DuPuy: MLB, D.C. 'at a crossroads'

DuPuy: MLB, D.C. 'at a crossroads'

Major League Baseball told the head of Washington, D.C.'s City Council in a letter on Monday that the sport was nearing "a crossroads" in its relationship with the city.

The letter was sent by Bob DuPuy, MLB's president and chief operating officer on Monday shortly after District of Columbia Mayor Anthony A. Williams pulled an item off Tuesday's City Council meeting agenda that called for a vote on the terms of a 30-year lease for the team to play at a newly constructed ballpark paid largely by publicly generated funds.

"We used our best efforts to reach closure with the Council to ensure the future of the Washington Nationals in the District of Columbia," DuPuy said in a letter addressed to Council Chairman Linda Cropp. "If the Council fails to approve the lease, we would be at a crossroads."

At stake are low-interest bonds that the city must sell by the end of the year to fund a great portion of the $535 million project, and the prospective ownership of a franchise that has been owned and operated by Major League Baseball for the past four years.

DuPuy said the very existence of the team in the nation's capital may be at stake.

"The Baseball Stadium Agreement (BSA) requires lease approval by the end of this month," DuPuy wrote. "Despite today's announcement that you will postpone the vote, we urge the council to approve the lease prior to this deadline. If the lease is not approved by then, the city will be in default on its contractual commitments and we will then have no choice but to prepare for arbitration.

"MLB has done everything the BSA required of us and...much more. In arbitration, all prior concessions by MLB would be revisited. We will all be very disappointed if we do not reach a result that serves the interests of our fans and the Washington D.C. community."

The Mayor's office said the lease agreement reached earlier this month was pulled from the council agenda to make "small technical changes" and that "the legislation will be resubmitted for consideration and a vote as soon as possible."

Tuesday, though, is the last regularly scheduled council meeting of the year. And unless Council Chairman Linda Cropp calls an emergency special session, the next one on the docket isn't until Jan. 3.

"We continue to work aggressively to get assistance from the federal government, from private developers and from Major League Baseball to put together the best deal possible for the city," said Mayor Williams, a strong proponent of building the new stadium. "There is no doubt in my mind that bringing back baseball has been and will continue to be a huge economic boost for our city. An investment in baseball and a new stadium is an investment in our city's future and in our children's futures."

Tuesday's vote was key because the city needs to sell $289 million worth of public bonds before a Dec. 31 deadline stipulated by the agreement formulated in the last days of 2004 between MLB and the city. The remaining cost of the project will be funded by a bank loan.

But as of Monday, the situation was delicate as pro- and anti-ballpark factions held rallies to try and sway the council vote.

DuPuy was in the District as late as Friday talking with council members behind closed doors and his assessment is that the vote was too close to call. The Associated Press reported that Mayor Williams had commitments from only five members, two short of the majority needed from the 13-person council.

MLB elected to move the Expos from Montreal to Washington last December only after it was given written assurance by the council that the stadium would be built.

Last year the question was whether to build the stadium at all and a last-minute reversal by Cropp saved the team for Washington, which had been without baseball since the expansion Senators moved to Texas after the 1971 season.

"It was almost exactly one year ago that the council paved the way for the return of baseball to Washington by approving the BSA," DuPuy wrote. "Although much has been made of some bumps in the road over the last year, I was actually struck by how little has changed since the City first approached us with a proposal to move our Montreal franchise to Washington. For the most part we accepted the basic economics of your first proposal.

"Just before approving the BSA last December, you requested some significant concessions to reduce the city's risks related to late completion penalties. We agreed to modify the BSA along the lines you requested. The basic terms of the lease were determined a year ago in the BSA. To be sure, we have fleshed out a lot of important detail, but the fundamentals were settled last year."

This year, some members of the council are wondering whether cost overruns have already made the project too expensive and are seeking alternatives, including building a new ballpark on land adjacent to RFK Stadium. But MLB, in a letter sent to the city last week, said that baseball would not support building on any site other than the one already designated south of the Capitol on the banks of the Anacostia River.

To keep the deal moving forward, MLB agreed to pay about $20 million in cost overruns and set aside about $24 million to cover rent payments in case of another terrorist attack, like the ones that struck Washington and New York on Sept. 11, 2001. The council now also wants changes in the current language allowing the $20 million for general use.

The Council needed the adjustments from MLB to obtain the best possible rating on the open market for the stadium bonds, which will be repaid from stadium user fees and a tax imposed on large businesses in the area.

"The city wanted an investment grade bond rating," DuPuy wrote. "To help achieve that important goal, the City requested that we pay our rent in a lump sum in advance of each season, that we put up a letter of credit for a one-year rent reserve, that we waive set-off rights against rent, and various other items. Although not required by the BSA, we agreed to do it and to bear the associated costs, which are substantial. I mention all this because I was surprised by how few council members were aware of all these concessions by MLB."

Meanwhile, Commissioner Bud Selig has concluded his meetings with representatives of the eight groups still vying for the franchise. Completing those meetings and a formal transition of the lease from a term sheet to a bona fide legal document are still the final hurdles to the expected $450 million sale of a franchise that has been owned and operated by MLB since Feb. 15, 2002.

Of the eight groups, two have the strongest ties to the District. The first is headed by Fred Malek, a former Texas Ranger minority partner during the early 1990s when President George W. Bush owned the team, and includes former Secretary of State Colin Powell. The second is Mark Lerner, a minority owner in the company that holds the NHL's Capitals and a suburban realtor. The other top contender is a group headed by former Mariners owner Jeff Smulyan that has limited Washington ties.

Originally, the Nationals were to begin playing in their new facility by the 2008 season, but that date is still fluid and will not be reached if the stadium funding mechanism is not set in motion until next year.

Until then, the team will continue to play at aging RFK Stadium where it sold about 2.7 million tickets this past season and reportedly made a profit of about $30 million.

Barry M. Bloom is a national reporter for MLB.com. MLB reporter Bill Ladson contributed to this story. This story was not subject to the approval of Major League Baseball or its clubs.