Baseball Balking Over Stadium Rent
Saturday, November 12, 2005
Major League Baseball is resisting the District's demand for a guarantee of $6 million in annual rent at a new ballpark, an issue that has bogged down negotiations over a stadium lease, held up the sale of the Washington Nationals and left city officials increasingly frustrated.
Baseball leaders want the lease agreement in place so they can assure bidders for the Nationals that the stadium deal is done, according to baseball sources. Baseball Commissioner Bud Selig said this week that the league would not pick an owner from the eight bidding groups by next week's ownership meetings in Milwaukee, as baseball officials had said last month.
MLB President Robert A. DuPuy said later in an e-mail that the lease "remains a troublesome topic, and one which needs to get resolved."
City officials are scheduled to resume talks early next week with Jerry Reinsdorf, baseball's lead representative on the lease negotiations. Some of the city's negotiators expressed confidence yesterday that a deal would be reached in the next week or two. But District leaders and Nationals officials have become increasingly impatient as the talks have dragged on for nearly three months while baseball officials continue to put off the sale of the team, which is owned collectively by the league's 29 other owners.
Nationals manager Frank Robinson complained this week that his team is unable to sign top free agents in the off-season without an owner in place. And with the city paying for most of the $535 million stadium project with public money, D.C. officials said they are eager to see an owner named, particularly a local one, to help them win more support from stadium skeptics.
"It would be a lot easier to do all this talking directly with an owner than with Major League Baseball," Mayor Anthony A. Williams (D) said. A local owner, he added, "would have a stake in the city, a sense of responsibility to the city."
D.C. Council member Jack Evans (D-Ward 2), the council's top stadium booster, said the team "should have had an owner six months ago. Any delay beyond that in my view is unacceptable. Baseball has all the information it needs. It makes a difference to the whole process moving forward when we don't have an owner."
Baseball officials declined to comment yesterday when asked about specifics of the lease negotiations. But D.C. leaders said a key sticking point remains the city's demand that the new team owner pay a guaranteed average annual rent of $6 million during the 30-year lease even if the stadium can't be used because of an unforeseen event such as a player strike or a terrorist attack.
That provision, known as a "hell or high water" clause, is not uncommon in large, publicly funded projects that require bond financing, District financial officials said. They said the city needs the guarantee to satisfy Wall Street bond raters that the rent payments will be constant and thereby get investment-grade ratings on the construction bonds.
The Nationals' owner can purchase insurance at a much lower annual cost than $6 million to cover rent payments in the unlikely event that the stadium becomes unusable, city officials said.
One high-ranking District official with knowledge of the discussions, who spoke on the condition of anonymity because the negotiations are at a sensitive stage, predicted that baseball would ultimately agree to the provision but that Reinsdorf could be holding out to get other concessions from the city.
The city's negotiating team is led by Mark H. Tuohey, chairman of the D.C. Sports and Entertainment Commission, along with his top aides and lawyers, and members of the city's development and finance offices.
In addition to Reinsdorf, baseball has been represented by Nationals President Tony Tavares, his aide Kevin Ulich and Richard A. Weiss, a lawyer for baseball.
Reinsdorf, the owner of the Chicago White Sox, is known in baseball circles as a tough negotiator and was the head of the search committee that recommended that baseball move the Montreal Expos to Washington last year. He also negotiated the baseball stadium agreement with the city that laid out the requirements for the ballpark -- from the number of seats and suites to the size of the restaurants and team offices.
The stadium lease is a complex document, numbering dozens of pages, that details the myriad terms under which the Nationals will use the facility, including the rent the team will pay, the office space it will occupy and who will be responsible for stadium maintenance, security, parking and other operations.
Several of these issues are still being negotiated, city and baseball officials said, with the rent guarantee being among the most important.
Evans stressed that baseball already has missed many of its own deadlines for the sale of the Nationals.
"They were going to do it by Opening Day," he said, "then by the Fourth of July, by the All-Star Game, the playoffs, during the World Series, next week at the owners' meeting and now they say before Thanksgiving."