What one guy with a rich father and a sports team asks of you
Paulsons father and son use public treasuries like ATMs
| We trim, blend, and append four 2008 articles from: (1) the Associated Press on accountability on Dec 2 by Jim Kuhnhenn; (2) Project Clawback on Yankee Stadium on Nov 7; (3) Portland’s Williamette Week on Merritt Paulson on Nov 26 by Nigel Jaquiss; and (4) Project Clawback on KC TIFs on Dec 5. |
by Jim Kuhnhenn and by Clawback and by Nigel Jaquiss
- GAO faults no oversight of bailout funds
Hank Paulson’s Treasury Department does not track how institutions are using the $150 billion in taxpayer money that he has given banks as of last month, the Government Accountability Office concluded.
In its report to Congress, federal auditors said Treasury must toughen its monitoring of the $700 billion financial bailout. Contrary to the agreement, some banks pay dividends and their top executives' bonuses. The bonuses were based on inaccurate financial statements [Ed. Note: instead of being punished for lying, CEOs were rewarded].
Initially, Treasury Secretary Henry Paulson said the bailout would be used to buy distressed mortgage-related securities from banks. After it passed, the ex-Wall Street CEO said he’d let banks figure out what to do with the taxpayer dollars. Responding to criticism, federal regulators urged banks to lend the money. The advice, however, isn't legally binding.
Meanwhile, the Federal Reserve said it was extending the life of its lending programs to financiers. Elsewhere in New York City …
- Check Please! Yankees Forced to Pay $11 Milliont
The Big Apple billed the New York Yankees baseball team for $11 million. Ex-Mayor Giuliani had permitted the team to deduct planning expenses for its new stadium from the rent it pays to the city. Auditors found deductions for: travel expenses to other stadiums, $34,328; donation to a Political Action Committee, $50,000; bonuses to the staff of the stadium’s developer, $359,617; revenue sharing with other baseball teams, $1.8 million; and receipts for 2006 expenses, even though the city gave them two years worth of annual credits in 2005 worth $5 million.
- Hank Paulson’s son wants millions of tax dollars, too, for his team
Merritt Paulson, 35, has asked Portland taxpayers to spend $85 million to build a new baseball stadium for his Beavers and renovate PGE Park -- just remodeled in 2001 at a cost to taxpayers of $38.5 million -- for soccer. In return, he’ll spend $40 million to win a Major League Soccer (MLS) team for the city. “This is not a negotiation,” Paulson said. “The $85 million is it.”
None of the 10 soccer stadiums recently developed around the US was financed entirely with public money. Billionaire Paul Allen, owner of the basketball Trail Blazers, built Portland’s “Rose Garden” with virtually no public money.
Meanwhile, demand for public services grows as the revenue to pay for them shrinks. And pro sports do not increase jobs, urban renewal, or tourism.
Profit from owning teams comes from appreciation in the value of major-league sports franchises. Starbucks CEO Howard Schultz bought the Seattle Supersonics for $200 million in 2001 and sold the franchise for $350 million in 2006, although it lost money nearly every year he owned the team.
US soccer has never achieved commercial success. The 13-year-old MLS teams are all owned by three tycoons: railroad magnate Phil Anschutz, oilman Lamar Hunt, and logger Robert Kraft. Yet in the 2008 season, the 14 MLS teams averaged 16,261 fans per game and have deals to televise every game.
The cost of an MLS expansion franchise has risen from $10 million in 2005 to $40 million today. “The quality is way up and so is the fan’s experience because of the soccer-specific venues,” Paulson says.
His proposal is an example of socializing the costs and privatizing the profits.
- Another city finds subsidizing big development backfires
By diverting sales and property tax revenues, local governments subsidize private development. Now these tax increment financing (TIF) projects are not paying out as planned. Cities and towns in Texas, Indiana, Illinois, Ohio and California must bailout TIF-ed projects from their general fund.
Kansas City subsidized retail, hotel, parking garages, and a factory designed with “guaranteed” revenue streams. The city -- expecting a $60 to $80 million budget shortfall next fiscal year -- projects a $9.3 million shortfall in tax revenue dedicated to debt service for TIF, sales tax increment financing (STIF), and Super TIF projects. With the support of Mayor Funkhouser -- who ran on a platform of reining in TIF abuse in the city -- the council recently approved a $20 million cash advance for a TIF project above the $40-plus million TIF funds already approved by the city.
TIFs are risky under good circumstances. Given the current economy, shouldn’t local governments quit using the taxpayers’ credit card to develop private projects?
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Also see: Much of high finance lately has not been legal
Bailout for AIG Not Needed
A crisis is a terrible thing to waste |
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