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Tom Ostertag, Washington Nationals
Letter to Mark Tuohey responding to Chairman Cropp’s concerns about ballpark financing bill
December 14, 2004




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December 14, 2004

Mr. Mark Tuohey
D.C. Sports & Entertainment Commission 
1455 Pennsylvania Avenue NW 
Washington DC 20004-1008

Dear Chairman Tuohey:

Over the past several months we have enjoyed working with the D.C. Sports & Entertainment Commission, the Office of the Mayor and representatives of the D.C. Council to bring baseball back to Washington. Based upon the strength of the District's proposal and the trust that has developed among the parties, we entered into the Baseball Stadium Agreement and recommended the relocation of the team to Washington D.C. In reliance on and in accordance with the Baseball Stadium Agreement, Major League Baseball approved the relocation on December 3, 2004. The Nationals are now fully in motion making preparations to begin playing baseball in Washington in April. It will be an exciting time for us and for baseball fans in the Nation's Capital.

We are certainly aware that the City's legislation is scheduled for final approval on December 14th and that Chairman Cropp raised a number of matters she hoped could be made more definitive. We have gone over those items carefully, and we understand and appreciate Chairman Cropp's attention to the public interest.

To ensure the long term success of Major League Baseball in the Washington D.C. community, we believe it is essential that the Washington Nationals be a responsible and generous citizen of the District of Columbia. In that spirit, it has always been and will continue to be our sincere intention to cooperate with the District.

We can make the following substantial commitments on the assumption that the legislation will be fully consistent with the Baseball Stadium Agreement:

1. If the District wants to pursue alternative private financing, we will have no objection so long as the terms are in compliance with the Baseball Stadium Agreement.

2. Chairman Cropp was interested in increasing the number of days the Commission could use the new ballpark beyond the twelve allotted in the Baseball Stadium Agreement. Although national experience indicates that twelve is more than will be used, we are willing to increase the number by 50% for a five-year trial period with up to eight dates during the season and the remainder during the November 1 to March 1 off season subject to the limitations of Section 6.03 of the Baseball Stadium Agreement.

3. In the Baseball Stadium Agreement we agreed to have an affordable ticket program. In accordance with Section 6.12 of the Baseball Stadium Agreement, starting with the 2005 season, we will make a 3-year commitment to (a) have at least one-half million regular season tickets per year priced in the range of $7 to $10 per ticket, (b) assure that at least 25,000 regular season tickets per year will be allocated to an affordable ticket program at between $3.50 and $5.00 per ticket, and (c) distribute 8,000 free regular season tickets each year to appropriate D.C. charities that will make such tickets available to underprivileged youth accompanied by adult mentors.

4. The Baseball Stadium Agreement requires the team to encourage its players and other team personnel to make personal appearances. 'Pursuant to Section 6.12 of the Baseball Stadium Agreement, in each of our first three seasons we will work with our players and our coaches to make at least 50 separate public appearances in the District in support of education, youth sports and/or other public service activities.

5. We agreed in Section 6.12 of the Baseball Stadium Agreement to maximize benefits for youth and the residents of the District of Columbia from Major League Baseball's charitable organizations and programs. Pursuant to that commitment, Major League Baseball and the Major League Baseball Players Association's "Baseball Tomorrow Fund" recently committed $100,000 for the renovation of the baseball field at Ft. Greble Recreation Center. In addition, Major League Baseball has developed plans to expand the District's "Reviving Baseball in Inner Cities" Program and provide additional support for the "Field of Dreams" Elementary School Program.

6. We appreciate Chairman Cropp's concern about cost overruns and late completion. Everyone suffers if they occur and so we have a mutual interest in avoiding them. Although the D.C. Sports & Entertainment Commission controls the construction process, we nevertheless agreed in the Baseball Stadium Agreement to bear a fair share of financial losses arising from late completion when neither of us is at fault. And we agreed to be responsible for cost overruns caused by design changes and construction change orders made at our request. The Baseball Stadium Agreement establishes a Project Coordination Team to coordinate our efforts in dealing with items of mutual concern. The Nationals will have a representative on that Coordination Team. Among other things we expect that it will deal with matters such as insurance programs, construction contracts and surety arrangements that will provide the District and us with substantial financial protection against overruns and late completion risks. For example, we expect to work with the Commission to develop construction documents that shift substantial risk and responsibility to the general contractor for cost overruns and late completion.

7. The Baseball Stadium Agreement requires the District, the Commission and the Nationals to enter into a Construction Administration Agreement that will contain the detail on how the risks of late completion are allocated. To help respond to Chairman Cropp's concerns about the extent of District/Commission exposure to late completion damages, we are willing to include in the Construction Administration Agreement a provision that allows the Commission to pay any amounts that may become due to the Nationals under Section 8.04(c)(iii) of the Baseball Stadium Agreement by abating, to the extent necessary, the license fees for the use of RFK Stadium after March 1, 2008 and reducing the rent at the new ballpark by $1 million in the first year and $1.25 million in each of the second and third years or such higher amounts as the Commission determines. Any unpaid amounts owing to the Nationals under Section 8.04(c)(iii) would accrue interest at 5% per annum (non compounded) and be due upon the earlier of a termination under Section 8.03 of the Baseball Stadium Agreement or the end of the third lease year at the new ballpark. Furthermore, we are willing to include a provision in the Construction Administration Agreement that would cap the maximum liability to the Nationals under Section 8.04(c)(iii) of the Baseball Stadium Agreement at $19 million per year in respect of each of the two years of potential exposure.

8. The Nationals are excited to announce yet another community initiative. Promptly after the enactment of the legislation, the Nationals will create a foundation to help carry out the community benefit programs promised in the Baseball Stadium Agreement. The foundation will invite the Chairman of the D.C. Sports & Entertainment Commission to appoint a person to the foundation board. To jumpstart the funding of the foundation we will play an exhibition game at RFK on April 3`d of next year and donate the entire net gate and concession proceeds to the foundation. We will also join with our players in hosting a "Red, White and Blue" gala and auction to be held in the District early in the first season and donate all of the net proceeds to the foundation.

Thank you again for all of your efforts to bring baseball back to Washington. The new ballpark will be a wonderful investment in the District, and the Nationals will do their part to make everyone proud of it.

Very truly yours, Baseball Expos, L.L.P.
By Tom Ostertag

By [illegible]

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