"Taxpayers cover Yanks’ execs, lobbyist costs" MetroNY 07/26/06

Taxpayers cover Yanks’ execs, lobbyist costs

by patrick arden / metro new york

JUL 26, 2006

MANHATTAN — A clause in the Yankees’ stadium lease allowed the team to deduct the cost of executive salaries and lobbyists pushing its new stadium plan from the rent it paid to the city over the last five years.

As detailed by journalist Neil deMause in today’s Village Voice, a deal struck with the Giuliani administration in late 2001 gave the Yankees and the Mets a right to write off a combined $36 million in “planning costs” for new ballparks from their rent. For the Yankees, that deduction even paid for lobbyists in discussions with city officials — and 30 percent of the 2004 salary of the team’s president, Randy Levine.

The role of lobbyists in winning approvals for the Yankees’ new stadium has been widely reported. Earlier this month, the team’s financing plan received an OK from the Internal Revenue Service, and its design on using Bronx parkland got the go-ahead from the National Park Service.

Metro’s calls to Levine were directed to spokesperson Alice McGillion, who had no comment on the rent deductions and remained uncertain about the team’s schedule for breaking ground.

Inside pitches

Levine has long played the game of insider baseball. While he was Rudolph Giuliani’s deputy mayor for economic development — collecting a city paycheck of $142,140 a year — he also earned $900,000 on the side as a consultant to Major League Baseball.

The city’s Conflicts of Interest Board had allowed Levine to moonlight, but it barred him from discussions with the Yankees or the Mets, who were both looking for hundreds of millions in subsidies to build new stadiums. After Levine left City Hall in 2000 for the Yankees’ job, observers wondered how he could possibly not recuse himself from stadium negotiations with the city.

Addition by subtraction

The Yankees have also long taken advantage of provisions in its lease agreement to deduct maintenance expenses, but audits by the city’s Comptroller have repeatedly found the team overstating its deductions.

For 2005, the Comptroller's Office disallowed $320,919 of the Yankees claimed rental credits for lack of documentation, taking ineligible expenses and errors in calculations. Between 1997 and 2002, the audit discovered, the Yankees underreported revenue by $9,070,960 and overstated deductions by $34,489,804. After disputing the conclusion that it still owed the city $3.6 million, the team cut a check for that amount last January. In three preceding audits, the Comptroller disallowed $2,399,051 in rental credits.

These audits did not track deductions for new stadium “planning costs,” said spokesperson Laura Rivera.

“Even though the Yankees often end up paying what they owe the city, this annual dance is just another way of taking taxpayers for a ride,” said Dan Steinberg, a research analyst with the government watchdog group Good Jobs New York. Earlier this year Steinberg authored a study that found government subsidies for the Yankees’ new stadium could top $400 million.