"The Yankees' latest request for cash is yanking N.Y.'s chain" Daily News 1/4/8
The Yankees' latest request for cash is yanking N.Y.'s chain
By Paul Weinstein
Sunday, January 4th 2009, 11:06 AM
Christmas came early for Yankee fans this year. In a period of about a month, the Bombers spent $423 million for arguably the three best players on the free agent market, possibly putting themselves smack back into World Series contention.
Unlike those in Beantown, I don't begrudge the Steinbrenner family's attempts to put a winning product in pinstripes. As a fan of baseball, I wish every owner would put their team's profits back onto the field.
Unfortunately, it's not the Yankees' money that will be paying for CC Sabathia, A.J. Burnett and Mark Teixeira. Rather, it's yours.
That's because while the Yankees were preparing their record-breaking spending splurge, they were at the same time holding their hat out and asking for hundreds of millions in additional taxpayer dollars for the soon-to-be-completed Yankee Stadium.
And as we speak, the team is asking for another $259 million in tax-exempt bonds (and $111 million in taxable bonds), on top of $940 million in tax-exempt bonds (and $25 million in taxable bonds) already provided for the $1.3 billion project.
According to an estimate by the New York City Independent Budget Office, the request for more bond authority will cost city, state and federal governments more than $80 million in lost revenues.
This is happening, remember, at a time when the city can ill-afford to waste a single dollar.
It's not just the literal dollars being spent that hurts; it's the opportunity cost. New York City will lose $259 million in tax-exempt debt that could be used to fund other important projects - such as building more affordable rental housing or a new Moynihan Station. In 2009, according to the IRS, New York State will receive roughly $1.7 billion in tax-exempt bond authority for joint public and private ventures. If the Yankees' request is approved, it will use about 15% of that allotment.
Most economists will tell you public support for stadiums and arenas is not efficient. While that is true as a general rule, it is not always right. Public financing of sports arenas can make sense when the venues can be used for multiple purposes (concerts, conventions, as well as sports); a project is the foundation for the rebuilding of a distressed area (see the Verizon Center in Washington); fans from other states get drawn into the city; the team that uses the facility is an integral part of the community (e.g. the Green Bay Packers), and team owners are paying a fair share of the cost of the project.
Because the new Yankee Stadium project met several of the above criteria, city government was right to provide public funding for the initial project. By all measures, it's going to be a beautiful and economically important addition to the Bronx.
But it is never a good idea to use public funds to cover costs not projected in the initial plan, as in December a number of media outlets reported the Yankees now intend to do. Doing so encourages government officials and sports franchises to hide the true cost of the projects and contractors to overcharge for their work.
Worst of all, that $259 million in extra bonds will not create a significant number of new jobs at a time when New York is facing the worst economic crisis since the Great Depression.
With the Yankees' spending spree apparently proving the team to be recession proof, it's time for the team to take one for its fans, step up to the plate, and pay for finishing the stadium.
If they can hand out $400 million for three players, then surely the Steinbrenners can root around in their couches and find the money to finish a stadium that will reportedly have projected ticket-and-suite revenues exceeding those at the House that Ruth Built by $250 million a year.
And if they can't, they can always ask Alex Rodriguez for a loan.
Weinstein, a former policy adviser to Bill Clinton and Al Gore, is a fellow at the Progressive Policy Institute and Johns Hopkins University.