My latest communique in the ongoing skirmish with economist Andy Zimbalist over the New York Yankees stadium plan is up at Baseball Prospectus today. You need to be a BP subscriber to read it in all its glory, but I’ll summarize a couple of the new findings here:
Annual city rent receipts from the Yankees are going up, not down. Here are the official rent payments by the Yankees, along with deductions for stadium maintenance and for “planning costs,” over the past ten years for which the city has figures:
1995-99 2000-04 Gross rent $32,400,000 $60,900,000 Maintenance deduction $21,000,000 $23,500,000 "Stadium planning" deduction $0 $10,970,000 Net rent $11,400,000 $26,430,000
While Zimbalist and Yankees president Randy Levine might argue that the team’s maintenance deductions will grow to the point where it’s paying zero rent, that’s not where things have been headed of late. Rather, while maintenance costs have edged slightly upwards, the Yankees’ gross rent has nearly doubled, thanks to soaring attendance and ticket prices, and a rent formula that charges the team more when it’s doing well at the box office. In this light, my estimate that the Yanks would keep on paying $7.5 million a year in rent for the next 30 years – money that would be lost to the city if the team gets rent-free new digs – seems conservative if anything.
Baseball’s revenue-sharing deduction may not be worth as much as everyone has thought. While all previous reports have been that stadium costs are fully deductible as expenses – which would result in teams getting back about 39 cents in reduced revenue-sharing payments for every dollar they spend on construction – Zimbalist asserts that teams actually have to amortize their costs over anywhere from 10 to 40 years, which would reduce the value of the deduction by anywhere from 26% to 62%. I’ve been unable to independently confirm this – the experts I’ve asked, both inside and outside of baseball, have given me a little bit of “it might be” and a whole lot of “beats me” – but I hope to have a definitive answer pinned down in coming weeks.
Meanwhile, I’ve managed to compile the most comprehensive estimates yet of just who would be paying what for the Yankees’ new pleasure palace. Some of these numbers I’ve covered here before; others were newly uncovered by the recent Good Jobs New York report:
PUBLIC COST: $136 million city money for land and infrastructure $13 million city rent rebates on current stadium $70 million state garage subsidies $5 million operational fund (city) $5 million operational fund (state) -$62 million city garage ground lease $19 million lost city garage revenue -$10 million memorabilia sales (city) $55 million tax-exempt bond subsidies (federal, city and state) $44 million future property-tax savings (city) $11 million sales-tax breaks on construction materials (city) $11 million sales-tax breaks on construction materials (state) $103 million forgone city rent revenues $8 million forgone city mortgage recording tax $14 million forgone state mortgage recording tax $1 million present value of additional reserve fund in year 2039 ------------- $423 million YANKEES COST: $800 million bond payments -$117-311 million revenue-sharing deduction -$103 million forgone future rent -$13 million present rent rebates -$44 million future property-tax savings -------------- $329-523 million GARAGE OPERATORS COST: $164 million garage construction $62 million ground lease -------------- $226 million MLB COST: $117-311 million revenue-sharing deduction -------------- $117-311 million
So there you have it: Taxpayers would be stuck with about $420 million worth of costs (not counting “as-of-right” property tax breaks that apply to all of the Bronx), while George Steinbrenner, depending on how the revenue-sharing break works out, could end up putting in less of their own money than the public. The team, meanwhile, would reap all the stadium revenues like naming rights and luxury suite sales; taxpayers would be left with a thin trickle of new tax revenue that wouldn’t even come close to paying the public costs. As bad deals go, that’s Buhner-for-Phelps territory.