In the view of city officials trying to lure the Montreal Expos to Washington, the proposal to build a ballpark had to be especially generous to overcome rival bids as well as baseball's long-standing reluctance to return a team to the nation's capital.
The result is a stadium deal that is more advantageous to the Expos, in terms of the direct investment required of the team, than the last 10 agreements made by other cities with their ballclubs, according to newly released details of the financing plan.
When the District's offer was outlined to baseball's executive council in Milwaukee last week, it was one of the most generous deals some baseball officials had seen, a source said. "People were amazed that the District had done the deal that they did," said one source in the meeting in Milwaukee. "People sitting around the table were amazed."
In defense of the deal, negotiators point out that the $440 million stadium financing package crafted by District leaders had to be favorable enough to the Expos to win the approval of Major League Baseball, which exercises monopolistic control over team locations. It also had to trump a rival bid from Northern Virginia and compensate baseball for the financial damage claims that were expected from Baltimore Orioles owner Peter G. Angelos.
But what District officials apparently did not know was that the Northern Virginia group -- at one point this summer rumored to be the front-runner for the Expos -- had seen its bid begin to unravel Aug. 25, when its organizers told baseball officials that the state was no longer prepared to guarantee all of the bonds for the project. The sudden weakness of the city's main competitor could have given District officials a much better bargaining position.
Negotiators for the District said, however, that they feared that without an attractive stadium-financing plan, Major League Baseball might simply delay a decision on where to place the troubled Expos franchise, or decide eventually to "contract" or disband it, leaving the nation's capital once again without a club. But baseball officials had already said publicly that contraction was not an option and that the Expos would definitely be moved.
"We thought our competition was them doing nothing -- delaying -- as much as it was Northern Virginia's bid," Stephen M. Green, special assistant to Mayor Anthony A. Williams (D), said yesterday.
The stadium construction plan presented to baseball reflects the "reality of the sports world," Williams said this week in defending the terms of the deal.
That reality is that professional sports -- especially baseball -- hold the upper hand in negotiations. Baseball commissioner Bud Selig had several times set and missed deadlines for a relocation process that had little transparency. Some thought a team would never come to Washington because of Selig's personal opposition to putting a team here.
"Major League Baseball has bargaining leverage that they shouldn't have because they are an unregulated monopoly," said Andrew Zimbalist, a Smith College economics professor and a frequent critic of Major League Baseball. "Until we have a public policy that it's not okay for sports leagues to have that amount of power, then these kinds of deals are what we have to live with."
Under the financing plan described by District officials, the city would sell about $440 million in bonds; the proceeds of the bond sale would pay for stadium construction, land acquisition and other improvements.
To pay back the bonds, the District would rely mainly on a tax on the District's big businesses and new and existing sales taxes within the stadium. Less than 18 percent of the money to pay for the District's stadium would come from the team -- through rent payments -- over the first 20 years of the deal, according to projections.
Other cities typically have demanded that teams pay 33 percent or more of construction costs, according to statistics compiled by teams and the Sports Business Journal.
Those statistics show, for example, that the St. Louis Cardinals are paying 77 percent of the cost of a $387 million stadium now under construction; the Detroit Tigers are paying for 62 percent of their $327 million stadium. The Arizona Diamondbacks, by contrast, are paying 28 percent of the cost of their $359 million project.
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."
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.