Two months ago, a delegation of D.C. officials, led by Mayor Anthony A. Williams, met at Major League Baseball's Park Avenue headquarters with the committee that will either set the terms for baseball's return to the nation's capital -- or choose to bypass Washington, D.C., again.
The officials knew that a lavish new ballpark -- replete with luxury suites and the type of high-end amenities that have come to define "major league" -- was the key to any deal, and they sought to show how a stadium could be financed in a manner that baseball would accept and the public would stomach.
Deputy Mayor Eric Price held up a chart of MLB's last 11 stadium mega-deals, and suggested to the committee that the proper mix had settled at about two-thirds public funding to one-third private -- a deal that would cost the District more than $250 million but also would cost MLB more than $100 million.
The reply came with a smile from the committee chairman, Chicago White Sox owner Jerry Reinsdorf, but it was not taken as a joke.
"Two-thirds/one-third is fine," Reinsdorf said, according to two people present. "But three thirds/no thirds is more of what we had in mind."
The exchange captured the not-so subtle game of municipal hardball that is under way as MLB seeks to relocate the money-losing Montreal Expos to D.C., Northern Virginia or Portland, Ore. Delegations from all three locations were scheduled to make formal presentations to the relocation committee Thursday and Friday.
Williams and Portland Mayor Vera Katz, who were expected to lead their respective groups, cancelled plans to attend yesterday because of a possible war with Iraq, and Virginia Gov. Mark Warner signaled he would not attend if hostilities break out. Officials from D.C. and Virginia said Major League Baseball declined requests to postpone the presentations. One baseball official said the committee was sympathetic but felt it was still important to hold the meetings to try to meet baseball's timetable of moving the Expos by next season.
In determining which city wins the prize, MLB officials have made clear that a new ballpark built primarily with public money will be a key -- perhaps the key -- to where the Expos land. Over the past 15 years, MLB has played a similar game of leverage to raise $3.3 billion in public funds for stadium construction -- an extraordinary boom financed mostly by taxpayers.
But this traditional strategy has collided with a new reality of crippling budget deficits and public skepticism, raising questions about whether the Expos, in fact, can be moved on MLB's timetable and terms.
Emerging details about the financing plans under consideration in each location reflect the delicate balance officials are trying to strike between meeting MLB's demands and assuaging citizens already concerned about cuts in basic services, interviews with government officials, business leaders and others involved in the relocation process suggest.
"You have two pressures," Williams said. "You have the pressures on Major League Baseball in terms of its profitability and market pressures. They're looking for more from the cities, while meanwhile the cities with declining revenues have less that they can do. So the two are really colliding in . . . an adverse way. But I happen to believe that we can raise the sums that we need to put an outstanding proposal forward to Major League Baseball."
In each location, officials are exploring unorthodox financing strategies to avoid using existing government resources. The strategies allow politicians to tell constituents that the ballpark would not take money from other services, but it is unclear whether some of the strategies are workable or even legal.
The city's plan to raise $275 million, for example, includes a tax on ballplayer salaries that some experts believe may be unconstitutional. The so-called "jock tax" already exists in 20 states, but the D.C. home rule charter prohibits the city from taxing non-resident income. Congress would have to amend the charter to permit the tax, but even then it could face a legal challenge on grounds it was created to tax a specific group.
"If we think a jurisdiction is singling out players and treating them differently from all other taxpayers, then that's a situation we would certainly look to challenge," said Stephen W. Kidder, the former Massachusetts commissioner of revenue, who represents the Major League Baseball Players Association on tax issues.
Portland, meanwhile, recently entered into discussions with an Indian tribe that offered to finance a new ballpark in exchange for permission to build a casino near the city limits. Baseball historically has avoided any connection with gambling, and two baseball officials privately told the Post that it was unlikely that such a deal would be approved. One official referred to the proposal as "non-starter" that the owners would "never approve."
Oregon Governor Ted Kulongoski said last week he would block any effort to link stadium financing with a casino, a decision that appeared to kill the proposal. But Katz signaled that she would still like to discuss it. David Kahn, who is heading the Portland bid effort, said the delegation planned to update the committee on the status of the casino-financing idea and a $150 million state financing bill that remains critical to Portland's viability.
"Nobody from baseball has told us that [casino financing] is not viable," Kahn said.
In Virginia, the General Assembly has approved $10.5 million annually to finance a bond estimated to raise $150 million toward stadium construction. The $10.5 million would come from sales and income taxes collected in and around the stadium site, as well as from a tax on tickets. Backers of Northern Virginia's bid say that still leaves a gap in approved funding for a stadium. One official estimated Virginia would need to come up with another $5 million to $8 million annually -- perhaps through taxes on rental cars or hotel rooms -- to finance an additional $90 million in bonds. That would cover about two-thirds of the cost of a $360 million stadium, for example.
But with no end in sight to a budget crisis that forced legislators to resolve a $6 billion shortfall over the past two years, the Virginia Baseball Stadium Authority is seeking a "conditional award" of the Expos from MLB. The award would be contingent on completion of the financing package and public approval of the stadium site.
The gambit will be a tough sell to major league owners, a baseball official close to the process predicted. The state could still fail to gather the necessary financial and public support, forcing the league to start over.
"I'm not saying it's a non-starter, but it's certainly not the best scenario from Major League Baseball's point of view," the official said.
Gabe Paul Jr., executive director of the Stadium Authority, said he understood MLB's concerns but "in these economic times, it's a risk to talk about money. I do not feel in the political situation that we're in today that we can go before the public sector and ask them to pass baseball legislation that does not have a reasonable guarantee that we would get a team."
The uncertainty surrounding the bids appears to raise questions about baseball's timetable and the immediate future of the Expos, who are playing 22 games in Puerto Rico this season to generate more revenue. The relocation committee hopes to present options to Commissioner Bud Selig by the all-star break in July. Selig would then make a recommendation to major league owners, who would vote. At some point MLB is expected to open negotiations with potential owners willing to purchase the team for the location baseball has chosen.
If the bids fail, however, MLB will be faced with an assortment of unpalatable options. One would be to keep the Expos in Montreal, where the team draws fewer fans than some minor league teams. Another would be to relocate the team to an existing venue such as RFK Stadium or Portland's PGE Park until a stadium plan materializes.
The atmosphere is dramatically different than when the process quietly began three years ago. At that point, major league owners had completed or successfully negotiated deals to build 16 stadiums and extensively renovate another. The total cost of the ballpark construction was $4.83 billion, of which the public staked $3.15 billion, or 65 percent, according to Sports Facility Reports, a newsletter published by the National Sports Law Institute of Marquette University in Milwaukee.
Reinsdorf, the head of the relocation committee, received 100 percent public financing from the Illinois legislature to build a new Comiskey Park in 1991 -- but only after the White Sox owner threatened to move the team to St. Petersburg, Fla. One year later, the Baltimore Orioles moved into Camden Yards -- the widely acclaimed $235 million retro park built with 96-percent public money in the form of lease revenue bonds backed by sports-themed lottery tickets.
"Camden Yards was the basis for really going crazy with this stuff," said Martin J. Greenberg, managing director of SheerGame Sports Development, LLC, a stadium development firm.
Fueled by the expanding economy, the ballparks grew more elaborate and expensive, reflecting the optimism of the decade. By the end of the 1990s, the cost had risen to $266 million for the Houston Astros' new stadium, $395 million for the Detroit Tigers', and $413.9 million for the Brewers'. The Astros' stadium, christened Enron Field (Minute Maid bought the naming rights after Enron's collapse), featured a working 50,000-pound replica of a 19th-century locomotive. The Tigers' new home, Comerica Park, featured a 50-foot Ferris wheel. Bank One Ballpark, home of the Arizona Diamondbacks, contained a "signature swimming pool" behind the right-center field fence in which high-paying fans could frolic during games.
Recently, however, the public has become less willing to support these sports palaces. After four failed attempts to pass ballpark referendums, the San Francisco Giants built their own facility, Pac Bell Park -- perhaps the finest in baseball -- for $306 million in 2000. Even Reinsdorf, who is planning an extensive renovation of a stadium built 12 years ago, is not going back to the public trough. To fund the construction, Reinsdorf sold the naming rights for Comiskey Park to U.S. Cellular, a telecommunications company, for $68 million.
The battered economy and public resistance have forced cities to become more creative to finance expensive stadiums. "It used to be that the financing was pretty organized," said Earl Santee, head of the Major League Baseball division of HOK Sport, the Kansas City-based firm that designed Camden Yards and nine other new or renovated major league parks. "But the public sector doesn't have the kind of resources it once had. You have to be pretty intelligent to figure out how to resolve the needs of the new ballpark. The diversity of the funding sources these days are incredible . . . and in some ways it creates more risk."
The D.C. package reflects that complexity. It would rely on a combination of sources to raise $20 million-$30 million a year -- the city's estimate of what it would need to cover its share of the borrowing costs on a stadium estimated to cost $430 million. The new team owners would be expected to make up the remaining costs. Any source of revenue not generated by the stadium is likely to face opposition at the D.C. Council, which this week begins debating a two-year budget proposal by the mayor featuring $195 million in cuts and $49 million in tax increases.
"How do you tell people whose services are going to be cut that we're going to raise this money to build a stadium?" said D.C. Council member Jack Evans (D-Ward 2), chairman's of the finance and revenue committee.
The largest amount of the city's public funding would come from taxes generated at a stadium or in its immediate vicinity.
Officials are considering a new, higher sales tax on baseball tickets. They also plan to direct the tax on beer, food and merchandise at the ballpark to repay construction bonds. A larger tax district, including shops and restaurants in the surrounding neighborhood, also could be used to repay construction costs.
Taken together, those taxes could generate $10 million or more, say D.C. officials, but the city still would need more.
An income tax on the salaries of baseball players would contribute $5 million more in annual revenue toward repaying construction loans, city officials hope. The city sought advice on the legality of taxing a specific group of non-residents, such as baseball players, while not taxing others. Officials said the report shows that the tax would be legal, but independent tax experts said that depends on how it is structured.
Harley T. Duncan, executive director of the Federation of Tax Administrators, said a tax aimed specifically at ballplayers would be "on the edge" of what is legal. The courts have determined that governments must show a "rational basis" to single out a specific tax group, Duncan said. Richard D. Pomp, a professor of tax law at the University of Connecticut, said the city would face less scrutiny by broadening the tax to include the Wizards and the Capitals, as well as the teams they play.
However, Pomp still said it was unlikely the courts would rush to the defense of well-paid ballplayers. "I have nothing against Sammy Sosa, don't get me wrong," said Pomp, referring to the Chicago Cubs slugger. "But it's not the most sympathetic group of people if you're trying to make an equal protection argument."
Staff writers Mark Asher, Timothy Dwyer and Spencer S. Hsu contributed to this report.