Rent seeking and the Florida Marlins

First, let me say – I love baseball. Since I was a kid and played in Little League, it has been the game for me. And consequently I’m a huge professional baseball fan. I live for the season and the playoffs.

However, I’m not a fan of professional baseball’s ethics at times. And I’m certainly not a fan of those who own teams and attempt to swindle taxpayers into paying for their new stadiums. Obviously that’s not just something that professional baseball teams do. You can find examples of it among all professional sports teams. But the latest example does come from professional baseball, specifically, the Florida Marlins.

If you follow the game at all, you know that the Miami-Dade county government has agreed to pick up the lion’s share of the cost of a new stadium for the team down there. Owner Jeffrey Loria and president David Samson have, for years, maintained that the Florida Marlin franchise was, at best, a break even venture. They claimed, they needed a new stadium to attract fans and become profitable and if the county couldn’t help provide it, they’d probably have to move the team.

The Miami-Dade County government acquiesced to this blatant attempt at rent-seeking, apparently believing the financial claims of the Marlin’s front office.

Miami-Dade County agreed – without the consent of taxpayers – to take $409 million in loans loaded with balloon payments and long grace periods. By 2049, when the debt is due, the county will have paid billions.

In fact, it is estimated the $645 million dollar stadium complex will end up costing $2.4 billion with all of the loans the county unilaterally took out without taxpayer permission to keep the team in Miami. The Marlin’s franchise will only pay $155 million of the stadium cost.

In case you’re not familiar with the term “rent seeking” or need a refresher, it’s defined as:

The expenditure of resources in order to bring about an uncompensated transfer of goods or services from another person or persons to one’s self as the result of a “favorable” decision on some public policy.  …  Examples of rent-seeking behavior would include all of the various ways by which individuals or groups lobby government for taxing, spending and regulatory policies that confer financial benefits or other special advantages upon them at the expense of the taxpayers or of consumers or of other groups or individuals with which the beneficiaries may be in economic competition.

That is precisely what the Florida Marlin team has done. As mentioned, they’re not alone. This happens all too often. Tax payers end up being burdened with increased taxation that benefits a private company or business but puts a huge dent in the government’s budget. That’s not how it should work. It is both an abuse of power by government and abuse of the taxpayer by the private entity via its rent seeking.

What’s even worse is it appears the county government may have been conned by the team, according to this report:

Most harrowing is the takeaway that baseball’s biggest welfare case could have funded a much greater portion of the ballpark. In 2009, when the Marlins started spending some of their profits on their portion of the stadium, they still had an operating income of $11.1 million. The team fought to conceal the $48.9 million in profits over the last two years because the revelation would have prompted county commissioners to insist the team provide more funding. Loria, an art dealer with a net worth of hundreds of millions, wouldn’t stand for that. He wanted as much public funding as possible – money that could’ve gone toward education or to save some of the 1,200 jobs the county is cutting this year.

The lesson, of course, is one that governments never seem to learn. The pot of money they have to work with is finite. There’s only so much the taxpayer will stand for. When government involves itself in a project of high cost and dubious worth – no matter what the “experts” tell them about the importance of something like a professional baseball franchise to the city – they usually end up hurting themselves and those they serve. The tradeoff here is actually obvious. Those interest payments on the huge loans taken by the county could have been used to save jobs that actually served the community. 

Instead they are going to pay for a stadium from which a private enterprise will profit, even while that private entity pays less than a quarter of its cost.

That’s not the free enterprise system at work. That’s not capitalism. Instead it is an example of corporate rent-seeking – subsidizing business on the back of the taxpayers – that governments do more and more.

No baseball team is worth $2.4 billion dollars, but that’s what the citizens of Miami and Dade county, via their government, have now committed to spend to keep the Marlins there. I’m a fan of baseball, but I’m not a fan of rent seeking. And I’d guess most the taxpayers in Miami, no matter how much they enjoy the game, probably feel exactly as I do.

BaseballBay Area NewseconomicsMiami-Dade county

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