May 22, 2008

Nats Claim Stadium Not Done on Time, Seek $100K per Day from D.C.

Remember when Washington Nationals' owner Ted Lerner said "Everyone has done a wonderful job on this ballpark...I think expectations have actually been expectations"? It turns out Lerner had low expectations.

The Washington Post is reporting that the Nationals are seeking a $100K per day penalty against the District of Columbia for failing to have the stadium complete by Opening Day. Great idea, Lerner. Make the District build your stadium and then extract additional taxpayer money for your own pockets once you determine they failed to meet perfection. City attorneys seem to have hit the nail on the head, accusing the team of "windfall-seeking" according to the Post.

At the heart of this dispute is the definition of "completed". As anyone who attended the first game or the subsequent series can tell you, the stadium was fit for baseball. There were quite a few glitches, but nothing apparent that indicated incomplete construction. Apparently, some of the team offices were not completely done in time. According to the Washington Sports Commission, the offices make up less than 3% of the stadium and the District let the Nats retain their RFK offices rent-free to make up for the delay.

Let me be clear about something. I do not doubt that the Lerners are contractually entitled to the penalty if the offices were not completed by March 30 of this year. It is offensive to me that they would actually seek to enforce the provision though.

The purpose of the penalty was to give the District an incentive to do something that probably has never been done before in the history of municipal construction: open on time and on budget. The District actually managed to accomplish both feats. In addition, the District footed the bill for most of the stadium, upgraded the Navy Yard Metro station, provided shuttle service to a parking lot near RFK, actually made Metro work efficiently, pissed off a lot of - shall we say - less-than-enthusiastic-about-baseball District residents, extracted money from a lot of businesses, and basically did everything it possibly could to make this stadium happen. Ted, do you really think it's a good idea to make THIS Council bitter and feel fleeced? It is likely to be the only one to ever be on your side.

Let it go, Ted. This isn't the construction business you are used to - you're now building public favor, political goodwill, chips to call in later and allies in the places that matter. This $100K per day penalty is going to cost you way more than you realize, especially now that the District feels really comfortable talking to the Post.
And yes. I did just defend the District of Columbia Government. I'm going to take a shower now.
Read more about this fiasco at Why I Hate D.C., a blog title so appropriate I feel I should be writing it myself.

5 Responses:

"ben" said...

You defended D.C.? I missed that. All I saw was you taking shots at Lerner and the Nats.

That's not to say I disagree with your point.

J-Red said...

I took their side. That's as close as it's ever going to come.

Russell said...

This is a ridiculously terrible idea. Even if they were a month late, that's only $3M, which is peanuts compared to the cost of the stadium and the potential revenue. The bad press and pissed fans will more than take away whatever money is gained.

J-Red said...

Russell: $3M is 6% of what the Lerners actually put into the stadium. Remember that their total investment for the franchise and stadium is only $500M, not counting operating expenses/profit.

Jeremy said...

I do a fair amount of construction litigation at my firm, generally on behalf of builders, but also on behalf of buyers. So I totally understand wanting to hold people to the terms of the contract. But in this situation, even as a Nats fan, I'd tell the Lerners to just shut up and walk away. Focus on building partnerships with the City, not nickel and diming them. The spirit of the contract was performed (and in quite an amazing way). Now, in defense of the Nats, DC's tax revenues from the stadium are well-publicized to be exceeding their wildest hopes. They'll be able to pay off the bonds used to fund construction well in advance of when they expected. It's also well-publicized that the tax base around the stadium is growing insanely. So DC is certainly getting the promised benefit from the stadium and wasn't sold a bill of goods.

If I'm the Nats, I'm more focused on finding a decent hitting coach and a decent training staff than I am on trying to recover this money.

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