When Mayor Michael Bloomberg killed Rudy Giuliani’s stadium plans for the Mets and Yankees in 2002, he deemed the $800 million taxpayer gift that Giuliani had proposed to be both irresponsible and unnecessary. Three years later, when Bloomberg revealed his own stadium plans for the city’s baseball teams, he said that taxpayers wouldn’t be on the hook for the stadiums at all.
“We don’t do subsidies,” said Bloomberg during the announcement. He also promised that the city would eventually make a profit on the deal.
Bloomberg was wrong. According to a new report from the Brookings Institution, the federal government got shafted.
Because the municipal bonds the city offered the teams for construction were labeled “tax free,” the federal government wasn’t able to collect a combined $706 million in taxes on the bonds, money that both the Yankees and Mets were able to keep and put toward the construction of their stadiums.
That’s all in addition to the millions of dollars in infrastructure that the city created for the two new stadiums, something the Brookings report makes clear hasn’t resulted in any substantive benefits to the city’s bottom line.
“There is little evidence that stadiums provide even local economic benefits,” the report says. “Decades of academic studies consistently find no discernible positive relationship between sports facilities and local economic development, income growth, or job creation. And local benefits aside, there is clearly no economic justification for federal subsidies for sports stadiums.”
Both Yankee Stadium and Citi Field sit atop city-owned land, and neither team pays rent or property taxes. The city takes home none of the profits the stadium makes, besides taxes on the corporate entities themselves.
While the federal government was left with a hefty portion of the bill, Bloomberg thought the city could turn a tidy little profit from the stadiums by getting the teams to provide luxury boxes that the city could then rent out. That plan fell flat as Bloomberg left the teams in charge of renting out the suites — something neither was inclined to do if it couldn’t keep the profits. Bloomberg projected $1 million a year from the suites. Last year the teams barely managed to scare up $160,000.
Both stadiums have been decently profitable. The Yankees saw their valuation rise to $3.4 billion this year, and the Mets experienced a 22 percent increase in value following a World Series run that shook off the economic funk that almost sank the team following its involvement in the Madoff scandal. Even with all the transit improvements the city rolled out for the Yankees, the team is facing its worst year of attendance in over a decade, due to sky-high ticket prices and an underperforming (well, until very recently) squad. Now the Yankees are attempting to get the city to refinance their debt on the stadium that taxpayers helped build for them.
The city also doled out tax-exempt bonds when luring the Nets to the Barclays Center, to the tune of $161 million. That stadium has turned out to be a complete disaster. And of course, this all pales in comparison to the inane property tax exemption that the Knicks and Rangers have been handed for the past 34 years. Last year alone, the city could have collected $48.5 million from Madison Square Garden. It’s all one big scam, people!