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Lucrative Deal On Stadium Won Baseball Over

Some critics of the D.C. deal, which requires the approval of the D.C. Council, are already calling it too favorable to whoever ends up owning the Expos.

"Clearly, the monopoly power of Major League Baseball makes it hard to say no to the demands for a publicly financed stadium," said Ed Lazere, director of the D.C. Fiscal Policy Institute, a nonprofit research group that focuses on city budget issues. "But given Washington's market power, we think the city could have taken a tougher stance in the negotiations."


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However, even some critics of publicly financed pro sports ventures have softened their objections in this case because most of the financial burden for the ballpark proposed for the Anacostia waterfront would be placed on taxpayers who would benefit from or appear to support the ballpark. Essentially all of the money is coming from the team or its fans, who will pay the in-stadium taxes, or the nearly 2,000 biggest businesses in the District, at least some of which already have signaled their support.

"Not one dime of D.C. residents' money" will fund the ballpark, Williams boasted -- twice -- during yesterday's announcement.

What's not clear, however, is what kind of publicly financed road improvements might be necessary around the ballpark. Moreover, critics argue that some of the sales taxes to be collected at the stadium and devoted to the ballpark amount to a diversion: The ballpark patron would have spent his money elsewhere in the District, and the sales tax generated would have gone to city services.

But by targeting baseball and its fans, according to sports economists, the Washington deal has not spread the burden the way other stadium deals have by imposing taxes that fall on the general population: general sales taxes, cigarette taxes, hotel taxes and others.

"The way they're financing it [in Washington], with the in-stadium taxes, is more appealing," Zimbalist said.

Exactly how much a city ought to pay for a stadium is a question that had roiled politics in dozens of cities even before Major League Baseball announced in 2002 that it planned to move the Expos and essentially offered the team to whatever city presented the best deal.

The District's eagerness to get a team may be most apparent in the relatively modest amount it asks from the team in terms of rent -- basically, the team's only contribution to stadium construction. The plan negotiated by Williams envisions the team paying $3.5 million in rent the first year, rising to $5.5 million in the fifth year and rising 2 percent annually for the next 25 years. This is what constitutes the team's direct investment in the stadium construction and represents less than 18 percent of the revenue needed to repay the bonds over the first 20 years of the deal.

By comparison, the original Virginia stadium proposal called for a much larger team contribution: $10 million a year in rent.

"Clearly, the District has taken a different approach. It's much more generous to baseball and to the baseball owners," Virginia Gov. Mark R. Warner (D) said on WTOP radio on Tuesday.

But Green said he believed that baseball would not have accepted a lower offer. "I didn't think a $10 million lease payment was going to work for baseball," he said.

In fact, he said, baseball's negotiators sought to lower the team's rent further. "They wanted to negotiate that down to $3 million," he said.

Green noted, moreover, that his projections showed that the bonds would be repaid after 20 years. Once that happens, the big business tax would be rescinded, but the team's rental payments and the revenue from sales taxes at the stadium would continue.

The burden of the team's rental payment to the District is partly offset by other aspects of the deal. It gives the team naming rights to the stadium, the sale of which is expected to yield more than $2.5 million annually; all of the game-day revenue from the stadium's 1,100-car parking garage; and the rights to hold events in the stadium on all but 12 days of the year.

"There's a social safety net provided for professional sports that we don't see in other businesses," said Robert A. Baade, a sports economics professor at Lake Forest College in Illinois. "Other businesses take risks. What exactly is the risk here for the team?"

Staff writer Thomas Heath contributed to this report.


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