Ticket sales and parking revenues go to the city who needs to be payed back after $1.5 billion construction which the Yankees covered around $300 million of that.
It is difficult to figure out how financing in this case works for other events. Typically, there is a rent payment that goes to the city (cities typically attempt to get their money back from the host team thru discounted rent payments). They also do it through portions of ticket sales (and often cities cover the team if there is a shortfall on ticket sales) and parking revenues (which is true in the Yankee Stadium since the Yankees asked for more money after initial construction costs).
Here is some information on the Yankees financing and like I said it isn't clear how it applies to other events but I think the question, does NYC need the money? is fair.
The story so far: Back in 2006, Mayor Bloomberg and the Yanks' owners put forward a plan to make the team's $1-billion-or-so stadium project eligible for tax-exempt bonds, which are normally not allowed for private projects. The trick? Even though the Steinbrenner clan will be paying for all construction costs for the stadium itself (the city gets to pay for a few hundred million in exciting stuff like underpasses and sewer lines), they're calling those expenses "payments in lieu of property taxes" (PILOTs) in order to meet the feds' requirement that tax-free bonds be paid for with public tax revenues. (The Mets used a similar scheme for Citi Field.) While many tax experts looked askance at the dodge, the IRS (after lobbying by Charles Rangel) okayed it, and the Yanks broke ground a few weeks later.
Since then, the Yankees have asked for another $350 million in tax-free bonds (to pay for, among other things, a snazzier scoreboard), while Nets owner Bruce Ratner has proposed floating $800 million in tax-exempt bonds for his planned Brooklyn arena via the same PILOT dodge. The IRS, however, has spent the last two years trying to concoct new regulations that would reconcile the PILOT scheme with existing law.
The final regulations, obtained today and provided to the Voice by Norman Oder of the Atlantic Yards Report, require that stadium PILOTs float with the property's tax assessment - which makes sense, since for IRS purposes they're supposedly really property taxes operating under deep cover. That would significantly reduce the benefits to teams, since bondholders tend not to be thrilled about having their bond payments fluctuate with the real estate market. The IRS does, however, include a couple of outs for projects already in the works:
The new regs provide "broader flexibility for phased adjustments to PILOTs during the development, construction, or initial start-up period of the property." This could be used to justify the Yanks' use of additional bonds under the same rules as they got in 2006, as an "adjustment" of their previous PILOTs.
http://www.fieldofschemes.com/news/archives/2008/10/3433_more_on_the_irs.html
My connection is too slow at the moment but this video link by OTL should better explain the financing of Yankee Stadium. No idea if it is clear on third-party events.
http://espn.go.com/video/clip?id=3665106&categoryid=3286128
= new reply since forum marked as read
