Miami Marlins bondholders win as fans cry 'swindle'

, Bloomberg


Marlins Park
Marlins Park

The Miami Marlins won public support for a $515 million stadium by saying they couldn't compete without it. Now, after the team capped its worst season in more than a decade by trading high-priced players, taxpayers on the hook for ballpark costs are angry.

"It looks like they just looted the city," said Michael Cramer, director of the sports and media program at the University of Texas in Austin and former president of the Texas Rangers baseball team. "It doesn't smell right, but as a business person looking at that team, I probably would have been real tempted to do the same thing."

Taxpayer backing means investors in municipal bonds that Miami-Dade County and the city sold for the stadium that opened this year will get paid no matter how the team performs. The debt has gained along with the $3.7 trillion local-debt market this month even after the team logged the worst attendance for a new stadium's first season in 11 years.

"It becomes a political problem when the taxpayers have invested all this money and then a team gets rid of its best players," said Justin Land, who helps manage $3 billion of munis at Naples-based Wasmer Schroeder & Co. "The taxpayers still have to pay money to support the team."

Baseball Commissioner Bud Selig cleared the trade Monday. P.J. Loyello, a team spokesman, didn't respond to calls and an e-mail.

In 2008 the team, city and county agreed to fund a $515 million stadium. Miami-Dade County financed its $347.5 million share with a $319.3 million muni issue in July 2009 and subsequent debt sales. Revenue such as taxes on stays at hotels and motels backs the borrowings.

Stadium bonds carry higher interest rates than other debt backed by state and localities because ballfields aren't deemed essential services such as water systems, said Daniel Solender, who helps manage $17 billion of munis at Lord Abbett & Co. in Jersey City, New Jersey.

Miami-Dade stadium bonds maturing in October 2028 traded Nov. 13 at an average yield of 3.01 percent, data compiled by Bloomberg show. Benchmark debt yielded 2.05 percent that day, amid a post-election rally spurred by bets that income taxes are set to rise.

The stadium bonds, which are insured by Assured Guaranty Ltd., have a AA-rating from Standard & Poor's, the fourth-highest mark. The underlying credit is ranked one step lower.

Miami officials sold the public on the stadium bonds based on the team's assertions that a new ballpark would boost revenue, helping it compete with wealthier rivals.

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