Beyond The Hype: MLB Goes to Harlem Seeking Welfare

By Diane M. Grassi
Updated: July 1, 2008

NEVADA – Just prior to the beginning of this 2008 Major League Baseball (MLB) season, this writer wrote an article titled, MLB Goes to Harlem Seeking Welfare, Part 1 of these series of articles, primarily examining the deceit and misappropriation of funds, regarding the new Yankee Stadium project.

It referenced the public entitlements that MLB will be receiving from the City of New York in the form of public financing and incentives, including a direct cash payment to MLB to the tune of $5 million in order to lure the tenancy of its new baseball broadcast network offices into a new high-rise building in the historic neighborhood of Harlem.

Since that time, in March 2008, the New York City Council has approved and ratified the complete rezoning of the entirety of Harlem in order to level up to 76 neighborhood businesses as well as many residences, to completely and forever change the skyline of this once hallowed neighborhood.

The rezoning will provide for the construction of buildings over 20 stories high and is a boon for big business looking to cash in on lower real estate costs, especially in light of the present mortgage crisis and with property values in flux.

That prior report also discussed the parameters and arrangements of the initial public financing of both new stadiums for the New York Yankees and the New York Mets, set to be ready for Opening Day 2009 and both beneficiaries of such funding.

But upon further inspection, in addition to the now realized and disclosed cost-overruns by theYankees just recently, these rather complex and in some cases unorthodox arrangements extended theYankees by the City of New York date back to former Mayor Giuliani’s administration in the mid-1990′s.

And as recently as mid-June 2008, the Yankees are looking for even more handouts from New York city andstate taxpayers between $350-400 million in funds, bringing the total and final cost of the new Yankee Stadium to nearly $2 billion, up from its current total of $1.3 billion. And of the $2 billion, the majority would be funded either directly or indirectly by public subsidies.

But the machinations of the funding as well construction costs are now just part of the story and now includes both ongoing federal and state investigations on a multitude of issues where there is no shortage of actors in this drama. One would think that theYankees’ new stadium would not necessitate so many state and federal agencies and investigations, including nefarious characters involved in this script, no better suited for Broadway.

However, the new Yankee Stadium construction now includes the issues of graft within City Hall– including the former Giuliani administration– the hiring of state and federal lobbyists for both the U.S. Congress and the Internal Revenue Service, a state probe of construction fraud and violations, a Manhattan District Attorney’s Office racketeering investigation, an FBI probe, the Seminole Indian Tribe involvement– with its own federal problems– and the lack of oversight by the NYC Economic Development Corporation, the NYC Buildings Department, the NYC Parks Department as well as theYankees own oversight.

In order to simplify, this part of the series discusses the involvement of the New York State legislature as well as the IRS. Part 3 will delve into the more involved details concerning NYC and the NY Yankees organization and how both of their interactions and deals have led to all of their various conflict-of -interest scenarios.

What got the ire of the NY State legislature was perhaps best described by NY State Assemblyman, Richard Brodsky, Chairman of the Committee on Corporations, Authorities and Commissions. “These decisions are being made in secret, in these Soviet-style meetings and it is outrageous.”

Brodsky was referring to a meeting between theYankees and Mayor Michael Bloomberg’s administration and its Economic Development Corporation office during the month of June 2008.

It was revealed that NYC is seeking relief from the Internal Revenue Service (IRS) to receive a special waiver from a law that the IRS amended in 2006 concerning the amount of tax-exempt bonds that may be allotted for the public financing of sports stadium facilities.

The Yankees’ argument is that the amendment should be waived retroactive to 2004, when the original agreement with NYC was finalized. However, over $940 million in tax-exempt bonds have already have been floated for Yankee stadium alone.

With the NY State legislature’s shortfalls in its present annual budget, Brodsky, among other legislators, feel that the $60-70 million in lost NYC revenue, as the direct result of issuing more tax-exempt bonds, could be better spent on its infrastructure in desperate need of repairs.

Similarly, the United States Congress has gotten involved, as both NYC as well as theYankees have hired lobbyists to get face-time with various members of Congress serving on various finance committees who may have influence over the IRS and input in its special consideration for theYankees.

But certain members of Congress believe that it would but set a terrible precedent for sports stadium construction all over the nation and that there was good reason for reeling in the financial structuring of such ventures, especially at a time when states are considerably strapped for cash.

Among the amenities that theankees claim they need the additional financing for is a larger video scoreboard. It is curious as to why in June 2008 that theYankees all of a sudden had a need to enlarge the scoreboard decided upon a few years ago in its finalized plans.

Could it be that over the winter the Kansas City Royals installed a new scoreboard at Kauffman Stadium, which is now the largest of its kind in North America?

If there were not so many serious issues involved in this whole matter it certainly would be comical. But this is past the point of amusement. It is but greed, abuse of power and thievery in the dead of night put on the backs of New York residents and that which has potential national ramifications for all professional sports franchises.

It must thoroughly be examined by all of the officials and agencies involved.

As we will see in the next report, you cannot make this stuff up!

NOTE: For a look at Part One, log on to