Stadium Financing Has Cruise Companies Calling Foul

Friday, April 07, 2000
A plan to build a $400 million bayfront ball park for the Florida Marlins is pitting the team's millionaire owner against Miami's powerful cruise industry and its billionaire patriarch.

Boca Raton, Fla.-based hedge fund manager John Henry paid $150 million cash for the 1997 World Series champion Marlins after former owner Wayne Huizenga stripped the team of its talent and alienated fans.

Key to Henry's plan to rebuild the losing team's roster and dwindling fan base is a retractable-roof stadium, which he wants to pay for with a $4 per-day tax levied on cruise passengers traveling through the Port of Miami.

Henry's proposal, now moving through the Florida Senate, puts him head-to-head with the lightly taxed cruise industry and Carnival Corp. chief executive and major shareholder Micky Arison, the billionaire owner of the Miami Heat basketball team.

If Henry is successful, cruise lines - which flag their vessels in foreign countries to avoid U.S. taxes - could join rental car companies and hotel operators, which have seen so-called tourist taxes added on their customers' bills to pay for sports facilities around the country.

"I know that the media would really like to make this a John Henry vs. Micky Arison issue. It is not. It is an economic issue," John Fox, vice president of government relations for Miami-based Royal Caribbean Cruises Ltd., said.

The facts surrounding the issue, however, make the clash of wealthy titans virtually unavoidable.

Arison gets $6.4 million a year from Miami-Dade County's special hotel tax collections to cover operating expenses at the brand new, $200 million arena his basketball team calls home. That county-owned, team-built facility sits on a $4 million site, which was donated by the county, and is located next door to the publicly owned stadium site that Henry covets.

The cruise industry has sent representatives to Tallahassee to lobby state Senators to reject the proposal. Miami-Dade County commissioners shut out the plan, but Henry is undaunted.

"We think Dade County should not be hypocritical in how it chooses to fund its facilities. Why should the cruise industry be sheltered?" Jonathan Mariner, executive vice president for the Florida Marlins, said.

Carnival Corp., Royal Caribbean and Norwegian Cruise Lines directly employ 6,700 people in Miami and pump a total of $1.3 billion into the local economy each year, Fox said.

He and other industry executives argue that Henry's $4 cruise tax would impose a $40 million burden on their intensely competitive business, and that the extra expense would force companies to relocate to less expensive ports of call.

A report prepared by the Port of Miami estimates that the cruise tax would add $112 to the cost of a seven-day cruise for a family of four and cause costs at the world's busiest cruise passenger port to skyrocket.

Carnival spokesman Tim Gallagher said the prospect of the tax already has prompted his company to put a ship in Fort Lauderdale's Port Everglades rather than the Port of Miami.

Cruise officials said they operate in a hyper-competitive market and that they would not be able to pass the added cost on to budget-minded vacationers.

"This is Bert and Ethel. This is people saving nickels and dimes, this is middle America," Fox said. "There is no company that would eat a tax like that happily to build a baseball stadium."

The cruise tax also threatens the port's $122 million expansion plan, would cost the port $6.4 million in the first year and could ruin the port's ability to remain self-sufficient, Port of Miami Director Charles Towsley said. "We're under siege here," Towsley said.

The Marlins' Mariner does not buy the argument, saying that $4 is merely the cost of a deckside pina colada. "We don't think $4 per person, per day is the break point. We're not so convinced that it's going to truly affect demand," he said. - (Reuters)

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