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January 18, 2006
Mets stadium a freebie?
The board of New York's quasi-public Empire State Development Corporation (which incidentally has the doofiest domain name ever) gave its signoff to the Mets and Yankees stadium projects today, and in so doing released a whole slew of new economic impact projections that are completely different from the ones I picked apart last week. I'll have more on this once I hear back from ESDC on where the numbers came from.
In the meantime, though, hidden in the ESDC's press release is an unexpected tidbit of information: While the Yanks plan is projected to cost $1.2 billion ($800 million for the stadium, $400 million for infrastructure), the Mets stadium project would cost just half that ($444.4 million for the stadium, $155.6 million for the rest). And while the Mets claim they'd pay the entire stadium construction cost, with a cheaper stadium and the same level of subsidies as the Yanks, they could end up with a discount of - well, let's run the numbers:
$444.4 million construction cost–$173.3 million MLB revenue-sharing deductions–$69 million city rent rebates–$96 million city parking revenue rebates–$16 million construction sales tax breaks–$39 million future property tax breaks–$55 million savings on tax-exempt bonds
And the total comes to... negative $3.9 million. So as things stand, it looks like the Mets will be paying for a $444.4 million stadium - but by collecting $448.3 million in subsidies from the city, state, and federal governments, and the other 29 MLB teams in the bargain, effectively getting the stadium for free. That's positively Seligian.
LATE NOTE: On further consideration, the benefits to the Mets are slightly less than listed above: The construction sales-tax break and tax-exempt bond benefits are already factored into the $444.4 million price tag (which would be higher otherwise), and the Mets would have to pay revenue-sharing on the extra parking money, reducing their take there. So Fred Wilpon can expect to end up cutting a check for about $104.5 million - still less than one-quarter of the stadium's list price.
I don't understand. You're upset that the Mets aren't paying rent and are getting the parking revenues from a stadium they paid to build?
Are you saying it would be more reasonable for them to pay for the stadium, then pay rent on it, allow the city to generate revenues from it, and not be allowed to borrow on a tax free basis to raise the captial?
If you're ever looking to move, I've got a great place for you to live. It's an empty lot right now, but after you build a house on it, the rent will only be $4k a month and I only need to keep half the garage for my own storage needs.
Posted by Chase Hinderstein on January 19, 2006 02:41 PM
The parking lots are already there - the new stadium will be in the parking lot of the current Shea Stadium. The only difference is that under the new lease, the Mets would get $7 million a year off the top of parking revenues, whereas under the old one the city gets that money.
Posted by Neil on January 19, 2006 03:07 PM
I think the more proper analogy here would be if I were to tell my landlord: "Hey, how about I tear down your house and build a new one of my own in your backyard, and pay you nothing for the privilege? Oh, I'll also want to charge people to park in the driveway."
Posted by Neil on January 19, 2006 03:22 PM
I can't see why you are bashing the 173 mil in revenue sharing money. It's still the Mets shelling out, but instead of giving it to poorer franchises, who usually pocket the money, they are spending it on a new stadium for New York.
It's still the Mets money and it's going to put to better use.
Posted by Joe McDonald on January 19, 2006 07:41 PM
This is like that Odd Couple episode where Felix tries to convince Oscar to give him the money he got from an old gambling buddy, since the buddy won it at Felix's opera club's Casino Night. ("From me to him to you to me! It's like an isoceles triangle!") If the Mets are deducting stadium costs from revenue sharing, that's getting other teams to pay their bills; same as if I buy Mets tickets, bring a business contact, and deduct it on my taxes, that's getting the federal government to pay for part of the ticket price. There's nothing unethical about it - all 30 teams agreed to this revenue-sharing deduction - but that doesn't make it "the Mets' money."
Posted by Neil on January 19, 2006 08:53 PM
No, it's not the gov't paying for the tickets, it's you deducting the price of the tickets from your adjusted gross income, and therefore not paying taxes on it. If it is a legitimate part of your business, then congrats, you've got a cool job.
I don't know the whole background, but I assume you wouldn't be too pleased with the city paying for the building costs either, even if the team pays rent.
So, the team should build the stadium, not be allowed to raise capital through tax free debt offerings (even if it is an important municipal ammenity), and then pay the city to play there.
By the way, if you don't believe that stadiums can improve the surrounding neighborhoods for all to enjoy, visit the MCI Center in DC (was unsafe to walk the streets midday before the arena) or Camden Yards. I'm sure other could provide other examples.
Posted by Chase on January 19, 2006 09:50 PM
I love the Mets and sometimes I love baseball and I actually love stadiums...but I love this website the most :)
Thanks for having a space entirely devoted to alerting us to how we (collectively) are getting screwed. We need more like it.
Posted by Saurav on January 20, 2006 10:47 AM
Thanks - for the record, I love baseball and stadiums as well, though I stopped loving the Mets after they traded Tom Seaver for Doug Flynn.
Posted by Neil on January 20, 2006 11:01 AM
As for Camden Yards, I've been there many times, including a lengthy tour of the neighborhood while researching our book. (For those who haven't yet read Field of Schemes, Camden Yards and Jacobs Field are the focus of Chapter 1.) Walk two blocks in any direction from Camden Yards, and you'd have no idea that a "renaissance" is supposedly underway - unless you walk toward the waterfront, but that was all built up well before the ballpark. I've yet to see a claim of stadium-spawned redevelopment that has panned out. (Arenas are somewhat different, since they can be in operation 365 days a year.)
Posted by Neil on January 20, 2006 11:06 AM
Yeah, okay, I don't really love the mets the way I love certain small dogs. But I can't stop liking them and still get annoyed when they lose. Or make seemingly stupid trades.
Posted by Saurav on January 23, 2006 07:56 PM
Neil, I too became a Yankee fan in June of 1977 and you are absolutely correct about Camden Yards. Go one block past the ballpark and everything is not so "economically vibrant."
Posted by Andrew Pate (SFP!) on January 31, 2006 02:05 PM