Sunday, August 3, 2014

Bloomberg's Yankee/Mets Luxury Landlord Suites Deal Not Paying Off

In yet another Bloomberg stadium deal debacle, his Yankee/Mets luxury landlord suite arrangement is also not paying off as expected.  In 2009, then-Mayor Michael Bloomberg did an about face and decided to raise cash by having the Yankees and Mets lease out the 12-person ‘landlord suites’ owned by the public. That decision came about after embarrassing emails surfaced which revealed the behind-the-scenes antics of the Bloomberg administration in demanding that the city receive its own luxury boxes as part of the deal to heavily subsidize the new stadiums.  After the revelations the teams agreed  to a deal to turn over rent and ticket revenue to the city. 

Bloomberg predicted the city would make $1 million a year, but it’s only getting a fraction of that amount.   In 2013 the suites brought in less than $160,000.  The lease with the city mandates that both teams must make a “reasonable effort” to rent out the landlord suites.
In six years, the Parks Department has never requested a single receipt. 

The Yankees, the richest team in Major League Baseball  were allowed to seize 25.3 acres of public parkland to build the new stadium with little accountability from the city's elected officials. 


The plan was simple: Raise millions of dollars for the city by renting out the so-called “landlord suites” the public owns at Yankee Stadium and Citi Field.  

The plan was a big flop.  

The city, which owns the land upon which Yankee Stadium and the Mets’ Citi Field are built, has a luxury box with a capacity for 12 in each stadium.  Five years ago, then-Mayor Michael Bloomberg decided to raise some much-needed cash by having the teams lease out the suites and turn over rent and ticket revenue to the city. He predicted the city would pocket $1 million a year from these suites.  He was not even close, according to the New York Daily News.

Instead, the city has realized only a fraction of that amount, pulling in less than $160,000 last year. That’s because under its deal with the Yankees and Mets, the city relies entirely on the teams to scare up what could be easy revenue for the city that subsidized both teams’ new homes.  

Both the Yankees and the Mets now appear to make barely any effort in that regard, with the Yankees renting out the suite on only 16 of 83 home games during the 2013 season, according to documents obtained through the Freedom of Information Law. The Mets did slightly better, leasing it out for 30 games.  

A box of similar size at Yankee Stadium typically rents for $600,000 per year. Last season the Yankees scrounged up a paltry $100,107 in rent for the “landlord suite” for the entire season. The Mets managed to collect a pathetic $59,889.

The city must renew the agreement to waive use of the box each year. Because the city missed the waiver deadline with the Yankees last year, they were forced to accept a check for $113,000 for the 2014 season — no matter how many days the league’s richest team rents it out. The Mets’ rent has yet to be determined.

This lopsided deal began in 2009, after the Daily News revealed that the Bloomberg administration had demanded the city get its own luxury boxes as part of the deal to heavily subsidize the new stadiums.  Shortly after The News’ revelation, Bloomberg decided instead to use the boxes to raise revenue, signing a lease amendment in 2009 requiring the teams to rent out the suites and turn over most of the rent and ticket revenue to the city.  

At the time, the billionaire mayor predicted the city would net $1 million in revenue each year. His spokesman Andrew Brent noted, “We took another look at the numbers and decided we wanted to take the value of the boxes in cash.”  

The first year the two teams turned over $351,000, then peaked with $481,000 in 2010. From there it was all downhill, bottoming out at $159,996 from both teams last year.

The Yankees were recently designated the richest team in Major League Baseball, valued at $2.5 billion with $461 million in revenue last season. The Mets are the ninth-richest, valued at $800 million with $238 million in revenue. Both teams built new stadiums with generous public assistance, including low-interest bonds, tax breaks and credits, and outright public grants worth a total of $1.8 billion over the coming decades.  

The lease with the city mandates that both teams must make a “reasonable effort” to rent out the landlord suites, and requires them to charge “market rates” for rent and tickets. Most of the money — minus certain expenses — must be turned over to the city each year.

Since 2009, however, the city has never double-checked to see if the teams were, in fact, charging market rates for the use of the city’s boxes.

“We do not have this information,” said Arthur Pincus, spokesman for the city’s Park & Recreation Department.

“You would have to ask the teams directly.”

Also under the 2009 deal with the Yankees, the city can request at any time “copies of invoices, bills, contracts, receipts, evidences of payment and other expense records” related to the landlord suites.

In six years, the city has never requested a single receipt. Pincus said the city still has until 2015 to check the receipts for the 2009 season.

“We reserve our ability to request records related to our landlord box in order to assure that payments have been made correctly,” he said.

“At this time, we have no reason to believe that any payment has been made incorrectly.”

A review of records obtained under the Freedom of Information Law shows, with few exceptions, the daily rate charged by the Yankees to rent out the landlord box during the 2013 season was far below what they would normally get.

While a 12-seat box goes for $600,000, the Yankees collected just $100,107 last season. Though hot games like the Red Sox or a Subway Series with the Mets usually go for $9,000 for a one-game rental, the Yankees generally charged much less — $6,700.

And the box remained empty through some hot games. They rented out the landlord box on April 1, an Opening Day game against the Red Sox for $12,859. But on the next day’s matchup with the Sox, the box remained empty.  In fact, it appears the Yankees landlord box remains empty during the vast majority of home games — 67 of 83, records show.

Often the Yankees charged even less — around $2,520 through most of August and into September.  The Yankees did not return several calls seeking comment.

Mets spokesman Harold Kaufman said, “We continue to look for creative ways to fill all of our suites at Citi Field, especially given the changing marketplace for suite and premium seating that is occurring across the industry.”

Read More:

New York Daily News - August 3, 2014 - By Greg B. Smith

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