July 30, 2004

Yankees update

After further analysis (in other words, reading it again after getting some sleep), it appears that the New York Times' take on the Yankees' stadium finance plan wasn't entirely accurate. The Times, you will recall, reported:

The league's rules allow teams to subtract annual stadium costs from their revenue-sharing obligations. So the Yankees would pay, say, $40 million a year to repay the bonds, rather than handing it over to Major League Baseball.

Only one problem: While George Steinbrenner could possibly deduct this amount from the team's shareable revenues, he couldn't deduct it from his payments. (Think of it in terms of tax deductions and the check you write to the IRS, and it should be clearer.) So the maximum benefit of $40 million a year in stadium debt would be 37% (the revenue-sharing "tax rate") times $40 million, or $14.8 million. Still nothing to shake a fungo bat at, but not enough to wholly pass off stadium costs onto the other 29 MLB owners, either.

And there's another potential pitfall to this scheme, one that I haven't yet seen discussed in the media. The deduction for "stadium operations" costs is contained in the collective bargaining agreement with the players, which expires in 2006. If the other MLB owners decide they'd rather not help buy their richest competitor a new playpen - hello, Larry - then they could easily rewrite this provision in the next CBA, before the Yankees have gotten the chance to deduct a dime. If Steinbrenner goes ahead with this plan, there could be some very interesting bedfellows before it's all over.