Senior Bloomberg aides had fought hard to get the luxury boxes, describing the perk in internal e-mails as "a big issue to the mayor" during negotiations with the teams in 2006.
That battle for the boxes only recently came to light as state and federal lawmakers launched investigations into how the teams and the administration went about making those deals.
The decision to give up the luxury boxes comes as Bloomberg seeks re-election this year and repeatedly cites the city's enormous budget shortfalls. The former chief executive officer, whose critics sometimes label him as an out-of-touch billionaire, has staked his campaign for a third term on his ability to protect the city from fiscal ruin, and he often says every city agency must learn to "do more with less" in tough economic times.
Bloomberg spokesman Andrew Brent said the new agreement means the city will receive cash payments for the use of its Yankees box. Future mayoral administrations will have the option of using the box or being paid for it.
Yankees suites cost $600,000 to $850,000 each. According to a letter from the city to Yankees President Randy Levine, the new deal stipulates that the team can market the city's box at "fair market value" and pay the city no less than $100,000 for each season.
Mets suites were priced at $250,000 to $500,000 apiece.
State Assemblyman Richard Brodsky, who accuses the city of conducting the stadium negotiations behind closed doors, said the Bloomberg administration is clearly worried about how it looks to be haggling over luxury boxes now that the city is grappling with dramatic budget cuts, job losses and tax hikes.
"This whole thing has been an embarrassment," Brodsky said. "I think they were scared about the public reaction to this entire fiasco."
The luxury box deal was announced as the city and teams prepare for a public hearing next week to discuss additional support for the stadium projects.
Both teams have asked the city for more public bonds to finance their increasingly expensive ballparks, which are expected to be completed this year.
In applications filed before the hearing and released Tuesday, both teams gave long lists of reasons why they want more public bonds. They cited additional expenses including construction delays, government requirements such as security and fireproofing and design changes such as enhanced scoreboards and expanded food service areas.
The Yankees are asking for another $259 million in tax-exempt bonds and $111 million in taxable bonds, on top of $940 million in tax-exempt bonds and $25 million in taxable bonds already granted for its $1.3 billion Bronx stadium.
The Mets are requesting an additional $83 million, after the $615 million already approved for their $800 million Queens park.
The city's Industrial Development Agency must hold a hearing before granting any additional public support for the ballparks.
