Did county whiff on stadium financing?

Friday, July 6, 2007

Peter Kirk, president of Maryland Baseball LLC, said that concerns about the county commissioners’ 3-2 decision last week to underwrite his company’s share of the stadium construction costs are unfounded.

‘‘We had suggested that there were two ways to finance the stadium,” Kirk said Thursday. He said his company could have made an up-front payment for its $8.5 million share of the project, financing it with a bond from a private bank. He said stadiums in New York and Salisbury were financed that way.

Kirk said his company also presented an alternative method, which he said was developed by public officials in Pennsylvania for construction of the Lancaster stadium.

The method, narrowly adopted by the Charles commissioners last week, has the county financing both its third and Maryland Baseball’s third of the construction cost ($17 million total) with public bonds. Maryland Baseball will make a payment of $900,000 to the county each year, the same as it would if paying on a private bond.

Since public bonds carry a lower interest rate than private ones, the county plans to channel the difference between Maryland Baseball’s payment and the bond’s cost into a contingency account. The contingency account, which could grow to $1 million, would then be used to offset unforeseen costs or to pay down the county’s portion of the public bond.

‘‘It costs us the same either way,” Kirk said.

However, critics have pointed out that the deal leaves the county holding all of the stadium debt in the event that Maryland Baseball folds.

‘‘On the surface, to me, it just doesn’t seem right,” said Donna Cave, a longtime critic of the stadium, whose group Preserve Hughesville helped scuttle plans to build the stadium in that town. ‘‘If [Maryland Baseball officials] default, or whatever, then we’re stuck with [the debt].”

The commissioner board’s two most senior members felt the same way and voted against the new financing deal last week.

‘‘The risk was too great for the gain,” said commissioners’ President F. Wayne Cooper (D), who, along with Commissioner Edith J. Patterson (D), opposed the deal. ‘‘I would not have done it with my own money.”

Cooper said he supported the original deal, which would have tied Maryland Baseball to the project more closely.

‘‘So what happened to the third, third and third?” Cooper asked, referring to the deal’s original arrangement that had Maryland Baseball, the county and the state each shouldering a third of the stadium debt. ‘‘How do you switch it right here at the end?”

Cooper said he wanted Maryland Baseball to open up its financial books for review before he committed to the deal. He said the company declined to provide any independent verification, such as an audit or tax returns, of its cash and holdings.

Kirk defended the disclosure refusal, saying that his company went as far as it could to accommodate the county.

‘‘We gave Charles County more material on us than we have given anyone in 25 years,” Kirk said. Opening his company’s books would have been a ‘‘no-win situation” that would have compromised the company’s bargaining position, he added. ‘‘We’ve never provided [open review], and we’re not going to.”

Kirk said he encouraged the commissioners to research his company’s reputation by talking to other jurisdictions the company has dealt with. He also pointed to the ‘‘whole lot of belts and suspenders” his company provided to guarantee the deal, including a $900,000 security deposit and collateral in the form of the company’s shares of the stadium’s skybox and concession revenues.

Cooper dismissed the idea that the skyboxes and concessions were real collateral, asking, ‘‘How much of his money has [Kirk] put into this deal?”

Kirk said his company would not let the stadium fail, saying, ‘‘The risk of this happening ... is nonexistent.” He added the independent Atlantic League, in which the Southern Maryland Blue Crabs are scheduled to play, has never bailed out of a stadium in two decades, but added that the league would act if necessary to save the league’s reputation.

Kirk said he is ‘‘excited” that construction recently began on the Waldorf stadium, to be known as Regency Furniture Stadium. ‘‘This is the earliest we’ve ever started construction,” he noted. He hopes the stadium will be ready by early May to host the Southern Maryland Blue Crabs first home game.

E-mail Jay Friess at jfriess@somdnews.com.