Those Damn Yankees, parking that is
I have commented on the Yankee Parking Structure fiasco in the past. Here’s a Bloomberg article as to where it stands today. Basically it says that the folks who issued the bonds that are nearly in default, will not default this year because they will be able to use its reserve fun to find the money to make the interest payment on the bonds. How bad is it? They are having to take $5.5 million from reserves to reach the $6.9million they need for the payment. I’m no financial wizard, but doesn’t the bond issuer have to come up with the money to pay off the bonds when they mature? In this case its $237 million.
As I have commented before, one garage is closed except on game days. The other never fills. The reason? There are plenty of garages within in couple of blocks to handle non game day parking, and they charge half what the Yankee garage charge. And strangely enough, the local garages fill on game days.
The parking wizards at Morgan Stanley are quoted in the article as saying that the bonds are now worth about 80% of their original value because, get this, there is pricing flexibility. In other words, as fewer and fewer people use the garages, they simply have to raise prices to meet their income goals. So the $237 million I mentioned above, are now worth $189 million. $48 million has already evaporated. Anyone want to guess who is going to have to pay the $237 million. Yep, the taxpayers of the city of New York.
To avoid default, and assuming the same occupancy rate, the Yankees would have to raise prices to $55 a car in the next few years. Can anyone out there tell me what happens when you raise prices in a market where you don’t have folks lining up to buy your product? What is that banker smoking?
I’m told that most of the people that attend Yankee games ride the subway and if they are coming from Connecticut they take the train, both of which have stations nearby. Who would drive if you could easily ride the rails and save a (now) $23 and (Later) a $55 parking tab? Think how much beer and dogs that would cover. Plus, if you don’t mind walking three or four blocks, you can drive, park down the street, and pay under $20.
A buddy of mine tells me that parking is a business that is run on the ground. He means that you have to go out and walk around your parking facility, you have to see what’s going on in the neighborhood, and you have to understand the motivation of your customers. I’m not sure you can do any of that reading a spread sheet on mahogany row on the 37th floor of a high rise on Wall Street.
They were wrong when they conceived of building all this parking, wrong when they did the feasibility study, wrong last year when they talked about the scale of the financial problems with this project and they are most likely wrong today. Can anyone spell default?