Baseball deal carries tough terms, penalties

Major League Baseball’s relocation of the Montreal Expos to the District carries five specific provisions to void the deal if not honored by the city, according to terms of the deal released yesterday.

A 32-page Baseball Stadium Agreement (BSA) governs the impending move of the Expos to Washington, the short-term use of RFK Stadium for baseball and the construction of a new stadium in Southeast near the Anacostia River waterfront.

The conditional deal, however, will not be honored by MLB if the D.C. Council does not pass by Dec. 31 a stadium financing package that includes up to $500 million in bonding authority. The city must also achieve four other key target dates in the stadium development process over the next 31/2 years. It is not expected that the conditions will not be met.

The stadium financing bill, introduced yesterday to the City Council by Mayor Anthony A. Williams, has generally strong support among the 13-member body. Mr. Williams is grappling with numerous pockets of heated community activism against the project, but he did as well for the now-thriving Washington Convention Center.

The specificity of the agreement, however, highlights the extreme degree to which MLB executives want to avoid problems with the first franchise relocation in 33 years.

“There was heavy negotiation on all the major money points of the deal, and certainly the significance of all the timeline milestones,” said Bill Hall, director of the baseball committee for the D.C. Sports & Entertainment Commission.

The agreement also provides a window into how little flexibility the council will have as it reviews the ballpark-financing package over the next 10 to 12 weeks. Many portions of the deal are completely set, such as the ownership of stadium naming rights and other lucrative ballpark revenue streams by the future team owner, the annual rent payments at both RFK Stadium and the forthcoming ballpark, and the location of the new ballpark at the Southeast site near South Capitol Street.

The rent payments are one of three key components funding the ballpark construction. The second, taxes on stadium-related commerce such as tickets and merchandise, also appear all but locked. The new legislation calls for a tax-rate increase at the ballpark from 5.75 percent to 10 percent.

That leaves the third leg of the financing, a gross-receipts tax on District businesses earning $3 million or more per year, as the one portion of the deal with true wiggle room.

City officials yesterday said the collections from that tax would range from $3,000 to $28,200 per year per business and would be increased if necessary. The city is responsible for any cost overruns to the project, currently pegged at $435.2 million.

Besides the need to ratify stadium financing legislation by the end of the year, the District must gain control of and rezone the stadium property, and complete a lease and development agreement for the new stadium by Dec. 31, 2005. The city must also sell bonds for the stadium funding by the same date and have the new ballpark completed by March 1, 2008.

For each of these latter four steps, there is a two-year buffer period before the team can walk away from the deal. But in the agreement, there are several sections with the phrase, “It is agreed that time is of the essence with respect to such deadline dates.”

The stringent provisions of the baseball deal are not limited to the city. If the Washington team, soon to be renamed from Expos, leaves before the expiration of the 30-year lease term, the club will be responsible for any outstanding debt on the ballpark. Sports commission officials said the team would be also subject to potential lawsuits in such a situation.

MLB, the current owner of the Expos, also must indemnify the city and sports commission against any possible damages arriving from an ongoing lawsuit from former limited partners of the Expos. The partners claim that MLB Commissioner Bud Selig and others wrongly conspired to destroy the value of their equity in the club. An arbitration decision on the case is expected soon.

The legal indemnification additionally protects the city if Baltimore Orioles owner Peter Angelos elects to sue MLB over the Expos’ relocation.

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