Audit Report on the New York Yankees Rental Credits For the Second Quarter of 2002

AUDIT REPORT IN BRIEF

The Comptroller’s Office is required to audit all rental credits claimed by the New York Yankees for the maintenance of City-owned Yankee Stadium. Under the terms of the lease, the Yankees are responsible for the care and upkeep of Yankee Stadium, and the costs incurred by the Yankees for maintaining the stadium are offset against any rental income due the City from the Yankees. Thus, every approved dollar spent and accounted for as a rental credit for the maintenance of the stadium results in a dollar-for-dollar decrease in the rent due the City.

The audit found that Yankees rental credits submitted for the second quarter of 2002 were overstated by $280,793.07, as follows:

• $16,816.69 in excess payroll charges and salary expenses that should have been paid by the Yankees.
• $112,551 in payments to PEM Electric consisting of labor and material costs that, based on the terms of the agreement, should not have been charged to the City.
• $2,088.88 in sales tax on fuel. According to an October 29, 1993, settlement agreement that designated the Yankees as agents of the City, sales taxes are not acceptable for deduction as maintenance credits.
• $767.62 in purchases of supplies that are not chargeable to the City.
• $148,320.17 in Yankee Stadium repairs that are not chargeable to the City.
• $248.71 in "Other Expenses" that are not chargeable to the City.

We recommend that the Yankees: deduct $280,793.07 from the total rental credits taken for maintenance pertaining to the second quarter of 2002; ensure that all maintenance credits claimed are properly supported by sufficient documentation; and obtain appropriate approvals before submitting rental credits to the Comptroller’s Office. In addition, we recommend that the Department of Parks and Recreation (Parks) ensure that the Yankees comply with the report’s recommendations.