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's release 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 income of $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 line 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 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 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.

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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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Cash Rich and Honor Poor

In business, there are times when bad news is released and there is no apparent reaction because the information had been anticipated and already discounted. So it was yesterday in Miami, when Jeffrey Loria admitted lying and no one was surprised.

The Sun-Sentinel's Sarah Talalay documents how Jeffrey Loria [through David Samson] reacted to the public release of the Marlins financial statements:

However, with their contents revealed, Samson changed his long-held contention the team wasn't making a profit and instead said the documents prove the team has been saving its dollars to pay for its new baseball-only ballpark under construction in Little Havana.

Changing 'long-held contentions' could come as a result of soul searching. When it comes after financial documents prove you have been lying, the proper analogy involves rats instead of souls.

The article will ultimately be remembered for a particularly incisive quote towards the end:

"Local government's in business with a very profitable baseball team," said Jorge Costales, a Miami CPA, who blogs about Marlins finances. "To me, there's no doubt the Marlins' strategy since 2006 has been 'Let's budget as if we're not getting a cent from revenue sharing.' When it comes time to make payments on stadium, there should be no concerns about defaulting. The irony is to get the stadium, they've misinformed people about the profitability of the team."

For the record, I believe this story will have a good ending. A Major League Baseball franchise firmly established in Miami, a new stadium on the site of the great former Orange Bowl and at some point, the team of Loria and Samson voluntarily exiled from the City of Miami. They will leave financially enriched and little respected. Solovalla, ....

The Talalay article referenced is copied in full at end of post.

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Marlins more than profitable, records show
By Sarah Talalay, Sun Sentinel
August 23, 2010


The Marlins, who for years have said they weren't making a profit, generated nearly $50 million in operating income the past two years, documents show.

Financial records for a handful Major League Baseball teams obtained by Deadspin.com, show the Marlins had a net operating income of $37.84 million in 2008, when the team's on-field payroll was a league-low $24.8 million, and a more modest $11.1 million in 2009, when the payroll was up to $35.1 million.

Marlins President David Samson called the release of the information "disappointing" and a "crime" and said MLB and its clubs will launch an investigation.

However, with their contents revealed, Samson changed his long-held contention the team wasn't making a profit and instead said the documents prove the team has been saving its dollars to pay for its new baseball-only ballpark under construction in Little Havana.

"It basically confirms everything we have said over the years of how we've operated the team," Samson said Monday. "It's about making sure baseball would be secure in South Florida."

Samson said to ensure the team could meet its $155 million obligation to the $515 million ballpark, which is also being funded by $347 million from Miami-Dade County and $13 million from the city of Miami, it needed to show it had paid down debt and had assets to borrow against.

The team has been profitable in part because of its low payrolls - which ranked last among the 30 clubs in three of the last four years and second to last in 2007. Over the years, Samson has repeatedly denied the team made a profit and said payroll would reflect revenue.

"Very often the mistake that's made is they look at revenue sharing numbers and the team's payroll and take the difference and see profit without looking at our expenses," Samson said in 2007 in reference to a Forbes report the team had the league's highest operating income.

In 2008, he said, "We're always going to do what we can with revenues and match payroll to revenue in a current year."

But that contention clearly ruffled MLB and its Player Association enough to reach agreement with the team earlier this year that requires the club's 2010-12 payrolls better reflect the revenue sharing dollars it receives.

The Deadspin documents show the team benefited handsomely from the Major League Baseball's revenue sharing program — the system by which the richest teams share revenue with the lowest revenue ones to even competition.

Revenue sharing plus the dollars from MLB's central fund — the pot that includes items such as national TV contracts and to which all teams contribute and then receive an even distribution — brought the team more than $75 million each of the past two years. That's before factoring in ticket sales, sponsorships and the $16 million annually the team gets from local television and radio broadcast contracts.

Total revenues in 2009 were $135.5 million with expenses of $122.8 million, including dollars spent on the ballpark, the records show.

"Local government's in business with a very profitable baseball team," said Jorge Costales, a Miami CPA, who blogs about Marlins finances. "To me, there's no doubt the Marlins' strategy since 2006 has been 'Let's budget as if we're not getting a cent from revenue sharing.' When it comes time to make payments on stadium, there should be no concerns about defaulting. The irony is to get the stadium, they've misinformed people about the profitability of the team."

Miami politicians, who approved the ballpark deal, never saw the Marlins' finances.

"The Marlins' net worth was never a concern of ours," said Victoria Mallette, a spokeswoman for Miami-Dade County Mayor Carlos Alvarez. "The mayor and the [county] manager thought it would be an asset to the community. It's always been about a community asset and keeping professional sports in Miami-Dade County."

Staff Writer Juan C. Rodriguez contributed to this report. Sarah Talalay can be reached at stalalay@SunSentinel.com.
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Florida Marlins: Profitable As Charged

It's as though George Bailey was able to go back in time, Inception-like, and place a hidden camera in the offices of Old Man Potter and then get to play his misdeeds back for everyone to see. You can probably hear the citizens of Bedford Falls now, 'why you lying sack ....'

The Florida Marlins lost their best defense against the accusation of profitability yesterday when the web site Deadspin produced financial statements involving four major league teams, including the Marlins. Previously, despite absurdly low payrolls, team valuations which were consistent with Forbes analysis and the complaints of revenue sharing payee teams, Jeffrey Loria, through David Samson, would deflect criticism of their pocketing revenue sharing monies by asking if anyone could produce financial statements which would substantiate the claims of the Marlins profitability. Today the answer is yes.

I was most interested in how the Deadspin financials compared to the previous Forbes reporting. Here are the highlights [numbers in millions]:

• Operating Profits for the years 2008 and 2009 combined - $90 million according to both Forbes and the Deadspin - no difference
• 2009 Revenues - Forbes higher by 8
• 2009 Expenses - Forbes lower by 1
• 2008 Revenues - no difference
• 2008 Expenses - Forbes higher by 9

At first glance, there might appear to be a difference between the Forbes and Deadspin numbers. However, I believe the differences are attributable to certain accounts on the Deadspin [i.e. the Florida Marlins] financials being improperly classified as operating activities. Forbes would have likely not treated those accounts as affecting operating profits. Those expense accounts are:

• Ownership Payments [account reads Administration -- about $10 million each year by the way -- hey you thought Loria watched the games for free?]
• Management Fee - Related Party
• [New] Ballpark Expenditures

I prepared the spreadsheet below to illustrate my point. Please click on image to enlarge or print

In an attempt to deflect the bad news and ensure their fans that this proof of their lack of veracity would not change how they do business, the Marlins released one of their more popular players, Cody Ross.

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Cuban Catholic Hierarchy: Wheat or Chafe?

Please read the recent post by Robert Molleda over at his Searching for Signs blog. I agree with Robert's thoughts on the topic of the failure of the 'Cuban Ecclesiastical Hierarchy.'

It is tempting to compare this ongoing failure of the Cuban Catholic Church to other failures of the Church in general, but that type of speculation would just be lending comfort to our enemies at this point. But another thing that I will avoid is describing their behavior is inexplicable. What reason do we have to look beyond the obvious? The appear to be acting out of fear for their own well being -- personal security as well as positioning to remain unaffected over future upheavals, i.e. 'Hey remember us Commandantes, we didn't rock the boat' -- instead of compassion for their most needy and brave flock. Could it be that the bravery of the dissidents so highlights their own fecklessness that the Catholic hierarchy in Cuba has actually come to hate them as much as the Communist ruling class?

Whatever past compromises the 'Cuban Ecclesiastical Hierarchy' may have made, they received a pass of sorts for the tricky conditions they were operating under. That pass has clearly expired and they have been exposed to a great extent. Today the higher echelon of the Cuban Catholic Church behaves cowardly. Who concludes otherwise and why?

May God bless the dissidents. May the current powers that be in the Catholic leadership of Cuba survive any future sifting, even as I believe they behave like chafe.

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Bob Gibson, Thomas Sowell and Asian Students

Old baseball joke. Bob Gibson was the luckiest pitcher in major league baseball. Why? Every time he pitched, the other team didn't score any runs.

The great Thomas Sowell doing what he does best; pointing out the lack of logic behind the political correctness in much of the media.

In the case his column addresses, a New York City public school for the intellectually gifted has seen its demographics change as follows:

In 1995, the entering seventh-grade class was 12 percent black and 6 percent Hispanic, according to state data. This past year, it was 3 percent black and 1 percent Hispanic; the balance was 47 percent Asian and 41 percent white, with the other 8 percent of students identifying themselves as multiracial. The public school system as a whole is 70 percent black and Hispanic.

The student chosen to give a speech at graduation -- the school does not name a valedictorian, to relieve some of the pressure on its students [insert barf sound]-- used the opportunity to express his belief that the graduates were there "due to luck and circumstance," given that he could not believe that the demographic distribution of the graduating class accurately reflected the distribution of intelligence in the city.

Sowell dissects:

One of the biggest fallacies of our time is the notion that, if all groups are not proportionally represented in institutions, professions or income levels, that shows something wrong with society. The very possibility that people make their own choices, and that those choices have consequences-- for themselves and for others-- is ignored. Society is the universal scapegoat.

If "luck" is involved, it is the luck to be born into families and communities whose values and choices turn out to be productive for themselves and for others who benefit from the skills they acquire. Observers who blame tests or other criteria for the demographic imbalances which are the rule-- not the exception-- around the world, are blaming whatever conveys differences for creating those differences.

They blame the messenger who brings bad news.

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

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Cheering Immaturity
By Thomas Sowell
August 10, 2010

A graduating senior at Hunter College High School in New York gave a speech that brought a standing ovation from his teachers and got his picture in the New York Times. I hope it doesn't go to his head, because what he said was so illogical that it was an indictment of the mush that is being taught at even our elite educational institutions.

Young Justin Hudson, described as "black and Hispanic," opened by saying how much he appreciated reaching his graduation day at this very select public high school. Then he said, "I don't deserve any of this. And neither do you." The reason? He and his classmates were there because of "luck and circumstances."

Since Hunter College High School selects its applicants from the whole city on the basis of their test scores, "luck" seems a strange way to characterize why some students are admitted and many others are not. If you can't tell the difference between luck and performance, what has your education given you, except the rhetoric to conceal your confusion from others and perhaps from yourself?

Young Mr. Hudson's concern, apparently, is about what he referred to as the "demographics" of the school-- 41 percent white and 47 percent Asian, with blacks, Hispanics and others obviously far behind. "I refuse to accept" that "the distribution of intelligence in this city" varies by neighborhood, he said.

Native intelligence may indeed not vary by neighborhood but actual performance-- whether in schools, on the job or elsewhere-- involves far more than native intelligence. Wasted intelligence does nothing for an individual or society.

The reason a surgeon can operate on your heart, while someone of equal intelligence who is not a surgeon cannot, is because of what different people actually did with their intelligence. That has always varied, not only from individual to individual but from group to group-- and not only in this country, but in countries around the world and across the centuries of human history.

One of the biggest fallacies of our time is the notion that, if all groups are not proportionally represented in institutions, professions or income levels, that shows something wrong with society. The very possibility that people make their own choices, and that those choices have consequences-- for themselves and for others-- is ignored. Society is the universal scapegoat.

If "luck" is involved, it is the luck to be born into families and communities whose values and choices turn out to be productive for themselves and for others who benefit from the skills they acquire. Observers who blame tests or other criteria for the demographic imbalances which are the rule-- not the exception-- around the world, are blaming whatever conveys differences for creating those differences.

They blame the messenger who brings bad news.

If test scores are not the same for people from different backgrounds, that is no proof that there is something wrong with the tests. Tests do not exist to show what your potential was when you entered the world but to measure what you have actually accomplished since then, as a guide to what you are likely to continue to do in the future. Tests convey a difference that tests did not create. But the messenger gets blamed for the bad news.

Similarly, if prices are higher in high-crime neighborhoods, that is often blamed on those who charge those prices, rather than on those who create the higher costs of higher rates of shoplifting, robbery, vandalism and riots, which are passed on to those who shop in those neighborhoods. The prices convey a reality that the prices did not create. If these prices represent simply "greed" for higher profits, then why do most profit-seeking businesses avoid high-crime neighborhoods like the plague?

It is painful that people with lower incomes often have to pay higher prices, even though most people are not criminals, even in a high-crime neighborhood. But misconstruing the reasons is not going to help anybody, except race hustlers and politicians.

One of the many disservices done to young people by our schools and colleges is giving them the puffed up notion that they are in a position to pass sweeping judgments on a world that they have barely begun to experience. A standing ovation for childish remarks may produce "self-esteem" but promoting presumptuousness is unlikely to benefit either this student or society.

Copyright 2010, Creators Syndicate Inc.
Page Printed from: http://www.realclearpolitics.com/articles/2010/08/10/cheering_immaturity_106678.html at August 10, 2010 - 10:51:12 AM PDT
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Isiah Thomas: He's Just Not That Into [FI]U

If James Dolan or Pete Garcia were female, Isiah Thomas may not have seen his last sexual harassment lawsuit. Fortunately for Thomas, these men are in position to enable him to return to the NBA in an executive capacity, all the while continuing to be employed as a coach for a NCAA Division I school.

Thomas has impressively maneuvered his way into this position despite the following items on his recent resume:

• April 2008 - Fired from the New York Knicks after one of the worst executive tenures since Thomas himself ran the CBA out of existence.
• October 2008 - Having overdosed on sleeping pills, Thomas attempted to deflect attention by claiming the person revived and taken to the hospital was his daughter.
• April 2009 - Hired as FIU Coach.
• February 2010 - Publicly leaked interest in role with the Los Angeles Clippers.
• March 2010 - FIU's record of 7-25 placed it last in the Sun Belt Conference.
• July 2010 - New York Knicks hired Thomas to sway Lebron James. James declined to speak with Thomas.

What will likely develop in the next few weeks is that the NBA will determine that Thomas' dual role would violate boundaries it establishes between itself and the college game. At that point, Thomas will take a full-time position with the Knicks, pushing Donnie Walsh out the door. [If this doesn't happen, the Thomas hire officially becomes weirder than the Fredi Gonzalez firing]. At that time, FIU will name a coach which it is now scrambling to recruit, even as Pete Garcia claims to be fine with the current situation.

In the meantime, FIU will tolerate what seemingly few other Division I schools would tolerate, a coach who clearly is not committed to his job. New York Knick fans will ask why and the answer will come in the person James Dolan. But for those of us in Miami, for whom FIU is not some afterthought or stepping stone, the why is a much more interesting question.

I did not think FIU was in a desperate situation when it hired Thomas or is in a desperate situation now, where the situation clearly calls for FIU to thank [yada yada] Thomas, but decline to be his fall back position. In Miami, FIU has the luxury of anonymity to get things right. Garcia and FIU are taking advantage of that time with Mario Cristobal and their football program.

That's why I referred to Thomas as the anti-Cristobal when they hired him. The Cristobal and Thomas hires, both by Pete Garcia, must be in the running for the most philosophically divergent hires by the same Athletic Director ever. I am a fan of the Cristobal way. Isiah Thomas represents much of what I dislike about sports. So why the two approaches?

To me, it clearly is all about the U. Garcia made a name for himself at the University of Miami. He is approaching his fourth year at FIU without upstaging the U in any of the major sports. Itching to make an impact, Garcia took a gamble with Thomas. It failed. [Who knows, maybe one of the top recruits will stay even when Thomas leaves]. But now, Thomas' constant maneuverings has made it an unforgettably bad move and Garcia appears to have all the backbone of an Obama Justice Dept official sent to investigate Black, as opposed to Golden, Panthers. Garcia partially gambled FIU's good name on basketball bling. Let's hope Garcia doesn't think the risk was worth it and his next hire is more Cristobal and less Thomas.

Please leave for New York soon, Mr. Thomas, and if it's not too much trouble, please take Loria and Samson with you.

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