IDA approves more tax-free bonds for Yanks

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A Tampa identity crisis, in uniform

Despite contentious hearings, a strident Times editorial, and opposition from numerous advocates and officials, the New York City Industrial Development Agency has approved another $370 million in tax-free bonds for the Yankee Stadium construction project.

The agency voted 11-1 in favor of the bonds with Comptroller William C. Thompson’s representative voting against the issuance and the Queens rep abstaining. Neil de Mause estimates the total subsidy for the Yankee Stadium and CitiField construction projects at $1.8 billion. One can make convincing arguments for against public support of the initial costs of construction, but by now, I have to believe that the teams should be taxes for more bond requests. Either way, the bond issue is pretty much closed. Problems surrounding land valuation and missing green spaces and parks in the Bronx remain.

For Mike’s chat, click here. He’s still going. I wanted to get this breaking news up on site.

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A Tampa identity crisis, in uniform
  • A.D.

    Well at least this is essentially over

  • jsbrendog

    i look on this as id id witht he santana trade talks. its ot the point i stopped caring so long ago i dont even remember what it is i dont give a shit about anymore.

  • UWS

    Jej…Aw, fuck.

    • http://www.spartacus.schoolnet.co.uk/CRsmithT1.jpg tommiesmithjohncarlos a/k/a Ridiculous Upside

      You tried. I admire your effort.

  • mustang

    it’s just funny.
    the more things change……

  • TomG

    Randy Levine tricked them into thinking they were voting whether to get Barry Bonds.

  • http://www.nycdeveloper.net Tim C

    Preface: So I was thinking about all of these silly people complaining about the Yankees receiving bonds from the city on my 2 hour train ride home tonight. I grabbed a piece of paper and my BlackBerry and began to scratch out this argument. Anyway, it’s not perfectly thought out, but i think it gets the point across. I used a lot of estimates when generating numbers and working out this data. The numbers used are best described as ball park accurate.

    The City of New York has issued the Yankees around $940 million in bonds to help build the new Yankee Stadium. The city is paying an additional $225 Million or so to build infrastructure (includes the new park, parking structures, road work, metro north stop, demoliton of old stadium, etc…). The Yankees put in about $250 million in cash and will repay another $1 billion in bonds. That puts the total Yankee cost at around $1.2 billion. Yes, the bonds do have to be paid back, so they are considered to be private funding, not a handout / subsidy. Remember, none of us will know the real numbers until all is said and done so these are just estimates at this point.

    Also, keep in mind the factors of inflation and cost of construction in a Metro Market per square foot in each city respectively. The renovation to the UN Building in Manhattan is a similarly sized project with cost estimates between $1.2 and $1.9 billion. Current estimates have the cost of construction per square foot estimated a massive $613.76. The average cost per square foot for a school in New York City is $450. The new Yankee Stadium is approximately 1.3 million square feet (this number is not used in cost per square foot calculations). Let’s say the Yankees cost per square foot is less than the UN because they don’t have to deal with computers, fixtures, detail work, etc… and similar to schools. My guess is the cost is probably somewhere between $400-$500 per square foot. If you think that number is too high, I beg to differ. Please see this little fact sheet about the Washington National’s park (most recent park to open). Their cost per square foot was $283.
    http://www.usgbc.org/ShowFile.aspx?DocumentID=5108

    Based on that number, I’d say $450 per square foot is on the conservative side.

    Compare that with:
    Atlanta ~$150-250
    Baltimore ~150-250
    Boston ~250-350
    Chicago ~200-300
    Cleveland ~150-250
    Cincinnati ~120-220
    Denver ~120-200
    Pittsburgh ~120-200
    St. Louis ~120-200
    San Fransisco ~250-350
    Washington DC ~200-300

    I could go on, but you get the point. Clearly building something as massive as a baseball stadium in New York is 2-4 times more expensive than building the same thing in a smaller market.

    Now, let’s take a look at a list I just compiled of teams with new facilities that had their stadium paid for partially or entirely by their city (in order of % Public Funding)…

    The number in the [] is the cost adjusted for inflation. Also note that I used the national CPI for the inflation calculations. I used the date ground was broken as the year to base the inflation off of (or best estimate of that year i.e. year opened – 2).

    Washington Nationals – National’s Park: $611[$665] Million (100% Public)

    Atlanta Braves – Turner Field: $239[$351] Million (100% Public)

    Kansas City Royals – Kauffman Stadium: $43[$205] Million(100% Public)

    Chicago White Sox – U.S. Cellular Field: $150[$234] Million (100% Public)

    Tampa Bay Rays – Tropicana Field: $115[$223] Million-original (100% Public) / $85[$112] Million-renovations (79% Public, 21% Private)

    Oakland Athletics – Oakland Coliseum: $25.5[$179] Million-original (100% Public) / $100[$132] Million-renovations (100% Public)

    Anaheim Angels – Angel Stadium: $24[$164] Million-original (100% Public), $117[$155] Million-renovations (25% Public, 75% Private)

    Baltimore Orioles – Camden Yards: $110[$172] Million (96% Public, 4% Private)

    Minnesota Twins – Metrodome: $124[$290] Million (93% Public, 7% Private)

    Cleveland Indians – Progressive Field: $175[$257] Million (88% Public, 12% Private)

    Cincinnati Reds – Great American Ball Park: $320[$384] Million (82% Public, 18% Private)

    Texas Rangers – Rangers Ballpark in Arlington: $191[$289] Million (80% Public, 20% Private)

    Seattle Mariners – Safeco Field: $517[$673] Million (72% Public, 28% Private)

    Colorado Rockies – Coors Field: $215[$326] Million (75% Public, 25% Private)

    Arizona D-Backs – Chase Field: $354[$493] Million (71% Public, 29% Private)

    Pittsburgh Pirates – PNC Park: $216[$275] Million (70% Public, 30% Private)

    Houston Astros – Minute Maid Park: $250[$331] Million (68% Public, 32% Private)

    Milwaukee Brewers – Miller Park: $382[$517] Million (66% Public, 34% Private)

    Detroit Tigers – Comerica Park: $300[$383] Million (63% Public, 37% Private)

    Toronto Blue Jays – Rogers Centre: $500[$898] Million (63% Public, 37% Private)

    San Diego Padres – Petco Park: $449.4[$554] Million (57% Public, 43% Private)

    Philadelphia Phillies – Citizen’s Bank Ballpark: $458[$528] Million (50% Public, 50% Private)

    New York Yankees – Yankee Stadium: $1,425 Million (16% Public, 84% Private)

    St. Louis Cardinals – Busch Stadium: $344[$397] Million (12% Public, 88% Private)

    San Fransisco Giants – AT&T Park: $255[$338] Million (100% Private)

    New York Mets – Citi Field: $650 Million (100% Private)

    Based on percentage of project cost adjusted for inflation, the city of New York gave the Yankees less than or equal financial assistance [$225mm] than these cities gave their teams: Philadelphia, San Diego, Toronto, Detroit, Milwaukee, Houston, Arizona, Colorado, Seattle, Texas, Minnesota, Cincinnati, Cleveland, Oakland, Tampa Bay, Chicago, Atlanta, and Washington.

    Some of the bonds the Yankees were given were taxable bonds while others were tax exempt bonds. As part of the bond agreement, the city mandated that the Yankees give them their own luxury suite in the stadium. This suite has a regular season value of $600,000 and approximately $25-$30 million over the next 30 years if you adjust for inflation and ticket price increases. Those numbers don’t even include post season games where a luxury box could very well fetch between $75,000-$250,000 per game depending on the series.

    I borrowed this little explanation of the bond issuance/repayment system from a guy named John, “There is no municipal subsidy in the issuance of tax exempt revenue bonds, which these seem to be (i.e., the bondholders get repaid from Stadium revenue, not from the City). The “gimmick” is that the bonds use the tax exemption of the City to do this (technically, the City’s industrial revenue bond agency borrows the money from the public by issuing bonds, lends it to the Stadium owner, and gets repaid from the Stadium owner in order to repay the bonds’ principal and interest). The City is not on the hook for repayment, since the bondholders only get repaid from Stadium revenue. The result is that neither the City’s treasury nor its credit is affected. ”

    So you see, the truth of the matter is, the Stadium is in fact almost entirely privately funded. The only subsidy is the $225 million cost of infrastructure and the forfeiture of taxes on the $950mm tax exempt bonds ( the Yankees are receiving approximately $125mm in taxable bonds).

    Many people complain about the “$450 million” the Yankees have spent this off-season, instead of spending it on the stadium. What they are failing to acknowledge is that the Yankees do not have that money without those players. They don’t just have $450 million sitting around. The players pay for their contracts annually by increasing the team’s revenue. Having less star power = less revenue. The proof of that is perfectly clear when you look at the Yankees teams of the late 80’s and early 90’s. These teams were terrible. The only real draw was Don Mattingly. I used to walk up to the box office before the game, buy a ticket for $1 to $5 for nose bleed seats, and then walk down and sit right behind the dugout because the place was absolutely empty. Now I can’t buy a ticket in December for the following August. What do people think draws 4.5 million people, paying $25-$250 for a ticket, $20 for parking, $9 for a beer, and $6 for a hot dog to the stadium every year? Well it certainly isn’t Mr. Journeyman Utility Player.

    As for the “sports franchise doesn’t benefit the city in any way, financially or otherwise” argument…I just don’t get it. The Yankees average 55,000 fans per game (4.5 million annually). If the average ticket is $50 (probably more) and the average fan spends an additional $20 (also conservative) on concessions and souvenirs, the average seat spends around $70 per game. If you take that amount and multiply it by 4.5 million ($315 million) and then take 8.625% of that value you get the annual amount the city/state is earning in sales tax alone: approximately $27.5 million! The Yankees 2007 sales figures showed $327 million in sales, higher than the $315 I used in my ball park estimates. That revenue for the city/state doesn’t include the employee income tax, corporate tax, or property related tax associated with the franchise. The Yankees have 175 full-time employees and around 1200 part-time employees who are all going to pay income tax. Not to mention the tax income derived from all of the surrounding businesses and parking structures. Then of course you have parking ticket revenue which must be massive (probably 300-800 per game @ $60 – $150 a shot). The bottom line is the stadium/franchise is an absolute cash-cow. Don’t think for a second that Connecticut and New Jersey wouldn’t absolutely love to have the Yankees playing in their states.

    Now that I’ve done my math and analysis thing, I guess I’ll get to the point…The Yankees are good for the city and for the state. Their cost of building a new stadium is extremely high due to their location, buried deep in the Bronx. Even if the stadium was built absolutely bare bones, it would still have cost far more than any single franchise could possibly afford. The tax exemptions on the bonds will cost the federal government millions more (I have no idea how much this is…some people speculate $500mm, but I doubt it is that much) on top of the $225 million the city is already spending on infrastructure improvements. However, in the long run, the government (city/state/federal) should recover much of the money lost due to the tax exemptions as well as the infrastructure expenditures.
    $25-30mm – Sales Tax
    $8-12mm – Employee Income Tax (total including federal & state)
    $65-75mm – Player Income Tax (total including federal & state)
    $15-20mm – Property Tax (assuming non-exempt property tax status)
    $1-2mm – MTA Fares
    $5-10mm – Taxes (Employee, Sales) Surrounding Businesses / Garages
    $2-4mm – Parking Citations

    $121-153mm collected annually in the form of direct and indirect revenue generated by the team and stadium.

    The indirect list could go on forever. The stadium increases the property value of the surrounding area, thus increasing the property tax on properties in close proximity to the stadium. As a result of the new stadium, a large scale redevelopment project is taking place in the Bronx just to the south of the stadium on the river. The team brings in countless tourists and their money from all over America and the world. The list goes on and on.

    Obviously the City of New York doesn’t get 100% of the tax profits generated by the stadium, but they certainly get a chunk. The federal government gets most of the income tax and the state gets a chunk of the sales tax, but the city certainly gets their share.

    All in all, it is a win/win for everyone. Civic projects assisted or wholly funded by the public are important to our way of life. They raise morale, create community, and benefit all of society by providing cheap and affordable means of entertainment for everyone.

    Now that I’ve said my piece…Let’s go Yankees!!!

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