In case you somehow missed it, Amazon made it official this morning that its new 50,000-person second headquarters was going to be split into two 25,000-person sites, one in the Long Island City section of New York City and one across the river from Washington, D.C., in Arlington, Virginia. (Nashville, Tennessee, will also get an “Operations Center of Excellence,” which is maybe not the name you want to give your corporate outpost if people are already worried your company is an Orwellian nightmare.)
Attached to its press release, Amazon included the full memoranda of understanding for the New York, Arlington, and Nashville deals — since my purpose in life somehow seems to have evolved into reading these damn things and figuring out what’s hidden in them, I sat down to write up an analysis of the New York deal for Gothamist. The upshot: Between the city and the state, Amazon will cash in at least $2.5 billion in checks from the public (and probably more like $3 billion — see update below) in the form of tax breaks and other goodies. With Jeff Bezos in line for about another $1 billion from Virginia and a pittance of $60 million from Nashville — hardly worth counting the bills, honestly — that’s about $4 billion that America’s richest man will be raking in for the trouble of holding a year-long bidding war before doing whatever he wanted anyway.
A few further notes on this, from our usual perspective of sports subsidies:
- Damn, that is a chunk of change. Yes, an Amazon headquarters is arguably more valuable than a sports stadium — there’s no way even the busiest sports venue will employ 25,000 workers, and those it does employ only be there a few hours a day during the season of whatever sport it hosts — but even the Steinbrenners have never managed a $4 billion payday. Neither did Elon Musk. (Though Boeing did, and celebrated by laying off workers.)
- Modern subsidies are really hard to keep count of. Amazon’s press release fessed up to $1.5 billion in subsidies from New York and $573 million from Virginia, but that didn’t count $200 million from each state for bonus jobs created over 25,000, nor a $300 million infrastructure fund in Arlington, nor about $1.3 billion in off-the-rack tax breaks from New York City (I included $900 million of those in my Gothamist article, the New York Post’s Nolan Hicks found another $386 million), nor an additional infrastructure slush fund that will be created in New York from payments in lieu of property taxes. I’ve been staring at this thing all day and I still don’t feel 100% confident there aren’t additional hidden costs lurking about — which is par for the course for both sports and non-sports subsidy deals.
- Subsidies aren’t what determine location decisions. We’ve seen this before in sports, where team owners have used the threat of going elsewhere to shake down the cities they already want to be in for cash. But it’s especially bald-faced in this case, where other states offered as much as $8.5 billion for Amazon’s hand, only to have Bezos say, Sorry, our first love is big cities where techies want to live. At which point you have to wonder: If Amazon was going to go to NYC and D.C. anyway, why did those locales bother coughing up so much public money? As with sports venues, cities could be thinking, “These people on the other side of the table need us more than we need them” — but they’re largely not.
Anyway: New York just threw a giant wad of cash at Amazon, Arlington can comfort itself that its wad is at least a bit smaller, and all the cities that missed out don’t get the new jobs, but do get to keep their money. There’s probably a lesson in here somewhere, but given that everyone involved is steadfastly refusing to learn it, it’s hardly worth spelling it out.