Another Yankee Sweep

How city officials snoozed while the Yanks burned public money for their new stadium

The bulldozers are only now getting in gear for construction on new stadiums for the Yankees and Mets—as of Monday, dozens of trees had been felled in and around Macombs Dam Park to make way for the Yankees' new playpen, while the Mets have started excavations in the Shea Stadium parking lot in advance of an official groundbreaking. But city taxpayers have already been paying for them for years, thanks to lease clauses that have allowed the two teams to deduct $46 million from their city rent payments for "stadium planning" expenses.

The true cost of the Yankee lease clause —and how far the team has been allowed to stretch the definition of "planning"—is only now becoming apparent. (A Freedom of Information request for Mets documents was still pending at press time.) But last month ("Yankee Lobbyists on Taxpayers' Tab," July 26–August 1), the Voice revealed that among the "planning expenses" the Yankees charged to city taxpayers were portions of the salaries of top team execs Randy Levine and Lonn Trost, as well as the cost of the lobbyists who pressured both Albany and the City Council to approve the stadium deal.

Now, further investigation by the Voice has revealed that:

Taking their cuts: City workers chop down trees at Macombs Dam Park to make way for the new Yankee Stadium
photo: Cary Conover
Taking their cuts: City workers chop down trees at Macombs Dam Park to make way for the new Yankee Stadium

Those having a portion of their salaries charged to taxpayers included George Steinbrenner's sons Hal and Hank, plus his son-in-law (and now designated successor) Steve Swindal.

In addition to lobbyists, the Yankees charged the city $56,967.46 for the services of Sive, Paget & Riesel, the outside law firm that drew up the new lease in the first place.

Not only did Mayor Michael Bloomberg fail to act to repeal the giveaway leases, handed out by predecessor Rudy Giuliani, but his own stadium negotiations with the two teams actually cost the city a chance to recoup millions of dollars of the lost rental revenue.

"I fault the city as much as, if not more so than, the Yankees," says Dick Dadey, director of the good-government group Citizens Union, who calls it "alarming" that the Yankees were allowed to bill taxpayers for their stadium lobbyists. "The Yankees tried to cut the very best deal for themselves, as is understandable. But the city should have pushed back and been more explicit about what would have been an allowable expense."

The cast of characters that convened to write the new leases in the waning days of the Giuliani administration was not exactly motivated to push back. In the Yankees' case, the new lease—technically the eighth amendment to the team's existing lease on Yankee Stadium—was drawn up in late 2001 by a team headed by Yankees president (and former Giuliani deputy mayor) Levine and COO Trost. Sitting across the table on the mayor's side, meanwhile, was longtime Giuliani aide Robert Harding, who had worked alongside Levine as city budget director, then stepped into his old job as deputy mayor for economic development when Levine left to be Steinbrenner's stadium point man.

The resulting agreements—announced on December 28, 2001, just days before Giuliani left office—promised new stadiums for both the Mets and Yanks, with the city bearing half the estimated $1.6 billion construction cost, and gave the teams five one-year lease extensions, during which they could deduct up to $5 million a year apiece from their city rent payments for "stadium planning costs."

Bloomberg immediately put the stadium plans on ice—but let the planning deductions stand. Giuliani, he insisted, had tied his hands by signing the new lease language—though the Yankees publicly offered to scrap the new lease language if the new mayor asked.

But if it was the Giuliani administration that opened the treasury door, it was to a large extent Bloomberg who shoveled out the cash. That's because under the Giuliani lease, the city was supposed to recoup the stadium planning money eventually, as a credit against the city's share of construction costs—which in the Giuliani plan would have amounted to about $800 million.

Once the stadium deal was reborn under Bloomberg, however, it had changed: Now, in exchange for not paying rent (the Yankees would have been on the hook for more than $100 million worth of rent payments under the Giuliani plan), having land and infrastructure costs provided for free by the city, and receiving numerous city and state tax breaks, the two teams agreed to take on 100 percent of the construction costs. In part, this was done to maximize the amount that the teams could deduct from MLB revenue sharing— construction costs can be deducted, but rent and tax payments can't. But it also effectively made the recoup clause worthless, since the city no longer had construction costs to apply the credit to—making for an additional $46 million that Bloomberg left on the table, in addition to the roughly $600 million in city and state subsidies he agreed to provide for the two teams.

"The more we learn about this project, the more it looks like a backdoor version of the much maligned Giuliani proposal," says Good Jobs New York research analyst Dan Steinberg, who has been studying Bloomberg's stadium finance package since last year. "The city went so far out of its way to make this project appear to be privately financed that it was willing to shoulder additional costs."

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