Paul Beeston, a former executive of the Toronto Blue Jays and a chartered accountant in Canada, once tried to explain how businesses — including baseball teams — could engage in creative accounting. “I can turn a $4 million profit into a $2 million loss and get every national accounting firm to agree with me,” he famously — and accurately — said.
Jeffrey Loria, who sold the Miami Marlins to a group that includes Derek Jeter in October, can relate to Beeston’s comments.
On Friday, Miami-Dade County filed a 64-page lawsuit against Loria, accusing him of engaging in “self-serving and fuzzy math” designed “to deceive the public.” Under the terms of an agreement signed in 2009, Loria agreed to pay a percentage of the profits on the sale of the Marlins to the county as partial reimbursement for the cost of building the team a new stadium.
When contacted by USA Today, Loria said, “I don’t know anything about it, and I have no comment,” in reference to the suit. “They (the county) can do whatever they want.”
The county is upset after Loria claimed a $140 million loss on the $1.2 billion sale price of the Marlins. And they aren’t the only ones crying foul. Emilio González, city manager of Miami, which also contributed to the financing of the Marlins’ stadium, said the city plans to file its own suit against Loria. Both parties claim Loria is required to provide them with a detailed calculation, prepared by independent auditors, of the proceeds of sale. Instead, Loria’s lawyers and accountants merely provided a five-page summary report, leaving the county and city unable to determine the accuracy of any deductions and expenses.
The summary statement is quintessential Loria. In an effort to convince the taxpayers of South Florida to build the team a shiny new stadium, Loria and his stepson, team president David Samson, pled poverty, claiming the team was losing money.
A year later a Deadspin article based on leaked financial statements detailed the finances of several MLB teams, including the Marlins. The article revealed the Marlins were one of the most profitable MLB teams in 2008, thanks to baseball’s generous revenue-sharing provisions.
The revelations created additional backlash against Loria and Samson who were already on the defensive for a number of public relations missteps they committed after acquiring the Marlins in 2002. After winning the World Series in 2003, Loria proceeded to trade off his high-priced stars in an effort to reduce payroll.
Loria has been ripping off his partners and the fans ever since he parlayed a 24 percent investment in the Montreal Expos in 1999 into a 94 percent stake in three years, before abandoning the city. Why would anyone think he would suddenly change his stripes after making a financial windfall on the sale of the Marlins?
Jordan Kobritz is a former attorney, CPA, Minor League Baseball team owner and current investor in MiLB teams. He is a professor in and chair of the Sport Management Department at SUNY Cortland and maintains the blog, sportsbeyondthelines.com. The opinions in this column are the author’s. Kobritz can be reached at email@example.com.