Matt Welch, editor in chief of Reason, takes up an issue that I have written about on numerous occasions: the inexcusable gargantuan public subsidies for the New York Yankees’ new stadium:
This year the Yankees moved into a new stadium. According to baseball economist Neil deMause of the excellent Field of Schemes website, the facility cost a stunning $1.56 billion, and the total project (including replacing 22-acres of parkland that had been destroyed by the construction) totaled $2.31 billion [pdf]. Both figures are all-time records in the history of sports stadia. “Of that,” deMause estimates, “the public—city, state, and federal taxpayers—are now covering just shy of $1.2 billion, by far the largest stadium subsidy ever…..”
To sum up: The most successful, most opulent, and most hated baseball franchise in North America, widely known as “the Evil Empire,” receives an unprecedented amount of government giveaways in a time of recession and government budget-squeezes, with which it increases its already sizeable revenue advantage, partly by charging ticket prices that only the rich can afford. With all that dough safely pocketed, the team then shells out $423 million in free agent contracts for just three players, who help vault them back into the League Championship Series for the first time since 2004.
For my own earlier posts on the Yankee Stadium subsidies, see here, here, here, here, and here.
As a fan of the rival Boston Red Sox, I am definitely biased against the Evil Empire of the Bronx. However, as I pointed out in my very first post on this subject, I am just as vehemently opposed to similar subsidies for Boston teams. For example, I was against various proposals to use public funds to build the Red Sox a new stadium that were considered back in the 90s; fortunately, the Sox decided to keep Fenway Park and refurbish it with private funds. Otherwise, I would have had to choose between my principles and my fan loyalties. And I could not love the Red Sox half as much loved I not freedom more. In any event, the possible impurity of my motives doesn’t undermine the validity of my point. As numerous studies show, sports stadium subsidies virtually always create far more costs than benefits for the public. If the Yankees’ George Steinbrenner and his fellow millionaire owners want to build new stadiums, they should pay for it themselves. In the meantime, we Red Sox fans will have moral reasons to root against the Yankees, in addition to those derived from our loyalty to Red Sox Nation.
Steve says:
Do the Yankees pay rent? Who holds legal title to the stadium?
October 17, 2009, 1:44 amjvarisco says:
I doubt the people paying the subsidies (New Yorkers) “hate” the Yankees. In fact, they are probably fans. As a New Yorker, I can think of a lot worse ways the government spends money than helping the greatest team in the history of sports get a nice new facility.
October 17, 2009, 1:58 amIlya Somin says:
I doubt the people paying the subsidies (New Yorkers) “hate” the Yankees. In fact, they are probably fans. As a New Yorker, I can think of a lot worse ways the government spends money than helping the greatest team in the history of sports get a nice new facility.
New York includes a lot of people who are Mets fans, indifferent to baseball, or believe that public funds can be spent better in other ways. Why should they be forced to subsidize the Yankees? Moreover, much of the money subsidizing the stadium comes from federal and state grants, not just NYC funds. So taxpayers all over the country are paying for this.
October 17, 2009, 2:12 amIlya Somin says:
Do the Yankees pay rent? Who holds legal title to the stadium?
The Yankees do. And, obviously, they don’t pay themselves rent.
October 17, 2009, 2:13 amJosh Blackman says:
Ilya, the timing of this post screams SOUR GRAPES! Yankees over the Dodgers in 5.
October 17, 2009, 2:32 amLeo Marvin says:
If you say so.
As long as we’re judging MLB teams on ideological grounds, don’t forget which franchise was the last one to integrate.
October 17, 2009, 3:34 amPersonFromPorlock says:
Despite the pieties of the (big) business world, we don’t have a capitalist economy; we have a rent-seeking one. There’s no point in fulminating about Yankees ownership corrupting the system when they’re just skilfully using it. Changing the system might be a good idea, but it’s hard to see what leverage ordinary taxpayers have that could manage that.
October 17, 2009, 5:57 amLinda F says:
Nice re-write of the Browning quote.
October 17, 2009, 7:29 ammikeyes says:
There are a lot of cases of public construction of privately used buildings that required a referendum before being built. Miller Park in Milwaukee and the Convention Center in Nashville to name the first two I found on google.
October 17, 2009, 8:39 amHere are a few more (ignore the illiterate “Referendum’s.”)
rpt says:
The Goldman Sachs of baseball.
October 17, 2009, 9:12 amwm13 says:
What jvarisco said. Compared to all the other nonsense that New York City pays for, a new stadium for our team seems like the least of our problems. I don’t think this is the issue that will galvanize some sort of libertarian taxpayers’ revolt.
October 17, 2009, 9:41 amRSF677 says:
fortunately, the Sox decided to keep Fenway Park and refurbish it with private funds.
Ilya, I think your Red Sox bias might be showing here. I’m pretty sure the ownership group chose to refurbish using private funds because the legislature told them to get lost. I don’t think Tom Henry and Co. would have any problem with taking free handouts. Otherwise, I don’t have any objection to your claims above. Taxpayer funded stadiums are clearly a total waste. This is especially true in cities like NY and Boston where the team can’t threaten to move to a new city.
October 17, 2009, 10:10 amProf. S. says:
Listening to a Red Sox fan talk about the Evil Empire of the Yankees is like listening to North Korea talk about the wrongs of Iran.
October 17, 2009, 10:26 amChrisIowa says:
The Brooklyn Dodgers might disagree.
October 17, 2009, 10:28 amDave N says:
So might the New York Giants (the one that plays baseball, not football).
October 17, 2009, 11:59 amRSF677 says:
I think examples from fifty years ago prove next to nothing. The Giants and Dodgers left New York in a very diiferent time. What city would the Yankees or Mets move to now that wouldn’t dramatically reduce thevalue of the franchise?
October 17, 2009, 12:33 pmA.S. says:
“New York includes a lot of people who are Mets fans, indifferent to baseball, or believe that public funds can be spent better in other ways. Why should they be forced to subsidize the Yankees?”
For the same reason people are “forced” to subsidize parks, zoos, beaches, Lincoln Center, roads, buildings, and lots of other things.
I have probably noted on all of Ilya’s posts on the subject, I don’t see any relevant distinction between subsidization of the stadium and of lots of other recreational activities. After all, we publicly subsidize all sorts of entertainment options, including options that are not free to users, and options that lead to profits for private entities. Moreover, I don’t see any reason that public provision of entertainment should be treated any differently that public provision of transportation, safety, and lots of other public goods.
To me, Ilya’s posts on the subject have never been particularly convincing.
(And I am a Mets fan.)
October 17, 2009, 12:37 pmDave N says:
RSF,
Newark (or Long Island). They wouldn’t have to move far — and the teams could even keep their current names.
October 17, 2009, 12:50 pmA.S. says:
BTW, I should add that the so-called “subsidies” being provided by the City are, in fact, public infrastructure – mostly including several brand-new parks and a new Metro-North station. So Ilya and others may call this “subsidies” for the Steinbrenners, but in reality they are parks and other infrastructure that are free and open to the public.
The other material categories of subsidies include the tax-exempt financing (reducing taxes that would otherwise be paid to the federal government). That “subsidy”, which is of course not limited to sports projects, assumes that the project would otherwise be built for the amount actually paid – a dubious assumption. Finally, the other material “subsidy” is the even more dubious category of foregone future property taxes.
In sum, the supposed “subsidies” are, in reality, public infrastructure open to all and the assumed foregone taxes – which is based on highly dubious assumptions.
October 17, 2009, 1:19 pmA.S. says:
This is false. The real estate is owned by the City’s Economic Development Corporation (EDC) and leased to the Yankees. There are no rent payments. However, the Yankees will pay maintenance and upkeep costs, which the City was responsible for under the lease for the old Yankee stadium. Which nets out to be a wash as compared with the lease for the old Yankee stadium.
October 17, 2009, 1:33 pmTexEd says:
Many think that the beneficiary is “the Yankees” just as many think that the new stadium in Arlington, Texas benefits the Dallas Cowboys. My view is that the public money benefits the owner of the team, Steinbrenner of the Yankees and Jones of the Cowboys.
October 17, 2009, 2:02 pmWhen either team is sold, what will the existence of the new, publicly funded, stadium ADD to the purchase price of the privately owned team? My view is that NONE of this incremental amount should go to the owner. I can’t believe that any public official would look beyond years of free use of private suites at the new facility to write any such contingency into the agreements or address the methodology to calculate what the incremental value might be.
David Welker says:
I find myself in total agreement with Somin. Public subsidies for sports stadiums do not strike me as an efficient means of advancing the economic goals that such projects are said to promote.
October 17, 2009, 9:48 pmBruce Hayden says:
Of course they aren’t. It doesn’t matter. Cities do this to prove to the rest of the country that they are now in the big time (or, in New York’s case, the biggest). It is an ego thing, pure and simple.
October 18, 2009, 2:12 amyankee says:
This.
October 19, 2009, 7:47 pm“Temporary” Tax to Pay for DC Baseball Stadium Becomes a Permanent Cash Cow for City Government | theConstitutional.org says:
[...] the record expenditure of over a billion dollars in government money on the new Yankee Stadium (see here for my most recent post on the subject and links to earlier ones). As I pointed out in my very [...]
June 3, 2010, 2:00 am