"Bloomberg's bombast": historian Siegel says sports facility subsidies don't pass cost-benefit analysis
Siegel's essay, headlined Bloomberg's Bombast: New York's mayor buys himself a third term, begins:
The folks over at Newsweek have a sly sense of humor. They put New York mayor Michael Bloomberg on the cover of their November 3 issue and let him dispense fiscal advice to the next president. In the article, Bloomberg, who has presided over record levels of spending and debt increases, chastised "Washington" for putting us in a hole by "spending with reckless abandon for years." The lofty Bloomberg told Newsweek's readers, "Programs that don't pass a cost-benefit analysis, that have been driven by politics rather than economics, should be cut."
This is excellent advice. But Bloomberg has never taken it. One of the few things economists agree on, for example, is that subsidized sports stadia are a bad investment of public funds. They are also one of Bloomberg's passions. The mayor tried and failed to subsidize a West Side football stadium to the tune of roughly $600 million, but succeeded in sending similar sums toward his developer friend Bruce Ratner for a massive Brooklyn project, centered on a basketball arena, now stalled, for which there was no demand. He subsidized the Mets' new home, Citi Field, and, through direct and indirect subsidies--some of which are now under New York state and congressional investigation--Bloomberg has been paying for the construction of George Steinbrenner's new Yankee Stadium. The costs to the city so far are $458 million (with tax breaks provided to the two teams for the stadium projects further costing the city an estimated $480 million in revenue). Yet, the mayor tells Newsweek's readers that national infrastructure projects have to be funded "strictly on merit."
Costs and benefits
I'm not sure $600 million is the appropriate sum for Atlantic Yards--the direct subsidies would be about half that and the indirect subsidies significantly more--but Seigel's point is sound. There's been no cost-benefit analysis. And the press has been supine.
Is there "no demand" for Atlantic Yards? That's a good question. There was little demand for the much-ballyhooed office space. Surely there's demand for housing, but could the city and state have achieved housing faster had there been a more legitimate bidding process?
There is demand for an arena, given the opportunity to move a team from New Jersey, but not necessarily at the terms Forest City Ratner achieved. What if the state had tried to keep some of the naming rights? What if federal taxpayers didn't subsidize the move of a sports team, which does nothing for the federal treasury, as Rep. Dennis Kucinich has pointed out?