by Neil deMause
Reported the Associated Press: “The members who switched their votes said they wanted to send a message to baseball officials that the city would build a stadium, but not at any cost.” One “key player” in the negotiations between baseball and the city told the Post’s Marc Fisher, “It was time to declare victory and move on.”
It was a stunning finish, and one that left the stadium critics dismayed at the actions of their former council allies—who had, after all, been elected back in September 2004 in part because they’d explicitly promised their constituents they would oppose any stadium giveaways. Weiss, a former council staffer, concluded that Brown, Gray, and Barry were each merely “trying to be perceived as a team player, assuming that it’ll affect committee assignments down the road.”
In the end, after all the haggling back and forth, DC officials had agreed to a deal that cost taxpayers $171 million more than the one the mayor had at first promised. They could only console themselves that they’d fashioned a compromise that was equally disliked all around. “People feel betrayed on both sides,” declared Williams. “There’s bad faith on both sides. And I think the only thing everybody agrees on is they don’t like me.”
Tallying the Bill
When Bud Selig and Bob DuPuy decided to move the Montreal Expos to Washington, they were facing a hugely uphill battle. They needed to negotiate a stadium deal and get it passed by the city council, all in a tight three-month window before the new council members took office. And yet, despite seemingly everything going wrong that could go wrong—spiraling costs, Cropp’s wavering, the need for vote after vote after vote—they still emerged victorious.
To some degree MLB lucked out by picking the right adversary. “The accounts from inside the room were that the mayor’s negotiators were not very good,” says Lazere. “They either weren’t skilled at it, or they were so desperate to get the team that they ignored any leverage that they had.” For Selig and DuPuy, on the other hand, using hardball negotiating tactics was their one undeniable forte. “Brinkmanship is something that baseball is intrinsically aware of,” says Maury Brown. “They deal with it every four years with the union. If they can do brinkmanship with the state of the game that way, they certainly can do it with municipalities that quite honestly are ill-equipped in most cases to deal with baseball’s workings.”
Early in the negotiations for the Expos, for instance, Williams had suggested that the city would be willing to build a ballpark with two thirds of the money coming from the public and one third coming from the team. That reportedly drew this response from MLB negotiator Jerry Reinsdorf: “Two thirds/one third is fine. But three thirds/no thirds is more of what we had in mind.”
“The mayor,” says Lazere, “I think because of his desperation, and his lack of negotiating skills, didn’t say ‘fuck you’ back to Reinsdorf to that, which is what he should have said. Something to show that he was not just going to take anything. Rather than pushing back, he apparently said, ‘We’ll see what we can do.’”
For baseball, meanwhile, what at several points had looked like a fruitless game of chicken had left them looking at a windfall. In May 2006 the ex-Expos were finally sold, to developer Ted Lerner and former Atlanta Braves exec Stan Kasten for $450 million. Even after accounting for Zumsteg’s estimated $40 million a year in losses, the other twenty-nine teams had still more than doubled their initial $120 million investment.
More important, though, Selig and DuPuy had successfully ended a long, slow slide in the value of stadium subsidies—and simultaneously pumped new life into the threat to relocate teams if they didn’t get their way in stadium talks. The Expos-go-round, says Brown, “was a derby to leverage the markets they were actually trying to place the team in—because to be honest about this whole thing, they were looking to place the team in Northern Virginia first, and Washington DC second.” The Portlands and Norfolks, then, were “to help that leveraging process.”
Beyond that, though, says Brown, Selig’s strategy served a more long-term goal. It went back to 1983, when Reinsdorf, who had just become co-owner of the Chicago White Sox, jetted down to St. Petersburg, Florida, to meet with local officials there who were seeking a team. While he had no intention of really moving, Reinsdorf later explained: “A savvy negotiator creates leverage. People had to think we were going to leave Chicago.”
Reinsdorf would be just one of several big-league baseball owners to use Tampa–St. Petersburg as leverage to extract a new stadium from their hometowns. In 1998, though, the expansion Tampa Bay Devil Rays were brought into existence, leaving baseball owners without a leading threat to hold over the heads of their cities. And once DC was filled, the void would grow even worse.
In this light, Selig’s Expos gamble hit the jackpot: Not only did he get a new stadium to pour more money into MLB’s shared pot, but he jump-started baseball fever in other cities like Portland and Vegas that had previously been dismissed as too “bush league” to be seriously considered for membership in the MLB club. “There was some method to the madness,” agrees Brown. “They wanted to have these other markets do their due diligence and come up with funding, to see if they were options in the future. Markets investigating whether there is the ability to come up with public funding—you can’t do that without a team being available.”
Within days of the announcement that the Expos were headed to DC, baseball boosters in San Jose began gearing up their own plans to lure a team, while Marlins president David Samson announced: “Everyone realizes as soon as the Expos [were] announced, the likelihood of the Marlins relocating without a stadium significantly increases.” Editorial writers for the Minneapolis Star Tribune would later raise the specter of the Expos’ fate to throw a scare into the local populace, noting: “Even after covering operating losses in Montreal and paying other expenses, MLB’s owners stand to make a windfall of $150 million. The lesson is clear. Moving a struggling team makes money for all owners. Reinvesting the windfall in the next movable team—the Twins—may be irresistible. As early as next year, look for MLB to make Pohlad an offer he’ll have trouble refusing.”
As for what the city got, that wouldn’t be clear until 2008 at the earliest, when the new Nationals’ stadium would open its doors. The early previews, though, were not promising. In a long analysis of the stadium designs, the Washington City Paper’s Josh Levin revealed that MLB had arm-twisted the DC sports commission into agreeing to a double-decked layer of luxury suites that would both increase construction costs and raise the top deck twenty-one feet higher than it was at the RFK Stadium—but would boost team revenues and so the league’s potential sale price for the team. Adding insult to injury, upper-deck seat widths would be reduced from the twenty-inch standard at RFK to a mere nineteen inches, while high-priced seats in the field-level section would be an ample twenty-two inches wide.
Yet in addition to shelling out $600 million that could otherwise have gone to schools or hospitals, and squeezing fans’ butts into tinier seats, the costs to DC, says Weiss, go beyond mere dollars and cents. “This mayor put the whole administration onto working to get the baseball stadium here—people’s hours and time were used,” he says. “And that doesn’t show up in the budget analysis. In the years the mayor has been here, I’ve never seen so much energy going into doing anything as much as I saw him trying to bring baseball here.”
In the end, DC residents were left with the feeling that MLB didn’t have to hoodwink DC—Mayor Williams did it for them. By the time the stadium opens, says Weiss, “he’ll be gone, and we’ll have this commitment we have to take care of. And we’ll be screwed. We’re going to continue to be screwed for many years.”
15
The Perfect Storm
There are only two things you do not want on a valuable piece of real estate. One is a cemetery, and the other is a football stadium. —University of Chicago sports economist Allen Sanderson
We make “investments.” We don’t do subsidies. We get our money back, and we make mon
ey. —New York mayor Michael Bloomberg on his administration’s stadium deals
All told, it hadn’t been a great couple of years for New York mayor Rudy Giuliani. He’d had an extramarital affair and his subsequent estrangement from his wife exposed in the press, and he’d received treatment for prostate cancer and been forced to drop out of the race against Hillary Clinton for a U.S. Senate seat. His popularity had rebounded after his calm performance on 9/11, but even then, a last-minute proposal (by Giuliani himself) to extend the mayor’s term by three months failed, leaving “America’s Mayor” out of a job.
Perhaps most gallingly to the ex-mayor, Giuliani left office with one dream denied, that of cutting the ribbon at a new major-league sports stadium. At one point, the mayor’s desk bulged with plans for eight city-subsidized sports facilities: new homes for the Yankees and Mets, a football stadium for the Jets, a replacement for Madison Square Garden, new pro soccer and cricket fields, and two new minor-league baseball stadiums, one in Coney Island and one on Staten Island. In the end, the only ones to be built were the last two, for a pair of low-level affiliates of the Mets and Yankees—though at a cost of $110 million to taxpayers, at least Giuliani could justifiably brag that he’d built the most-expensive minor-league baseball stadiums in history.
And so, with one week left to go in his term, the mayor made one last-ditch effort to ensure that his sports legacy would go on without him. On Christmas Day 2001, Yankees president (and former Giuliani deputy mayor) Randy Levine leaked to the press that the mayor was set to announce agreements with the Mets and Yankees for new retractable-roofed stadiums. The cost: a record $800 million apiece, with half the cost to be covered by the city.
It was a masterstroke of timing: With any likely critics unreachable on the holiday, the news coverage of the stadium plan was unsullied by opposition. Still, the mayor made sure to launch a preemptive strike against any naysayers. “I know there’s a knee-jerk misunderstanding of it,” declared the lame-duck mayor, “but somehow leadership is about getting beyond knee-jerk misunderstandings.”
But just weeks later, Giuliani’s successor, a business media mogul named Michael Bloomberg, who’d financed his mayoral campaign with $73 million of his own money, declared the stadium plans dead. “Given the lack of housing, given the lack of school space, given the deficit in the operating budget, it is just not practical this year to go and build stadiums,” said Bloomberg. The fifteen-year-long battle over new homes for New York’s sports teams, it seemed, was finally over.
Yogi Berra, needless to say, would have begged to differ.
Deputy Dan
When Bloomberg took over after eight years of Giuliani, the new mayor promptly cleaned house, bringing in mostly people new to City Hall. For the key role of deputy mayor for economic development, Bloomberg selected a forty-three-year-old investment banker named Dan Doctoroff.
Doctoroff, who had ties to some of the city’s biggest real estate developers (and more than a passing resemblance to a young Albert Brooks, down to the obsequious grin), came fresh from the top job at NYC2012, a business-funded group dedicated to landing the 2012 Summer Olympics for New York. As Doctoroff himself liked to tell the story, he had had an epiphany one hot July afternoon in 1994, while watching Italy and Belgium face off at Giants Stadium in the World Cup soccer semifinal. “The passion and intensity absolutely floored me,” he would later recall. “When you injected national fervor into the event, it totally changed its character.”
Giuliani had initially targeted a plot of land on Manhattan’s West Side for a stadium for the Yankees but abandoned it in 1999 after the city council, in an unprecedented show of independence, wrote its own budget rather than approve the mayor’s stadium-funding plans. (It was no coincidence that the council speaker, Peter Vallone, was then running for governor.) At the time, the mayor had thrown out an alternative—a domed football stadium and “new Madison Square Garden” to be built on the same West Side rail yards site—adding, almost as an aside, that the complex could even be used to host the Olympics.
On arriving in City Call, the Olympics booster Doctoroff picked up the ball and ran with it. Asked if his new boss was on board with plans for an Olympic stadium despite his statements that the city had more important priorities, Doctoroff replied: “He wouldn’t have picked me, and I would not have accepted, if we were not in sync.”
On November 3, 2002, the first part of Doctoroff’s Olympics prayers were answered when the U.S. Olympic Committee announced that New York would be its next candidate for the Summer Games, duking it out in an international competition with the likes of London, Paris, and Istanbul to be the 2012 host city. New York’s Olympic backers, who’d gathered in a hotel ballroom to await the decision, erupted in glee; Mayor Bloomberg promptly hugged the nearest person to him at the time, who happened to be Billy Crystal. For the city’s official coronation the following week, a squadron of former Olympic athletes lined up in City Hall’s Blue Room, where USOC CEO Lloyd Ward awkwardly praised New Yorkers’ trial under fire after 9/11: “If there’s any place that’s demonstrated the power of hope, New Yorkans have done that.”
The next morning, New Yorkers awoke to wonder how exactly the Olympics would be paid for. For the cornucopia of beach volleyball stadiums, equestrian centers, and velodromes that would be needed for the two-week event, organizers promised that $2.7 billion would be financed by Olympic revenues. That left the Games’ proposed centerpiece, an Olympic stadium to be built over rail yards west of Penn Station, which could run close to $1 billion. Add in a concrete platform to support the structure while commuter trains rumbled underneath, and a new subway line to bring spectators to the far western edge of Manhattan, and the overall price tag would soar to $3 billion. And that was before any of the cost overruns that were proving a given for Olympic host cities: Atlanta, according to one accounting, had lost an estimated $1 billion on the 1996 Games, and, according to an audit by the state of New South Wales, Sydney’s “best Olympics ever” in 2000 ended up costing the Australian public more than $1.2 billion.
As for the site targeted for a makeover by the Doctoroff plan, Manhattan’s Far West Side had a long history of both tempting and frustrating would-be developers. Once the site of a thriving seaport, during the mid-twentieth century the area in the West Thirties and Forties along the Hudson River had been sliced up by access roads for the Lincoln Tunnel and Port Authority Bus Terminal. What was left had remained a world apart from the office towers of nearby midtown, with a patchwork of light industry and small apartment buildings where about twenty thousand residents enjoyed the low rents and easy access to the adjacent theater district.
The proximity to midtown Manhattan attracted the eyes of more than just starving actors. John Fisher, a theatrical stage manager who moved to the area in 1981 and quickly became a leading tenant advocate, notes that the neighborhoods known as Hell’s Kitchen and Clinton made an alluring target for developers and real-estate speculators. This interest intensified after the 1980s, when city zoning incentives helped advance the edge of the business district two blocks west, from Sixth Avenue to Broadway; the following decade, Fisher launched the Clinton Special District Coalition to fight off a push by developers to allow Broadway theaters to sell their air rights to developers west of Eighth Avenue, who would have used them to demolish low-rise apartments in favor of high-rent skyscrapers. “The area from Thirtieth to Forty-second Street, they felt, didn’t have a huge residential population, although it was growing,” he says of real-estate interests’ view of his neighborhood. “In their eyes, it was this big wasteland.”
A wasteland, however, represented both opportunity and dilemma: No one would want to build there without something more than auto repair shops and cheap tenement apartments to jump-start interest. A stadium would serve a twofold purpose: Not only would it be an “anchor” for new development (much as the Javits Convention Center, built along the river’s edge, was supposed to be twenty years earlier), but it would provide the impe
tus to extend subway service one mile west and south from its current western terminus at Times Square. In the same way that the original subways had helped seed such virgin locales as Harlem and the South Bronx with row houses after train lines were run through what had been open fields, West Side landowners could hope that a stadium and accompanying subway line would at last bring skyscrapers to midtown Manhattan’s last frontier.
First, though, somebody had to pay for it. The finance plan for what was being called Hudson Yards, first floated by Doctoroff when he was still at the helm of NYC2012, was incredibly complex, requiring a brain-numbing flowchart just to detail all the city and state agencies that would lease and sublease various pieces of the project to and from each other. The New York Jets, who under the plan would relocate from New Jersey to the West Side, were set to supply an unspecified share of the stadium’s construction costs. As for all the rest, it would be paid off by the public—though Doctoroff tended to steer clear of any specifics as he carted his PowerPoint presentation around to show to business and political leaders. When James Sanders, chair of the city council’s economic development committee, asked Doctoroff at a hearing: “And the city won’t have to put any money in the plan?” Doctoroff simply replied: “No existing tax money will be used.”
The key word: “existing.” To raise the necessary $3 billion, it turned out, Doctoroff was proposing to use tax-increment financing: The property taxes for a huge swath of the West Side, running from Twenty-eighth Street to Forty-first Street and from Ninth Avenue to the Hudson River, would be frozen at their current rate. Any new taxes from the office buildings that were to sprout like mushrooms across Hudson Yards would go not to the city treasury but to pay off the construction bonds for the subway extension and the city’s share of the stadium. “That is not city tax money,” explained NYC2012 CEO Jay Kriegel, “because that is not money that’s available unless you do the plan.”