The Dismantling of the Miami Marlins is Reflective of the Republican Tax Bill

After 2017, the Miami Marlins were a middling team with an intriguing future. They possessed arguably the best outfield in baseball, centering around 2017 NL MVP Giancarlo Stanton—an alien sent here with the sole purpose of obliterating every baseball on planet Earth. But that intrigue is gone, as is Stanton and one other outfielder, with the third requesting a trade. Now, I’m not completely equating the Miami Marlins to America in this analogy—as the Marlins are famous for winning the World Series and subsequently dismantling the team—while America does not have a similar penny-pinching history. Former owner Jeffrey Loria is one of South Beach’s chief villains, and many Marlins fans thought that the nightmare was over when he pledged to sell the team, but the new ownership group brought the horror story back for a fourth time.

This is where the analogy begins. With the owners. The Marlins have them, and so does America. The Marlins owners are just a lot newer, as they were recently bought by a group headed by former New York Yankee great, Derek Jeter. Like the old Chris Rock joke goes: “Shaq is rich, but the guy who signs his checks—he’s wealthy,” so goes this partnership. Jeter ponied up some dollars to join the ownership group—reportedly owning four percent of the team—but it’s Bruce Sherman, Co-founder of Private Capital Management, who is doing the heavy lifting with a 46% stake.

Sherman owns the largest slice of any of the Marlins several owners, and he was one of the architects of this deal which bought a baseball team for $400 million in debt and $800 million in cash—which includes $90 million of preferred stock. Debt and cash? Those are easy, anyone knows what those are. Preferred stock? Now this is where the American capitalist magic show begins.

The Marlins Owners Can’t Lose

If you buy stock in Apple on a regular exchange, you are almost surely buying common stock. Preferred stock is a different kind where its owners always get paid a dividend (a payout to stockholders), and the dividend must come before those holding common stock receive one. If the company goes bankrupt, preferred shareholders’ claims on company assets have more say than common shareholders do. So what does this have to do with baseball? Per Rob Mains’ excellent piece in Baseball Prospectus:

The preferred stock is from MSD Partners, an investment fund controlled by Dell Computer founder Michael S. Dell. In other words, MSD handed Marlins ownership a check for $90 million, and in return it received preferred shares. The shares have two features that I think are pretty interesting:

— The dividend rate is 14 percent.

— They are puttable in 2020.

To put that wild dividend rate in some perspective: 30-year Treasury bonds yield less than 3%. By 2020, MSD could sell those shares back to the Marlins for $90 million (what puttable means). That’s fair, but there’s a catch: if the Marlins cannot come up with the cash (which is a very likely possibility, given the current hostility towards a team that has always had trouble making money, and just built a $500 million taxpayer-funded ballpark on the promise that these tear downs would not be necessary anymore), the Marlins must give MSD common stock in the team instead.

That $90 million is $90 million regardless of what the Marlins are worth. So right now, that represents about an 11% ownership of the $800 million. But if the Marlins lose money and are worth $725 million in 2020, that $90 million represents a little more than a 12% ownership stake.

In summation: an investment fund is potentially slated to make more money and/or have more power the worse the Marlins get. If the Marlins are good, great news! They’ll still make lots of money! If they exercise their 2020 put option and the Marlins pay them back in cash, then they just made $37.8 million on dividends by letting the Marlins hold on to $90 million for a few years. The rich guys can’t lose, but the Marlins can. Especially after the rich guys came in and traded the reigning league MVP, and two other top-five players on the team (so far, we still have a month-plus of offseason to go, and the other two top-five players have both requested a trade).

America’s Owners Can’t Lose

Which brings us back to the Republican tax plan. There is a very remote possibility that it could work out for the majority of us, but regardless of what happens to the populace over the next decade, America’s oligarchs are getting a great deal. As soon as the bill was passed yesterday, mega-companies like Wells Fargo, AT&T, Comcast and Fifth Third Bank announced that they would be giving their workers $1,000 bonuses, and/or raising their minimum wage to $15. If you didn’t get the sense these announcements were far too coordinated, then you’re not cynical enough for 2017. Just to recap, this is what the Republican tax plan does for you, the person—the second most important priority in this bill (at best).

Rs keep claiming their plan is fundamentally a middle class tax cut in the short term.

Here’s the reality, using TPC data averages.

Bottom quintiles get relatively tiny tax cuts.

Top 1% gets over $50,000

Top 0.1% gets nearly $200,000https://t.co/ijnySc7FTtpic.twitter.com/6ZdTGLtyKm

— Greg Sargent (@ThePlumLineGS) December 19, 2017

This is a corporate heist with a small payoff to us plebeians to buy our silence. Yes, you will almost surely receive a tax cut the first year this goes in to effect. If you make more than roughly $75,000 per year, this will likely be a net benefit to you financially. For the rest of us underneath that figure? Our only hope is that the Republican myth of trickle-down economics finally works after nearly four decades of trying. I wouldn’t hold my breath, considering that even Goldman Sachs doesn’t believe this bill will stimulate the economy.

Even if you do make more than $75,000 per year, these tax cuts will not remain permanent for you. Corporations are the priority in this bill. Cuts for humans are gone by 2027, but the corporate tax cuts remain in place forever (or until repeal). This is a wealth transfer to the ultra-wealthy, and we’re being asked by the same people who have been wrong for decades to go along with their plan one more time. This is an invasion in the same way that the Marlins have become the victims of a corporate takeover. Our version of Giancarlo Stanton being shipped to the Yankees for below market value is this bill being passed on the backs of California, New York and New Jersey’s state budgets. It’s just a massive insult on top of an already odious and offensive plan.

The Ultra-Wealthy Have a Plan, All We Have Is Hope

But who knows? Maybe the Marlins will be good in a few years. I watched my beloved Colorado Rockies—the Marlins’ brothers in expansion—struggle for the past half-decade (well, really since their inception in 1993), only to get swept up in a dream season that resulted in a playoff berth in 2017. The Houston Astros were consistently the worst team in baseball for years, and they just won the first of what looks to be multiple World Series. It’s certainly possible that the fans of South Beach could be at the beginning of another long slog to a championship, but that’s not the point. Their team’s owners have rigged the game, so whether they win a championship doesn’t really matter—and in fact, the worst outcome for the fans may be the best for some of their owners.

This smattering of mega-corporations dumping a small sliver (roughly 2%) of their overall tax cuts on their employees is American oligarchs’ way of saying “see? Massive tax cuts for the wealthy work.” All the while, both ours and the Marlins owners are working behind closed doors to funnel more profits to themselves, because that’s what America is all about. We can prosper, but only after our oligarchs do. They hold the preferred stock, and we are simply common shareholders.

If I were a Marlins fan who just watched True Yankee Derek Jeter waltz in to town, and trade the reigning MVP to the freaking Yankees for a return that everyone agrees did not meet the standard of the best power hitter in baseball—as well as some of the other team’s best players—then learned that a larger owner than Jeter stood to potentially benefit from the team’s demise, then listened to the MLB commissioner “deploy some lawyerly evasion” to ESPN’s Dan Le Batard, saying he didn’t know of Jeter’s plans when the league sold him the team (after the city just shelled out half a billion dollars they didn’t have to build a new stadium), I’d be similarly disdainful of the Marlins as I am of the Republicans right now. If you know a Miami Democrat, send them some love right now. They’re in pain.

I hope I’m wrong about both plans. I hope that Marlins fans weren’t victims of a nefarious corporate takeover, but an honest attempt to win with a sober acceptance that the team’s current finances could not build a winner around Stanton. I hope I’m wrong about the Republican tax plan, and that this is the first time in history that trickle-down economics will actually work—and these “bonuses” are not one-time payoffs—but are indicative of a shift in corporate America’s behavior to actually try to create shared prosperity. The problem is, one of these hopes is based in reality, while the other is not. The Marlins are emulating a proven model of success: suck for a while, get high draft picks, then develop top-shelf talent. The Republicans are implementing an economic theory with absolutely no proven real-world examples. Well, unless you see trickle-down economics for what it really is: class warfare initiated by America’s True Owners. Then the present state of our inherently unequal country is proof of its ultimate success.

Jacob Weindling is a staff writer for Paste politics. Follow him on Twitter at @Jakeweindling.