Build it and even if they don’t come, you’ll be paying for it forever, not us.

The New York Times reports today, in “Stadium Boom Deepens Municipal Woes,  (http://www.nytimes.com/2009/12/25/sports/25stadium.html?ref=business) that taxpayers are being asked to cough up money to cover shortfalls from the boom in taxpayer-financed stadium construction over the past decade.

Reports the Times’ Ken Belson,

From New Jersey to Ohio to Arizona, the stadiums were sold as a key to redevelopment and as the only way to retain sports franchises. But the deals that were used to persuade taxpayers to finance their construction have in many cases backfired, the result of overly optimistic revenue assumptions and the recession.

These stadia were sold to taxpayers as an economic savior. Companies won’t relocate their headquarters to a town that doesn’t have a great social life, citizens were told. We have to have a sports franchise or people won’t set up shop here. As Dr. Phil would say, “How’s that working for you?” Not very well, it seems.

It will come as no surprise to readers of stadium bond analyses by S&P over the 1990s that the chickens are coming home to roost in cities that cut sweetheart deals to keep pro sports teams in town by paying for stadia that the teams demanded.

S&P took a high profile at the time, making its analysts available to comment on muni sports bond issues, and they all but predicted the current collapse of municipal sports bond issues – but then the media access was cut off by worried S&P execs who, apparently getting heat from municipal clients about the negative assessments of bond issues for sports teams,  wanted to keep rating the deals (and presumably getting the fees for those deals).

In S&P’s estimation at the time, football stadiums generate little incidental revenue for towns other than hot dog and beer sales, since there are only 8 or 9 games a year. Baseball is only marginally better, even though there are about 70 games.

Cities shouted down critics of these sub-prime financial deals for years, branding them anti-business and traitors to the sports fans.

Now cities and their taxpayers are surprised that they are stuck with all the debt and the teams don't care?

In case you don’t understand how tone deaf sports teams can be, remember that the Philadelphia Eagles players just gave Michael Vick an award for “courage.”

Huffington Post: Barney Frank Vs. The Credit Raters (VIDEO)

On Friday, the Huffington Post reported that

After deftly dodging federal regulation for years, the nation's top credit rating companies now must get past the formidable Barney Frank.

Cluelessness must come with getting big bonuses

I’m sitting here both appalled and outraged at what is either utter disrespect shown to the President by the heads of Morgan Stanley, Goldman Sachs, and Citibank -- or total cluelessness by these guys about how to get around in life.

They are so unwilling to give up any of their entitlements – like flying EVERYWHERE -- that they don’t even realize that flying from New York to Washington is one of the biggest time-sucks in the universe of which they claim to be Masters.

You probably know that they missed a meeting at the White House because their commercial flight from New York was delayed by fog.

The amazing thing is that Andrew Ross Sorkin, the chief mergers and acquisitions reporter of the New York Times, was the only media person who called them out on their inability to think outside the aviation box. 

 

 

Andrew Ross Sorkin

Sorkin is the author of the best-seller, Too Big to Fail, which chronicles the financial collapse of the past year and a half.

[Amazon Associates Link below]

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves

 

In his December 15 DealBook column, “Putting Obama on Hold, in a Hint of Who’s Boss,” Sorkin noted that

President Obama didn’t exactly look thrilled as he stared at the Polycom speakerphone in front of him.

Can you blame him?

Imagine what Obama must have been thinking.

“Excuse me? Flying to Washington from New York?”

I had the same reaction when I first started working on Wall Street in 1991 and someone was arranging to fly to Washington for a hearing.

Look, it takes longer to get driven by car service or limo to any airport in the New York metropolitan area and go through airport security, land at Washington’s Reagan Airport, get a cab, and get to the White House than it does to hop on an Amtrak Acela train at Penn Station, and arrive a couple of hours later ten minutes from the White House.

For God’s sake, you could even walk from Union Station in Washington if you wanted to!

And Sorkin picked up on this fine point of transportation logistics in his column.

If the meeting were really that important to Mr. Blankfein, Mr. Mack and Mr. Parsons, they would have found a way to get there.

They would have left the night before, or they would have flown out at the crack of dawn, or better yet, taken Amtrak (I called customer service, and the Acela was running only a couple of minutes late).

But the heads of three of the largest financial institutions in the world don’t even think about some other way of getting there.

They are so wedded to their power tools, like private limos, private jets (although they left them home this time and were trying to fly commercial), that they just don’t know how to exist without them.

And that goes straight to the heart of Wall Street’s continued problem.

The people who run the institutions – and almost ran the economy into the ground – simply don’t know any other way to behave except as if they are more privileged, more entitled, somehow better than the rest of us.

I remember an interview some years ago with Graham Claytor, the legendary railroad man who had retired from Norfolk Southern and took on the challenge of running Amtrak.

He decreed that Amtrak executives should take the train if Amtrak had service to a destination they wanted to reach, even to the West Coast.

One vice president, unhappy at not being able to fly, confided to the reporter that he secretly paid out of his own pocket for a YMCA membership in Chicago so he could shower after an overnight train ride.

“Anybody who needs a shower every day, it’s too god-damned bad,” Claytor thundered when he heard that. “He shouldn’t work for the railroad!”

President Obama needs to tell these bankers to hit the showers.