Tuesday, April 25, 2006

"Stadium costs out of the park" MetroNY 04/25/06

Stadium costs out of the park

my view by neil demause

APR 25, 2006 Metro NY

Anyone who’s tried to follow the twists and turns of the Yanks’ and Mets’ stadiums will be forgiven for wanting a scorecard. First the Yankees claimed Yankee Stadium would be preserved as a “heritage field” and museum; then it turned out the House That Ruth Built would be razed to make way for replacement softball fields. And now, after Mayor Bloomberg insisted no public money would be spent on new stadiums, the Independent Budget Office reports that city and state taxpayers would actually be on the hook for about half a billion dollars.

What’s going on? In part, the funny numbers reflect a shift in the stadium game as it’s been played the last two decades. Hitting up taxpayers for stadium cash, it turned out, wasn’t too popular with those stuck with the bills. Instead, teams have increasingly made use of hidden subsidies so convoluted that it’d take a fleet of economists to decipher them.

Pennsylvania introduced “tax-increment financing,” where teams take money they normally would pay in sales and property taxes and instead use it on stadium costs. (As one legislator quipped: “It’s not a grant. It’s not a loan. It’s a groan.”) The St. Louis Cardinals negotiated a $45 million public “loan” that they can repay by deeding their new stadium back to the county — in 30 years, when it will likely be ready for the wrecking ball anyway. And new Oakland A’s owner Lew Wolff has declared he’ll do without stadium subsidies if he instead is granted lucrative development rights to build condos.

Likewise, for the Yanks and Mets, Bloomberg ditched Rudy Giuliani’s promise to pay up-front stadium costs, but has instead piled on goodies at the back end. The teams would pay no property taxes, no sales taxes on construction materials and no mortgage recording taxes; where under Giuliani the teams would have paid a share of gate receipts as rent, the city would now get bupkis. The Mets would no longer have to share parking revenues with the public, even though cars would use the same Shea Stadium lots. And access to cheap city-floated tax-exempt bonds alone would save the teams a combined $277 million.

In the end, all the under-the-table subsidies could stick the public with just as much of the bill as George Steinbrenner and Fred Wilpon. And while taxpayers would get next to nothing in return — the IBO says there’s “little reason to expect a large gain in local economic activity” — the teams would reap all the new revenues from luxury boxes, concessions malls and the like.

It’s a stunning turn of events, especially when you consider these are two of the most valuable teams in baseball — the Yanks are No. 1, the Mets are No. 3, according to Forbes’ latest rankings — thanks to being able to tap the enormous New York media market. But even though the city holds all the cards, it’s nonetheless bent over backwards to hand over the keys to the treasury.

The City Council has one last chance to demand that these deals be reworked, or stop them entirely, when it votes on the bond issues later this week. Let’s hope that this time our elected officials mind the fine print.

Neil deMause is the co-author of “Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit.”


At 1:17 PM, Anonymous Anonymous said...

The city has bent over backwards to hand over the keys to the treasury? More like "bent over forwards."


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