Absolving Yankees garage debt could raise NYC’s Bronx soccer arena subsidies to more than $250m

New York Daily News columnist Juan Gonzalez reports on an until-now overlooked piece of the proposed $350 million NYC F.C. soccer stadium deal in the Bronx, which is that it would require the city to give up its future rent payments from parking garages built for the Yankees:

Under the bailout plan approved Dec. 18 by Bronx Parking’s board of directors and the holders of its debt, the reorganized company would pay no rent until 2056 for more than 20 acres of city-owned land where its other stadium garages are located.

The Yankees garages, which received $70 million in state funding, were supposed to be paying $3.2 million a year in rent to the city (initial reports had it as $2.3 million, but the city Independent Budget Office confirms that it’s actually $3.2 million), but when the garages went all but bankrupt, city officials effectively gave up on ever collecting on its debt, given that there are a whole lot of angry bondholders in line ahead of them. So the city could argue that it’s just burning some IOUs it’s never going to collect on.

For the garage company, though, it’s still getting out from under debt, even if it’s debt it was planning on skipping out on. Gonzalez notes that the city is already owed about $50 million in back rent; the IBO, meanwhile, calculates that tallied up through 2056, the forgiven rent payments would add up to about $150 million, though in present value it’d be closer to $50 million. So if we count the forgiven garage rent as $100 million total, and add in probably another $150 million or so in tax breaks and free land for the stadium, we’re now looking at the city — if new mayor Bill de Blasio goes ahead with the deal started by his predecessor Michael Bloomberg — providing more than $250 million in subsidies for a project that only costs $350 million to build. Now where have we seen this before?

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9 comments on “Absolving Yankees garage debt could raise NYC’s Bronx soccer arena subsidies to more than $250m

  1. Neil, you can debate whether this is a good deal or not (I do support it), but Juan Gonzalez is not exactly the most objective source for information on The Bronx (especially related to Yankee Stadium (he makes Met & Red Sox fan Mike Lupica look like a “Bleacher Creature”)). You can count on Gonzalez to write at least 10 Columns a year using Yankee Stadium’s sins as a template, then just filling in two paragraphs of rants oops details to finish the column. I basically cannot read the guy.

  2. Yeah, but http://www.newsday.com/sports/football/glauber-s-nfl-hot-reads-1.811959/super-bowl-xlviii-expected-to-bring-in-nearly-600m-for-nyc-new-jersey-1.6734169

  3. That Newsday article is paywalled now, but when I read it yesterday it claimed that 500,000 people would be coming to NY/NJ for Super Bowl week, which is pretty hilarious.

  4. How do 500,000 people contribute $600M to the economy? By spending $1,200 each, when fewer than 10% of them would be allowed in the stadium?

  5. Question, how does absolving the garage’s debt actually raise the subsidy for the soccer stadium? The stadium itself isn’t getting the benefit of that subsidy, the garage and its owners are…

  6. The garage company holds the ground lease on the site, so presumably absolving them of rent means they don’t have to charge the soccer team anything in rent in turn. That’s the only way it makes sense for this to be part of the soccer deal, anyway.

  7. How is it that the garages are already “$50m” behind in rent when their annual payment is supposed to be $3.2m? Were there balloon payments missed or something?

    Anyway, it’s not like we needed another warning about how speculative most stadium/ancillary revenue projections are… but this one never looked like being a winner. $50 to park plus the hassle of traffic vs taking public transit to the new Yankee stadium? Really? And since the garages were supposed to be cash cows, this was one subsidy that should definitely have been refused.

    It’s just too bad that the plan (and thus, one expects, the city… surely they can’t be expected to think for themselves…) essentially requires that the lost parkland and garage subsidy be considered a total loss right now. If that is the case and the garages/lots need to be abandoned, perhaps the city should pay to turn them back into parkland. Lesson (probably not) learned.

    Paying to have someone else build something that isn’t going to produce any revenue (for the city) seems twice as stupid, frankly…

  8. “How is it that the garages are already ‘$50m’ behind in rent when their annual payment is supposed to be $3.2m?”

    Gonzalez says it’s “$50 million in rent, taxes and penalties.” So presumably the city tacked on some uncollectable late fees on top of the uncollectable rent.

    I’m still trying to track down a copy of the actual garage lease, since every number I’ve seen for it has been different…

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