Dolphins reportedly offer to trim subsidy demands to $136m

Miami Dolphins owner Stephen Ross, apparently having realized that his stadium subsidy campaign is massively unpopular and going nowhere, has reportedly revised his proposal in recent days:

During meetings last week with NFL owners in Phoenix, the Dolphins shared a confidential report on their ongoing negotiations with Miami-Dade Mayor Carlos Gimenez to bring the issue to a countywide vote, according to an NFL source. The source said the Dolphins revealed they have offered to use private dollars to fund $225? million in construction costs for a renovation now estimated at $389? million, less than the $400 ?million figure that was the most commonly used estimate for the deal…

And the Dolphins have offered to go one step further and repay Miami-Dade for the $120?million the county would be expected to put into the renovation, the NFL source said.

Wow, really? If the Dolphins would reimburse the county for its contribution, that’s potentially a huge deal. Depending on what the repayment terms are like, of course—

Under those terms, the Dolphins would repay the county $120?million in 2043, after the end of a 30-year deal covered by the agreement. The terms do not include an adjustment for inflation, and would not return to Miami-Dade any of the interest expense the county would incur to repay $120 million in bonds borrowed using the revenue created by the higher hotel tax.

Okay, not such a huge deal, then. What the Dolphins are proposing is to turn the $120 million public subsidy into a $120 million 30-year interest-free loan — and given the value of $120 million in 2043, that’s almost as much of a subsidy as if the team didn’t repay it at all. Look at it this way: If Ross could expect to earn 5% annually on an investment, how much would he have to put away buy lorazepam india today in order to end up with $120 million in 2043? Get out the calculator, remember how to do exponentials, and … looks like around $28 million.

(This is, incidentally, exactly what economists do when they talk about future money having a present value of $28 million at a 5% discount rate. Learned you something there!)

So, Ross is offering to give back something that’s worth around $28 million, in exchange for getting $120 million up front from the county. They’ve also (if you believe this NFL source) trimmed their total subsidy demand from $200 million to $164 million, so take away the $28 million from the future value of that 2034 repayment, and … let’s see, where’s that calculator again … you’re left with $136 million that the Dolphins want the public to pay for no damn good reason.

(Oh, and they’ve promised not to accept any county money at all if the stadium renovation plan moves ahead and the NFL doesn’t grant Miami one of the next two Super Bowls to be decided, which is a risk of exactly zero since it’s absolutely certain that the NFL will give Miami a Super Bowl if it agrees to stadium renovation subsidies. And in all likelihood even if it doesn’t agree to stadium renovation subsidies.)

Still, it’s a concession, and that’s something. Though, come to think of it, the hotel tax hike and sales tax rebate that the Dolphins are asking for would apparently remain the same size, even though the stated public share of renovation costs would go down. So you don’t think that Ross would be looking at collecting the same amount of money (less the 2043 repayment), but calling part of it something other than renovation costs … nah, that could never happen.


9 comments on “Dolphins reportedly offer to trim subsidy demands to $136m

  1. Kicking the can down the road, moving around money, restructuring contracts, loopholes, rhetoric. When more means less.
    Isn’t this why the housing market collapsed or something?

  2. Neil, you did some numbers for the Seattle deal, could you do something similar for this one?

  3. I think I just did. Aside from the repayment of the hotel tax money principal 30 years from now, there’s no other money going to the public to offset its expenses, is there?

  4. Not fair to say that it’s absolutely certain that Miami gets Super Bowl L or LI with the reno subsidy unless you’re going to admit that there’s no earthly way that Miami will get either of those games without it.

    It’s simple: Santa Clara/Houston if Miami denies the reno or Santa Clara/Miami (in some order) if Miami approves the reno.

  5. “See, I told you the Dolphins were nice guys after all”.

    On a similar note, if someone is kicking you in the nads and punching you in the face at the same time, and they stop kicking you in the nads, do you say thank you?

  6. Mr. deMause, I must strongly protest your use of the term, “no damn good reason”. Giving public money to the NFL is always good. Damned good! Just ask any NFL owner.

    As far as fancy accounting that the average schmuck can’t understand (he understands beer and cheerleaders, don’t tax his brain!), I must ask you, what is the NPV of the Dolphins franchise if we move 5% of it a year to Los Angeles for 30 years. Yup, that’s right: 136 million Miami area taxpayer bucks today! Woot! Score one for Piggy, baby!

    1-877-STADIUM-CASH-NOW, Miami citizens. Phone in early and often and pledge your tax dollars to the NFL where they belong. As Mr. deMause might say, ‘there’s no damn good reason…. not to!’

  7. I’m with Ms. Piggy! I’m gonna get to tell people I live in (nudge, nudge-wink, wink) Santa Clara and then cross my arms, throw my head back and grin. Anyone will understand and envy the feeling of reflected greatness coursing through my veins.

    You really can’t put a dollar value on that (plus it’s kind of hard to rally around a math class at the local H.S. in comparison).

  8. So, anyway… I’m watching Niall Ferguson’s excellent series on China’s development over the last 30 years (China: Triumph and Turmoil) last night. And he’s discussing the rampant corruption and payola involved in Chinese construction and development… and how appalling it all is and how nobody seems to notice, much less do anything about it.

    And I’m thinking, “hey man, that’s just peanuts. You should be doing a three hour series on the North American stadium subsidy game…”

    It’s really the only thing we still do better than the Chinese. Take money from the poor to give to the rich.