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February 16, 2006 12:00 am

Bronx Bummer


Neil deMause

Neil deMause responds to Andrew Zimbalist and the Yankee Stadium financing debate.

Now that Zimbalist has issued his rebuttal, though, I'm glad for the opportunity to get to the bottom of the question of just who'd be paying the $1.8 billion tab to replace Yankee and Shea Stadiums. As I've been stressing for months now, it's not as straightforward a question as it sounds, what with the current craze for financing agreements that are more complex than the save rule.

As Zimbalist correctly observed on BP Radio, I'm a journalist, not an economist--though I do consult with economists and other sports business experts on a regular basis, to check both my reasoning and my Excel skills. That said, he's an economist, not a journalist, and may not have all the information on the nuances of the New York stadium deals. So I've spent the last couple of weeks digging through the public record, and the not-so-public record, to clear up the facts of the matter. The result is going to take a bit to explain and will delve in places into economic minutiae, but try to keep your eyes from glazing over for just the next few minutes--this is worth getting right, not just for the sake of New York taxpayers, but because it's an excellent lesson in the difficulties of ferreting out the true costs of modern stadium deals.

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January 30, 2006 12:00 am

Financing A New Yankee Stadium


Andrew Zimbalist

Who pays for a new ballpark for the Yankees? Zimbalist breaks it down.

DeMause's sarcasm is unjustified, as are his estimates. Let me try to set the record straight. In my January 22 op-ed, I argued that after accounting for a $44 million tax break, the Yankees would be covering $756 million out of a total expense of $1.01 billion for the project. The balance of the project would be spent on infrastructure and covered by the public sector (city and state). Overall, the Yankees would be paying 75 percent of the total project costs.

In fact, because the state's contribution of $70 million for parking garages would be repaid from the parking receipts (or indirectly via a subcontracting deal), the public outlay would be lower. Furthermore, the city will be able to sell off memorabilia from the present Yankee Stadium, which will lower its net costs.

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As noted in my last column, operating losses account for only $232 million of the $519 million Major League Baseball claims to have lost in 2001. Another $112,491,000 represents net interest expenses. Here's how the interest was distributed.

Part One
Part Two
Part Three
Part Four
Part Five
Part Six

As noted in my last column, operating losses account for only $232 million of the $519 million Major League Baseball claims to have lost in 2001. Another $112,491,000 represents net interest expenses. Here's how the interest was distributed:

Team Interest Chicago Cubs $4,665,000 Chicago White Sox $2,263,000 New York Mets $2,152,000 Kansas City Royals $1,611,000 Atlanta Braves $1,139,000 Toronto Blue Jays $593,000 Boston Red Sox $51,000 Philadelphia Phillies ($239,000) Seattle Mariners ($682,000) St. Louis Cardinals ($962,000) Florida Marlins ($1,640,000) Colorado Rockies ($2,078,000) Cincinnati Reds ($2,633,000) San Diego Padres ($2,815,000) Montreal Expos ($2,835,000) Cleveland Indians ($2,869,000) Houston Astros ($3,056,000) Oakland Athletics ($3,939,000) Minnesota Twins ($4,327,000) Pittsburgh Pirates ($4,677,000) Anaheim Angels ($4,978,000) New York Yankees ($6,089,000) Texas Rangers ($6,815,000) Milwaukee Brewers ($7,128,000) Tampa Bay Devil Rays ($7,421,000) Arizona Diamondbacks ($7,774,000) Baltimore Orioles ($8,385,000) San Francisco Giants ($12,831,000) Los Angeles Dodgers ($14,437,000) Detroit Tigers ($16,354,000) TOTAL: ($112,491,000)

The positive figures are no surprise. Every club--well, every one but the Expos--starts the season with an eight-figure bank balance, thanks to advance sales of luxury boxes, season tickets, and single-game seats. By the time the players start to collect their salaries, this money has been earning interest for months.

Thus, to estimate the interest actually paid by the other clubs, their reported interest expenses must be adjusted to reflect the offsetting interest income. This presupposes, of course, that interest earned on season tickets and luxury boxes is actually reported on the team's balance sheet... which doesn't appear to be the case for the Boston Red Sox. It's hard to imagine how the Red Sox, a club with no long-term debt, could have netted just $51,000 interest on local revenues of more than $150 million.

Since the two Chicago teams reported the most interest income, I'll use the average of their effective interest rates to estimate the total interest received by all 30 clubs. The Cubs earned 3.59% interest ($4,665,000 on total operating revenues of $129,774,000); the White Sox 2.03% ($2,263,000 on $111,682,000), for an average of 2.81%. Multiplying this rate by MLB's gross revenues of $3,547,876,000 yields an estimate of almost exactly $100 million in interest revenue--$99,695,000, to be precise. Since MLB reported net interest expense of $112,491,000, the 30 clubs paid more than $210 million in interest during 2001.

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January 24, 2002 12:00 am

The Numbers (Part Five)


Doug Pappas

The black hole of MLB's financial disclosures is titled "National and Other Local Expenses." This category includes all operating expenses other than those associated with players on the 40-man roster. Legitimate expenses in this category include salaries for managers, coaches, and scouts; signing bonuses for draftees and foreign free agents; the farm system; stadium expenses; front-office payrolls; and the cost of operating Major League Baseball's central office in New York.

Except for stadium expenses, these categories are largely the same from club to club. Everyone has about the same number of coaches, maintains the same number of minor league teams, and contributes the same to keep MLB's lawyers, lobbyists, and PR people working overtime to undo the damage created by Commissioner Bud Selig's every utterance. But as the table below shows, some teams spend twice as much as others to perform the same tasks.

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