NEW YORK (Reuters) - The New York Yankees baseball team wants a city agency to sell $350 million of bonds for its new stadium or else it will not be able to complete the project, state Assemblyman Richard Brodsky said on Tuesday.
The Internal Revenue Service, however, would have to approve the new bond sale. The federal tax agency cracked down on financing these types of projects with tax-exempt debt after the Yankees got a waiver for the first sale of debt for their new stadium in the Bronx, the Westchester Democrat said.
“Right now, they (the Yankees) are saying they don’t think they can complete the stadium unless the Internal Revenue Service ruling is reversed and they apparently have been joined in this effort to reverse the ruling by the Nets and the Mets,” Brodsky told Reuters by phone.
However, Yankees President Randy Levine said: “This will not affect the completion of the stadium.”
Levine and the city’s debt-selling agency confirmed they wanted a waiver from the IRS. “We are working under the strong leadership of the city and state to try to seek relief from the regulations,” Levine said.
The Yankees, one of the most profitable U.S. sports enterprises, once threatened to move out of the Bronx.
Though the team that has won 26 World Series titles decided to stay put, civic advocates say they and their cross-town rivals, the Mets, got overly rich taxpayer subsidies.
The new Yankee stadium is expected to open in 2009, replacing the 1923 stadium made famous by Babe Ruth.
In addition to other benefits, the city’s Industrial Development Authority in 2006 sold $941 million of tax-exempt bonds for the Yankees and $548 million of debt for the Mets, whose Shea Stadium in Queens dates back to 1964.
The Mets, a team that has won two World Series titles, plan to open a new home in Queens next year.
The National Basketball Association’s Nets now play in New Jersey but plan to build a new arena in Brooklyn that will anchor a billion-dollar office and housing development, which now faces a cooling real estate market.
Tax-exempt debt is crucial for the new basketball arena’s financing. The Nets, which won two championships when they were in the American Basketball Association, plan to open the Brooklyn arena in time for the 2010-2011 season.
Janel Patterson, an Industrial Development Authority spokeswoman, confirmed the city would consider selling more debt for the Yankees and said the IRS ruling blocks other projects.
“The City is working with the State in Washington to seek relief from the applicable IRS regulation, as this regulation has taken away a tool that would be useful for a number of important, New York economic development projects, not just Yankee Stadium,” she said in a statement.
A spokesman for the Nets had no immediate comment. A spokesman for the Mets was not immediately available.
Brodsky demanded reforms and more accountability, saying: “The explosion of public debt issued by obscure semi-public and private institutions is reaching unmanageable proportions.”
Brodsky also questioned if a city corporation, the Capital Resource Corporation that now plans to sell debt formerly sold by another agency, had met disclosure requirements.
He added: ”These deals are usually negotiated secretly, with little accountability or public oversight, and directly or indirectly leave taxpayers on the hook.
Editing by Braden Reddall