Report: Loot, Loot, Loot for the Home Team: How the Proposal to Subsidize a New Yankee Stadium Would Leave Residents and Taxpayers Behind

Date Published: 
February, 2006

Bettina Damiani and Dan Steinberg

Contrary to official claims of job creation and economic benefits, the report shows the fiscal benefits will not outweigh the over $400 million in subsidies proposed for the project and many “permanent” jobs will actually be low-wage and seasonal and therefore won’t lift workers out of poverty.

Download complete report

View the press release

Executive Summary

Whatever the Yankees want, the Yankees get. That’s been the policy of one mayor after another inNew York. The richest team in major league baseball wants to build a new stadium, and city andborough officials seem all too eager to subsidize one. But public officials and team executives arethrowing taxpayers a curve ball. They are making it seem as if the Yankees are footing the bill for thenew facility, but that is far from the truth.

Good Jobs New York’s analysis of available information reveals that taxpayers will pay a very highprice for the project. Even if the Yankees pay the direct construction costs, the public will face otherexpenses and lost revenue totaling nearly half a billion dollars. This sum far outstrips the newstadium’s projected economic benefits to the city.

There are also serious problems with the process by which the deal has been pushed. It has beenmarked by top-down, closed-door decision making, and very limited community input. It has also beenmarred by a covert legislative maneuver in Albany to seize park lands, as the proposed new stadiumand parking garages would displace 22 acres of heavily used public park lands in the South Bronx.According to many residents, plans to replace the parks are woefully inadequate.

Given our findings about both costs and process, Good Jobs New York suggests that the entire deal bereevaluated to make sure it is in the best interests of both the residents of the Bronx and all New Yorktaxpayers.

Major findings

Direct and indirect subsidies could exceed $480 million. Public officials and team executives have stressed that the Yankees would cover the $800 million cost of constructing the new stadium, with thecity and state contributing about $210 million for replacement parks, parking garages, andinfrastructure improvements.  But the taxpayer costs are far higher: the Yankees would not be required to pay rent, property taxes, mortgage recording taxes, or sales tax on construction materials. The city and state would also issue tax-exempt bonds to finance the stadium’s construction, generating tax-free income for the bond buyers.  These additional subsidies will cost taxpayers far more than what has been reported.

The new stadium will not generate enough revenue to cover its cost to taxpayers. The public costs ofthe project will exceed the stadium’s contribution to the city’s economy over a 30 year period, asestimated by a report commissioned by the New York City Economic Development Corporation. This finding is consistent with countless previous studies by academic economists who have found thatrevenues created by new stadiums, especially replacement facilities, do not result in significanteconomic growth.

Subsidizing this stadium is a costly and inefficient strategy for creating jobs. Even by the city’saccount, many of the “permanent jobs” created by this project will be seasonal and low-wage. Compared to other uses of the money, it is difficult to justify spending and foregoing hundreds ofmillions of dollars in tax revenue for poorly compensated jobs such as ticket takers, ushers, vendors,restaurant workers, and parking lot attendants. Jobs such as these would not effectively address thealarmingly high rates of poverty and unemployment in the stadium’s South Bronx community – theU.S. Congressional district with the nation’s highest rate of poverty.

The surrounding community has been excluded from the planning process. Despite the massive sizeof this project, little or no effort was made to include community residents in its development. This topdown approach has created resentment among many residents, park advocates, and transportation groups. Public officials have taken great pains to expedite the public review and subsidy allocation processes while obscuring the deal from local residents. As a result, many residents believe the new stadium would not address the long standing needs and concerns of their community.

The state-legislated seizure of two parks – Macomb’s Dam Park and sections of John Mulally Park –sent shockwaves through the area. Together they function as the South Bronx’s Central Park, and Macomb’s Dam Park would be entirely lost to the stadium and parking garages. The Bronx Borough President and local officials seek to plan replacement parks, but these plans have fallen short of what the community currently has. Instead, smaller parks would be sprawled about the area of Yankee Stadium. New recreational space is even proposed for the roofs of the parking garages, not ideal for a neighborhood with one of the highest asthma rates in the city. Other new park space would have to compete with the sounds of elevated subways and shadows from the new stadium.

Public officials must be held accountable. Both Mayor Bloomberg and then-Bronx Borough President Adolfo Carrion altered their positions regarding publicly subsidizing this project. And local elected officials State Assembly Member Carmen Arroyo and her daughter, City Council Member Maria del Carmen Arroyo, were instrumental in seizing the parks by co-sponsoring the state legislation and home rule message permitting the Yankees to build a new stadium on top of a public park.

Yankee President Randy Levine is also central to the story. Levine, Deputy Mayor for EconomicDevelopment and Planning under Mayor Rudolph Giuliani, knows a great deal about packaging corporate giveaway deals. That administration’s proposal to build a new trading floor for New YorkStock Exchange, at its height, would have cost over a billion dollars. Even as an aborted deal, it has still cost taxpayers upwards of $122 million. Besides the NYSE boondoggle, over $200 million in subsidies were allocated to some of the wealthiest firms in the country; several media firms even received a second helping.

South Bronx residents live in the poorest Congressional district in the country. In recent months they have actively sought a place at the community planning table. But insiders seem to have set the table long ago. We note that Levine has made $2,000 in campaign contributions to Borough PresidentCarrion and that executives of the Yankees cable television station, the YES Network, have contributed $7,000 to Carrion’s campaign.

A recent “community benefit” deal negotiated by the Bronx Borough President for a neighboringproject, the Bronx Terminal Market, has set a low bar for future deals.

The New York Yankees and baseball are an integral part of being a New Yorker. The Yankees are aninternational symbol of a successful sports franchise; people around the world wear Yankee merchandise. New Yorkers love their baseball (don’t worry Met fans, your team is up for subsidies too) and by and large Bronxites take great pride in hosting the Yankees. That’s why many Bronx residents feel they deserve better from the Yankees and their elected officials.

Public Policy Options

Call the Yankees’ bluff. As the largest sports and media market in the United States, New York has terrific bargaining power. This power should be used to insist that the Yankees exhaust every availableoption – including stadium renovation instead of replacement – with the goals of creating good jobs,lower taxpayer costs, better public health, and more vibrant public parks.

Restart the planning process to include community stakeholders. The stadium deal will never achievethese goals unless the community is genuinely involved in the process. Many Bronx organizations want to participate. It may slow the process a bit, but it would ensure a far better outcome. Delaying theYankees’ desired spring groundbreaking should not be an issue.

Give the renovation option a full hearing. Residents and taxpayers deserve a full exploration of whythe Yankees don’t want to renovate their current stadium. Public officials should investigate and weighall other options and make the findings public. A “financial hardship” for three seasons for the Yankeesshouldn’t drive a permanent blunder for New Yorkers.

Get the figures straight. GJNY’s research reveals recurring inconsistencies between city and stateagencies on the deal’s costs and benefits. A full accounting of both the true subsidy costs and realisticpublic benefits is necessary for a more informed debate.

 

Download complete report

View the press release