The Maryland Stadium Authority may face scrutiny from lawmakers disturbed by the finding of an arbitration panel that the agency gave away stadium naming rights, failing to collect at least $10 million from the Ravens.
"When the members of the stadium authority come before the General Assembly in January or in summer session, I'm sure they are going to face questions," said Senate President Thomas V. Mike Miller Jr.
A three-man panel of arbitrators, in a case brought by the Orioles, ruled Friday that the Ravens contributed about $24 million to the construction of PSINet Stadium rather than $34 million as the stadium authority testified.
Specifically, the Ravens were given the right to sell the name of the building to a corporate sponsor for free, not for $10 million as the stadium authority described in public comments and testimony before lawmakers and the Board of Public Works in 1997.
"As we view what was done ... the Ravens effectively received the naming rights and $10 million in unique design elements without further cost to them," the panel, headed by former CIA chief William Webster, wrote in its 12-page decision.
"In substance, the Ravens effectively paid $24 million" of the cost of construction, the arbitrators found. The downtown stadium was completed in 1998 and cost the state $223 million to build. The Ravens later sold the naming rights to PSINet in a deal valued at more than $100 million.
The arbitrators ordered the state to pay for $10 million in stadium improvements to Oriole Park at Camden Yards and gave the Orioles the naming rights for the stadium. They based the decision on the "parity" clause of the Orioles' lease, which guarantees treatment comparable to the neighboring football team. However, the panel rejected the Orioles' demands for extra skyboxes and $50 million in rent credits, among other things.
Miller said the arbitrators' findings will be a temporary cloud over an agency with an unusually good record. "Obviously, their dealings will be scrutinized more closely, but the stadium authority has such a good track record; they have done a marvelous job," said Miller, a Prince George's County Democrat.
The ruling amounts to a $20 million loss to taxpayers, said Sen. Christopher Van Hollen, Jr., vice chairman of the Senate's Budget and Taxation Committee.
"I will bring it up during their [the stadium authority's] budget debate" said the Montgomery County Democrat.
Transcripts of Van Hollen's 1997 query to a stadium authority executive were entered into the record of the arbitration by the Orioles. At a hearing, he was assured that the football team would pay $10 million for the naming rights.
"I definitely feel misled on that issue because we were left with the impression that the taxpayers got $10 million for the naming rights," Van Hollen said yesterday.
The stadium authority contends that the Ravens did pay for naming rights, though indirectly. Part of the money was paid by the team's concessionaire, Fine Host, on the Ravens' behalf and was linked to spending on so-called "unique design elements."
The football team's chief financial officer testified that the team put $10 million more into the facility than it would have without the naming rights and considered the extra spending a quid-pro-quo for the naming rights.
But the Orioles argued that there was no record of a specific payment to the state. Before the arbitration, the Orioles were prepared to consider paying for their naming rights and hired an accounting firm to go through the stadium authority books to verify the Ravens' payment, said Orioles attorney Alan M. Rifkin.
The accountants were unable to find any trace of the payment, leading the Orioles to demand equitable treatment.
The Orioles say they have no intention to sell the name of the stadium for now, but wanted to secure the right for the future. Corporate sponsors in recent years have paid $30 million to $100 million, depending on the terms, to attach their monikers to ballparks.
To longtime stadium foe Robert L. Flanagan, a Howard County Republican, the revelation suggests the public was deceived by the stadium authority.
"It supports the conclusion that there was a massive effort to deceive the Maryland public and Maryland lawmakers about the terms of the deal," Flanagan said.
He called for hearings on the matter, including whether stadium authority general counsel Allison Asti provided false testimony to the arbitrators when she said the Ravens were charged $10 million for the rights.
Asti defended her testimony yesterday: "The Ravens testified under oath that they paid $10 million extra for naming rights and that is reflected in the amended lease. It was clear that the Ravens would not have caused Fine Host to pay us an additional $10 million up front were it not for the simultaneous grant of naming rights."
State treasurer Richard N. Dixon, who voted for the naming rights deal as a member of the state's three-man Board of Public Works, said he remains satisfied.
"The arbitrators have their opinion and I have mine. Just because they made that decision does not make that correct," Dixon said.
"We wanted a football team in the worst way, and the deal was very lucrative," Dixon said. "The entire package to Oriole Park at Camden Yards and the football stadium has been a winner."
Another member of the Board of Public Works, Comptroller William Donald Schaefer, said he'll have questions when stadium authority executives next appear before the board.
"I presumed they [the Ravens] were going to pay for it. I don't think they [stadium authority executives] were diligent in following up and getting the money," Schaefer said.
Stadium authority executive director Richard Slossum, who joined the agency after the Ravens' deal was made, said "I'm sure there will be questions from detractors."