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April 4, 2009
Baseball and Bailouts
Condé Nast Portfolio
by David Levine
Does the opening of new ballparks for the Yankees and Mets herald the fall of the stadium boondoggle era?
Three years ago, at the height of the real estate boom, the wealthiest team in baseball persuaded the city of New York to help it build a luxurious and expensive ballpark. The city provided land for the stadium rent-free. It issued bonds to pay for the park’s construction and convinced the Internal Revenue Service to waive any taxes associated with the project. And when Yankees management needed more money to put the finishing touches on their luxe new marvel (to install, among other things, 1,100 flat-screen televisions), they came back to the city and got what they wanted. Viewed through the dark lens of our current recession, the Yankees deal seems absurdly lavish. Certainly, at a time when America’s largest city is bleeding jobs and slashing services, there are better uses for its money than coddling A-Rod and one of the richest teams in professional sports.
But the stadium plan is more instructive now than ever. What happened in the Bronx is reminiscent of what’s happened between teams and towns all across the country in the past decade or so, albeit on a less expensive scale. And it was, in a way, an early illustration of the flawed philosophy that has marked the recent bailout binge: If we open the public coffers to private industry, the thinking went, bounty will follow. Since then, the notion of public funding chasing private companies has become national policy, and the fallout grows uglier by the day. Wall Street received big bailout money (and was dragged before Congress to justify how it managed to pay bonuses even as consumer lending continued to stagnate). Detroit CEOs jumped on the bandwagon too, submitting their own restructuring plans in exchange for government money they hoped would stave off the insolvency of the American auto industry.
So far, none of the bailouts seem to be working. Federal handouts meant to translate into increased lending appear only to have kept the banks from collapsing; Detroit’s bailout money looks like it will just delay the inevitable.
...In the end, the big bailout may have been the only solution we could have reached. If we had let the banks fail, who knows where we’d all be today? But the thing that unites both efforts—the bailout on a large scale and the stadium on a small one—is our own faulty thinking: a philosophy that held that if we placed the public trust and funds in private hands, it would lead us to plenty.
Now, though, as questions arise and anger abounds over just how all of these firms are spending our money, perhaps the thinking has finally changed. It’s no longer such a given that industry knows best. And as improbable as it may seem, we might one day look at that edifice newly erected in the South Bronx in a different sort of light: not just as a glitzy new ballpark built at the end of an epic American boom, but as a brick-and-mortar remnant of a very old way of thinking.
Posted by eric at April 4, 2009 9:40 AM