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BY CHARLES RABIN, MARTHA BRANNIGAN AND PATRICIA MAZZEI
CRABIN@MIAMIHERALD.COM
Federal authorities have opened a wide-ranging investigation into the Miami Marlins’ controversial ballpark deal with Miami-Dade County and the city of Miami, demanding financial information underpinning nearly $500 million in bond sales as well as records of campaign contributions from the Marlins to local and state elected leaders.
In a pair of lengthy letters delivered to government attorneys Thursday, the U.S. Securities & Exchange Commission gave the city and county until Jan. 6 to deliver everything from minutes of meetings between government leaders and Marlins owner Jeffrey Loria and Major League Baseball President Bud Selig, to records of Marlins finances dating back to 2007.
In the almost-identical subpoenas, the SEC also requested documents concerning stadium parking garages built by Miami. The Miami Herald reported Nov. 22 that city leaders are now complaining they were hoodwinked into likely having to pay an annual $2 million tax bill on the garages.
The financing agreement to build the controversial new stadium in Little Havana left the county and city on the hook for almost 80 percent of the overall $634 million tab, which critics considered a giveaway to the Marlins.
The deal was a contributing factor in the recall of Miami-Dade Mayor Carlos Alvarez, who championed it.
The subpoenas focus heavily on the Marlins, requesting communications to and from team executives, documentation that might show the team’s ability to pay for or contribute to the financing of the stadium, and information on any meetings involving not only Loria and Selig, but also team President David Samson and former Major League Baseball president and chief operating officer Robert DuPuy. DuPuy was instrumental at the latter end of the hard-fought deal.
Both governments have said in the past, however, that they do not possess the Marlins’ financial information. And the Marlins have not received a subpoena, according to Samson. Asked to comment, the team president told The Herald: “Appreciate the info.”
The subpoenas, signed by SEC senior counsel Drew D. Panahi, say: “We are trying to determine whether there have been any violations of the federal securities laws. The investigation and the subpoena do not mean that we have concluded that Miami-Dade County or anyone else has broken the law.”
In Miami, Mayor Tomás Regalado could not be reached Friday and City Attorney Julie Bru declined to comment. City Manager Johnny Martinez would only say he learned of the subpoena Thursday evening, and that he knew “zero” about the issue.
The news was an unwelcome blow to the city. Miami remains the focus of a separate, two-year SEC investigation into bond dealings dating back to 2006 — a probe that has already cost the city $1.4 million.
Most of the city’s five commissioners knew little about the new investigation, but expressed concerns about another lengthy and expensive review.
“It’s frustrating, because we’re working so hard to get the city back on its feet financially,” said Commissioner Francis Suarez, who went as far as to suggest that the city consider hiring a full-time lawyer to handle SEC matters. “I don’t know that there’s any precedent for them investigating any other financial transaction like this. It doesn’t sound like a small investigation.”
Miami-Dade County Mayor Carlos Gimenez could not be reached for comment. Deputy Mayor Ed Marquez said the county would respond to the federal agency’s demands.
“I don’t know what they’re looking at,’’ he said. “We’ve received this thing and we’re going to start complying.’’
Neither subpoena said exactly what the SEC was looking for, though federal investigations into municipalities generally focus on whether bond holders were misled about finances while being enticed to purchase the bonds.
Two former SEC attorneys who reviewed the subpoenas for The Herald said government investigators are likely looking at whether the city and county did proper due diligence into the Marlins’ finances, and whether there was any influence peddling to local politicians.
“There’s always the issue of pay-to-play. They want to know whether there were unlawful contributions,” said William Nortman, a Fort Lauderdale attorney and former SEC regional administrator. “Don’t forget, there was a lot of controversy over the building of this in Miami. They are examining how this came to be. They want to know whether inappropriate payments were made.”
Due diligence by the county and city into the Marlins’ finances was a key component of auto magnate Norman Braman’s failed court fight two years ago to stop stadium construction. City and county leaders said they never required the Marlins to open their books, though the team often cried poor and argued it needed public funding to stay in South Florida.
But the team’s claim was rebuked in August 2010, when the sports website Deadspin.com revealed that the Marlins were in fact financially healthy, having received more money from baseball’s revenue-sharing system over 2008 and 2009 than anyone in baseball — and pocketing $92 million in revenue-sharing those two years, making a $33 million profit.
Long before the deal to build the Marlins a new ballpark in Little Havana was cemented with a county commission vote in March 2009, the deal was ridiculed as lopsided, with critics complaining that elected leaders kowtowed to a wealthy ballclub owner threatening to leave town. In the end, the Marlins got their way.
The 37,000-seat, retractable-roof stadium ended up being a top-heavy deal for the county, put on the hook for $347 million in construction bonds, a $35 million loan to the Marlins, and $12 million for incidentals such as road repairs. The city’s end of the deal is $94 million worth of parking garages, $13 million toward construction, and $12 million for other improvements.
The county will have to dish out more than $2 billion over 40 years to pay back the principal and interest on the bonds, which were sold under poor market conditions.
The ballclub — which receives virtually all revenues, from concessions to ticket sales for everything from ballgames to soccer matches to concerts — was required only to spend $120 million at the end of construction, on top of repaying the loan to the county in $2 million yearly installments that would serve as rent.
To avoid a tax bill, the county was deeded the footprint of the stadium from the city, and is the property’s owner.
The deal so angered some residents and Braman that it played a part in his successful ouster of County Mayor Alvarez in March.
Braman had fought the three-party deal even earlier, going to court to shut down the construction by calling the agreement a shell game.Reached Friday amid all the hoopla of Art Basel — the country’s premier art fair, which Braman was instrumental in bringing here — Braman welcomed the SEC investigation, saying: “I feel exhilarated.”
Across town, hammers pounded in nails and cement was poured in anticipation of construction being complete before Opening Day in April.
“Let the truth come out,” Braman said. “Now we’ll know what this whole thing was about and who was really for this travesty.”
CRABIN@MIAMIHERALD.COM
Federal authorities have opened a wide-ranging investigation into the Miami Marlins’ controversial ballpark deal with Miami-Dade County and the city of Miami, demanding financial information underpinning nearly $500 million in bond sales as well as records of campaign contributions from the Marlins to local and state elected leaders.
In a pair of lengthy letters delivered to government attorneys Thursday, the U.S. Securities & Exchange Commission gave the city and county until Jan. 6 to deliver everything from minutes of meetings between government leaders and Marlins owner Jeffrey Loria and Major League Baseball President Bud Selig, to records of Marlins finances dating back to 2007.
In the almost-identical subpoenas, the SEC also requested documents concerning stadium parking garages built by Miami. The Miami Herald reported Nov. 22 that city leaders are now complaining they were hoodwinked into likely having to pay an annual $2 million tax bill on the garages.
The financing agreement to build the controversial new stadium in Little Havana left the county and city on the hook for almost 80 percent of the overall $634 million tab, which critics considered a giveaway to the Marlins.
The deal was a contributing factor in the recall of Miami-Dade Mayor Carlos Alvarez, who championed it.
The subpoenas focus heavily on the Marlins, requesting communications to and from team executives, documentation that might show the team’s ability to pay for or contribute to the financing of the stadium, and information on any meetings involving not only Loria and Selig, but also team President David Samson and former Major League Baseball president and chief operating officer Robert DuPuy. DuPuy was instrumental at the latter end of the hard-fought deal.
Both governments have said in the past, however, that they do not possess the Marlins’ financial information. And the Marlins have not received a subpoena, according to Samson. Asked to comment, the team president told The Herald: “Appreciate the info.”
The subpoenas, signed by SEC senior counsel Drew D. Panahi, say: “We are trying to determine whether there have been any violations of the federal securities laws. The investigation and the subpoena do not mean that we have concluded that Miami-Dade County or anyone else has broken the law.”
In Miami, Mayor Tomás Regalado could not be reached Friday and City Attorney Julie Bru declined to comment. City Manager Johnny Martinez would only say he learned of the subpoena Thursday evening, and that he knew “zero” about the issue.
The news was an unwelcome blow to the city. Miami remains the focus of a separate, two-year SEC investigation into bond dealings dating back to 2006 — a probe that has already cost the city $1.4 million.
Most of the city’s five commissioners knew little about the new investigation, but expressed concerns about another lengthy and expensive review.
“It’s frustrating, because we’re working so hard to get the city back on its feet financially,” said Commissioner Francis Suarez, who went as far as to suggest that the city consider hiring a full-time lawyer to handle SEC matters. “I don’t know that there’s any precedent for them investigating any other financial transaction like this. It doesn’t sound like a small investigation.”
Miami-Dade County Mayor Carlos Gimenez could not be reached for comment. Deputy Mayor Ed Marquez said the county would respond to the federal agency’s demands.
“I don’t know what they’re looking at,’’ he said. “We’ve received this thing and we’re going to start complying.’’
Neither subpoena said exactly what the SEC was looking for, though federal investigations into municipalities generally focus on whether bond holders were misled about finances while being enticed to purchase the bonds.
Two former SEC attorneys who reviewed the subpoenas for The Herald said government investigators are likely looking at whether the city and county did proper due diligence into the Marlins’ finances, and whether there was any influence peddling to local politicians.
“There’s always the issue of pay-to-play. They want to know whether there were unlawful contributions,” said William Nortman, a Fort Lauderdale attorney and former SEC regional administrator. “Don’t forget, there was a lot of controversy over the building of this in Miami. They are examining how this came to be. They want to know whether inappropriate payments were made.”
Due diligence by the county and city into the Marlins’ finances was a key component of auto magnate Norman Braman’s failed court fight two years ago to stop stadium construction. City and county leaders said they never required the Marlins to open their books, though the team often cried poor and argued it needed public funding to stay in South Florida.
But the team’s claim was rebuked in August 2010, when the sports website Deadspin.com revealed that the Marlins were in fact financially healthy, having received more money from baseball’s revenue-sharing system over 2008 and 2009 than anyone in baseball — and pocketing $92 million in revenue-sharing those two years, making a $33 million profit.
Long before the deal to build the Marlins a new ballpark in Little Havana was cemented with a county commission vote in March 2009, the deal was ridiculed as lopsided, with critics complaining that elected leaders kowtowed to a wealthy ballclub owner threatening to leave town. In the end, the Marlins got their way.
The 37,000-seat, retractable-roof stadium ended up being a top-heavy deal for the county, put on the hook for $347 million in construction bonds, a $35 million loan to the Marlins, and $12 million for incidentals such as road repairs. The city’s end of the deal is $94 million worth of parking garages, $13 million toward construction, and $12 million for other improvements.
The county will have to dish out more than $2 billion over 40 years to pay back the principal and interest on the bonds, which were sold under poor market conditions.
The ballclub — which receives virtually all revenues, from concessions to ticket sales for everything from ballgames to soccer matches to concerts — was required only to spend $120 million at the end of construction, on top of repaying the loan to the county in $2 million yearly installments that would serve as rent.
To avoid a tax bill, the county was deeded the footprint of the stadium from the city, and is the property’s owner.
The deal so angered some residents and Braman that it played a part in his successful ouster of County Mayor Alvarez in March.
Braman had fought the three-party deal even earlier, going to court to shut down the construction by calling the agreement a shell game.Reached Friday amid all the hoopla of Art Basel — the country’s premier art fair, which Braman was instrumental in bringing here — Braman welcomed the SEC investigation, saying: “I feel exhilarated.”
Across town, hammers pounded in nails and cement was poured in anticipation of construction being complete before Opening Day in April.
“Let the truth come out,” Braman said. “Now we’ll know what this whole thing was about and who was really for this travesty.”
Huh.
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