Another Yankee Sweep

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

Comptroller William Thompson harshly criticized Bloomberg's acceptance of the Giuliani leases at the time, and called on the mayor to renegotiate the leases. "Although the teams have to submit to the City 'invoices and other evidence of the Planning Costs in reasonable and customary detail,' " wrote Thompson in a January 14, 2002, letter to Bloomberg, "the City is left with very little input in how and when these funds are expended." The only oversight left to the city, noted the comptroller, was auditing the money trail once the cash had already been spent.

Yet once the mayor refused to revisit the lease, the comptroller apparently threw up his hands when it came to playing watchdog. Contrary to claims by Thompson's office last month that it hadn't audited the teams' "stadium planning" rent deductions, the comptroller's office now says its auditors did look at planning costs as part of its regular review of the Yanks and Mets rent payments—but only to disallow invoices for costs before 2001, when the planning deductions kicked in. (Among the handful of receipts that got the ax: an April 2000 hotel bill for George Steinbrenner himself.) As for the rest of the teams' questionable claims, Thompson— the only government official to have examined how the Yanks and Mets were spending city money—apparently never mentioned them to anyone.

The logic, presumably, was that under the incredibly broad lease language drawn up by Giuliani—acceptable deductions are defined as "the preparation of studies, surveys, tests, analyses, estimates and designs, [and] architectural, engineering, design, financing, accounting, consulting, planning, surveying, environmental, land use, and legal services, and any other similar or related costs customarily incurred in planning new sports stadium facilities"—pretty much anything was fair game for the teams to claim as a legit expense. But lobbyists and the hired-gun lawyers who drew up the 2001 lease for the existing stadium? Even John Tepper Marlin, a business ethics professor at NYU who until earlier this year served as Thompson's chief economist, wonders about that: "One could stretch the word, but there must be a boundary. At some point, the definition of 'planning' must mean something."

Henry Stern, who as Giuliani's parks commissioner was the one to actually sign the Yanks and Mets lease extensions, says he "never heard any conversation relating to legal and lobbying costs," though he quickly adds, "I didn't handle negotiations." But he's not exactly surprised that things turned out as they did.

"I have found that very often, just in the course of business, when the city signs an agreement with another party, and city officials change and the private party remains the same, things don't come out the way they were intended by the city," says Stern, who has served on and off in city government since 1973 and now runs his own think tank. "Particularly in economic development matters, the reality on the ground often ends up different from what the parties intended when they signed the lease." This was particularly true, he says, at the end of 2001, as Giuliani's staffers cleared out their desks to make way for Bloomberg's team: "The city was not rich in institutional memory."

"I'm not sure if the city ever did imagine that the Yankees would include lobbying expenses as part of their project planning expenses," muses the Citizens Union's Dadey. "But now that the city knows full well what charges are being deducted from the rent, the city owes it to the taxpayers to go back and clarify what are legitimately accepted expenses. This is like padding the expense account, but the people who pay are the taxpayers."

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