The New York City Independent Budget Office, an agency created in 1989 as an independent check on city governance that has provided a ton of good economic analysis over the years throwing cold numerical water on various elected officials’ pet projects, has a report out on city subsidies for Madison Square Garden and the city’s three most recently built sports venues, for the Yankees, Mets, and Brooklyn Nets. And while it includes no overall subsidy numbers — “because the subsidy structures for each are different, cross-comparisons are difficult to make,” writes the IBO — there is this breakdown of property tax breaks alone:
As of February 2023, the DOF assessed fair market values for Yankee Stadium, Citi Field, and Barclays Center are $2.6 billion, $3.2 billion, and $2.6 billion respectively, and the property tax amounts would be $115 million, $121 million, and $99 million, respectively.
That’s foregone property tax amounts per year, mind you. Add in the complete tax break for Madison Square Garden, and the city is currently granting Hal Steinbrenner, Steve Cohen, Joe Tsai, and James Dolan $377 million a year in tax breaks. (The Yanks, Mets, and Nets technically pay a smaller amount of “payments in lieu of taxes,” but as the IBO notes, these are redirected to pay off the teams’ own construction costs, so the city treasury is still getting bupkis.) Even without taking into account that property values are certain to rise, that would amount to more than $5 billion in present value over the next 30 years, assuming all these sports facilities last 30 years, or at least that the tax exemptions do.
This is on top of more than $1.1 billion in other subsidies for the Yanks and Mets stadiums alone. (The Nets arena financing is so complex, being all intertwined with housing development and its attendant subsidies, that it’s nearly impossible to put a number on its public costs.) That brings the total to more than $6 billion, which could build 15,000 units of affordable housing, or an entire new train line linking Brooklyn and Queens, or lots of other things costing $5 billion. (A free 99-cent pizza slice for every city resident every day for a year and a half?) It’s a bunch of money, but “a bunch of money” doesn’t make headlines, numbers like “$377 million a year” and “more than $6 billion” do, so feel free to bandy those about on the socials as you see fit.
[NOTE: This post initially had lower numbers because I typoed “$277 million” for “$377 million.” My fingers regret the error.]
I wouldn’t mind payments in lieu of taxes if its actually paid, but if it pays off their stadium construction it’s not a payment to the local tax authority.
Right, as I’ve written before, it’s not actual PILOTs, it’s bond payments that the teams put in a box and wrote “PILOTs” on to meet IRS requirements for tax-exempt bonds. More here:
https://www.villagevoice.com/2006/04/25/bloomberg-on-stadium-bonds-it-depends-what-you-mean-by-taxes/
There are legitimate reasons why sports stadia (or other “limited use” facilities) might seek to use PILOTs. A simple one is that a big box store development is theoretically open to the public and can generate revenue 24/365 (although virtually none are), or at least 16 hours a day 300 days a year. A sports stadium in which the main tenant is limited to 80 (or just 8) or so games a year does not have that same ‘useability’ factor.
I’m not against them being taxed at a rate different from other commercial developments (although we can make the argument that this usage factor means they are not viable business places and therefore should not be subsidized through a lower property tax rate)… so long as they are not commercial developments with a stadium attached.
But as Tom says above, those payments do have to go to the same place taxes go… if not then guess who pays instead?
We made a similar similar comment in our study on Santa Clara’s Levi’s Stadium.
https://crossworks.holycross.edu/econ_working_papers/186/