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January 16, 2006

Our Long Nationals Nightmare

The Roots of the D.C. Stadium Stalemate

by Neil deMause

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Last year at this time, Bud Selig and Bob DuPuy were popping open the bubbly. It had been a long haul, but the Expos Stadium Extortion Across America Tour ( Doug Pappas) had finally landed its prize: Approval by the D.C. city council of a brand-spanking-new stadium on the Anacostia River waterfront, to be paid for almost entirely with public funds. Sure, some i's needed to be dotted and t's crossed--things like paying off Baltimore Orioles owner Peter Angelos for parking a new team on his doorstep--but the four-year-long Expos soap opera was finally over.

As it turned out, not so much. So far this month:

  • The D.C. council, in a tizzy over growing stadium cost overruns, refused to certify the Nationals' lease, making it impossible to sell stadium bonds by the January 1 deadline.

  • MLB president DuPuy threw a public hissy fit on the Washington Post op-ed page, charging that "the D.C. Council is trying to walk away from the agreement that brought the team here" and that Washington should be grateful even to be invited to joing the baseball fraternity, what with "city leaders [who] frequently quibble with baseball about its commitments, and often quarrel with each other."

  • MLB announced that it would file a request for immediate mediation of the dispute, as provided in the original stadium agreement, and if that fails to resolve things, to proceed to binding arbitration.

  • Last Tuesday, D.C. Mayor Anthony Williams declared that "I would hope as early as late this week" to have council approval of a stadium lease--only to have chief council stadium booster Jack Evans declare the next day that "there are not even any discussions about it taking place around here," and the Washington Times assess the stadium's outlook as "nearly dead."

So what exactly is going on here, and what does it mean for the future of the Nationals? I'll attempt to answer the big questions in the form of answering questions, as posed by a hypothetical composite reader. (There, I've told you up front. So please don't take away my Pulitzer.)

Why all this fuss now about cost overruns? I thought the stadium bill that passed last year capped city spending at $535 million.

Not quite. When council chair Linda Cropp agreed to end her holdout against the stadium deal in December 2004, she extracted one last-minute concession from MLB: The amount of bonds to be sold to pay for the stadium would be capped at $535 million. If the projected cost of the stadium, plus needed land and infrastructure, was more than $50 million over that mark, the bill would be voided, and the stadium issue kicked back to the council to seek cheaper options.

(Yes, that makes it really a $585 million cap. If your head is spinning now, hold onto your cranium, because the math only gets funnier from here.)

In February, D.C.'s chief financial officer, Natwar Gandhi, officially certified that the stadium cost would come in under the cap--but barely, as $46 million in additional land costs brought the total to within $4 million of the cutoff point. Then, in the fall, as the council prepared to approve the final stadium lease, the other shoe dropped: The final bill would actually be $667 million, thanks mostly to increased cost of land and infrastructure, such as an expanded Metro station that somehow got left out of the budget entirely. (A D.C. government source admitted to the Washington Post that the mayor's office had intentionally lowballed contingency costs, to make the deal more palatable to the council.) And soaring costs in the post-Katrina construction industry could drive it still higher.

At that point, support on the council--now facing three additional anti-stadium legislators who weren't around for the original 2004 vote--collapsed. Mayor Williams pulled the lease from the council's agenda for "minor technical changes," and never put it back on.

So who's supposed to pay all these extra costs? Surely all this was resolved back in the original deal to bring the Nats to D.C., right?

It was, except the original deal was to have the city pay for all cost overruns, which is what Cropp and her fellow councilmembers balked at. Now that the budget is busticated, both sides are refusing to make up the difference. (MLB did agree to chip in another $20 million, but only in exchange for a larger share of non-game-day parking revenues--and even that may be off the table once things hit arbitration.)

Instead, stadium boosters have been frantically looking for a guy behind the tree, suggesting that the additional costs would be paid for by anything from federal government subsidies to private developer contributions to something called "value engineering," which seems to be developer-speak for we'll find something to skimp on. But so far no third-party cavalry has ridden to the rescue, so the standoff continues.

If they're going to binding arbitration, can't an arbitrator settle this mess?

Depends who you ask. MLB insists that D.C. signed a binding contract, and so an arbitrator can force a settlement. But the Baseball Agreement is between MLB and the mayor; the councilmembers are the ones who are holding up the deal, and they're not signatories to the Baseball Agreement. No one seems sure just what an arbitrator can and can't do, but the best guess is they could order D.C. to pay damages to MLB, but not actually force the council to approve the lease--or build a stadium.

So what happens now? Do the Nationals hit the road again?

Despite all the apocalyptic talk of the last week, talks are still ongoing, and a settlement is still possible. Cropp issued a ten-point list of demands last week, the most significant of which was the first: "No more money shall be allocated for baseball other than the $535 million already authorized and all baseball-related income." That last clause could provide wiggle room, though, in that a fair bit of "baseball-related income" (team rent, ticket taxes, etc.) was already slated to help pay off the $535 million in bonds; if that instead counts on top of the bonds, D.C.'s tab could rise while Cropp insists that the cap is unsullied. (Whether this would actually be enough to sell councilmembers on the deal is unclear: Cropp is already part of the five-vote minority backing the plan, and swing votes like Kwame Brown and Carol Schwartz have been adamant about not paying a dime over the original amount.)

Another thought has been to let MLB take over stadium construction if it promises to pay for cost overruns, something DuPuy has already offered to do, saying, "Asking baseball to pay for overruns when D.C. government officials are in charge of the stadium's design and construction is like MasterCard telling you to pay your credit card bill even though MasterCard gets to do all your shopping." Unfortunately, most of the "overruns" are things like subway station expansion and land acquisition, which will remain regardless of how much is spent to build the actual ballpark.

If, instead, the standoff drags on, you'll no doubt see Selig and DuPuy unsheathing their move-threat sabers, hinting that the Nats will relocate again if the council doesn't blink first. But if you'll recall, it's not like MLB had a lot of other options when it agreed to move the Expos to D.C.--the lack of better options is, in fact, the only reason why they agreed to grant the team before a stadium bill was finalized--and since then, the best fallback option, Northern Virginia, has let its stadium authorizing legislation lapse, and would have to be starting from square one. Moreover, there's competition now, in the form of the Florida Marlins, whose owners have been jetting across the nation (stops so far: San Antonio and Portland) in search of someone to cough up stadium dough, or at least emit a low throaty grumble that can be sold to legislators back in Florida as a reason to provide added stadium subsidies.

But let's see: Two "homeless" teams, two intractable stadium standoffs... this sounds ripe for the scenario I discussed last month where Bud and Bob drop the C-bomb, announcing in April that the Marlins and Nationals will be short-listed for contraction if their stadium demands aren't met. It'd be an incredibly expensive gambit to follow through on--MLB would have to swallow the $450 million franchise fee it's counting on getting from a new Washington owner, for starters.

But this is Bud Selig we're talking about, the man who had to be stopped by court order from putting strikebreakers in uniform, and who arm-twisted the Wisconsin legislature into providing him a stadium at no cost. Once a brinkman, always a brinkman.

Neil deMause is an author of Baseball Prospectus. 
Click here to see Neil's other articles. You can contact Neil by clicking here

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