Photo by Ian Koski/Horizon
A recent audit by the City Comptroller's office found the Yankees underpaid $367,000 between 1997 and 2001 for their lease of Yankee Stadium. Upon being notified of the discrepancy, the team paid up.

Audit finds Yankees underpaid stadium rent

By Ian Koski
Managing Editor

An audit of the Yankees’ books showed the ball club shorted the city more than $367,000 in fees related to the team’s lease of Yankee Stadium from 1997 to 2000 by inaccurately reporting certain types of revenue.

The office of City Comptroller William Thompson initiated the audit in January, shortly after discovering the changes made to the Yankees’ lease by former Mayor Rudolph Giuliani. According the team’s 1972 lease agreement with the city, the Yankees must pay in annual rent a percentage of revenues from ticket sales, concessions, wait service, pre-paid parking and cable television receipts, or $200,000 – whichever is greater. Payments to Major League Baseball and all sales taxes are deducted before the rent is calculated.

The Comptroller’s office says that during the four-year audit period beginning Jan. 1, 1997 and ending Dec. 31, 2000, the Yankees reported gross revenues of $416.7 million and paid the city $18.8 million in rent.

The city’s audit found the Yankees underreported their revenue by nearly $1.4 million and inflated their deductions by $2.5 million. Roughly 10.6 percent of that total — $367,321 — was owed to the city.

Upon being notified of the audit, Mr. Thompson said, the Yankees confirmed the findings and promptly paid up. “We didn’t think it was particularly intentional,” Mr. Thompson said during a meeting with reporters last week. “If we would have thought the Yankees did that, we’d say that.”

Independent of the four-year audit, in April the Comptroller’s office began auditing the rental credits submitted by the Yankees for the year 2001. The team’s lease says that the city is responsible for maintaining the stadium, but it also allows the Yankees to make the repairs and deduct them from the rent paid to the city.

“The general rule for eligible work is that the city pays to maintain all areas of the stadium except Yankees offices, concession space, the receiving room, the commissary and the restaurant space,” the Comptroller’s first-quarter audit stated. The city also pays for materials used to maintain the stadium, however, it does not pay for uniforms or tools.”

During the first quarter of 2001, the Yankees claimed $1 million in rental credits. After reviewing those credits, the Comptroller’s office found all but $56,000 of the credits to be justified. Yankees’ accountants successfully negotiated for $800 of the credits to be restored, leaving the total rental credit for the first quarter at just over $944,000.

During the second quarter of 2001, the Yankees claimed $1.9 million in credits. The Comptroller’s office initially disallowed $148,000 of the credits, but the Yankees were able to restore $23,000. The city remained at odds with the Yankees over an additional $2,800 paid to team employees assigned to certain areas of the stadium grounds. In the end, the Yankees were able to claim a $1.7 million credit for the second quarter.

The third-quarter audit proved even more contentious. The Yankees claimed $900,000 in credits, of which the Comptroller’s office initially disallowed $152,000. The Yankees were able to restore $26,000, but continued to argue over a $92,000 sales tax bill with Miranda Fuel. The ball club believes it should be exempted from the tax as an agent of the city, but the city and state say it the Yankees do not qualify for the exemption. Ultimately the Yankees were only allowed to claim $774,000 in rental credits for the third quarter.

The Comptroller’s audit of the fourth quarter was not complete at press time.