Monday, November 10, 2008

Yankees Si, Bloomberg No

With all of the furor over corporate malfeasance roiling our national political debate and stimulating calls for accountability, it's important to point out that we have one of the best examples of shifty business accounting practices right here in NYC-and, no, it's miles away from Wall Street-up on River Avenue in the Bronx.

As Juan Gonzales has tirelessly pointed out, the Yankees, a franchise worth upwards of $1 billion, have been cheating New York tax payers for years: "The Yankees improperly deducted more than $11million from their annual rent bill for Yankee Stadium over a four-year period, city Controller William Thompson has found. Thompson, who will make a formal announcement about the Yankee bill today, said the team has agreed to pay it all back - with interest. The richest franchise in baseball overstated expenses by more than $24 million from 2003 to 2006, which allowed it to underpay its rent bill on the city-owned stadium, Thompson's year-long audit found."

So while these masters of the House that Ruth built have been, "rooking the guests, and cooking the books," what has our corporate maven down at City Hall been doing in the way of oversight? Jim Dwyer's follow up to Gonzales in Saturday's NY Times is instructive in this regard. The current sleight-of-hand is really chump change; and the mayor appears to have bent over, with his drawers around his ankles, when it comes to the Yankees: "But these are appetizers before the true banquet: The subsidies for the construction of new stadiums and garages that come in hard cash, in the loss of public parkland and in forgone taxes. Earlier this week, The New York Times reported that the state and the city would cover at least $659 million in costs related to new stadiums for the Yankees and the Mets. The teams will receive an additional $480 million in tax breaks of one kind or another."

Now, as Dwyer recounts, we're all aware of how Rudy's jock sniffing was costly to the tax payers-and Bloomberg did cancel out some of the Giuliani excesses; only to add his own it seems: "Over the next few years, Mr. Bloomberg proceeded to slather new layers of icing atop the Giuliani cakes. The stadium plans were reborn, richer than ever. As a result, on Saturday, there will be one of these hokey quasi-religious ceremonies moving home plate from the old stadium across the street to the new one. This happens the same week that Mr. Bloomberg says he has to close health clinics, shut libraries one day a week, not hire a new class of cops and raise property taxes."

Can you say corporate welfare? And we'd be remiss if we didn't credit Battina Damiani and Good Jobs, New York, for all of that group's work in exposing this malfeasance. Assemblyman Richard Brodsky's work has also been sterling on this issue.

Now the counter argument here is that these "investments" will pay off. Dwyer wonders: "The premise of these sports stadium investments, public officials say, is that economic development benefits will roll into the city over the decades — $40 million over 40 years in the Bronx, for instance.Perhaps this will happen. Or maybe it is a hallucination that is even flimsier than the assumptions that drove Wall Street to sink trillions into financial instruments that no one actually understood but all the right people agreed were worth tons of money."

All of which calls into question, once more, the economic strategies of the Bloombergistas-pushing stadia and mega rich real estate development at the expense of small business, local communities, and now we find, the tax payers as well: "No one is ready to say that the Yankees will turn into Lehman Brothers. But will the city really be able to collect all the rent it is owed from the garage that it is building for the team at a cost of $80,000 per parking spot? The garage operator gets to deduct some of the rent it owes the city if revenues don’t make certain projections, says Bettina Damiani, project director at Good Jobs New York, a think tank that has done studies critical of the stadium subsidies."

Stopped clock Lupica captures this and refracts it through the Bloomberg third term lens: "Somehow New York could make the transition from Rudy Giuliani to Bloomberg in the shadow of Sept. 11. Just not now. Of course this isn't about what is best for the city, it's about what's best for Bloomberg, who is 66 now and got absolutely no interest from the rest of the country when he tried to float his name for higher office earlier this year. So now Bloomberg, busting out of the gate showing how indispensable he is already, proposes big budget cuts for the city and more taxes and reducing the city's work force by as many as 3,000 jobs."

But the Yankees continue to live large will all others must sacrifice: "Both the Mets and the Yankees got a pile of city money to build themselves new baseball stadiums, both of which will open in April. They got this kind of money because ballclubs getting this kind of money, no matter how much of their own money they put up, has become the great civic hustle of the last 25 years in America, at least when America still had money. Always the taxpayers are told the same thing, from coast to coast: How good this will be for them, when the truth is that it is good only for the taxpayer who owns the team, and the taxpayer who builds the owner his grand new stadium."

Concluding, Lupica underscores the Bloomberg hypocrisy: "At a time when there isn't enough money to make the city work right and Bloomberg has to ignore public referendums to keep himself on the job because he needs something to do in his golden years, it is a boom economy in New York baseball, you bet. And nobody at City Hall seems to appreciate the irony of that at a time when the mayor wants everybody else to clip coupons and make sacrifices."

So, with Bloomberg arguing that his expertise and fiscal probity merits overturning the will of the people so he can lead the city for a third term, it's extremely useful to examine how his expertise has been exercised. If we look at Yankee Stadium, what we see is toadying to another billion dollar enterprise with no thought to the impact that corporate largess would have on the city. That's the kind of financial know how that's not even worth a dollar a year.