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September 08, 2010
Times fumbles ball on Giants Stadium debt
I've beaten up on New York Times sportswriter Ken Belson plenty before in this space, in large part because of his failure to fully investigate the rosy economic claims of stadium boosters. So you'd think it'd be good news that today Belson tackles the troublesome fiscal legacy of New York-area sports stadiums:
It's the gift that keeps on taking. The old Giants Stadium, demolished to make way for New Meadowlands Stadium, still carries about $110 million in debt, or nearly $13 for every New Jersey resident, even though it is now a parking lot.
The financial hole was dug over decades by politicians who passed along the cost of building and fixing the stadium, and it is getting deeper. With the razing of the old stadium and the Giantsand the Jets moving into their splashy new home next door, a big source of revenue to pay down the debt has shriveled.
New Jerseyans are hardly alone in paying for stadiums that no longer exist. Residents of Seattle's King County owe more than $80 million for the Kingdome, which was razed in 2000. The story has been similar in Indianapolis and Philadelphia. In Houston, Kansas City, Mo., Memphis and Pittsburgh, residents are paying for stadiums and arenas that were abandoned by the teams they were built for.
And so on. Only one problem: Whether the debt on an old stadium is paid off before it's demolished doesn't matter one whit. While "Whattaya mean, we're still paying for that pile of rubble?!?" is a natural reaction, it doesn't make much economic sense. Stadium debt is, when you come down to it, a bookkeeping measure — the construction expense is sunk the moment you sign the contract to build the thing. The rest is just a matter of (in a manner of speaking) what kind of mortgage your municipality wants to take out.
If the state of New Jersey had chosen to pay off Giants Stadium by selling 20-year bonds, in other words, it still would have represented the same expense to the public — but since the bonds would have been retired faster, suddenly it wouldn't make Belson's hall of shame. That's nonsensical. If cities shifted to paying for their stadiums with suitcases full of twenties, would that make them better deals?
The problem with tearing down stadiums early isn't the debt, it's the revenues that you're giving up by allowing teams to move into new buildings with sweetheart leases. As Belson notes late in his piece, the old Giants Stadium generated about $20 million a year for the state; at the new one, the Jets and Giants supply only $6.3 million a year in lease payments. That's a real cost, and one that could have been avoided if the state hadn't agreed to rent public land to the teams so they could build a new stadium and get out from their Giants Stadium lease.
The real scandal here isn't how debt service is financed, but rather that cities and states are tearing down perfectly functional stadiums just so that teams can stop paying rent, costing taxpayers millions. Now there's a headline I'd like to see in the Times.