Highly questionable or in the tank?

Graphics by G. Costales

Dan Le Batard’s recent column makes various assertions about the finances of the Miami Marlins which echoes what Jeffrey Loria would have us believe. I don’t know when Le Batard would ever reach the point of skepticism about his Marlins sources, but his patience is impressive. While he is critical of Marlins management on non-financial issues, what he accepts as fact about their finances just doesn’t add up. He wrote:

The team overspent assuming we’d fill the ballpark [#1], which we didn’t, and that meant losing about $40 million [#2] in that calamity of a season…. Unlike Micky Arison, who lost money every year he owned the Heat except last year, Jeffrey Loria doesn’t have enough money [#3] to keep losing $40 million a year even as the ballpark appreciates his and the franchise’s value [#4].

  • #1 – Depends on the meaning of the word ‘fill.’ Marlins stadium capacity is 37,442. To have sold it out, or filled it, would have meant drawing 3 million fans. David Samson is on record with ESPN’s business reporter Kristi Dosh noting that they expected attendance of 2.7 million [89% capacity], or about 500,000 higher than the 2.2 million [73% capacity] it turned out to be. Noting 89% vs 73% capacity may not be sexy, but it sure is more useful for the purposes of determining expected revenues.
  • #2 – The lower than anticipated attendance would not even come close to accounting for a $40 million loss. It is misleading to imply that the 1st year attendance is to blame for dramatically altering the Marlins business model in year 2 of the stadium. Here’s why.

Marlins revenues from gate receipts, as per Forbes, averaged between $15.1 & $16.3 per fan [gate receipts divided by attendance] between 2007 and 2011 [click on spreadsheet within blog post]. Assuming a healthy 25% increase in per fan revenue to $20 per fan in the new ballpark, multiplied times the missing 500,000 fans, equals a nice round $10 million in missing revenue. A more accurate description of what had to occur to make up for the missing fans was to dump Heath Bell’s contract.

On the positive side, its good to know the Marlins are back to discussing the results of their yearly operations. Let’s hope it’s not a 1 year thing, given that 2013 is looking a lot like 2006 through 2009.

  • #3 – Sloppy and misleading. Does Le Batard know how much money Loria has? Does ‘money’ refer to cash flow as opposed to assets? When exactly would Loria run out of ‘money,’ given the assumed losses? Answering any of those questions would be useful information. Or is Le Batard suggesting that 1, 2, or even 3 lean years would affect the net profitability of Loria’s MLB investment, given the Revenue Sharing fat years which preceded it and the new ballpark which came after? Here’s what is known:

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Marlins fan pesadilla draws to an end?

Graphics by Gabriela Costales

Graphics by G. Costales

Pesadilla is the Spanish word for nightmare and a feminine noun. For Miami Marlins fans, pesadilla is a particularly accurate description for having our MLB team owned by a Manhattan bred arts dealer who made his bones running Expos out of Montreal. But this nightmare is likely coming to an end soon, since selling the team now constitutes Jeffrey Loria’s best option.

While I believe selling the team makes business sense, personal factors also point to a sale. Being the Marlins owner in 2013 appears to be a miserable use of septuagenarian millionaire’s time. This without even considering potential health issues and whether his spouse–on whom he appears to have about a quarter-century of life head start on–has an opinion about being married to a locally despised figure.

In addition, the Non-Relocation agreement’s penalty for early sale is not significant enough to deter the sale. The additional amount due the County if the team is sold between now and the next operational phase [April 2014], would be around $2 million — assuming a sale price of $450 million — or roughly the equivalent of what a typical Babalao would earn for not managing your team for one season.

Business reasons to sell sooner rather than later:

  1. No factors which would increase that the value of the franchise over the next few years. The ballpark was a great success, with potential parking and traffic issues proving to be manageable in the 1st year. The expected significant increase in national broadcast contracts would already be factored into any sale negotiation.
  2. No long-term, heck, no commitments period on the team’s payroll. A team paring down salary for profit, would still have keep at least one of their free agent signings for appearances sake if nothing else. When they all were shipped out, that’s how ‘dead’ owners roll.
  3. Attendance – The Marlins drew 2.2 million in the new ballpark and that figure is widely described as both inflated and disappointing for a 1st year stadium. However, Guillen’s Castro comments stifled enthusiasm that the Marlins should have enjoyed at the beginning of the season. Despite that, the Marlins averaged 28,988 during the 1st half of the year [thru July 1st] when their record was at 38-40 — average attendance ended up at 27,400 for the year. Soon afterwards, the trades of Ramirez, Sanchez and Infante signaled that ownership had given up on the season. The point is that a case can still be made that MLB in this market is *viable, in comparison with overall MLB attendance. Owning the team past the coming season, could begin to undermine that argument.
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Hubris on display, Marlins management

This blog post has two purposes. One is to document the continuing attempts — see Jeff Passan’s and Sarah Talalay’s columns — by the Florida Marlins president David Samson to mislead the public about the Florida Marlins profitability and how Jeffrey Loria has benefited from that profitability. The other purpose is to give future auditors a good example of how someone can attempt to mislead by using pretentious language. This latest example came on Samson’s radio show with Dan Le Batard on 9/1/10.

The exchange came with 18 minutes left in the program. My clarifications will be in [brackets] and my comments will be [bolded in brackets]. See the text below:

Le Batard: Given your claim that “not a dollar has gone to Loria,” what’s the explanation for the payments which went to Double Play, a company run by you and Jeffrey Loria?

Samson: Yeah you have to look a little deeper though into the statements and understand they are … Double Play is the Managing General Partner of a partnership [Marlins] and … God we’re getting so technical it’s such bad radio, I’d rather talk about other things [JC: No doubt.] but I will always answer your questions … Daniel.

Samson: Ugh … it is a … it’s [Double Play] the Managing General Partner of a partnership [Marlins]. Any limited partnership [type of partnership the Marlins are] has a [Managing] General Partner … and what Double Play is … in the books … is that Managing General Partner … and the Partnership [Marlins] gives money to the [Managing] General Partner, in the form … we call it a … it’s a management fee, for its expenses in running the Partnership [Marlins].
[JC: Important to note that Samson has said nothing yet to answer the actual question. He merely stated that Double Play is the Managing General Partner of the Florida Marlins, but he did so in a very confusing manner. For example he never mentions the Marlins, always calls them the partnership, and Double Play is alternately referred to as the ‘Managing General Partner’ and the abbreviated ‘General Partner.’ They are one and the same in Samson’s explanations.

The question was; Why did the Marlins pay Double Play? Double Play’s role in relation to the Marlins is clearly spelled out in the released financial statements. So he has merely reiterated facts which were not asked or in dispute, and done so in an attempt to create confusion.]

Le Batard: [clearly baffled] What?
[JC: So it worked, for now. Where’s Jo-Ellan Dimitrius when you need her.]

Samson: What you don’t understand or what you want a different answer?

Le Batard: Is that how owners get paid?

Samson: [cough] I, I, … In terms of getting paid, I don’t know what that means.
[JC: He does.]

Samson: In terms of W-2 income … [cough] …
[JC: W-2’s reflect salaries paid to employees. There is no reason to refer to a ‘W-2’ when discussing the fees paid by the Marlins to Double Play. Clearly an attempt to confuse in the hopes non-business people associate getting paid with an employee salary, as opposed to a management fee from one company to another.]

Samson: … it’s [Management Fees] expenses that are paid [to Double Play] in the running of the partnership [Marlins].
[JC: So he raised the issue of W-2’s and then just ignored it. The question was not whether the monies paid to Double Play were expenses to the Marlins, the question was whether that is how Loria gets paid. Since it is how Loria gets paid, we get his nonsensical answer.]

Le Batard: Like?

Samson: Travel
[JC: Remember, Double Play was paid $5.4 million over two years and is scheduled to earn $3.2 million this year. Samson has tried to imply that Loria does not benefit from those monies because the company which he controls, Double Play, had expenses which would have eaten up the $5.4 million received from the Marlins.

Here, he can’t even think of anything significant which would be an expense to Double Play, which strongly suggests that the monies paid were exactly what the question implied, fees paid to the owner. Fees which obviously put a lie to the claim that “not a dollar has gone to Loria.”]

Le Batard: Like?

Samson: I could go on and on.
[JC: If he could have, he would have.]

Samson: It’s a complicated thing to run a partnership.
[JC: Misleading people about numbers on audited financial statements is even more complicated.]

LeBatard: And it [costs] millions of dollars right?
[JC: Key question. Without putting a dollar amount on Double Play’s expenses, Samson could continue to allude to different expense line items — for example the “travel” he noted earlier in the interview or the “architects and engineers” he had told the Miami Herald last week — which don’t alter the main point here.

Whatever expenses Double Play may have, they would never approach the $5.4 million paid to them by the Marlins. Because the main reason for setting up a [related party] company like Double Play — an arrangement which involves two companies with the same owner — is to pay the owner [Loria] in an indirect manner.]

Samson: Ugh … it is millions …
[JC: Careful David, this lie would be really hard to walk back.]

Samson: … it is millions of dollars [the $5.4 million management fee] that is awarded to the Managing General Partner [Double Play] …
[JC: No David, we know $5.4 million was paid [awarded?] to Double Play. But what were Double Play’s expenses? That’s the question now being asked.]

Samson: … that they [Double Play] then use, it [DP] then uses, it’s not a they [JC: kinda funny that Samson interrupts himself to ensure that Double Play is thought of as an “it” as opposed to a “they” – it’s the only thing he is interested in being clear about], which it [DP] then uses to do it’s job.
[JC: But David, the question was how much of the $5.4 million it uses to do that job. Because even if travel amounted to $400,000, that means that Loria personally benefited by $5 million from the team in fees alone over the two exposed years.

To be clear, if Double Play’s expenses were millions of dollars, the answer could have been a simple yes. It does not cost millions of dollars to run Double Play. It is how Loria gets his money from the Florida Marlins and simultaneously reduces the Marlins net income. Samson ends the interview how he began it, reiterating facts which were not being asked in such a way as to confuse non-business people.]

LeBatard: We come back with your questions for David Samson….

Some people would argue that this attempt at obfuscation is just part of Samson’s job. I believe that if he can’t be truthful, Samson should just avoid these type of public comments. Far from revealing any type of financial acumen — the things I pointed out could spotted by most 1st year accounting students — they reveal a contempt for the listeners; Marlins fans, people concerned about public monies committed to private projects and the actual hosts of the radio show.

Of the hosts, only Dan Le Batard would claim any type of journalist role, but not necessarily, or perhaps explicitly, not on the radio. But at what point does someone who earns a living at least part of the time as a journalist, have a responsibility not to appear to be complicit in the public dissembling of the Florida Marlins?

To me the complicity comes not in the actual interview, during which it would have been difficult for someone unfamiliar with financial language to spot — I had the luxury of replaying the broadcast — but in the lack of a serious follow up, even if it means bringing up the topic on the next show. The irony is that the Le Batard questions I noted in this interview was one of the few times [I’m a regular listener] that there was a follow up to something Samson had said on a previous show.

But what’s the point if the follow up is met meet with yet more of the same unchallenged nonsense? Samson has been making these type of misleading comments for years on his shows. It’s just too convenient for Le Batard to write that the truth is a matter of perspective when most of Samson’s lies have been spoken on his radio program.

This latest radio interview was just another example of the hubris of Jeffrey Loria and David Samson.

How Loria Took Money For Personal Use

The Miami Herald on Sunday, in an article by Charles Rabin and Adam Beasley, did a good job of summarizing the issues surrounding the web site Deadspin’srelease of the financial statements for various MLB teams. In addition, they got the Florida Marlins team president David Samson to admit the following:

  • “Some” of the money [5.4 million over 2 years] reported as a ‘Management Fee – Related Party’ to the company Double Play, covered expenses for architects and engineers. This also then means that “some” of the monies represented actual management fees paid to Loria. This is in direct contrast to Samson’s assertion earlier in the week – see Jeff Passan’s column – ‘that not $1 had gone into Loria’s pocket.’ What are the odds that if the portion of the $5.4 million which had gone to expenses represented all or most of the $5.4 million, that Samson would have failed to note that?
  • That Loria collected $16 million from the team in the past 2 years in repayment of loans [interest was not noted, but probably should have been]. My own attempt to quantify the monies which Loria had collected from the Marlins through Double Play came to $14.2 million — see my earlier blog post.
  • Samson refined his ‘not $1 in Loria’s pocket’ defense to “Loria has never taken money from the team for personal use.”

Given Samson’s track record, it would not be unreasonable to try and analyze that assertion. Other than having enough money to donate $20 million to Yale in March 2007, not much is know of Loria’s wealth as far as I can tell.

Why Management Fees = Taking Money For Personal Use

We don’t need any special insight to know that any monies paid to a company Loria controls, like Double Play, should be considered funds that are at his disposal, net of any expenses. As such, almost by definition, whatever amount “some” of the $5.4 million in management fees paid to Double Play which were not being used to cover expenses [architects and engineers] amounted to, those funds would end up at Loria’s disposal, or for his personal use.

Left unexplored is why any necessary stadium related expenditures would be handled through an owner controlled company instead of the Florida Marlins themselves. Lack of transparency is not some unfortunate by-product here, it is likely the main purpose of involving Double Play.

Here is how the Marlins will respond. When Samson said “taken” he did not mean to include Loria’s management fees [payments to an owner], which likely is most of the $5.4 million. Neither did he mean to include the $16 million of loan repayments and interest earned on those loans. He only meant the net earnings [or surplus in the case of a partnership] from the Marlins themselves.

Then let Samson and the Marlins say that — with all the caveats which that entails — rather than making cynical statements which imply that their owner has not benefited [income and cash flow well into eight figures] personally from the team’s finances during the two years exposed. The truth is that one of the purposes of a company like Double Play is that it allows owners to take monies from the main business, without appearing to be taking the money directly.

More left unexplored is how many owners of franchises preparing to build stadiums can use that time to pull monies out of their team instead of having to invest in a project which will substantially increase the value of their investment. Loria’s behavior is especially egregious when you factor in that the franchise increased in value by about $70 million during the two years covered, as per Forbes valuations, which have an excellent track record. No wonder respected MLB writer Buster Olney has called for a government investigation of the Marlins.

One of Miami’s best know journalists remains neutral on this issue. Elsewhere in the Sunday Miami Herald, it took Dan LeBatard about 1,300 words to conclude that this issue is really complicated. As evidence, he noted that he received unsolicited input from CPA’s which defended Samson. One was quoted as writing:

Few people understood then, and understand now, how poorly capitalized Loria is.

Unless that CPA was privy to Loria’s personal financial statements and or those of his company Double Play, the released Florida Marlins financials would not tell you how well or poorly capitalized Loria was or is. They tell us how leveraged the Florida Marlins were, not Jeffrey Loria, an important distinction. The fact that Double Play lends the Florida Marlins money, is evidence that Loria keeps his money elsewhere. The one concrete observation about Jeffrey Loria’s personal finances which can be made after reading the Florida Marlins financials [and the Rabin and Beasley article], is that his cash flow increased by at least $16 million [plus “some” management fees] during the two exposed years.

Maybe it’s time for some solicited opinions?

Even more left unexplored. How does a team with operating income of $134 million [according to Forbes – hey, we’re done with the whole Forbes just makes it up spin no?] since Loria purchased the team in 2002, end up in debt with a partners’ deficit? Just think of it this way, if 2008 and 2009 resulted in a total of $52 million in operating income, what would make 2006 and 2007 any different in terms of profitability? What makes 2010 that much different [in terms of baseball operations]? Same bottom of the league payroll and same revenue sharing agreements in place since 2006. Where did all the operating income go? The amount of management fees paid to Loria during that time is probably a good place to start. At least we know the profits are not in the bullpen.

This whole issue reminds me of Malcom Gladwell’s observation on the need for journalists to be smarter [about accounting and statistics]. I would add that a willingness to go outside comfort zones could easily compensate for any industry specific or technical issues.

The Rabin and Beasley article referenced is copied in full at end of post.

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Marlins saved millions in revenue-sharing deal
BY CHARLES RABIN AND ADAM H. BEASLEY
crabin@MiamiHerald.com

The Florida Marlins reaped more from Major League Baseball’s revenue sharing than the team paid for player salaries the last two years — a disparity fueling the $52 million in operating income the franchise pocketed in that time, previously secret financial records show.

The team secured its profit — which exceeded that of five other franchises whose books have also been leaked — as it won hundreds of millions of dollars in public money for its new stadium, the records show.

Critics chide the team for lobbying for $487 million in public money for its $642 million stadium as its own financial health was robust. The Marlins tell a different story: That the bottom line represents sound financial footing allowing the team to contribute $155 million to the structure rising in Little Havana.

Either way, there’s no disputing the bottom line:

“The Marlins are running a shoestring budget so they can turn a profit,” said Neil deMause, a Brooklyn-based journalist who co-authored the 1999 book Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit.

The previously confidential information came to light last week when the sports website Deadspin.com released the private financial statements of the Marlins and five other teams: the Tampa Bay Rays, Pittsburgh Pirates, Seattle Mariners, Los Angeles Angels of Anaheim and the Texas Rangers.

The documents covered the 2007 and 2008 seasons for the Pirates, Rays and Mariners, and 2008 and 2009 for the Marlins, Rangers and Angels.

While that makes it impossible for an apples to apples comparison, the records provide the first comprehensive look at MLB’s financial doings.

And, they show how the Marlins separated from the pack in the amount of money it collected from revenue sharing and income it earned:

• The Marlins reported the largest operating income over a two-year period, at $52 million. Next came the Pirates at $38 million, the Rays at $36 million, the Angels at $23 million and Mariners at $6 million. The Rangers were the only team to record a net operating loss, of $8 million.

• The Marlins also collected the most net income, at $33 million, followed by the Pirates at $29 million, Angels at $18 million, Rays at $15 million and Mariners at $13 million. The Rangers, meanwhile, were $23 million in the red.

• The team secured its largest financial advantage in revenue sharing, in which big-market teams share their wealth with smaller franchises.

In the two years, the Marlins received $92 million in revenue sharing, enough to cover the team payroll in that time with close to $20 million left over to go toward ballpark construction or other costs. Earlier this year, MLB called into question the team’s payroll practices.

The Rays collected $75 million from revenue sharing, the Pirates $69 million, and the Rangers $29 million. The other two franchises paid more than they pocketed, with the Mariners reporting a loss of $24 million and Angels $31 million.

The numbers also show the Marlins were last in concession sales and next to the bottom in television and radio revenue, ahead of Tampa.

On the flip side, the Marlins — who have remained competitive on the field despite being at or near the bottom of payroll in baseball — devoted the largest share for player development, at $60 million, according to the sports business website BizOfBaseball.com. The Pirates were next closest at $44 million.

Ultimately, the records reveal a franchise turning a healthy profit.

“It should come as no surprise — and, in fact, a great comfort — that the team’s balance sheet reflects the wherewithal to honor its commitments,” County Manager George Burgess wrote Friday.

Of the Marlins’ share of stadium costs, $120 million will be a direct contribution and $35 million a loan the team will repay the county through yearly rent. Bond deals are bankrolling the public end of financing, and interest costs could ultimately send the tab above $2 billion.

“The deal is so one-sided, it’s really sad to see this community obligated for 30 years,” said art collector Marty Margulies, who campaigned against the use of public money for a stadium set to open in 2012. “At the end of the day, the people who voted for this . . . are to blame.”

In March 2009 the Marlins won a decades-long battle to secure financing for the stadium now reaching skyward and visible miles away.

Team owner Jeffrey Loria landed the deal through commission votes in Miami and Miami-Dade, beating back a lawsuit from billionaire auto magnate Norman Braman and a legal effort to show the public its books.

Loria and Marlins President David Samson said the information was proprietary, convincing a judge local government didn’t need to see the records to award the money.

Though the team never released its financial records, Samson said it allowed elected leaders to speak with the Marlins’ bankers.

Some county and city commissioners are trying to reopen negotiations over the stadium and parking contracts, citing the franchise’s bottom line.

“Now, Mr. Samson on the record says that at the time, city officials in Miami knew everything about their finances — and yet on the record before the city commission they refused to disclose their records,” said Miami Mayor Tomás Regalado, who voted against the stadium as a commissioner and is trying to get the parking deal restructured.

Whether that will happen is yet to be seen, but Samson said city and county leaders were aware of the team’s financial shape. “You may disagree on how we run the team. But I didn’t lie. The documents are right there,” he said.

The president also said Loria has never taken money from the team for personal use.

That may be so, but in 2008 and 2009, the Marlins paid $5.4 million to Double Play Company, whose partners are Loria and Samson. Samson said some of that money covered expenses like the hiring of architects and engineers.

Also, the documents show Loria collected $16 million from the team the past two years. Samson said that represented repayment of a loan Loria provided the team to help with stadium costs.

“The team needed money,” Samson said. “Jeffrey lent the team money and the team has to pay him back.”

Samson said the ballclub used revenue sharing to shore up its bottom line so lenders would feel more comfortable that the franchise could cover its end of the stadium cost.

When the revenue-sharing system was adopted in 1996, broad language was written into the collective bargaining agreement between the union and baseball owners that allowed a team to use the proceeds “to improve its performance on the field.”

The Marlins received a public slap on the wrist earlier this year from Major League Baseball and the players’ union. Though the league never said why, it’s been reported the team wasn’t spending enough on payroll. The team later signed All-Star pitcher Josh Johnson to a multi-year contract.

Still, the position of MLB Commissioner Bud Selig is that, over time, the franchise has been in compliance with the use of revenue-sharing.

“It is always possible to take a club’s financial statements in a given year and make an argument that they spent less on payroll than they could have,” said MLB executive vice president for labor relations Rob Manfred.

“But with a lower-revenue club, you have to look at it over a number of years.

“When you think about the revenue sharing system, you have to focus on the system as a whole, and it has been very successful in improving the level of competitive balance.”

The Marlins have won two World Series, most recently in 2003 when the club toppled the big budget Yankees — ironically, a team contributing a share of Miami’s payroll.

Since then, the ballclub has jettisoned accomplished players, including Miguel Cabrera, Dontrelle Willis and, this year,Jorge Cantu and Cody Ross.

Opening the 37,000-seat, retractable-roof stadium will strengthen the Marlins’ long-term financial health, said MLB’s Manfred. The roof is sure to draw fans wary of rain or scorching heat.

And, the Marlins will reap more from concessions as the contracts stipulate the team collects almost all the revenue from a new ballpark.

Read more: http://www.miamiherald.com/2010/08/28/v-print/1797179/marlins-saved-millions-in-revenue.html#ixzz0y1J5HAsl
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Marlins Ownership: Doublespeak Through Double Play

The first line from Jeff Passan’s column reads, ‘Florida Marlins president David Samson has perfected the art of doublespeak.’ That actually might be an understatement. Passan, of Yahoo Sports, points out how the recently released Florida Marlins financial statements has disclosures which make David Samson’s assertion on The Dan Lebatard Show this Wednesday that “Jeffrey Loria did not put a dollar in his pocket” a lie. This is a blog and I’m not a journalist, but I’ll highlight that Passan credits my blog as a good source of information about the Marlins finances.


I’ll be writing more specifically about what’s in the financial statements — for example, what could possibly be the source of debts for a team that since Loria purchased the franchise in 2002, has had, according to Forbes, net operating incomeof $134 million through 2009 — but the key revelation in the Passan column is that the Managing General Partner of the Florida Marlins partnership is a Florida Corporation named Double Play [clever no?]. On the annual report filed with the State of Florida, a public document, Double Play’s officers and directors are listed as Jeffrey Loria [CEO] and David Samson [President]. The main disclosures in the Marlins financial statements which make David Samson’s statement untrue are:

  • As the Passan article notes, the Marlins are the only one of the six teams whose financials were leaked to have taken a Management Fee in their operating expenses. The fees paid in the two years to DP/Loria came to $5.4 million.
  • Related Party Promissory Note to DP/Loria was reduced from $19.9 to $14.1 million. So DP/Loria received $5.8 from the Marlins in repayment of loans.
  • The DP/Loria Promissory Note also earned $3 million [$1.2 & 1.8] in interest for the two years.

If you are keeping score, that’s $14.2 million that went from the Florida Marlins to DP/Loria. Management fees to companies you control, interest payments on related party loans and repayments of those loans are not illegal or even unusual, given certain tax implications. But they are unequivocally payments from the Florida Marlins to DP/Loria.

Now pretend you are Loria and Samson. Earlier in the week you had been exposed with the release of the documents. Samson is now going to be on a radio program taking questions. There may be times in the career of people who speak publicly, when they might make unintended comments. I don’t think this could reasonably be considered one of those times. What David Samson said on Wednesday has to be considered the firm position of the Florida Marlins and Jeffrey Loria. What the experienced MLB executive decided to say was that “Jeffrey Loria did not put a dollar in his pocket.”

The reaction of the people on LeBatard’s radio show after their interview with Passan last night was revealing. They reminded me of a David Letterman joke about defending Pete Rose from charges of gambling: “Recordings, fingerprints on betting slips, bank statements, and corroborating affidavits? Hey Commissioner, let’s see some real evidence!”

Passan had noted the management fees and interest received, but did not get into the repayment of the loans. The hosts reaction — mind you, these were the same people who Samson had told one day earlier that “Jeffrey Loria did not put a dollar in his pocket ” — was to speculate whether the $5.4 million in management fees could not have been considered a salary, … and “who would begrudge them a salary,” … it was a “small amount of money, all things considered.”

The point is not whether the $5.4 million was salary [we don’t know], or if that salary was fair, the point is that the president of the Florida Marlins did not go on the air the previous day and say; ‘Aside from a fair salary, interest income and repayments of principal on a loan, the total of which is well into eight figures, Jeffrey Loria did not put any other dollars in his pocket.’

He did not say that for the same reason that he has been intentionally lying prior to the release of the financials. The reason is that owner of the Florida Marlins does not consider telling the truth a viable option given his objectives, a largely taxpayer-funded stadium and pocketing revenue sharing monies, instead of spending them as intended by MLB. What we’ve learned this week is that their willingness to lie remains unchanged.

Unless of course, we’ve all misconstrued the meaning of ‘pocket.’

The Jeff Passan column referenced is copied in full at end of post.

—————————————————-
Marlins execs funneled cash to themselves
By Jeff Passan, Yahoo! Sports – Aug 27, 2010

Florida Marlins president David Samson has perfected the art of doublespeak. Even after the mushroom cloud settled over the disclosure of financial statements that showed he and Marlins owner Jeffrey Loria are indeed duplicitous, Samson couldn’t help himself. Lies are simply part of how the Marlins do business.

The latest came during Samson’s weekly radio appearance on The Dan LeBatard Show in Miami, during which he addressed Deadspin’s publication of the Marlins’ balance sheet. What Samson said was so provably false that it was akin to a 3-year-old trying to hide his peas under a pile of mashed potatoes.

“Jeffrey Loria did not put a dollar in his pocket,” Samson said.

So programmed is that statement in Samson’s head, he keeps repeating it, like a robot with a shorted circuit. He’s right. Jeffrey Loria did not put a dollar in his pocket.

He put millions.

On Page 34 of the documents, under the heading Note Y, is a transaction called “Management Fee.” A corporation named Double Play Company is listed as the Marlins’ managing general partner. The partner is paid a yearly sum. For the two years the documents cover, the fees were $2.6 million and $2.8 million. In 2009, the documents say, the fee was raised to $3.2 million.

Records from the Florida Division of Corporations show Double Play’s CEO is Jeffrey Loria. Its president is David Samson.

Of the six teams whose documents were leaked, only the Marlins have a management fee listed in their operating expenses.

Earlier in the balance sheet, under Note L, is a one-paragraph section called “Related Party Promissory Note.” It explains that the managing general partner made a number of loans to the team at 1.5 percent to 1.75 percent above the London Interbank Offered Rate – a particularly high interest rate for the current lending climate, according to two accountants who reviewed the Marlins’ financials. Over the past two years, the loans have paid Double Play $1.83 million and $1.19 million, respectively.

While the financial records of Double Play are unavailable because it is a private company, at least $8.42 million went to the managing general partner in the past two years. Though the documents do not show that Loria has taken a direct distribution of money as owner, it is undeniable that he plundered the team’s coffers as it received nearly $500 million in public funding for a new stadium and more than $75 million in revenue sharing from MLB.

Samson did not reply to a request for comment.

The ugliness of the ballpark debt was apparent long before the documents surfaced. To help fund the $634 million stadium complex, Miami-Dade County commissioners voted to secure more than $400 million in loans, most of which are loaded with balloon payments. The worst is a $91 million loan that will take $1.2 billion to pay off. By 2049, the county will have spent $2.4 billion to cover its portion of the stadium.

The anti-Marlins groundswell in South Florida continued Thursday when Miami mayor Tomas Regalado asked the city attorney to look into renegotiating a $100 million parking-facility contract for the stadium complex. Political backlash was a given after the Marlins’ refusal to release their financial records during the push for the new stadium.

For years, the Marlins cried poverty. Loria threatened to move the team from Florida. Despite several sources claiming the Marlins raked in money — Forbes’ annual valuations for the Marlins have proven extremely close to reality, and Miami-area accountant Jorge Costales has written incisively about Marlins finances — the county commissioners voted in December 2007 to pay for more than three-quarters of the stadium due open in 2012.

Samson claimed on LeBatard’s show that the tax dollars will come from tourism money devoted to sports and convention complexes. That is only half-true. To free the tourism-tax dollars, the county shifted general-use monies from property taxes to pay other debt. Take from one hand, give to the other and buy an owner worth hundreds of millions of dollars a new toy from which he reaps damn near every cent, all with the money of hardworking citizens.

This was avoidable, of course, had the county commissioners refused to approve a deal until they saw the Marlins’ financial statements. The management fee was an obvious red flag. How could Loria and Samson say they didn’t have enough money for a stadium when they were paying themselves? The loan was another red flag. Such revelations almost certainly would have given the commissioners pause about offering the breadth of public financing they did.

Loria refused transparency. He is an excellent businessman, and he knew the repercussions. In the end, the Marlins hoodwinked local politicians so caught up in the excitement of keeping the team in Miami, they forgot with whom they were dealing. When hundreds of millions of dollars are involved in anything, people are going to lie, and Loria and Samson made statement after misleading statement and got away with it.

“I never go back to regret what I do because I make decisions based on the information provided to me, my conscience and what is best for those I represent,” said Rebeca Sosa, one of the nine county commissioners who voted for the stadium funding against four opponents — including Regalado, now the mayor. “The situation and information I have today in my hand is different than the one I had before.

“I still support the Marlins stadium.”

How Sosa, or any commissioner who voted yes, could stand by a potential $2.4 billion of debt with a clear conscience is difficult to fathom. The Marlins are up to their old tricks, still pussyfooting their way around the facts. All those years the team had the lowest payroll in baseball, Samson claimed money went to hidden costs in running a ballclub. One of them, he told Sun-Sentinel columnist Dave Hyde, was marketing.

“Eight figures,” Samson said. He told The Miami Herald it was among the most in baseball.

In 2008, the Marlins spent $9.8 million on marketing, according to their balance sheet. The Tampa Bay Rays spent $23 million, the Pittsburgh Pirates $17.1 million, the Texas Rangers $16 million and the Los Angeles Angels $10 million. The only team to budget less among the six whose financials were leaked was the Seattle Mariners, whom the Marlins outspent by $11,000.

This isn’t a white lie here, a fib there. It is systemic. Marlins mislead, public follows. The balance sheet was a gift to Miami-Dade County taxpayers who deserve – and have deserved since the “yes” vote – to know how the team they were endowing is run.

The poor, poor Marlins had an operating profit of $48.9 million in 2008 and 2009, including $11.1 million last year, when they increased payroll and started paying off their stadium debt. Loria has already doubled his money on the Marlins – he bought the team for $158.5 million, including a $38.5 million interest-free loan, and it’s now worth $317 million, according to Forbes’ valuations – and the revenue streams from the new stadium should only increase that figure. A county hemorrhaging jobs funneled tax money to fund a stadium for a team with a reckless disregard for its community’s welfare.

The politicians can pursue recourse, and the fans can bellow, and it doesn’t change the reality that a $91 million loan to the county will take 39 years and $1.2 billion to pay off, and that Jeffrey Loria still owns the Florida Marlins with David Samson as his president, and that the retractable-roof stadium, the one that’s 40 percent done, was built on lies that never seem to end.
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