Sudden Wayne Change
Less than four years after persuading Dade County and the city of Homestead to spend upwards of $60 million in tax dollars on a giant motorsports complex in South Dade, the operators of the facility are quietly negotiating the sale of their lease -- a deal that would allow them to walk away from the project while pocketing as much as $32 million in cash.
In September 1995, while the new track was still under construction, the City of Homestead signed an 80-year lease with Miami Motorsports Joint Venture (MMJV), a partnership made up of Grand Prix race promoter Ralph Sanchez and South Florida entertainment and sports mogul H. Wayne Huizenga. The city owns the 65,000-seat racetrack, officially known as the Metro-Dade Homestead Motorsports Complex; the lease gives Huizenga and Sanchez control over all operations and events in exchange for annual rent that will total $1.8 million this year.
In early January MMJV entered into discussions with International Speedway Corp., a publicly traded company controlled by 64-year-old stock car impresario William C. France. France's family popularized the modern sport of stock car racing and today maintains a monopoly over the $2.2 billion industry through its ownership of tracks, leases, sponsorship contracts, broadcast and merchandising rights, and the National Association for Stock Car Auto Racing (NASCAR), a governing body that coordinates and sanctions all of the top races.
In mid-February, Sanchez and Huizenga's representatives met in private with individual Homestead City Council members, seeking support for the sale of the racetrack lease and indicating that they were close to cinching a deal with France. The lease sellout was scheduled to be discussed publicly for the first time this past Monday, with Homestead's city council poised to offer Huizenga and Sanchez conditional approval of a new lease in exchange for seven million dollars -- the necessary next step in jump-starting stalled negotiations with France.
Sanchez, whose personality, drive, and long-term commitment to the track were crucial factors in winning public support for its construction, says he's still committed. Sale of the lease, he acknowledges, would make him a multimillionaire, but he insists that money isn't his primary motive and that a deal with France would best serve the interests of taxpayers. Sanchez contends that a lease sellout is the only realistic way to bring a coveted NASCAR Winston Cup Series race to Homestead and transform the popular but as-yet-unprofitable motorsports complex into America's premier race destination.
"If I didn't have to sell I wouldn't sell, but this is the reality of the situation," Sanchez says. "It's very simple. The facility needs a Winston Cup date, and the only way I can see to get it is what we're doing now."
Though the track currently hosts the Marlboro Grand Prix of Miami and a Busch Grand National Series stock car race, these are minor-league events compared to the Winston Cup, a schedule of 32 events held throughout the year in different U.S. cities. A Winston Cup race typically extends over three or four days and at times attracts more fans than a Super Bowl. In 1995 the series pulled in 5.3 million paying spectators, plus another 14 million television viewers. Annual Winston Cup attendance has quadrupled since 1980 and helped make stock car racing the fastest-growing pro sport in the nation.
Sanchez promises he'll stay on as president of MMJV for the next eight years even if the lease sale does transpire. At the same time, however, city officials confirm that representatives of the Huizenga-Sanchez partnership have been lobbying Homestead to do away with a troublesome clause in the current lease. It requires Sanchez to show up every day for ten years and devote 75 percent of his time to the track.
"The substantial personal involvement of Sanchez in the operation of the Project is the primary inducement for the City entering into this Lease," the clause reads. "Sanchez's failure to devote a substantial amount of his time and energy to the Project will have a material adverse impact on the Project, the City and the individuals who reside or work in the City."
The motive for eliminating the clause, Sanchez says: A new owner such as France might not want to retain his services as operations manager, and so the requirement is a sticking point in any sale negotiation.
After first rejecting a one-million-dollar cash offer by Huizenga and Sanchez to rewrite the lease, Homestead politicians have come up with a counterproposal: seven million dollars. Any change requires majority approval of Homestead's seven-member city council.
County commissioners, by contrast, won't get a chance to vote on the lease sale, and the county won't receive a penny of payment -- despite having doled out $31 million in taxpayers' money for the track's construction. Some of them are far from happy with the prospect of a lease reassignment, and suggest that the public is morally -- if not legally -- entitled to a cut of the proceeds.
Former Dade County commissioner Maurice Ferre grudgingly went along with a majority of his commission colleagues in February 1993 when the county added $20 million derived from a sports-related bond issue to $11 million in hotel bed-tax monies already promised to Homestead. "Should the county have put controls on this? Absolutely. We screwed up," Ferre says. "I bawled and screamed about it at the time, and now here we are. I still wonder how we could have allowed this to happen.
"Would I have voted to build the track if Sanchez had not been there? Probably not. There's no question that there was an implied fiduciary responsibility on the part of Ralph, one that was supposed to extend into the future. Now, can I blame him for walking away with a pile of bucks? No. Why should he and Huizenga be any different than anyone else?"
Commissioner Bruce Kaplan, who voted against the motorsport monies, calls the proposed lease sellout a "disgrace," an "outrage," and "beyond the pale."
"As far as I'm concerned, this is a fraud being perpetrated on the people of Dade County. Every citizen in Dade County got screwed in the original deal and now they're going to get screwed again," Kaplan says. "For Ralph to sell out now really leaves a lot of questions hanging in the air.
"I like and respect Ralph Sanchez and I believe in his credibility," Kaplan continues. "The only explanation for this is that he's getting squeezed by Huizenga. Huizenga's a shark, and when you play with a shark, you're going to get bit. Ralph was the heart and soul of this thing, but for Huizenga it's just another business deal. But it's not just another business deal. This is about control over a publicly funded facility -- it's not there to be bought and sold and bartered."
Huizenga, the billionaire owner of the Dolphins, Marlins, and Panthers, has come under increasing public criticism for using tax dollars and political influence to maintain and expand his profitable business empire. In recent weeks, for example, Huizenga has sought to rewrite state law to get a $60 million sales tax rebate to renovate Pro Player Stadium in North Dade and make it a better home for the Miami Dolphins football team. But Huizenga already received a $60 million tax rebate in 1991 and used it to renovate the stadium for Florida Marlins baseball games.
Last year Huizenga persuaded Broward County commissioners to build a $185 million stadium for use by his Florida Panthers ice hockey team. Construction is under way now, bankrolled by a massive bond issue that will eventually be paid back by tourist taxes, tax rebates, and stadium revenues.
Meanwhile, Huizenga and the Miami Sports and Exhibition Authority are fighting one another in court over management rights to the publicly owned Miami Arena. In another lawsuit Huizenga claims that Pro Player Stadium should be exempt from Dade County property taxes, owing to a 1994 amendment to state law designed to attract sports teams to Florida.
While critical of Huizenga's public-private profiteering, Kaplan reserves his harshest comments for a former colleague, ex-county commission chairman and Metro mayoral candidate Arthur E. Teele, Jr. Along with former commissioner Larry Hawkins, Teele was responsible for shepherding the Homestead racetrack monies through the commission in 1993. Years earlier, between 1976 and 1980, Teele's Tallahassee law firm represented Daytona International Speedway, one of four tracks owned by the France family's International Speedway Corp.
More recently Teele served on the Florida Tax and Budget Reform Commission and was the principal sponsor of a 1992 amendment designed to eliminate tax breaks for business tenants in public buildings. The two-sentence proposal contained a one-sentence exemption for the Daytona International Speedway.
"I think the state attorney should immediately launch an investigation into Art Teele's role in this -- that is to say, the question of whether Teele set this up from the beginning in order to steer the lease to his good friend and former employer Bill France," Kaplan fumes. "It's way too coincidental, and I don't believe in coincidence."
Neither Teele nor Hawkins could be reached for comment for this story.
Ralph Sanchez, a Cuban-born real estate developer, organized the first Miami Grand Prix fifteen years ago. For a decade the money-losing event was run each year in late February or early March in downtown Miami with generous public assistance from City of Miami coffers. In 1992, with a proposed seaport expansion threatening to overtake the Grand Prix site, Sanchez and lobbyist Ron Book unsuccessfully courted the city of North Miami as an alternate venue. Then they turned their sights toward Homestead, population 27,000.
There Sanchez found a receptive audience in the person of City Manager Alex Muxo, Jr. Muxo began his public career as the youngest city administrator in South Florida, and by 1992 he was the highest-paid. More important for Sanchez's purposes, Muxo had a taste for glittery, big-ticket public works projects.
Noting a previously unnoticed paragraph in the Florida statutes, Muxo forced the county in 1989 to give Homestead $12 million in hotel bed-tax revenues for the construction of a major-league baseball stadium. Prior to that date, other city managers had believed the money was reserved for projects in Miami Beach, the primary source of the tourist tax. The deal was something of a stunner, and in the aftermath Muxo came to be regarded as a local hero in Homestead -- a sly fox who kept a copy of Donald Trump's The Art of the Deal in his office credenza. (Though Muxo later wooed both the Baltimore Orioles and the Cleveland Indians, neither baseball team settled on the stadium as a spring-training home. Today it remains empty much of the year, costing the city approximately $500,000 in annual upkeep.)
Through a combination of persuasion and legal sword-rattling, Muxo got Homestead $11 million in tourist bed-tax revenues for the motorsports complex in 1993 in a reprise of his baseball stadium performance. Sanchez, with lobbyist Book, talked the Florida legislature into amending a 1990 law that allows local governments to tax hotels and tourists for professional sports facilities. The amended law, including the new phrase "motorsport racing or testing facilities," provided the Homestead complex an additional $20 million from a revenue stream that had been used to build a tennis stadium on Key Biscayne.
When the costs of the racetrack construction project ballooned eighteen months later and the trio returned to Dade County to ask for yet another $20 million, county commissioners balked, then tried to extract some measure of control over Homestead's racetrack project. Relations between the county and the city soured, with each side accusing the other of legal extortion.
In the midst of this political stalemate, South Florida's best-known corporate citizen, H. Wayne Huizenga, offered to lend Homestead the additional $20 million in exchange for half-ownership in Miami Motorsports. The city accepted and Huizenga Holdings quickly became the new partner with Sanchez in the track's leasehold company, renamed Miami Motorsports Joint Venture.
By that time, Muxo had resigned his post as Homestead city manager and gone to work as a vice president of Huizenga Holdings at a reported doubling of his old $126,000 annual salary. In recognition of his good works in Homestead, the city council renamed a street Alex Muxo, Jr., Boulevard. The thoroughfare is on the east side of town, one of several leading to the 344-acre motorsports complex. Today the completed structure rises out of former tomato fields and includes two tracks -- a 2.2-mile road race circuit wrapped inside a 1.5-mile asphalt oval and ringed by skyboxes, grandstand seating, and a massive multistory control tower.
Muxo kept in touch with his old colleagues, and spent opening day at the track in a catered VIP suite with Sanchez, Book, Huizenga, and Homestead Mayor Tad DeMilly. Also present for the dedication, as they had been at the groundbreaking ceremony in August 1993: France and then-Dade County Commission chairman Teele.
Muxo returned to Homestead eight weeks ago, to a second-floor conference room at the Metro-Dade Homestead Motorsports Complex. Beginning in the morning of February 12 and continuing through the afternoon, Muxo and Sanchez met one by one with six out of seven of Homestead's elected officials. Homestead City Manager John Asmar was also present at each meeting, along with City Attorney Mike Watkins and city financial adviser Richard Montalbano.
Vice Mayor Steve Bateman remembers his 1:30 p.m. meeting this way:
"The discussion started off with them saying things like, 'We've just about got this wrapped up.' I asked, 'What wrapped up? This isn't about changing the lease to let in a third party, is it? It's a total sellout.' They said, 'Well, actually, yes: Bill France wants to buy Miami Motorsports, and Huizenga doesn't want to be partners with Bill France.' Muxo said that if we didn't agree to the deal, we would never get the Winston Cup.
"I said, 'What kind of dollars are we talking about here? And what's the city's cut?' Muxo said, 'We're talking about $32 million, with $18 million going to Huizenga for money he spent on capital improvements.' At that point Dick Montalbano said, 'Excuse me, that's not correct. It's a $50 million deal -- $18 million for the capital improvements and the remaining $32 million split between Mr. Sanchez and Mr. Huizenga.'
"At that point Alex Muxo got a little hot. Montalbano said, 'Look, Alex, we need to disclose all the dollars.' Then Muxo said, 'It makes no difference what we're making. We're willing to give the city one million dollars.'
"That's when I got irate. People in Homestead have been told from day one by Miami Motorsports that we're partners, we're a family, et cetera. If they want out, why should the city get one million dollars instead of the eight million in taxpayer money we put into this thing from the general revenue fund? What about the $20 million in bank debt we floated to help pay for construction? If these guys were walking out breaking even, that would be one thing, but they're going to be walking away with a whole pile of money.
"I said 'Alex, look at the people who brought money to the table for this project: the county, the city, Huizenga, Ralph Sanchez -- he brought his vision.' Then Alex flew into a rage and said, 'The City of Homestead brought nothing to the table! Alex Muxo brought this money to the City of Homestead! That's how it got on the table!' He flipped out.
"At some point I asked to see the lease changes they were proposing. Muxo reached over and took the new lease out of his briefcase and threw it down in front of me. I started to turn the first page, and Mike Watkins snatched it away and said, 'Please don't read that because then it will become public knowledge.' He said I would have ample time to look at the changes. I said, 'How am I going to do that when I understand you want this to go to a vote on Monday night?'
"At that point Muxo got very upset. He said, 'Mr. Bateman, obviously you don't know what's going on here.' He stared at me. I said, 'You're right, sir, obviously I don't.' He pointed his finger at me. He stood up. He tried to get tough. He started yelling: 'Your mayor has been out here for the past two weeks negotiating this with Ralph Sanchez, and he assured us that this is a done deal.' Then he stormed out of the room."
Why were the meetings held at the racetrack instead of Homestead City Hall?
"It was a couple of weeks before the Grand Prix," Sanchez offers. "That's the busiest time of the year for me, so it was just a matter of convenience. My office is right there." He adds, "There was no backroom dealing. We were just trying to find out where each council member stood."
Asmar, the city manager: "We met at the track because we didn't want to be interrupted."
Bateman, the vice mayor: "I thought it was extremely strange -- not only strange but wrong. Our new city manager [Asmar] will never allow this to happen again. I feel bad that I even went. I don't care who Alex Muxo is; next time around he's going to come to city hall and sit down with us collectively and discuss this in the open."
Council member Roscoe Warren, who did not attend the February 12 meetings, says Muxo's coziness with Homestead's powerbrokers, his current corporate persona, and his past role in creating both the baseball stadium and the motorsports complex don't keep him awake at night.
"People look at it and say he created these monsters, then walked away, and now he's coming back to do deals," says Warren. "But whatever leverage he may have, our responsibility is to look after the fiduciary interests of the city. Alex's role now, since he went to work for Huizenga, is to do the best for Huizenga. We just have to be careful that we look at Alex differently now. He'll use whatever leverage he can to get the job done."
Neither Muxo nor Huizenga returned phone calls seeking comment for this story.
Muxo and Sanchez were under tremendous time pressure at the February 12 meetings, for a reason unknown to some of the Homestead council members who attended. The deal with France had to be signed before March 2, the day of the 1997 Marlboro Grand Prix of Miami, so that revenues from the race would go to the new owner -- otherwise, no deal. Hence Muxo's and Sanchez's motivation to ramrod approval of the lease sale through the city's February 17 council meeting.
There was another problem, too. In 1996, at the request of Mayor Tad DeMilly, Huizenga Holdings executive and ex-city manager Alex Muxo sat in on employment interviews with the 31-year-old Asmar, then the deputy city manager of North Miami Beach, and later recommended him for the job of Homestead's top administrator. Asmar's corporate approach to public administration echoed Muxo's own style, and for a while the similarities between the two men led some city hall staffers to nickname Asmar "Muxo Junior." But by February both Sanchez and Muxo were frustrated with the new city manager. Asmar, according to several sources, was insisting on eight million dollars for the city in exchange for recommending approval of the lease sale. Alternatively, Asmar proposed that Sanchez and Huizenga, or a third party, simply buy the track outright for $28 million.
One Homestead council member, who spoke on condition of anonymity, says MMJV's frustration with Asmar explains the sub rosa setting of the February meetings. "I felt that it was a maneuver on the part of the Huizenga side to get at least four council members to agree to what they wanted, a way of sidestepping the city manager," he says. "I was a little worried about it. To be honest with you I thought it was probably a little illegal, or at least not an appropriate setting."
(City staffers and MMJV representatives say the racetrack meetings were perfectly legal. Florida's Government-in-the-Sunshine Law prohibits two or more members of the same municipal board or commission from meeting in private to discuss matters that may come before that board or commission. The law doesn't bar elected officials from meeting individually with anyone other than their official colleagues.)
In any event, the February 12 meetings backfired. First Bateman, then other council members, rejected MMJV's offer of one million dollars as too low, and the process bogged down. The Miami Grand Prix came and went, and negotiations with France cooled.
Today Huizenga and Sanchez face the prospect of revivifying discussions with France, and the would-be dealmakers continue to operate under intense time pressure. Though NASCAR is famously tightlipped about its plans, many industry insiders believe the sanctioning body will soon expand the number of Winston Cup races from 32 to 34. At least six cities are vying for the two new expansion dates, and the unofficial deadline for the decision is June.
In its favor, MMJV has the tentative support of Homestead politicians, who generally share Sanchez's view that a Winston Cup race is crucial to the eventual success of the track. As a practical matter, they have little choice but to support racing -- the city's economic destiny is now almost inextricably linked to the motorsports complex.
"The only thing I'm a little nervous about is that we've got a pink elephant over there, the sports complex," says council member Nick Sincore, referring to the city's empty, salmon-color baseball stadium. "I don't want a second pink elephant. The success of the motorsports complex is crucial."
To date Homestead has borrowed or spent more than $33 million to build the track, including $8.2 million in cash from its own general fund. The city has incurred a dizzying array of debt totaling $25 million and involving three commercial banks and a government-backed lending organization called the Gulf Breeze Pooled Loan Program. The debt was originally acquired by the city to pay back Huizenga's short-term $20 million loan.
The above figures don't include an additional five million dollars Homestead spent on land acquisition related to the track, nor the cost to the city for insurance, police protection, and other services related to the motorsports complex -- about $450,000 each year. Meanwhile, the city is suffering a continued hangover from Hurricane Andrew, which pummeled the area on August 24, 1992. Facing a two-million-dollar budget shortfall in the coming fiscal year, Homestead was forced to lay off seven full-time and two part-time employees last week. Nineteen others accepted early retirement and voluntary separation programs. A hiring freeze remains in effect.
"Our tax base is not where it should be, our population still isn't back to normal; we're hurting," says council member Roscoe Warren, chairman of Homestead's finance committee. "For a while it seemed that everything was okay, but it wasn't. What blurred our vision was the preponderance of grants and loans we received after the storm. If we had looked beneath that we would have seen the real budget was in trouble."
At the moment, Homestead is nervously awaiting a decision on an appeal of its request for forgiveness of a $10.3 million loan granted by the Federal Emergency Management Administration (FEMA) after the hurricane. The initial response from FEMA was a resounding no. If the agency chooses not to reverse its position, the result for Homestead could be disastrous -- a $1.8 million annual debt repayment over the next decade, money it simply doesn't have.
And so, by late last week, a majority of council members said they would support a lease sale in exchange for seven million dollars from Huizenga and Sanchez. The MMJV partners indicated they would be willing to pick up the $170,000 annual cost of liability insurance on the track, which the city now bears, and most of the cost of police protection.
"We're prepared to absorb some of those costs to relieve Homestead of some of those expenses," says Sanchez. "We understand they have money invested, and we think it's fair for us to take on some of it."
As of press time, Asmar and various council members said they would be willing to throw in another important concession. Under the current lease, Homestead is scheduled to share ten percent of any revenues from the track over and above $15 million (last year MMJV's racetrack operation generated approximately $13 million, while losing a reported $2 million net), but Huizenga and Sanchez want the clause dropped, in expectation that a Winston Cup race would increase revenues substantially. In addition, Asmar is recommending that the city reduce annual rent on the motorsports complex from $2.2 million to $1 million once track revenues pay off Homestead's outstanding construction debt.
Homestead Mayor Tad DeMilly echoes the position of many of his council colleagues: "I have nothing against the free market system, I like to see people make a profit, but we approached the construction of the track as at least a philosophical partnership. I never expected it to be a profit generator for the municipality per se, just an economic development engine and a quality-of-life enhancer. I wasn't going to suggest that we go thirds with Wayne and Ralph, but I thought one million dollars was low. My suggestion was it wasn't equitable. I said, 'We're not trying to hold you guys up, but I think we should share more equitably in the fruits of our labor.' And I think where we're at now is more satisfying."
After five terms as mayor, DeMilly says he won't run again this fall. He notes that in two decades he has given out only five keys to the city -- the last one to France in November 1995.
"The challenge that we're facing is that there's an incredible amount of competition for the crown jewel of domestic racing, and that's the Winston Cup," DeMilly says. "When you have total control of something like this, as the France family does, you can afford to be incredibly selective."
Warren, Homestead's lone black council member, says he's a steadfast supporter of the racetrack. Someday, he hopes, the benefits of Homestead's largest-ever public works project will trickle down to the city's poorest citizens. Now the track remains a boon to restaurateurs and hoteliers on the east side of town.
"Are we really seeing economic development?" Warren wonders. "Is the community really benefitting? The jury's still out. It's simply too early to tell.
"As for a new lease arrangement, my position is this: Not one dime more from the city coffers will be spent on that facility. As we renegotiate that contract, my main focus will be how does it benefit Homestead, and are there any new costs associated with a new lease. Whatever happens on the back side of this deal between Sanchez, France, and Huizenga, I don't really care about. That sort of corporate swapping goes on all the time."
Preparing the track for a Winston Cup race, if Homestead is ever lucky enough to get one, will require at least eight million dollars more in capital improvements, including additional parking, more seats, and re-engineering of the racetrack's curves to create NASCAR-required "constant radius turns." As of last week, earthmoving equipment and other heavy machinery were working late into the afternoon to do just that. For the moment, MMJV is paying the tab.
County Commissioner Bruce Kaplan vowed to visit Homestead City Hall during this past Monday's scheduled special-call meeting and harangue Homestead council members against any sale of the motorsports lease. "In addition, I'm going to ask the county to sue to enjoin any sale of the lease," Kaplan swore.
Should private business interests be permitted to make millions by selling control of a mammoth public works project? Not ideally, says former county commissioner Maurice Ferre. Ideals, however, exist mostly in the realm of the imagination. Because of its past decisions, Dade County now has little choice but to go along with whatever Sanchez, Huizenga, and the City of Homestead decide to do. Complaining about it amounts to crying over spilt milk, Ferre notes.
"Is this a slick, fast deal? Or is it merely business as usual? It's both things at the same time. But that's life in the tropics, my friend."
Update: As New Times goes to press, the Homestead City Council has unanimously approved a new lease with Huizenga and Sanchez. The amended lease allows MMJV to sell its controlling interest in the racetrack to France, provided France brings a Winston Cup race to Homestead. In return, MMJV agreed to pick up the full cost of police protection and liability insurance for the complex .
After some discussion, the council agreed to drop the city's request for seven million dollars. Sanchez, who spoke at the meeting, emphasized that MMJVand France have not signed a deal. Eventual compensation for himself and Huizenga -- the $50 million figure mentioned at the February 12 meetings -- remains to be determined.
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