine conditions Jerry Reinsdorf tries to impose at the 11th hour.

For what it's worth, Joe Madden's Sunday Notes column in the Daily News says we're not getting owners until after the New Year. For what it's worth, Reinsdorf raised that himself last week.

Tell me again why I should care...?


  • Chris is absolutely right and DC shouldn't budge an inch.

    What is so obviously phony is MLB's insistence that DC is at fault for an owner having not been selected yet; the constant inference is that an owner cannot be selected until a lease is executed. This of course is false; the original schedule for identifying an owner would have had one in place long prior to the date of lease execution, and none of the ownership groups has made execution of a lease a condition precedent to the deal.

    MLB wants the lease signed to remove DC's leverage as they engage in one odious, grasping practice after another. DC should hang tough not only on the rent insurance provision but on making the owners pay for cost overruns and on cleaning up the TV mess. This is completely practical, as current legislation requires DC to move the stadium to a cheaper location of land aquisition costs exceed a specified cap. DC to owners: you want the stadium on S. Capitol St? Pay up.

    By Anonymous Anonymous, at 11/14/2005 3:41 PM  

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