The latest from the Bronx

It’s getting to the point where it’s almost no fun to be outraged about the expenditure of taxpayer dollars on Yankee Stadium:

More than a quarter of the $370 million in taxpayer financing in the Yankees’ latest demand would go to shiny new toys like giant video screens and upgraded luxury suites, documents show.

Nearly $95 million is for “scope modifications” – items not in the team’s original plan when it got $942million in tax-exempt bonds via the city . . .

. . . The Yankees’ $95 million in extras includes $14.2 million for a scoreboard, $10.7million for a giant video board and $10.4 million in luxury suite upgrades.

The team wants more money to make room for two restaurants, a New York Yankees Steakhouse and a Hard Rock Cafe.

“It’s terrific that they want to have a Hard Rock Cafe and a steakhouse there, but why should the taxpayer pay for that?” [Assemblyman Richard] Brodsky asked.

I wish they’d at least try to hide some of this stuff in innocuous sounding line items like “site improvements” or “contributions to the Orphan’s Fund” or something. At least then we’d have the satisfaction of sniffing it out later. Just coming out and admitting that they’re gilding lilies here totally kills it for me.

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  1. Jon said...

    With tax-exempt financing, the City and State lose the ability to collect income tax on bond interest paid to the bondholders. It is a small amount of money.

    Lets say the bonds would have paid 5% interest if they were taxable. On $370 million in bonds that is $18.5 million in interest per year the City and State can not collect income taxes on. (the bondholders would report the interest as income on taxable bonds)

    The combined City and State tax rate is 10% so the amount of tax collection lost is $1.85 mil per year. (10% tax on 18.5 mil)

    This is not a big deal given the amount of revenue the City and State will take in.

    It is certainly much lower than the headline numbers bandied about. Remember, the Yankees have to pay off the debt, not the City.

    How much sales tax will the City and State collect from the Hard Rock and Steakhouse?

    Not to mention payroll taxes from the employees of the restaurants?

    You have to spend money to make money.

  2. Chipmaker said...

    The steakhouse is necessary to ensure attracting the spirits of deceased Yankees ballplayers—particularly Ruth, of course—from across the street. Getting those spirits to haunt/inhabit the new playpen is requisite to continuing the franchise’s winning ways.

    Hey, it’s a more salable argument than just proclaiming the for-profit motive.

  3. Charles Kitchen said...

    So was the reason for the stadiums were long term increased tax revenue?

    I am just curious because usually stadiums come out of relocation threats.

    Was the driving force that no one wished to be “that guy on the city council who doesn’t like the Yankees?”

  4. Pete Toms said...

    Dennis Coates, an economics professor, wrote this on The Sports Economist blog in September;

    “…Enter the Yankees and the financing of Yankee Stadium using PILOTS (payments-in-lieu-of-taxes). PILOTS are a way by which state and local governments, or quasi-governmental agencies like the New York City Industrial Development Authority, borrow money which is used to finance essentially privately owned development projects which are “owned” by the pubic agency. Interest costs are about 25% lower this way than if the private company had borrowed directly. (PILOTS sprung up in response to restrictions on the use of state and local government debt for essentially private purposes, of which stadiums and arenas were a prime example. NY Senator Moynihan was instrumental in getting such legislation through Congress.) The new development does not pay property taxes, for instance, because the public agency owns the property. To offset the loss in taxes, the user of the facility makes payments in lieu of taxes, which are used by the agency to pay the principal and interest on the borrowing.”…

  5. Melody said...

    Thanks for the info, Pete.  I hear you, Jon, that the amount of money the city is giving up may not be incredibly large, considering the scope of things.  But I imagine this is only the tip of the iceberg.  There’s probably a lot more government money and favors flowing to the Yankees and other companies like them.  It’s incredibly frustrating that the city and the team both trumpet the fact that the city is “only paying for infrastructure upgrades” and that the park will be fully paid for by the team.  And then we come to find out not only that it’s not the case, but that illegal things (like the extreme re-evaluation of the property value at the behest of the mayor’s office) were done that served the team’s interests.

    Maybe 1.85 million dollars in tax revenue doesn’t sound like a lot to the city of New York.  But I used to work in the city at a counselor to families who had lost a family member to homicide.  My salary was less than $30k, and I lost my job when the city budgets were cut.  I became a domestic violence counselor, and budgets were cut again.  $1.85 million could have easily paid the salaries and expenses of our entire program, with probably $1.5 million to spare.  So when I hear about large amounts being tossed around to corporations like they’re not important, I remember how much good that money could do if it were directed where it’s really needed.

  6. Pete Toms said...

    @ Melody.  If you don’t read the blog ” Field of Schemes “, I think you should.  The author is Neil deMause, a Village Voice reporter.

  7. Melody said...

    Thanks, Pete—I’ve looked at it but don’t read it regularly.  Rob Neyer has linked to it several times over the years, and I heard about it through his column.

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