"For Sports Teams, Mayors Play Ball at the City’s Expense" NY Times 11/7/8
For Sports Teams, Mayors Play Ball at the City’s Expense
By JIM DWYER
Published: November 7, 2008
By complete accident, the latest in a series of totally innocent mistakes that goes back three full decades, the Yankees baseball company — a very for-profit business — has once again managed to underpay the rent it owes to the City of New York. This time, the amount came to $11.3 million, as calculated in an audit by the city comptroller, William C. Thompson Jr.
Every year or so, an auditor digs through the team’s books and finds some new eye-catching way that the city has been cheated. Usually, it’s an outrageous expense that the team claims as a credit against its rent — like the time it said it paid an engineer, one human being, to work 168 hours a week for six consecutive weeks. This year, it was $50,000 on a political action committee.
The Yankees have agreed to pay back the $11.3 million that the audit found they shorted the city.
But these are appetizers before the true banquet: The subsidies for the construction of new stadiums and garages that come in hard cash, in the loss of public parkland and in forgone taxes. Earlier this week, The New York Times reported that the state and the city would cover at least $659 million in costs related to new stadiums for the Yankees and the Mets. The teams will receive an additional $480 million in tax breaks of one kind or another.
The first incarnations of these deals came in the final hours of the administration of Rudolph W. Giuliani, and thus had the faint whiff of idolatry about them. (Mr. Giuliani was such a Yankees fan that he managed to buy four World Series rings from the team “at cost,” which apparently meant thousands of dollars less than their actual value. Somehow, the city’s chief executive can get discount jewelry from a sports company that was being subsidized with public funds, while the Conflict of Interest Board fined a school librarian $500 for displaying a book written by his daughter.)
The Giuliani stadium deals were immediately canceled in 2002 when a new mayor took office — the hard-headed, clear-thinking businessman Michael R. Bloomberg. With the city facing a recession and the loss of income from the Sept. 11 attacks, Mr. Bloomberg said New York simply could not afford them. Maybe later, he said.
Over the next few years, Mr. Bloomberg proceeded to slather new layers of icing atop the Giuliani cakes. The stadium plans were reborn, richer than ever. As a result, on Saturday, there will be one of these hokey quasi-religious ceremonies moving home plate from the old stadium across the street to the new one.
This happens the same week that Mr. Bloomberg says he has to close health clinics, shut libraries one day a week, not hire a new class of cops and raise property taxes.
The premise of these sports stadium investments, public officials say, is that economic development benefits will roll into the city over the decades — $40 million over 40 years in the Bronx, for instance.
Perhaps this will happen.
Or maybe it is a hallucination that is even flimsier than the assumptions that drove Wall Street to sink trillions into financial instruments that no one actually understood but all the right people agreed were worth tons of money.
Will families really be able to spend hundreds of dollars for tickets, hot dogs and parking spots? Will businesses still lay out tens of thousands of dollars for season tickets and luxury boxes and $16 glasses of sauvignon blanc in stadium clubs? There are signs that the air is going out of the sports industry bubble, as The Wall Street Journal reported recently.
No one is ready to say that the Yankees will turn into Lehman Brothers. But will the city really be able to collect all the rent it is owed from the garage that it is building for the team at a cost of $80,000 per parking spot? The garage operator gets to deduct some of the rent it owes the city if revenues don’t make certain projections, says Bettina Damiani, project director at Good Jobs New York, a think tank that has done studies critical of the stadium subsidies.
The new Yankee Stadium, with all its architectural dazzle, will open in the spring; less certain is when the public parkland that Mr. Bloomberg gave to the team will be replaced.
The full reckoning on Mr. Bloomberg’s judgment about these major investments of public funds will most likely not come for a few years, long after he has run for a third term as mayor by arguing that he has been the wisest and steadiest of stewards — just the man for the city during hard financial times.