Funding the new Yankee ballpark

Behind The News
June 12, 2008 1:26:13 PM PDT
The old "in for a dime, in for a dollar" theory may be what comes into play in the current flap involving the New York Yankees. There are many people who expressed skepticism over any public contributions to the construction of the new ballparks for the Yankees or the Mets or the Nets, who want to move from New Jersey to Brooklyn as an anchor tenant of the new Atlantic Yards.

There's the valid argument that the presence of a new facility increases tax revenues, so the City gets money from these teams. But the truth is that these teams are cash cows and the profits redound not to taxpayers -- some of whom double as fans who pay the among highest ticket prices in the nation - but to the owners and highly paid players on the teams.

And so the critics say the teams should dang well fund these facilities themselves.

OK, so a compromise is worked out A $1.3 billion stadium for the Yankees gets funded with a couple of hundred million in City money, and the rest is up to the Yankees.

But a not-so-funny thing happened on the way to financing the new stadium in the Bronx -- a stadium that is fast rising by the way.

The IRS changed the way it taxes some of these industrial development bonds - and by "change the way" I mean it stopped giving them tax-exempt status. This is a huge deal, because selling bonds with tax-exempt interest is a huge - HUGE - incentive to investors. Consider that if a bond is sold with, say, an interest rate of 5% that's exempt from federal, state and local taxes - that could be the equivalent of a 10% "normal" return, pre-tax. That's a very good investment for most of us.

And not having that interest tax exempt could very well make the bonds less attractive, which is what now worries Yankees officials.

So someone floated the idea that the team would like more public financing, or a change in the construction's financial arrangement. The reaction was predictable, and team executives quickly tried to douse the firestorm.

But nothing happens by accident in these situations, and the Yankees may have achieved their goal -- to raise the issue.

So what does the City do? In for a dime, in for a dollar? Hard to imagine a guy like Mayor Bloomberg, who firmly believes in the effectiveness of business getting on with business (Exhibit A is the sometimes out-of-control building boom), would want to be responsible for pulling the plug on a three-quarters complete stadium for the most storied and richest sports franchise in the world.

I don't know what's going to happen, although I think it's safe to say the new stadium will open next season, completed. Who pays for what? That's the big question. Tonight, after NBA Playoff Game number four, we'll have the latest on this high-stakes game. (READ MORE)

Also tonight, we'll have reaction to a big defeat for the Bush Administration's tactics on the war on terror. The U.S. Supreme Court today - in a closely divided ruling, 5-4 - the court said that terrorism suspects held at the military's Guantanamo Bay in Cuba, have a Constitutional right to protest their incarceration in federal courts. "A stunning blow" to the White House, is how one veteran legal correspondent puts it. There are nearly 300 terrorism suspects held at Gitmo - held without any formal charges against them. Their rights as inmates have not been acknowledged - and that's unconstitutional, the Court ruled today. (READ MORE)

President Bush, in Rome meeting with Prime Minister Sivlio Berlusconi, said that he doesn't' agree with the Court's decision, although he says he "will abide" by it. "We'll study this opinion ... with this in mind: To determine whether additional legislation may be appropriate so that we can safely say, truly say, to the American people we are doing what we can to protect you." (READ MORE)

Also tonight, we're at a town hall meeting with Republican presumptive nominee John McCain in Lower Manhattan's Federal Hall. This is the town hall that ABC News and Mayor Bloomberg invited both candidates to attend; both candidates declined, saying they didn't want just one network to broadcast the meeting. So now, no one's broadcasting it - in part because it only involves McCain.


We'll also have any breaking news of the night, plus Lee Goldberg's AccuWeather forecast, and Scott Clark with the night's sports. I hope you can join Liz Cho and me, tonight after Game Four of the NBA Finals.