So Randy Levine wanted a better television, and you (and I) ponied up another $370 million. I’ve heard of overcompensation, but even for an outfit that spends $240 million on new payroll in a week, this is still an impressive bit of mid-life crisis outlay. I want to meet the 20 year-old he’s trying to impress, because s/he must be fine.
If would be unfair to use the ‘hat in hand’ analogy to describe how the Yankees get money from anyone. Turning us upside down and shaking the every last bit of change is more accurate, provided they make pants that can hold a billion quarters.
The ‘value’ of sports stadia is no longer an open question. In the past ten years of data collection and number crunching, no one has provided any solid argument that the investment is a net gain for the region that funds a project. For the Yankees one component of this ‘privately’ funded sinkhole is a city-built parking garage, now estimated to cost $170 million (the city will lease it to an operator, so hard revenue from this investment is unclear — the new garages will create more parking inventory, but no one knows if more people will drive to the games, and it is unlikely any operator will opt for a fixed amount, since the garage will produce very little non-game day revenue), so the net cost is still murky. Beyond that, the city is touting that it will create 20 permanent jobs. That’s right: 20. The city is spending $425,000 a year (over 20 years) to create each position.
The failings of this sordid tale are well documented. Here are some of the highlights: Giuliani signed off on a rent credit of $5 million a year for each year the new stadium was under construction for ‘development costs’. Those monies paid for the lobbyists and lawyers required to structure this deal, which required a ruling by the one-time IRS (that was questioned by Congress), the patching together of a Bronx-specific special-entity ‘community benefit’ non-profit to qualify for the bonds (the sole member of which is a non-profit located outside the city that has done no business other than generate bonds for similar projects outside the state). The other direct investment elements (including a promise to replace parkland that has been unavailable to the community that was seized to start construction) are behind schedule, and over budget — one drastically so, since the initial estimate did not include costs for the interior.
Aside from the initial handout from Rudy, which the team did not utilize to their full extent, the Bloomberg administration (with lots of help from the Bronx machine and the state) has overseen all the successive backtracks and overruns. The incrementalism at play is depressingly familiar: push the available financing as far as you can and then backload the budget. Once the money runs out, blame everyone but yourself and plead ‘out of scope’. Some of the ‘revisions’ are upgrades to seating and enclosing the press box. This coming at a facility that already planned to include a Hard Rock Cafe and steakhouse.
What is important to note here is that the stadium is free to the Yankees, no matter what. The MLB has a revenue sharing agreement (that sounds like it would run afoul of anti-trust regulations, doesn’t it? Oh, right). The Yankees are the highest revenue team in the country, and their out-sized payroll also mandates a “luxury tax” be assessed, which also feeds into the sharing pool and all but insures they will always be on the contributing end of the spectrum. But capital expenses (such as a new stadium) are deducted from the revenue sharing contribution. As we sit and marvel at contracts such as were provided to C.C. Sabathia and Mark Teixeira maybe we shouldn’t be impressed with the front office gumption, but the back room deals, which get us coming — the best estimate at direct public investment is nearing half a billion dollars — and going: the Yankees will get to increase ticket prices,
reduce eliminate rent payments and deduct any pesky bond payments from a revenue sharing number that would be fixed no matter who paid for the new jernt).
Or, put another way: the Yankees are using public money (see Page 38 of the PDF) — obtained via bond programs structured to increase public benefit — to artificially reduce its revenue sharing contribution and increase profitability. They literally can’t lose. Maybe Randy Levine should be coaching. Lord knows writing $200 million checks on the field hasn’t had any perceptible benefit.