Author Topic: Jaguars’ stadium, sports district could cost City of Jacksonville more than $1B  (Read 39358 times)

Ken_FSU

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Little more info from CNN on how he did it:

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Between September 2019 and February 2023 – when he was fired by the team – it’s alleged that Patel created an elaborate scheme to siphon money while avoiding detection.

“For example, to hide his fraudulent VCC transactions, the defendant identified legitimate reoccurring VCC transactions, such as catering, airfare, and hotel charges, and then duplicated those transactions,” according to the the court documents.

“He inflated the amounts of legitimate reoccurring VCC transactions; he entered completely fictious transactions that might sound plausible, but that never actually occurred; and he moved legitimate VCC charges from upcoming months into the month of the integration file that was immediately due to the accounting department.”

Amounts to roughly $524k per month skimmed off the top, over the course of about three and a half years.

Even in the NFL, where annual operating expenses are over $400 million a year, that's a pretty big chunk of change to go missing each month with no one noticing.

You'd think the lavish lifestyle would have raised some red flags.

thelakelander

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Negotiations for renovated Jaguars stadium described as puzzle with 15 moving pieces

A new long-term lease, a relocation contingency and agreements on parking revenue and a minimum number of home games are part of a lengthy list of elements under consideration for a complex deal between the city and the Jacksonville Jaguars on a renovated stadium for the NFL team, a lead adviser for Mayor Donna Deegan told the City Council.

“Fifteen pieces of this puzzle are all moving on their own schedule,” said Mike Weinstein, who is part of Deegan’s negotiating team. “Hopefully, they’ll come together.”

https://www.jaxdailyrecord.com/news/2023/dec/14/negotiations-for-renovated-jaguars-stadium-described-as-puzzle-with-15-moving-pieces/
« Last Edit: December 14, 2023, 10:33:21 AM by thelakelander »
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jaxlongtimer

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Employee steals $22 million from Jags before they notice it  ;D.  Are we sure they need City dollars to balance their books?

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Former Jaguars employee accused of stealing millions from team used most of the money to gamble on sports, attorney says

The lawyer for a former financial planning manager for the Jacksonville Jaguars accused of stealing more than $22 million from the franchise said he spent most of that money gambling on sports.

In a news release Dec. 7, the attorney for Amit Patel said his client will plead guilty to the charges of wire fraud and making illegal transactions and that he checked into a rehabilitation center to treat his gambling addiction this spring.

Patel met with NFL officials in February who were investigating his gambling activities, primarily involving daily fantasy sports betting on websites like DraftKings and FanDuel.

Later that month, he was fired for using the Jaguars’ money to fund his gambling addiction.

That attorney said 99% of the misappropriated money went to cover his gambling losses to win money back “with the anticipation he would repay the funds with the winnings and make the Jaguars whole.”

According to this federal indictment, Patel used his responsibilities as a manager of financial planning and analysis for the Jacksonville Jaguars to spend the team’s money on personal expenses.

Federal attorneys allege Patel spent more than $22 million of the company’s money via their virtual credit card program on gambling, private jet rides and luxury hotels for himself and his friends, cryptocurrency, a country club membership, spa treatments, event tickets, furniture and luxury wristwatches including one that cost him, but really the Jags, more than $95,000....

https://www.jaxdailyrecord.com/news/2023/dec/07/former-jaguars-employee-accused-of-stealing-millions-from-team-used-most-of-the-money-to-gamble-on-sports-attorney-says/

Update on this at ESPN... Jags looking to FanDuel to refund the money... LOL.  Good luck with that.

https://www.espn.com/nfl/story/_/id/39444143/jacksonville-jaguars-fanduel-amit-patel-stolen-millions

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Jaguars asked FanDuel to return stolen $20M, source says

The Jacksonville Jaguars have asked FanDuel to reimburse them for some or all of the approximately $20 million in stolen proceeds a former employee lost on the site, but the company is unwilling to pay, a source familiar with the situation told ESPN.

Amit Patel, a midlevel finance manager, has pleaded guilty to stealing $22 million through a virtual credit card system the Jaguars used for expenses. Sources with knowledge of the case told ESPN that Patel lost about $20 million of the funds on daily fantasy and sports bets at FanDuel, which had assigned him a VIP host. He lost about $1 million on DraftKings, sources said.

Patel transferred money directly from the team VCC to FanDuel, sources said.

The source familiar with the situation said discussions are ongoing among FanDuel, the Jaguars and the NFL on what the source called "a settlement." However, the source said, "The way they see it ... we got this money fair and clear. It's not our problem that we have to forfeit it back to you."

"I would be gobsmacked if it happened," the source added.

FanDuel and the NFL declined to comment. The Jaguars did not respond to requests for comment.

Patel siphoned the funds over 3½ years, according to federal court documents. In December, he pleaded guilty to fraud charges in federal court in Jacksonville, Florida. He faces up to 30 years in prison and a $500,000 fine when he is sentenced March 12.

Sources said FanDuel alerted the NFL to Patel's betting in January 2023 after he placed traditional sports bets in Tennessee. The amounts and types of wagers that triggered the investigation are unknown. The Jaguars had no knowledge of the embezzlement scheme or Patel's extensive daily fantasy habit until they were notified by the NFL, team and league sources said.

It's not clear what recourse the Jaguars might have to recoup the losses. Under federal law, FanDuel has an obligation to make sure funds used for sports betting were legally obtained, but the regulations are murkier for daily fantasy.

"Gambling sites have a duty to perform 'Anti-Money Laundering' and 'Know Your Client' procedures to ensure they do not onboard funds of an illicit origin," said Stephen Bell, an attorney who practices in white-collar criminal cases. "Where the size of a customer's bets far outweighs their income, red flags are present and should require additional due diligence to confirm the funds are clean."

Online records show Patel was a high-stakes and high-volume daily fantasy player on FanDuel and DraftKings, both of which are official betting partners of the NFL. Patel played daily fantasy sports as far back as 2017, the records show, and his play escalated in 2021 and 2022. ESPN previously reported that Patel played daily fantasy under the username "ParlayPicker" and was believed to have racked up big losses playing against elite competition in contests with buy-ins upward of $24,000.

One veteran daily fantasy player told ESPN on condition of anonymity that they believe ParlayPicker is "the biggest loser ever on FanDuel."

"He was legendarily bad," the person said.

Federal authorities say Patel lived an extravagant lifestyle while employed with the Jaguars that included chartering private jets, reserving luxury hotels, acquiring multiple vehicles and purchasing cryptocurrency, a country club membership, spa treatments and a wristwatch that cost more than $95,000.

Co-workers assumed Patel's family was wealthy. One former team employee said they remember seeing Patel's lavish lifestyle on his social media accounts, which he has since deleted.

"I remember on Instagram he was taking baller-style trips all the time. In the Hamptons, Miami, living a large life. Bottle service at clubs," the former employee said. "There was no way he could have afforded the lifestyle based on the Jaguar salary."

In a Dec. 7 statement, Patel's attorney, Alex King, denied that Patel funded his lifestyle with the stolen money and said his home and car were bought with family or earned money.

"Mr. Patel did not use the Jaguars' VCC to fund his lifestyle, but in a horribly misguided effort to pay back previous gambling losses," King said.

Patel said during a December court appearance that he has a "gambling disorder" and is seeing a therapist weekly for treatment. He said he underwent treatment for alcohol and substance abuse from March to June last year.


Ken_FSU

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Anyone have thoughts on the city's (early) idea to partner with the Police & Fire pension on stadium financing?

https://www.news4jax.com/news/local/2024/02/13/city-could-ask-pension-funds-to-be-investor-in-new-jaguars-stadium-deal/

I can see how it would be an attractive idea for the city, assuming a low enough interest rate that it's financially advantageous versus traditional bond financing. Seems like it'd be a tough sell to the Pension Board, however, who are rightfully motivated by getting the highest return possible vs. doing the city a solid (though I guess it would help with diversification). Will be interesting to see how this one plays out.

Also, it's starting to sound more and more like the stadium deal is going to be broken out separate from any surrounding sports district development. Doesn't sound like anything formal has been discussed at all in terms of what surrounding development may look like or entail, just purely stadium negotiations.

Others probably disagree, but I kind of hope we're able to negotiate them in tandem. Gives Shad more incentive to pay 85%+ of the cost of the surrounding development as originally stated if the city is willing to play ball on the stadium split.

marcuscnelson

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Folks I've talked to are pretty pessimistic about this making sense for the pension funds, but they're also rather pessimistic on public expenditure for the NFL in general so maybe that's to be expected.

I guess it's worth asking, but like the article notes it still relies on the city having a way to pay the financiers back, and regardless of whether it's a pension loan or a bond that is going to be the glaring question.
So, to the young people fighting in this movement for change, here is my charge: march in the streets, protest, run for school committee or city council or the state legislature. And win. - Ed Markey

jaxoNOLE

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Primary issue bond pricing is relatively straightforward. If the bond market would charge >6.5% yields to lend to the city, then the market views the bond issue as too risky for a 6.5% compensation in exchange for taking on that repayment risk. So why on earth would the pension fund accept a lower risk premium? I understand the argument that a fixed, guaranteed rate of return is attractive and minimizes their portfolio volatility, but the same can be achieved with any other bond purchase held to maturity. The pension fund isn't necessarily seeking the best possible return, but rather the best possible risk-adjusted return consistent with their stated 6.5% target. If the market thinks Jax city debt demands >6.5% yields, the implication would be that there are lower-risk investments available that meet the fund's 6.5% target RoR.

I'm not sure how a pension loan vs. bonding would affect the city's bonding capacity, but common sense would suggest that money borrowed by any other name is still debt, and no matter what you call it, the stadium funding will increase the city's riskiness in the eyes of investors for future lending unless it's backed by new, dedicated revenue streams.

jaxlongtimer

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The Trustees of any pension fund have a legal fiduciary responsibility to invest the fund in diverse and "arms-length" investments with risks appropriate for such funds (i.e, even at 1,000 to 1 odds, no placing bets at a horse track). 

Financing the stadium likely doesn't qualify on any of these counts.  If it is even $100 million, that is likely way too much for the fund's size to concentrate in a single investment.  As Jaxonole notes, any interest rate below the market is suspect as to being at arms-length.  As to risk, if the borrower or guarantor is the City (not the Jags), it is going to weigh on the City's total debt load and add to its financial risk.  Add it all up, and this doesn't seem to fly or even get off the ground.

I suggest the City borrow the money from Shad Khan.  He is worth a lot more than the pension fund, knowing the deal he won't ask for as much due diligence saving closing costs and speeding up things and he has a vested interest in the outcome.  Maybe he can give the City a sweetheart (hey, it's Valentine's Day) deal.

Bativac

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Great article on Deadspin about the absurdity of having public funds spent on NFL stadiums. Hope Jax comes to its senses. Doubtful!

https://deadspin.com/kansas-city-royals-new-stadium-kauffman-stadium-1851261353

thelakelander

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The big difference here is that the Jags aren't proposing to tear down an already vibrant district filled with businesses and historic buildings. Here, long vacant and underutilized surface parking lots are getting filled in. The Eastside is also likely getting millions in the form of a CBA to revitalize. However, the devil will be in the deal details.
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marcuscnelson

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Looks like the sports district is being separated from the stadium renovation.

https://floridapolitics.com/archives/659765-deegan-stadium/

Also, a note on the pension fund idea:

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As Florida Politics reported yesterday, Deegan in comments to WJCT seemed supportive of a Weinstein proposal to fund stadium renovation costs with pension fund assets, guaranteeing the city’s eternally challenged retirement funds a AAA rated income stream. She said that would keep the financing “all in the family.”

The Weinstein proposal assumes that interest rates will stay high, and he said that if rates declined, the city could simply refinance the debt on bond markets if that was a better deal.
So, to the young people fighting in this movement for change, here is my charge: march in the streets, protest, run for school committee or city council or the state legislature. And win. - Ed Markey

marcuscnelson

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So, to the young people fighting in this movement for change, here is my charge: march in the streets, protest, run for school committee or city council or the state legislature. And win. - Ed Markey

marcuscnelson

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Talks starting on environmental resource permitting.

https://www.jaxdailyrecord.com/news/2024/mar/11/stadium-of-the-future-takes-another-step-toward-development/

Also some mentions of timeline:

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Mayor Donna Deegan said Feb. 8 that her administration is on track to deliver the framework of a deal to renovate EverBank Stadium to the Jacksonville City Council by April or May.

[…]

Deegan said that once the framework is finalized, she plans to schedule public meetings for citizen input.

“I think it’s going to be important to try to come up with a framework by April or May and try to bring that in for a landing before the fall,” she said.

“The longer these things drag out, normally the more expensive they get and the more they go off the rails. And so I would really like to come to an agreement that everybody can feel good about and that we can move forward with sooner rather than later. And I think Council feels the same way.”

So, to the young people fighting in this movement for change, here is my charge: march in the streets, protest, run for school committee or city council or the state legislature. And win. - Ed Markey