Federal taxpayers subsidized the construction of the new Yankees Stadium to the tune of nearly half a billion dollars, according to a new study released Thursday.
The report, published by the nonprofit Brookings Institution, found that the New York Yankees, currently the fourth-place team in the American League East division, benefited from $492 billion in federal tax breaks for the loans used to build their stadium.
Since 2000, 35 other professional sports stadiums have been built with tax-exempt bonds, costing taxpayers a hefty $3.7 billion, according to the report. Those subsidies are separate from any support that local governments might provide.
Even if the state or city has an interest in helping teams, there is "no economic justification for federal subsidies for sports stadiums," the authors concluded.
The stadium builders accrue the tax breaks by having the stadiums financed with tax-exempt municipal bonds. Because investors prefer the tax-free interest payments on those bonds over other possible investments, the builders are able to finance their stadium construction more cheaply.
In fact, the report noted, the tax code creates a perverse incentive for cities to take on debt to help finance stadium construction. Under current rules, municipal debt issued to build a stadium is only tax-exempt if the local government is willing to finance 90 percent of the debt service for the bonds and if the revenue used to pay it off do not come from the stadium itself. That provision was meant to prevent sports team owners from benefiting from the tax break, but instead incentivized local governments to pony up 90 percent of the financing for stadiums to benefit from the federal tax breaks and make up the revenue with "tourist taxes" on local businesses.