A great piece by Nicole Gelinas today on the impending bond default by the company that runs the parking lots for Yankees games:
If the Zuccotti kids want to protest Wall Street bailouts, they should go occupy the Yankees’ luxury parking garages in The Bronx. Borough President Ruben Diaz Jr. wants to give the garages’ private investors a fat-cat rescue at the expense of Gotham’s Main Street mice.
Four years ago, the Yankees wanted a souped-up parking “system” for their new ballpark, and Mayor Bloomberg obliged. City Hall helped a previously unknown outfit, the Bronx Parking Development Co., borrow $238 million to build and run a $300 million parking paradise on city land under a long-term lease. (The state supplied the balance of the cash.)
But the mayor didn’t put the city’s credit on the line. Instead, the city’s Industrial Development Agency — which is not guaranteed by city taxpayers — sold the debt to bondholders.
No one ever said so outright, but bondholders were plainly supposed to assume that, because Bronx Parking’s board is stacked with city officials and city officials talked up the bonds, that the city was there should the deal run into trouble.
It sure didn’t make sense on the merits. The old parking lots generated $7 million a year, but the new lots were supposed to pay twice that in annual debt costs. And Bronx Parking can’t just raise prices to fill the gap. Not many folks will pay $35 to park when there’s a new Metro North station right there.
Reality has caught up. Last week, Bronx Parking made its payment to bondholders only by tapping an emergency fund. The firm must make two more payments by next October — and it doesn’t have the cash.
This is just another piece of the sports-debt bubble that has to pop, just like the housing bubble. There’s a similar situation in Tampa where State Senator Fasano is trying to find a legislative way to end blackouts of Buccaneers home games due to poor attendance. Fasano’s argument is since the stadium was financed entirely by taxpayers, taxpayers should get to watch their home team play.
The real answer isn’t legislative, it’s economic. Owners need to reduce ticket prices, and parking prices, and hot dog prices, etc. I’m sure the good folks at the Bronx Parking Development Corp. thought they’d be able to raise their parking prices eventually and cover their debt. Good luck with that, especially in New York City where ever Yankees game is on television.