In a critical review of the Maryland Stadium Authority's financial management, state auditors have questioned whether the Ravens owe the state up to $14 million gained from the sale of seat licenses to fans.
The matter has been turned over to the Maryland attorney general's office, which is investigating whether the football team was improperly reimbursed for numerous expenses in connection with its 1996 move to Baltimore.
At issue are $36.1 million in expenses - including the team's rent and contributions it made toward the construction of PSINet Stadium - that the team says are "moving related."
If all of the expenses are found to be ineligible, the team would owe the state $13.8 million - or the difference between those permitted by state law and the money made from "permanent seat licenses."
The Ravens have sold $65.6 million worth of the licenses, one-time fees charged most season-ticket buyers at an average cost of $1,100.
In the wide-ranging report, dated Oct. 31, the Department of Legislative Services also found "significant discrepancies" in matters unrelated to the Ravens. Among them: The authority failed to accurately bill other agencies for projects and failed to adequately account for its money, including proceeds of the sale of Memorial Stadium memorabilia.
The report goes to the General Assembly's Joint Audit Committee. It is unrelated to the arbitration case brought against the stadium authority by the Orioles. A panel of arbitrators ruled in July that the agency failed to collect at least $10 million due from the Ravens for stadium construction, a finding the Ravens and stadium authority dispute.
Maryland Stadium Authority executive director Richard W. Slosson said that the auditor's report was a routine review, conducted every few years, and that he would abide by its recommendations. "We don't think we have anything to hide," he said.
At the auditors' suggestion, he has asked the attorney general's office to issue an opinion on the Ravens' payments. The opinion is expected in about a month.
"We believe they are going to say the same thing we did, that these were all allowable deductions," Slosson said.
One member of the legislative audit committee, Del. Robert L. Flanagan, a frequent critic of the stadium authority, said, "I don't want to prejudge without hearing from everyone involved, but these were some very serious questions."
The Howard County Republican said some of the expenses claimed by the Ravens and cited in the report "didn't sound to me like ... a moving expense."
Under the team's deal with the state, proceeds from selling seat licenses were to be used only to cover the cost of team owner Art Modell's relocation of the franchise from Cleveland. Any excess was to revert to the stadium authority, which built and maintains the $500 million, twin-stadium Camden Yards complex.
A law passed when the team moved listed six categories of qualifying expenses (see box). Described in somewhat imprecise language, they range from "reasonable" air fare to employee severance.
The team said it spent $87.9 million on the move and there wasn't anything left over for the state. If the $36.1 million in expenses that are in question are subtracted, $51.8 million remains, compared to the $65.6 million worth of seat licenses sold.
After prodding from the auditors, the stadium authority obtained from the team in August a certified list of the moving expenses the team had designated.
The auditors balked at three items:
The Ravens claimed as an expense money they were denied under the agreement with the NFL that permitted the franchise to move and a new team to be created for Cleveland. The owners of the new Cleveland franchise paid an expansion fee that was split among the existing teams - except the Ravens. The Ravens claimed as a moving expense the $15.7 million they would have received.
$7.7 million in contributions to PSINet Stadium design and construction. The law allows seat license money to be used for "training facilities."
$12.7 million in payments to the stadium authority. The payments, reimbursements for the cost of operating the stadium, represent the team's annual "rent" to the state.
Ravens spokesman Kevin Byrne said he would wait until the results of the attorney general's review before commenting on the report.
The auditors also questioned the stadium authority's handling of the demolition of Memorial Stadium. The stadium authority had spent $1.7 million on the project through April, and had received $687,000 from the sale of memorabilia from the facility and expected another $400,000.
The auditors said the stadium authority hadn't fully verified the memorabilia receipts, and criticized its plan to use the proceeds to construct a new war memorial at Camden Yards instead of offsetting the demolition expenses as required by law.
