District, MLB at odds on lease

Disputes over a lease agreement for the Washington Nationals’ new waterfront ballpark are threatening the financing plan for the stadium and could lead to a stalemate between the city and Major League Baseball.

MLB and the District are at odds over how much money the Nationals should pay in annual rent, and councilman Vincent Orange (D-Ward 5) said he will introduce legislation Nov. 1 that would require MLB to announce the new owner before a lease agreement is in place. MLB has said it will not announce an owner until the lease is done.

“Our position hasn’t changed,” MLB spokesman Rich Levin said. “We think that’s the right way to do it.”

Orange said he will introduce the legislation as a way to urge MLB to select a locally based owner who could be taxed by the city, thus bringing in more revenue.

“It could be an impasse, but I like our position better,” Orange said. “Is baseball going to back away from this nest of profits over something as silly as the announcement of an ownership team?”

Under the financing plan being discussed, the $535 million ballpark would be paid for using a municipal bond and $246 million from Deutsche Bank in exchange for a lease payment and revenue from the stadium. The District’s chief financial officer, Natwar Gandhi, has said a guaranteed annual rent payment of $6 million would be needed to cover the city’s debt, but Nationals executives and Major League Baseball have been reluctant to offer a guaranteed amount.

Wall Street is refusing to approve the financing plan until a guaranteed payment is in place, and several city sources said they are fearful the council’s involvement in the lease will create uncertainty and cause the deal to fall apart.

District officials have set a Dec. 31 deadline to have financing for the stadium in place and said they must complete their talks with Wall Street by next month.

Many people close to the baseball negotiations say Orange is merely grandstanding because he is running for mayor. But they admitted that discussion of legislation can create delays, even if it is not passed by the full council. The District wants construction on the stadium to begin by March, with completion scheduled for March 2008.

While lease talks have delayed completion of the financing, city officials also said it has been held up because Wall Street has asked for more recent projections on revenues from the new ballpark. The city originally had submitted figures produced last October and is now in the process of submitting updated projections.

If the financing falls through, the city could decide to pay for the stadium by selling bonds for the full $535 million. Some council members, including chairwoman Linda Cropp, this week suggested building the ballpark near RFK stadium because it would be cheaper. Earlier in the week, Orange introduced a resolution asking Mayor Anthony Williams to allow the council to take another look at the financing plan. The resolution passed 9-4 but is nonbinding.

Officials from the D.C. Sports & Entertainment Commission declined to comment on the lease negotiations.

Some officials in the city have privately criticized Mayor Williams for failing to squash the council’s discussion on baseball. Williams has spent much of the last month traveling and currently is in China.

Levin offered no time line as to when the new Nationals owner would be announced but confirmed discussion of the lease is ongoing. An announcement on the team owner before the end of this month is seen as unlikely, in part because White Sox owner Jerry Reinsdorf, baseball’s chief negotiator with the District, has been busy following his team in the playoffs.

Eight teams submitted bids for the Nationals, who are expected to be sold for more than $450 million. Major League Baseball has been tight-lipped about who it prefers, though several city sources say they fear the league might choose Indianapolis communications executive Jeff Smulyan over an ownership group led by District businessmen Fred Malek and Jeffrey Zients, which the city has endorsed.

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