The stadium financing issue is in the news again, mostly because New York Yankees president Randy Levine has been subpoenaed by a state assembly committee investigating the funding used to build the team's new stadium.
The Yankees are asking for another $259 million in tax-exempt bonds and $111 million in taxable bonds, on top of the $940 million in tax-exempt bonds and $25 million in taxable bonds already allocated for the new stadium.
Yesterday, Levine and NY assemblyman Richard Brodsky (D), gave separate interviews on WFAN's "Mike without the Mad Dog" (AKA "Mike'd Up") program.
After listening to both sides and doing some investigating of my own Levine's argument makes more sense than Brodsky's.
Regular readers of this blog know that I am no fan of Randy Levine, so for me to take his side is quite rare.
Here is the deal:
1. NYC sold tax-free municipal bonds to fund the stadium. Normally, when a city sells bonds (to fund government operations), the city pays off the bonds (with tax dollars) when they are due. In this case, the Yankees are paying the bonds when due. That's how the Yankees are financing the stadium using Yankee money, not taxpayer money. NYC municipal bonds will be paid off by the Yankees, not the taxpayers. So when you hear the stadium is being paid by "public financing", that is simply not true. They are public bonds being serviced with private money. Using tax free bonds is more attractive to investors and reduces the cost to the Yankees due to the lower interest rates. Levine says that traditional financing would have brought the total cost of the stadium to over $2 billion.
2. Even though the Yankees are picking up the tab, the CITY OF NEW YORK is the owner of the stadium and the Yankees hold a 43 year lease to the building. That's right, the Yankees are basically giving NYC a stadium for FREE.
3. As most landlord/tenant agreements go, the landlord responsible for maintenance. In this agreement the Yankees will pay all maintenance costs for the stadium. In the old stadium the city paid for maintenance of the stadium by deducting maintenance costs off of the rent.
4. All of the parking garages are owned and operated by NYC, even though the Yankees are building them. The Yankees get no revenue from the parking fees. The Yankees get only 600 parking spaces from the city for their use.
Lastly, Citi-Field is being built with the same deal.
Now, Mr. Brodsky contends that:
1. The city would have been better served if the Yankees used private financing and paid property taxes to the city.
Levine said that if the Yankees would have had to go that route, the stadium would not have been built. I disagree. The stadium would have been built.....in NJ! I'm sure Governor Corzine would love all of the jobs and tax dollars the Yankees bring in.
2. The stadium is only creating 22 jobs and the city is not making any money on the deal.
Yes and no. The stadium is creating 22 "Yankee" jobs, people employed by the Yankees, mostly because the Yankees are contracting out the operations of the stadium. The facts are that the stadium will be home to 3000-5000 employees from various employers.
As for income to the City, there are more vendors, more restaurants, more concessions more maintenance people, more media support people (Levine mentioned more YES network cameramen) and a museum. The Yankees hired a private security firm, where NYPD (taxpayer expense) was the security at the old stadium. These are real jobs. Real jobs that the vast majority of which will go to minorities due to the ethnic diversity of NYC. I'm sure the Yankees are not paying the Hard Rock Cafe or the Yankees Steakhouse employees. These workers pay PAYROLL TAXES, everything sold inside the stadium is subject to SALES TAXES. Also, the amenities of the stadium will be open ALL YEAR, not just during the season.
NYC Comptroller William Thompson Jr. accused Mayor Michael Bloomberg of financial incompetence in the Yankee Stadium funding deal.
"Financial incompetence"? Bloomie is a self-made Billionaire!
Thompson, who intends to run for Mayor, said the deal ultimately will leave city taxpayers with the bills.
This would be true only if the Yankees default on the bonds. If the Yankees default, the City would be on the hook for the debt.
That is highly unlikely.