Crain's New York Business
By Greg David
January 31, 2005

Mayor Bloomberg says Cablevision boss Jimmy Dolan is a lying SOB. He's mostly on target. The advertising campaign that Cablevision has launched against the proposed West Side stadium for the New York Jets and the Olympics is filled with distortions and untruths.

With crucial decisions on the stadium about to be made, some truth-telling is in order.

The stadium is a $600 million gift to the Jets. There is a grain of truth in this assertion. The city and the state plan to spend that much money to accomplish two goals. Two-thirds of the money will go toward constructing a platform on which the stadium will be built. The remaining $200 million will pay for a retractable roof, air-conditioning and other items essential to making the facility usable for exhibitions and major sporting and political events.

What the ads don't explain is that the city must build a platform anyway in order to develop the West Side.

It would be impossible to create a commercial district with a huge hole in it where the Long Island Rail Road parks its trains. Even the Regional Plan Association, a staunch stadium opponent, admits that a platform is needed. The Jets can't afford to build one, and neither can a private developer. The choice is who gets the subsidy, not whether the money gets spent.

The real stadium contribution is $200 million.

The stadium plan is full of hidden extras costing hundreds of millions of dollars. The most recent version of the Cablevision ad campaign denounces hundreds of millions in tacked-on costs that the city and the state would be paying. The biggest single item is $400 million in tax-exempt bonds. Of course, the city isn't giving anyone $400 million: The Jets are borrowing it from institutions.

All that the city is losing is revenue that can't be collected because the interest payments aren't taxable. Who loses the most? The federal government. The state loses a much smaller fraction and the city even less.

If the bonds carried an interest rate of 5%, the annual loss to the city would be about $800,000--a far cry from $400 million.

Building the stadium would mean there'd be less money for cops, firemen and teachers. Cablevision flunks Finance 101 here. City workers are financed by the operating budget, which is the sum of taxes collected and aid received from Albany and Washington. Projects such as the stadium are financed by the capital budget, which is money borrowed for infrastructure. It is illegal for the city to use capital money to pay for operating expenses. Remember the fiscal crisis?

It is true that the operating budget must be able to pay for the interest costs on the debt. The Jets and the city believe that the economic activity generated by the stadium will more than cover it. They are probably right.

Big Lie campaigns like this one sometimes work. This one must fail.