pageok
pageok
pageok
Where Dennis Kucinich and I Agree:

I don't often find myself agreeing with Dennis Kucinich. But I have to commend him for his opposition the the massive state and federal subsidies for the construction of the new Yankee Stadium:

A congressional panel has taken tough swings at the New York Yankees and New York City government over a new stadium for the Yankees. But neither the team nor the city budged from their positions on the $1.3 billion structure.

Rep. Dennis Kucinich said Thursday he found "waste and abuse of public dollars" in the financing of the new stadium under construction in the South Bronx.

Kucinich is an Ohio Democrat who heads a House Oversight and Government Reform subcommittee. He charged that city officials misrepresented to the IRS the value of the property, helping them to get special tax deals from the federal government and in effect dumping the cost of construction onto taxpayers.....

"In the case of the new Yankee Stadium, not only have we found waste and abuse of public dollars subsidizing a project that is for the exclusive benefit of a private entity, the Yankees, but also we have discovered serious questions about the accuracy of certain representations made by the City of New York to the federal government," Kucinich said.

The panel's investigation found "substantial evidence of improprieties and possible fraud by the financial architects of the new Yankee Stadium," he added.

The criticism highlights tensions felt nationwide as governments increasingly support stadiums for profitable pro sports teams with multimillion dollar payrolls.

As I discussed in this post, construction of the new Yankee Stadium is being subsidized with up to $450 million in public funds, plus an additional $941 million in government-backed tax-exempt bonds. This is the largest government subsidy for stadium construction in the history of the United States, and there is no good justification for it.

I first criticized the Yankee Stadium deal in this 2006 post, where I summarized the extensive evidence that there is no public benefit justifying subsidies for sports stadium construction. In fairness, what the Yankees have done is similar to what many other pro sports teams have gotten away over the last several decades. The Yankee Stadium situation is unusual primarily because of its massive size. Hopefully, Kucinich's hearing and others like it will succeed in exposing this kind of sports stadium socialism to public scrutiny and eventually put an end to it. But I am not optimistic.

NOTE: As a Red Sox fan, I'm obviously unhappy about government subsidies to the rival Yankees. However, I would oppose similar deals for any team, including Boston teams. For example, I was against various proposals that have come up over the years to build a new government-subsidized stadium for the Red Sox. I love the Red Sox, but I could not love them half as much loved I not liberty more.

Kazinski:
Ilya,
you are way off base here, public subsidies for sports and the arts date back before the original Olympics in Greece or the Roman Coliseum. and probably have at least as long a history as state sponsored religion.
9.18.2008 3:59pm
GMUSL '07 Alum (mail):
What about the much larger subsidies for the Big Dig? At least Yankee Stadium hasn't killed anybody! Nor is it decades behind schedule due to Kennedy pork and no work/no shows that would make Tony Soprano's crew blush.
9.18.2008 4:01pm
Bpbatista (mail):
Even a stopped clock is right twice a day. The trouble is that Kucinich is such a buffoon in so many other areas that he has absolutely no credibility or influence with anyone on the few occasions when he is right.
9.18.2008 4:04pm
Glenn W. Bowen (mail):
He needs the building site for a landing field. That's where the Mabondagooniacs are going to arrive for their quadrimegular visit to Earth in their gigantic spaceship, "The Sweet Patootie". Dennis doesn't want anyone to miss it this time, because the Mabondagooniacs are bringing him a brand new wrinkle-free vinyl skin, and 11 quarts of blood fluid replacement. There will be an I-Pod filled galactic pinata for all others.

Also, they said he could leave with them this time, and we sure the f*** don't wanna foul that up...
9.18.2008 4:19pm
Ilya Somin:
What about the much larger subsidies for the Big Dig? At least Yankee Stadium hasn't killed anybody! Nor is it decades behind schedule due to Kennedy pork and no work/no shows that would make Tony Soprano's crew blush.


I oppose both.
9.18.2008 4:21pm
RSF677:
What I don't really understand is why, although everyone agrees that stadium deals are terrible, these deals keep being approving throughout the nation.
9.18.2008 4:22pm
Ilya Somin:
you are way off base here, public subsidies for sports and the arts date back before the original Olympics in Greece or the Roman Coliseum.

So what? Slavery dates back to that era too.
9.18.2008 4:23pm
Obvious (mail):
Kucinich's opposition is noteworthy. I wasn't aware there was any government spending in the domestic arena he opposed.

I'll consider his position principled when he opposes subsidies for a new Cleveland Indian's stadium...
9.18.2008 4:33pm
Obvious (mail):
I said, " I wasn't aware there was any government spending in the domestic arena he opposed."

I should have added, "And, ironically, it appears he opposes government spending for domestic arenas..."
9.18.2008 4:35pm
Tim Fowler (www):
Ilya - I'm a Yankees fan and I agree with your opinion here.

Kazinski - A practice being old, doesn't automatically mean the practice is good.

RSF677 - Because 1 -Its not true that "everyone agrees that stadium deals are terrible. Some think of them as great, others ok, or at least no big deal. Also 2 - The classic special interest problem. A $450 mil subsidy is only a bit over $20 per New Yorker, and many of them might not even know they are paying that $20. But its $450 mil to the special interest who will lobby extensively to get it and keep it.
9.18.2008 4:36pm
T.J.:
"In the case of the new Yankee Stadium, not only have we found waste and abuse of public dollars subsidizing a project that is for the exclusive benefit of a private entity, the Yankees,"

This position is utterly absurd. The public dollars are not for the exclusive benefit of the Yankees, but also any fans that will be enjoying the new amenities provided by the state-of-the-art stadium.

Whether those benefits, plus any collateral economic benefits, outweigh the cost of the public subsidy or not is of course another question.
9.18.2008 4:37pm
DSM:
FWIW, concentrated public disgust can occasionally work. There was an infamous assistance plan for Canadian NHL teams proposed by the federal government eight years ago which was cancelled within days because of the outcry. And we love our hockey.

Admittedly that good sense is more the exception than the rule, and the resistance succeeded mostly because the bailout was particularly egregious, and true, it left most of the quieter subsidies untouched.

Still, the "why is the gov't paying for this?!" question resonated across the political spectrum up North: left, right, other. I think it only took three days for the Feds to backtrack.
9.18.2008 4:41pm
Ilya Somin:
"In the case of the new Yankee Stadium, not only have we found waste and abuse of public dollars subsidizing a project that is for the exclusive benefit of a private entity, the Yankees,"

This position is utterly absurd. The public dollars are not for the exclusive benefit of the Yankees, but also any fans that will be enjoying the new amenities provided by the state-of-the-art stadium.


The fans are also private entities, of course. And the Yankees can internalize the benefits to fans by charging higher ticket prices (which they are in fact planning to do). Thus, if building the new stadium is worth it due to the benefits to fans, the Yankees would have every incentive to do it themselves. As for other economic benefits, see the studies cited in my 2006 post on this subject, linked in this one.
9.18.2008 4:42pm
fly ball, double play, yankees win again today:
T.J., you mean the Yankees will make it available for anybody? For all the public to use? The fans are buying tickets at least; why not fundraise them like we do for public television or something? And those taxpayers who are not interested in it or don't live anywhere near Yankee Stadium will be also shouldering the burden? yeah that makes sense.
9.18.2008 4:44pm
ruralcounsel (mail):
Instead of using tax dollars, ...

Maybe we could create a mandatory voluntary service program and force all school-age children to donate their spare time to building new stadiums instead! Think of the good works that would create! And it would good for the children too, to have that feeling of satisfaction one gets from serving others.

/sarcasm

Sorry, I couldn't resist, especially after I got a mental image of tens of thousands of grade schoolers being forced to build a stadium, like the Israelites on the Pyramids.
9.18.2008 4:46pm
T.J.:
Professor Somin: The quote I highlighted stated "the exclusive benefit of a private entity", not "entities." That is why the quote is utterly absurd.

Under your same logic, though, I would hope you are also opposed to any public funding of the arts or libraries, since those are also run only for the benefit of private entities, and can internalize the cost to the private beneficiaries.
9.18.2008 4:46pm
T.J.:
T.J., you mean the Yankees will make it available for anybody? For all the public to use? The fans are buying tickets at least; why not fundraise them like we do for public television or something? And those taxpayers who are not interested in it or don't live anywhere near Yankee Stadium will be also shouldering the burden? yeah that makes sense.

The exact same thing happens with any publicly funded museum or artistic troupe. The public at-large provides support, even though only a percentage of the public attends, and must pay for the opportunity to do so.
9.18.2008 4:48pm
Malvolio:
Under your same logic, though, I would hope you are also opposed to any public funding of the arts or libraries, since those are also run only for the benefit of private entities, and can internalize the cost to the private beneficiaries.
I would like to set that quote to music. Maybe Also sprach Zarathustra or Ode to Joy.

Yes! Yes! Funding a sports stadium is the same kind of stupidity as funding a library, just bigger.

Actually, the lies told to justify a stadium, which tend to be economic lies, are different that the lies justifying a library or museum, which are usually cultural lies. A distinction without a difference. I could claim that Martians or Baby Jesus think a publicly funded stadium is a good idea: still doesn't make it true.
9.18.2008 4:56pm
ruralcounsel (mail):
TJ
As I'm sure you are aware, there is generally assumed to be social benefits that go beyond the individual entities' benefits. While that is also likely for public sporting events, those are far more likely to be self-supporting ... in fact, businesses.

I doubt many art museums or libraries engage in arbitrage of paintings and rare texts in order to turn a profit for private indivduals. Now, maybe if the Yankees bought and put their players on permanent display? I don't recall ever hearing of a famous painting declaring free agency and running off to the richest art gallery because it would get more favorable treatment. Or if the Yankees became a non-profit?

If we look to past civilizations that did similar things, I certainly think we gained more as a people from the artwork created, sculpture made, books written, say by the Romans, than we gained from the slaughter of gladiators in the arena.

In other words, with limited federal dollars, why subsidize professional sports? They and their fans have enough $ to take care of themselves.
9.18.2008 4:58pm
those damn yankees, why can't we beat 'em?:
And the Yankees are now a non-profit like a museum or artist troupe? Or a library that is funded by public money (which doesn't charge for attendance by the way) is also overseen by public officials, not a Steinbrenner! Ridiculous. The teams make money from advertisers and fans. They can afford to raise funds for their own playing field. Instead, they bootstrapped the costs with the taxpayer as the strap-hauler.
9.18.2008 5:02pm
T.J.:
ruralcounsel:

I simply disagree. The fact that sporting events are popular enough to be a self-supporting business - if true - means that the public then prefers to watch this form of entertainment than go to a museum or watch a ballet. That in my view makes sports teams more, not less deserving of public financing - if the government is going to enter the entertainment financing game in the first place.

Just because you view an art gallery as a more worthwhile form of entertainment, doesn't mean that it is more deserving of public financing.
9.18.2008 5:04pm
T.J.:
And the Yankees are now a non-profit like a museum or artist troupe? Or a library that is funded by public money (which doesn't charge for attendance by the way) is also overseen by public officials, not a Steinbrenner! Ridiculous. The teams make money from advertisers and fans. They can afford to raise funds for their own playing field. Instead, they bootstrapped the costs with the taxpayer as the strap-hauler.

The reason that museums and artistic troupes are non-profit is because they are not popular enough to sustain themselves. The fact that sports leagues are popular enough form of entertainment to sustain themselves does not make them less deserving of public funding.
9.18.2008 5:08pm
ejo:
have there ever been any studies done as to the economic impact on communities when sports franchises move away from them? Did LA realize a gain of some sort while Brooklyn suffered a loss? Did Nashville get a boon while Houston took a hit?
9.18.2008 5:08pm
A.S.:
Ilya: The fans are also private entities, of course.

Huh???

The fans are the public. Every New Yorker (as well as every other American) has just as much right to enjoy the new Yankee Stadium as they have to every other public benefit the government provides.

Moreover, the direct subsidies are mostly for transportation infrastructure - so New Yorkers don't even have to purchase a ticket to enjoy the public benefits of the project financed by public money.

The new Yankee Stadium is no different than every other public entertainment project New York has subsidized - from Central Park to Lincoln Center's redevlopment to Coney Island.

I understand that Ilya doesn't think that the government should provide any entertainment at all, but some of like our parks and beaches and concert halls, even if they are government subsidized.
9.18.2008 5:20pm
KeithK (mail):

What I don't really understand is why, although everyone agrees that stadium deals are terrible, these deals keep being approving throughout the nation.


Consider this analogy. "Everyone" seems to agree to that COngress is terrible and all of the Congressmen are a bunch of bums. See approval ratings. Yet incumbents still win most elections. Peopel apparently think: Congress may be terrible but my Congressman is doing a great job protecting my interests.

Everyone may agree that public financing of stadiums is teerible, but a lot of folks change their opinion when it's their favorite team that will leave town if they don't get a new facility.
9.18.2008 5:22pm
A. Zarkov (mail):
Most likely Dennis would not object to a new Yankee Stadium so long as the government owned all of it, and the ball players were government employees drawing a modest salary. Their salaries would be set by a comparable worth formula. He would also be ok if the inevitable losses the new stadium racked up were passed on to the tax payers. He would have no trouble with this kind of subsidy. He wants enterprises run by the people and for the benefit of the people, and not a bunch of greedy rent-seeking Republican businessmen. Considering how poorly the over-paid greedy rent-seeking executives have run the US financial services industry, he might actually have a good point. Ernest Stanley O'Neal ended up as the Chairman and CEO of Merrill Lynch. After having run the company into the ground, O'Neil was able to retire on a $161 million severance package! As of this week Merrill no long even exists having been done in by its management. On the other hand, Diversity Inc. named Merrill Lynch one of the top 10 companies for lesbian, gay, bisexual, and transgendered employees, so Dennis might love them after all.
9.18.2008 5:23pm
GMUSL '07 Alum (mail):
Ilya, I'm sure you post both. But this is your third or fourth post about the new Yankee Stadium; they seem to appear every few months.

I can't remember your EVER having made a post about the Big Dig, but I could be wrong.
9.18.2008 5:41pm
ejo:
in terms of money wasted, one could argue that the Yankees, being far more popular to the masses, are more deserving of a subsidy than the "Arts", enjoyed in the main by folks who could afford to pay the freight all on their own.
9.18.2008 6:42pm
Sam H (mail):
You want to know why cities build stadiums, golf courses, and ...

Congressman Dennis J. Kucinich, Chairman of the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee, today requested documents relating to a provision in the new Yankee Stadium deal that entitles New York City government officials to free use of a luxury box that will be built in the new stadium and preferential rights to purchase up to 180 tickets for each Yankees home game. Chairman Kucinich made his requests to the New York Yankees, the Mayor of New York City, and the New York City Economic Development Corporation. A similar request was made to the New York Mets, which has a similar luxury box and preferential ticket purchase arrangement with New York City for the team's new stadium.

9.18.2008 6:51pm
Dilan Esper (mail) (www):
Sorry, I couldn't resist, especially after I got a mental image of tens of thousands of grade schoolers being forced to build a stadium, like the Israelites on the Pyramids.

Some Boston kids would sneak in and bury a Red Sox jersey in the concrete.
9.18.2008 7:15pm
Kazinski:
Ilya:
So what? Slavery dates back to that era too.
That is irrelevant, I'm a sports fan, not a slave or a slave owner.
9.18.2008 7:39pm
rfg:
The fact that the owners accept public subsidies for private bnefit is only good business...

Maybe that's what is wrong.
9.18.2008 8:37pm
MartyA:
Opposition to federal support of the new Yankee Stadium is pure racisim. The four Charles Rangel Memorial Luxury Suites will be used fairly often to allow neighborhood kids and community organizers to watch live baseball. The community organizers will invite community folks as part of the Harlem campaign to get voters to vote the right way.
Poor Charlie! I got to believe that he has spearheaded to federal money campaign and that his greasy, crooked fingerprints are ALL over this. Our new governor, blind though he may be, probably also got a memorial luxury suite in return for his legislative efforts to dump state money into this boondoggle.
9.18.2008 9:34pm
Elliot123 (mail):
"Under your same logic, though, I would hope you are also opposed to any public funding of the arts or libraries, since those are also run only for the benefit of private entities, and can internalize the cost to the private beneficiaries."

Museums and libraries are funding by the public. However, I have yet to see an art gellery or bookstore that is funded by the public.
9.18.2008 9:57pm
Smokey:
Glenn W. Bowen:
He needs the building site for a landing field. That's where the Mabondagooniacs are going to arrive for their quadrimegular visit to Earth in their gigantic spaceship, "The Sweet Patootie". Dennis doesn't want anyone to miss it this time, because the Mabondagooniacs are bringing him a brand new wrinkle-free vinyl skin, and 11 quarts of blood fluid replacement. There will be an I-Pod filled galactic pinata for all others.

Also, they said he could leave with them this time, and we sure the f*** don't wanna foul that up...
Dennis awaits the Mother Ship.
9.18.2008 10:11pm
jccamp (mail):
As a counterpoint, the City is spending 300 million and change for one or more parking garages, a new city park and some other stuff called "infrastructure." The Yankees are assuming the responsibility of 1.1 billion in spending, although the bonds issued as part of the 1.1 billion are tax exempt. In the sense that purchasers of the bonds won't pay income tax on the interest, I suppose Kucinich's position that this missing income tax is being paid for by the public is somewhere near the truth, but it really is not accurate. Government entities finance all kinds of stuff will tax-free bonds. A professional sports stadium seems to qualify.

NYC claims that the new stadium will lead to more hotels and stores in the area of the stadium, and lead to more and better private development. That part sounds reasonable to me. NYC will also receive property taxes, utility taxes, revenue from the Yankees TV network, sales tax from concession &ticket sales, and City income tax from all those millionaire baseball players. It's unclear who actually will receive the parking fees from the City financed garage(s). The Yankees claim that there will be around 1,000 unionized jobs created (or maintained from the old Yankee Stadium) by the new stadium.

I think NYC and the Yankees can make a case for the benefits to the taxpayers in return for the expenditure in public monies to be offsetting, excluding any intangibles about having a major league franchise, civic pride, etc.

It certainly doesn't seem as outrageous as the Venusian Ambassador would have us believe. Remember, Dennis is the guy who let Cleveland become the first major U S city to go into bankruptcy. He's not very credible, IMO.
9.18.2008 10:45pm
David M. Nieporent (www):
I think NYC and the Yankees can make a case for the benefits to the taxpayers in return for the expenditure in public monies to be offsetting, excluding any intangibles about having a major league franchise, civic pride, etc.
They can't. No independent economist, not funded/hired by the city or team, has ever found a stadium project to be a net positive economically.
9.18.2008 11:07pm
Rich Rostrom (mail):
Kucinich is dead right. The taxpayers (NYC, NY state, Federal) will pay out almost a $billion. The benefits will flow to George Steinbrenner.

Yes, the stadium may generate a little taxable economic activity for the city. But just about every study of these projects shows that the benefits are a fraction of the costs. Ask Pontiac what they got from the Silverdome.

Some of the comparisons made here are absurd. Governments do pay for other sports facilities - for the use of the general public. This facility is for the use of a private, profit-making entity.

Museums, libraries, and parks are for the use of the general public. "Arts" funding goes to non-profit entities. The Yankees are very profitable.

jccamp: "Government entities finance all kinds of stuff will tax-free bonds." Yes, and very often those projects are flat-out giveaways to polltically connected insiders.
9.18.2008 11:22pm
Ricardo (mail):
I simply disagree. The fact that sporting events are popular enough to be a self-supporting business - if true - means that the public then prefers to watch this form of entertainment than go to a museum or watch a ballet. That in my view makes sports teams more, not less deserving of public financing - if the government is going to enter the entertainment financing game in the first place.

I admit this is the first time I've heard this: businesses or organizations most "deserving" of public funds are those that either already turn huge profits on their own or those which produce the most popular forms of entertainment. Let's start subsidizing the porn industry next!
9.19.2008 2:56am
SeaDrive:
The public financing of the new Yankee Stadium is a pure political power plan, ripping off the taxpayers for the benefit of the well-connected.
9.19.2008 10:31am
Fedya (www):
Ilya Somin wrote
And the Yankees can internalize the benefits to fans by charging higher ticket prices (which they are in fact planning to do).


The Jets and Giants are doing more to make the fans who will be using their new stadium pay for it by instituting PSLs. The Jets are going even further by auctioning the PSLs for the 2000 best seats.

Yet the same populist hatemongers are shrieking the same old class-warfare garbage. They basically want government price-fixing, with the government setting an artificially low price.
9.19.2008 10:49am