Tim Gallagher, Carnival Corp.'s vice president of public relations, thinks recent articles in the Times and other papers haven't treated Carnival or its competitors fairly. (The Miami Herald has published shortened versions of some of Frantz's stories.) He notes the Times declined to run letters written in response to the stories. "Obviously the New York Times editors do not want their potential Pulitzer nomination to be tainted by letters to the editor or op-ed pieces that question the accuracy and objectivity of the series," Gallagher scoffs.
"The greatest misconception this has created is that the cruise industry operates outside the laws of the United States," he continues. "Cruise lines have not obtained any special tax exemptions. They simply operate within the long-standing provisions that apply to all international shipping and air transportation companies." He adds that Carnival pays U.S. corporate income tax on its Alaska tour business and also on its operations in the United Kingdom, Italy, France, and Germany. (The U.S. levy came to $3.8 million in 1998, according to Carnival's annual report. Gallagher can't put a number on the foreign tax bills.)
courtesy Historical Museum of Southern Florida
Ted Arison (with wife Lin): His moxie, with taxpayers' help, built Carnival
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The public expenditure that has most clearly benefitted the Arison clan isn't related to Carnival. It is the estimated $355 million the state and Miami-Dade County will shell out for the AmericanAirlines Arena, which opened last month in downtown Miami. The background of the deal shows the sway held by Micky Arison, who personally lobbied the county commission for the plan and spent millions selling it to voters.
Ted Arison first bought into the Miami Heat when the NBA awarded the city a franchise in 1987. In 1995 Micky Arison (by then in charge of the family business) bought out several partners and became the franchise's majority owner. Next Micky rammed an arena deal through the City of Miami and Dade County commissions that called for $115 million in public money and $50 million from the Heat.
In fall 1996 Alex Penelas, then a candidate to become the county's first executive mayor, capitalized on the outcry against the deal, railing that the public was being asked to pay too much. That position helped him win the election in October, one month before a referendum on the proposed arena. But Penelas quietly negotiated with Arison for a better deal, and scant days before the vote, he reversed his position and exhorted voters to back the facility. Along with confusing ballot language and Arison's $3.7 million of advertising, Penelas's support convinced voters to accept the idea.
But how good a deal was it? Jay Cross, the Miami Heat's president for business operations, responded in writing to a faxed question from New Times about the arena's financing. He pointed out that the public owns the building. "It was not given to Mr. Arison nor the Miami Heat," he stressed. The Heat, he continued, was responsible for financing the construction of the building, which cost roughly $213 million. In exchange the Heat would be allowed to operate the facility for 30 years. Cross contends the cost to taxpayers is $193 million, three decades worth of $6.4 million per year in operating subsidies.
He neglects to count $162 million, according to Bill Johnson, a special assistant to Penelas. That total includes county-donated land for the arena, street improvements, and a state sales tax rebate to the Heat, among other things. The grand total of public subsidies to the Heat for the arena is $355 million. For its part the county gets five percent of the arena's ticket sales as rent. Once the arena turns a profit, the first $14 million of profit goes to Arison. Only after that will the county get a 40 percent cut.
That level of public subsidy for a sports facility is about average for new arenas nationwide, says Andrew Zimbalist, a professor of economics at Smith College in Massachusetts. "What's unique about this deal is that, usually, the public money is put in up-front," Zimbalist comments. "Here, they've made this big elaborate procedure to make it look like it's privately financed.
"But to say that it's 'average' doesn't mean it's fair," he continues. "The average deal is very sweet for team owners, but that's the kind of leverage teams have when they have a monopoly; there's only one big basketball league." The large public expenditure, he adds, is hardly a guarantee of economic benefit to the community or even the neighborhood. The only person who benefits for sure: Micky Arison.
"It was a total bait and switch to the public," says attorney and activist Dan Paul, referring to the eleventh-hour deal between Arison and Penelas. "The Heat did not deliver on what they promised, and the county certainly laid back and let them do what they wanted. Now this big white tuna can is blocking the public view of bay. One of the most valuable pieces of downtown parkland is being used for a commercial purpose." Ted Arison (with wife Lin): His moxie, with taxpayers' help, built Carnival
