State AG: PSL funds were used in error

Stadium authority is criticized again

Pro Football

February 14, 2002|By Jon Morgan | Jon Morgan,SUN STAFF

The Maryland Stadium Authority erred in allowing the Ravens to use more than $20 million in permanent seat license revenue to cover costs related to PSINet Stadium, according to Maryland Attorney General J. Joseph Curran Jr.

Curran, in a 14-page opinion issued yesterday, said the authority misinterpreted a 1996 law passed to prohibit money made from the seat licenses from enriching the team or its owners.

Allowing the team to use the money to pay for its expenses at the state-owned stadium "would amount to a windfall that the statute was designed to prevent," according to the opinion.

The opinion, however, is unlikely to result in money being refunded to the state in the foreseeable future. Permitted expenses are likely to consume all the license revenue, the decision noted.

But the opinion was another blow to the prestige of the stadium authority, which has had its role as Ravens landlord formally questioned twice in the past eight months.

A panel of arbitrators in July said it was not convinced the Ravens had contributed as much as they and the stadium authority claimed to construct PSINet Stadium and ordered the agency to spend $10 million upgrading Oriole Park to make the baseball and football teams' leases comparable.

In October, a periodic audit by the Department of Legislative Services questioned the agency's treatment of the Ravens' seat license revenue, leading to the review by Curran's office.

Stadium authority executive director Richard W. Slosson issued a brief statement yesterday noting that "no money is due from the Ravens," and declined further comment. The stadium authority had said previously that it would abide by the attorney general's opinion.

Ravens spokesman Kevin Byrne said: "We've always done what the state and the Maryland Stadium Authority have asked us to do. We're very straightforward in all our dealings."

Permanent seat licenses, or PSLs, were one of the most controversial elements of the Ravens' debut in Baltimore in 1996. The team requires a season-ticket holder to first buy a license, at a cost that averages slightly more than $1,000, and then to buy tickets annually.

Sales of the licenses totaled $67.07 million as of Jan. 31, 2001, according to the team. More have been sold since.

The team promised to use the money gained from the sale of PSLs to cover the costs of moving the franchise from Cleveland. The General Assembly further restricted the use of seat license revenues to specific expenses, such as hiring movers and settling lawsuits and paying off obligations in Ohio resulting from the relocation.

The Ravens, however, interpreted the law broadly, chiefly a sentence that permitted deductions for "payments to the Authority." The team deducted its monthly payments for operating PSINet Stadium - payments it makes in lieu of rent under its lease - which totaled $12.7 million through Jan. 31, 2001. It also deducted $7.6 million for "design, construction and ... improvements" to the stadium.

According to documents obtained by The Sun through the state's public information laws, the Ravens' accountants, Arthur Andersen LLP, were uncomfortable interpreting the law to decide which items qualified. At the team's request, the stadium authority provided the accounting firm with a letter saying the team's inclusion of those items meshed with the agency's interpretation of the law.

The attorney general disagreed, and concluded neither category of expenditures was permitted under the statute. Contributions to the stadium construction "do not come within any of the categories of relocation costs" permitted by the law, the opinion concluded.

Curran's opinion agreed with the agency in regard to a third item raised by the legislative audit in October - an expansion fee distributed by the NFL. The fee, paid by a Cleveland financier in order to acquire the Cleveland Browns expansion franchise, was distributed equally to all the teams except the Ravens, which had abandoned the market. The Ravens claimed $15.4 million as a loss eligible to be offset by seat license revenues.

Curran's opinion said that was permitted because the law allowed the team to use seat license proceeds to cover a loss "resulting from ... relocation."

Even if future seat license sales exceed permitted expenses, the law still has a category for which the team can spend the surplus: a new practice facility. The Ravens last week reached a tentative agreement with Baltimore County on a 25-year lease for 25 acres of Owings Mills parkland where the team plans to build.

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