Stadium Discussion

[JGarrettLieb]

Explain to me how the city benefits from the NYCFC games being played in their own stadium vs in Yankee Stadium. There's nothing wrong with subsidizing billionaires if you can show it is an accretive transaction for the city, but how exactly would that be the case in this case?

https://emma.msrb.org/ER971182-ER759636-ER1161062.pdf

That is the financial statement of the parking garages for 2015. I'm assuming you know how to read them. They're freaking hilarious.

In short the city receives $0 for that space and likely never will.

I wonder what the bondholders are going to do come October this year though. They can start calling paper if they want to. I wonder what the NPV is for forcing a default now and selling the assets, which are probably overvalued, vs keeping the shambles going.

 

[Christopher Jee]

Explain to me how the city benefits from the NYCFC games being played in their own stadium vs in Yankee Stadium. There's nothing wrong with subsidizing billionaires if you can show it is an accretive transaction for the city, but how exactly would that be the case in this case?

It seems evident that the club's growth is hampered by playing at Yankee Stadium. If the club is larger and more successful, this is good for the city, both financially and with regard to intangibles like happiness. If the club builds a new stadium, it will create a modest number of jobs, which again has financial and intangible benefits.

Alternatively, land goes under-utilized and debt that is never going to be paid back goes unpaid.

Caveat – I'm no expert in these things.

 

[sundance]

Caveat – I'm no expert in these things.

That attitude has no place in these forums!

 

[413Blue]

The question in this case is what is the best solution for the garage? Leaving it as is will be awful for the City. Can they get a better offer than the one the stadium came with? Yet to be seen, but clearly the stadium was a better alternative than nothing?

 

[hatt91]

All the New York City legal minutia, real estate deals, and economics is over my head.

But the way I figure it is this... right now the city has no income from the parking garage. ZERO. If NYC FC were to build a stadium, they would create construction jobs and start paying taxes on the property, and would continue to do so.

So the city could maintain it's current course and get nothing, or let a stadium get built and have an income.

 

[snugglefarts]

Can we actually fit a stadium in the gal site, though? We've had that discussion and I can't remember how it turned out but I think the answer was no or just a small one.

 

[SanBartG]

NYC politicians have no "understanding of business and the realities of making money."

Deblasio treats making money like it's a sin. God forbid.

 

[FredMertz]

https://emma.msrb.org/ER971182-ER759636-ER1161062.pdf

That is the financial statement of the parking garages for 2015. I'm assuming you know how to read them. They're freaking hilarious.

In short the city receives $0 for that space and likely never will.

I wonder what the bondholders are going to do come October this year though. They can start calling paper if they want to. I wonder what the NPV is for forcing a default now and selling the assets, which are probably overvalued, vs keeping the shambles going.

This doesn't answer my question. What is the benefit to the city of NYCFC playing in a new stadium, vs. playing in Yankee Stadium? What incremental revenue to the city is created? I'm not talking team vs. no team, I'm talking team playing at Yankee Stadium vs new stadium.

 

[FredMertz]

It seems evident that the club's growth is hampered by playing at Yankee Stadium. If the club is larger and more successful, this is good for the city, both financially and with regard to intangibles like happiness. If the club builds a new stadium, it will create a modest number of jobs, which again has financial and intangible benefits.

Alternatively, land goes under-utilized and debt that is never going to be paid back goes unpaid.

Caveat – I'm no expert in these things.

Any new jobs created would be short-term construction jobs. There's no shortage of construction jobs right now.

Let's say you think a new stadium would draw 30k per game (which I think is a stretch), I'm still not certain that enough (or any) of that incremental revenue flows back to the city in a way that makes contributing to a new stadium a good deal.

Again, the choices right now are YS vs SSS, not team vs. no team.

 

[Christopher Jee]

Any new jobs created would be short-term construction jobs. There's no shortage of construction jobs right now.

Let's say you think a new stadium would draw 30k per game (which I think is a stretch), I'm still not certain that enough (or any) of that incremental revenue flows back to the city in a way that makes contributing to a new stadium a good deal.

Again, the choices right now are YS vs SSS, not team vs. no team.

The question is not YS vs SSS, it's underutilized land vs utilized land. If we wanna compare utilizations by some set of criteria, that would be reasonable. If the city were to give up the debt for just anybody and sell the land for market value, I'm genuinely curious what civic-maximizing alternatives we'd come up with. If nothing else, it'd probably be good for an extra page or two for the compendium.

 

[Lasker]

I thought there was some scuttlebutt to the effect that the club no longer interested in the parking garage space since they have decided they want to build a larger stadium that won't fit there, but I can't remember the provenance of that info.

 

[Alex Da Silva]

With the Portland Renovation Announcement, I looked at its inspiration, the Bombonera (Boca Juniors Stadium), and the flat and high side made me wonder if we could do something of a scaled down version of the stadium (30k-35k), would the footprint be significantly reduced and make it easier to fit the stadium somewhere?

 

[snugglefarts]

I thought there was some scuttlebutt to the effect that the club no longer interested in the parking garage space since they have decided they want to build a larger stadium that won't fit there, but I can't remember the provenance of that info.

That's what I thought.

 

[Gotham Gator]

I am tired of hearing about fucking subsidies at the GAL site. Asking the city to eat the parking garage's debt is not a subsidy to someone who doesn't own the garage and had nothing to do with the original deal. Indeed, if CFG had agreed to make good on even a portion of that debt, it would have been a subsidy in the other direction.

Now, if CFG had been expecting to get the land at below market rate or to receive tax abatements, those would be subsidies, but I don't think anyone knows if those were on the table.

 

[Brooooooklyn2015]

Mayor-elect Bill de Blasio, who was not briefed on the deal until Wednesday, did not immediately embrace the proposal, in part, because the Bloomberg plan entails tax breaks, the sale or lease of public land and public financing.

The team would also have to come to terms with the Bronx Parking Development Company, which controls a garage on the site that would have to be demolished. The parking company is teetering on the edge of bankruptcy, a move that could leave the city liable for its $240 million debt. Mr. Levine has offered the company about $25 million.

But the team also needs to buy or lease adjacent parking lots from the city and gain control of a section of East 153rd Street.

At the same time, the team wants the city to issue $250 million to $300 million in tax-exempt bonds. The team would be responsible for paying off the debt, but the bonds would save the team millions of dollars in federal and state taxes over 38 years.In addition, the deal would include sales tax and mortgage recording tax exemptions worth an estimated $21.5 million.

Quotes from the 2013 Times article. Sounds like a lot of giveaways. We need a stadium but ownership needs to pay up.

 

[Gotham Gator]

Mayor-elect Bill de Blasio, who was not briefed on the deal until Wednesday, did not immediately embrace the proposal, in part, because the Bloomberg plan entails tax breaks, the sale or lease of public land and public financing.

The team would also have to come to terms with the Bronx Parking Development Company, which controls a garage on the site that would have to be demolished. The parking company is teetering on the edge of bankruptcy, a move that could leave the city liable for its $240 million debt. Mr. Levine has offered the company about $25 million.

But the team also needs to buy or lease adjacent parking lots from the city and gain control of a section of East 153rd Street.

At the same time, the team wants the city to issue $250 million to $300 million in tax-exempt bonds. The team would be responsible for paying off the debt, but the bonds would save the team millions of dollars in federal and state taxes over 38 years.In addition, the deal would include sales tax and mortgage recording tax exemptions worth an estimated $21.5 million.

Quotes from the 2013 Times article. Sounds like a lot of giveaways. We need a stadium but ownership needs to pay up.

Good find, but I disagree that it is a lot of giveaways. As mentioned, I don't agree that the City being liable for the $240 million in parking garage debt is a subsidy. The tax exempt bonds are a break for the team, but they are a very common tool in all sorts of public/private works projects, in large part because the benefit in lower interest rates comes very much more from Federal tax savings rather than state and local tax savings. The $21.5 million is a subsidy, but a very small one in the scheme of things, and unlikely to have really held up the deal on either side.

What you don't see is the city giving away the land, paying for any construction, or providing property tax abatements, which are all fairly common in stadium deals and are the kinds of things that attract criticism. Interestingly, the original Yankee Stadium deal, with the Giuliani administration, had the city picking up $800 million in construction costs. Bloomberg killed that and in the final deal, the city did not pay anything for construction. The city and state did, however, pay for the new park built on the old stadium site ($200 million), road and sewer costs ($65 million), the new Metro North station ($91 million), and the parking garages ($70 million directly and $170 million in loan guarantees). The tax abatements, including in the form of tax free bonds, amounted to $310 million.

http://www.nytimes.com/2008/11/05/nyregion/05stadiums.html

Edited to add a link to a full breakdown of subsidies vs. team payments for Yankee Stadium and Citifield.

http://www.fieldofschemes.com/documents/Yanks-Mets-costs.pdf

 

[Gotham Gator]

By the way, here is an interesting read on the parking garage situation. Not sure why CFG is expected to bail the city out of this mess.

The city loses $12 million/year on the garages through unpaid rent and taxes. Also, the bonds have to get paid before the city sees any of the (then) $60 million the garages owe it. It is not clear from the article whether the city would have to cover principal on the bonds if there were a default.

http://www.nydailynews.com/new-york...ages-operator-drowning-debt-article-1.2297401

 

[SanBartG]

As long as the Yankees are part owners of NYCFC, the fate of the parking garages will be tied to any stadium financing agreement. Is it right? No. But that won't matter.

And with the bond holders entitled to payment before the taxpayer, you more or less guaranteed that the city will never get repaid under the current terms of the contract. Somebody needs to find a way to make the city whole separate from Citibank and other bond holders to have a chance at getting a stadium deal done.

 

[JGarrettLieb]

By the way, here is an interesting read on the parking garage situation. Not sure why CFG is expected to bail the city out of this mess.

The city loses $12 million/year on the garages through unpaid rent and taxes. Also, the bonds have to get paid before the city sees any of the (then) $60 million the garages owe it. It is not clear from the article whether the city would have to cover principal on the bonds if there were a default.

http://www.nydailynews.com/new-york...ages-operator-drowning-debt-article-1.2297401

Considering those bonds are trading at 29 cents on the dollar, I'm going to go with the city is not responsible for the principal.

 

[Brooooooklyn2015]

There should be no public financing of this stadium at all. For me, its not about a lot or the amount that just right. No need for subsidies.

Here is the FOS post about the deal.

http://www.fieldofschemes.com/2014/...cer-numbers-total-city-subsidy-now-at-206-5m/