Baseball Tries to Thwart Private Deals
By David Nakamura and Thomas Heath
Washington Post Staff Writers
Thursday, December 22, 2005
Major League Baseball has ordered bidders for the Washington Nationals not to promise D.C. government leaders money for a new stadium because their involvement could disrupt negotiations, angering some city officials who believe the bidders could help solve their cost concerns.
Despite what some bidders have called a "gag order" issued by baseball, at least two of the eight groups have offered to cover cost overruns for the stadium project, with one brandishing a $100 million check in the halls of the city's John A. Wilson Building, according to a council member.
Baseball officials declined to comment. But in an e-mail sent to the bidders Nov. 1, two baseball representatives, including attorney Thomas Ostertag, ordered the bidders not to make offers.
"Please be reminded that we are currently involved in sensitive lease negotiations," said the e-mail, obtained by council member Phil Mendelson (D-At Large), who disclosed it yesterday to The Washington Post. "No bidding groups have any standing at this point, and therefore no group should be in direct or indirect communications with the City or Commission in regard to any stadium issues. Similarly, no bidding groups should be in communication with the press about these issues."
Baseball's 29 team owners collectively own the Nationals and are poised to sell the franchise for $450 million, offers the bidders have made with the expectation that the District will build a publicly funded stadium on the Anacostia River in Southeast. Projected costs for the stadium project have grown to $667 million, well above the city's $589 million budget.
Baseball officials are concerned that if bidders offer to pay for some of the stadium construction, the city will try to drive up the future contribution of whichever group gets the team. That, in turn, could force the bidders to try to lower their bids for the franchise, some baseball officials have said. Baseball also has stressed that the stadium agreement with the city specifies that the city will pay for all cost overruns.
But Mendelson and other council members said they would like to hear offers from bidders to help with the stadium costs.
"I've never been in a negotiation for a $600 million project where the partners do not want to find common ground," Mendelson said.
The council was supposed to vote on the lease Tuesday, but Mayor Anthony A. Williams (D) asked that the document be withdrawn, and council Chairman Linda W. Cropp (D) postponed the vote until next month.
Williams continued to meet with council members yesterday to try to win support for the stadium lease agreement. He stepped up the pressure on the council in a statement criticizing council member Jim Graham (D-Ward 1) for supporting the use of public money to help build a parking garage for a future Target store in his ward while opposing public funding for the stadium.
"His actions are inconsistent and shortsighted," Williams said. "It's time for Mr. Graham and other council members to stop holding up our agreement with Major League Baseball."
Graham said the Target project was different because the costs are much lower and the use of public funds far less. "I hope the mayor is not in meltdown mode," he said.
To cover the rising costs of the stadium project, the Williams administration is seeking contributions from the federal government. Rep. Thomas M. Davis III (R-Va.) said yesterday that he spoke to Cropp recently about possible federal funds for expanding the Navy Yard Metro station.
"Whatever the city decides, they will have our support," Davis said.
Del. Eleanor Holmes Norton (D-D.C.) said she has not been contacted by city officials about funding the Metro station expansion, even though she serves on a House transportation panel. She said pursuing congressional financing for a particular project is neither a quick nor easy proposition.
Mendelson was one of several council members who were told last week by council member Marion Barry (D-Ward 8) that D.C. entrepreneur Jonathan Ledecky, who is among the bidders, had agreed to cover stadium overruns if he were awarded the team.
Barry said he brokered the deal with Ledecky as a way to find a solution to the council's concerns about the stadium, in hopes that his colleagues would then approve the stadium lease deal with baseball. Barry said he told baseball officials that eight members would block the lease unless Ledecky was named as the Nationals' owner.
Carol Schwartz (R-At Large), one of the members whom Barry counted among the eight, said yesterday she never met with Ledecky nor did she tell Barry what her plans were for the vote.
"Marion Barry never talked to me about any plan to help any potential owner," Schwartz said. "My only contact with Marion about this issue was his calling me several times to ask me how I was going to vote and my not answering that specific question."
The negotiations broke down when baseball officials told Ledecky to make no offers, according to Barry and other council members.
But on Monday, Franklin Haney, a developer with homes in Tennessee and Washington and a bidder for the Nationals, visited the council to renew his offer, made last month, to cover cost overruns in exchange for development rights on land near the stadium. Sources with knowledge of the discussion said Haney was invited by council members.
In a brief interview as he walked through the District building Monday, Haney said he was not violating the "gag order" because baseball had allowed him to visit city hall.
During his visit, Haney wrote a $100 million check to demonstrate that his offer is firm, said Vincent C. Gray (D-Ward 7). Haney also gave Gray a letter promising $250,000 to establish a baseball academy for youth in his ward if Haney were awarded the team. Gray tried but failed to convince Major League Baseball to establish the academy.
The three front-runners to buy the team are the Bethesda-based Lerner family, which owns and operates a Washington real estate empire; a group of Washington businessmen led by Frederic V. Malek and Jeffrey Zients; and Jeffrey Smulyan, an Indianapolis businessman.
Staff writer Eric M. Weiss contributed to this report.
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