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June 13, 2011

Life after death for Yankees garages?

Those privately run, publicly subsidized New York Yankees parking garages may be headed for bankruptcy by next April, but apparently they're not totally worthless: Hedge funds are reportedly buying up the garage debt in hopes of seizing the garages once they go into default and turning them around.

"This facility seems meaningfully impaired, but there are some potential fixes," said Laurence Gottlieb, chief executive officer of Fundamental Advisors LP, a private-equity firm in New York that buys municipal debt. "Costs can be reduced and it could be repositioned for commuter parking."

That seems pretty optimistic, given that Yankees fans have much cheaper parking options nearby, and that any commuters parking there would face a long subway ride to Midtown once they parked. (The Metro-North commuter rail line would be faster, but if you're going to ride Metro-North, there are already other park-and-ride options.) Of course, the Bloomberg News article doesn't say how much the hedge funds are paying for the garage debt — if it's pennies on the dollar, then suddenly even half-empty garages look a lot more profitable.

Either way, if the current garage owner goes under, city taxpayers presumably lose the $43 million in future rent payments they were supposed to be getting from them. But after $700 million in city subsidies, what's another $43 million among friends?

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