July 19, 2005
Yanks, Mets rent breaks to cost city $150m
Chalk up another hidden public cost for the proposed New York Yankees and Mets' "privately funded" stadium deals. New figures from the city parks department reveal that the city would be losing out on more rent revenue under the deals than was previously reported.
As you may recall, under the proposed deals, neither team would pay rent, but each would take on all maintenance costs for their new stadiums. New York Mayor Michael Bloomberg and other stadium backers had previously described this an fair tradeoff, as, in the Yankees' case, the city would lose the $5 million a year in rent it currently collects, but would also save on maintenance costs, currently running at about $5 million a year.
Well, not exactly. The Yanks' and Mets' leases work a bit differently - the Yanks pay maintenance costs then deduct it from their rent, while the Mets pay rent and let the city pay for maintenance out of that - but in each case, the city is netting considerable rent money even after maintenance costs. The previously reported $26.43 million figure that the Yankees have paid the city in rent over the last five years, it turns out, is the proceeds after maintenance deductions. For the Mets the figure is smaller - $3.75 million over five years - but still in the plus column.
Moreover, these figures don't take into account the five-year rent rebates for "stadium planning" that the two teams got as a going-away present from outgoing mayor Rudy Giuliani in 2001. Though Giuliani authorized $5 million a year for each team, the ballclubs have actually drawn down a bit less: a total of $10.97 million for the Yankees and $15.95 million for the Mets. Add those to our previous totals, and we get five-year rent totals of $37.4 million for the Yanks ($7.5 million a year), and $19.7 million for the Mets ($3.9 million a year).
I know, I know, enough with the numbers already - what will this mean in terms of costs of the two new stadiums? Without belaboring you with the math, suffice to say that losing out on a potential $7.5 million a year in future Yankees rent would cost the city a total of about $106.9 million (in present value); the Mets' free rent would cost the city a total of about $56.3 million PV. Adding that back into our previous estimates, we get:
- YANKEES: $385-475 million ($140m in city funds, $15m in city rent rebates on current stadium, $0-90m in Metropolitan Transportation Authority capital expenses, $57m in tax-exempt bond subsidies, $44m in property-tax savings, $22m in sales-tax breaks on construction materials, $107m in forgone city rent revenues)
- METS: $443 million ($85m in city funds, $15m in city rent rebates on current stadium, $75m in state funds, $100m in forgone city parking revenues, $57m in tax-exempt bond subsidies, $39m in property-tax savings, $16m in sales-tax breaks on construction materials, $56m in forgone city rent revenues)
- NETS: $451 million ($100m in city funds, $100m in state funds, $50m in tax-exempt bond savings, $21m in property-tax savings, $180m in discounted land price)
TOTAL: $1.279-1.369 billion
Note that I've tried to make these numbers even more conservative, by excluding the cost of state-funded parking garages near the Yankees stadium (since the team claims the state will recoup its investment through parking fees) and including a range of $0-90 million for the cost of the maybe they'll happen, maybe they won't Bronx mass transit improvements. I've also reduced the amount of expected tax-exempt bond savings to the teams, since it's unlikely they'll be allowed to use this financial instrument for 100% of their construction costs.
Still, the price tag keeps going up, thanks to those forgone baseball rents, and to the Nets land subsidy, which I now have an estimate for. The whole shebang may not quite hit $1.5 billion, as I predicted, but it's getting awfully close.
