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New York City Comptroller William C. Thompson, Jr. today released an audit that found the Staten Island Yankees failed to pay the City approximately $373,000 for items such as electricity costs, fees on signage revenue, and late payment charges. The audit noted that internal control weaknesses over the recording and reporting of revenue from attendance made it impossible to determine how much the Yankees should have paid the City’s Economic Development Corporation (EDC).

“The Staten Island Yankees did not live up to their obligations to the City,” Thompson said. “My auditors found that the team needs to take steps to ensure that attendance is properly documented and reported and that the EDC must ensure that all amounts are paid when due.”

Thompson’s auditors determined that, for the 2001 and 2002 lease years, the Staten Island Yankees generally adhered to certain non-revenue-related requirements of its 20-year lease agreement with the EDC. The lease grants the Staten Island Yankees the exclusive rights to use the Richmond County Bank Ballpark. The Staten Island Yankees are required to pay the EDC an annual base rent for actual attendance, for complimentary tickets, for “no shows” and for the team store, and percentages of revenues generated from special event net income and from advertising revenues. As well, the agreement requires that the EDC pay the team a portion of the net income from the City’s parking lot adjacent to the stadium.

The audit covered the period between May 1, 2001 and December 31, 2002. Auditors noted that the Staten Island Yankees reported actual attendance of 132,028 in 2001 and 116,322 in 2002. As a result, due to its rental agreement, the team paid base rent of $100,000 in 2001 and $0 in 2002. (If attendance dips below 125,001, the Staten Island Yankees do not pay any base rent.)

However, because of inadequate controls over attendance reporting, auditors could not verify whether reported actual attendance was accurate. Thompson’s review found that, because of an unreliable ticket scanning process, a total of 7,751 tickets were not reported in 2001 and 8,378 were not reported in 2002.

Additionally, Thompson’s audit found that the Staten Island Yankees owe the EDC at least $373,517 because of the following:

• The Staten Island Yankees did not reimburse the EDC for $303,858 in stadium electricity charges as of December 31, 2002.
• The Staten Island Yankees have an outstanding balance of $25,000 due for their 2002 percentage of signage revenue. Of the $250,000 owed for 2002, the Staten Island Yankees paid the EDC $225,000.
• Payments that were due were consistently late, resulting in $35,774 in late charges. The payments were made two to 11 months late.
• The EDC overpaid the Staten Island Yankees $8,885 in parking lot income both years. The lease agreement requires the EDC to pay the team a portion of net income derived from vehicles at the lot two hours before, and one hour after a stadium event.

Additionally, even though the lease agreement contains a provision for payments to the EDC from sales at the team store, the amount to be paid has not been negotiated between the Staten Island Yankees and the EDC.

Thompson made several recommendations. He urged the team to pay $373,517 for outstanding fees and late charges, make all future payments on time, calculate actual attendance and fee payments based on turnstile counts, distinguish between paid and complimentary tickets and ensure the actual attendance for events can be properly supported.

Thompson further recommended that the EDC ensure it receives the payment, charge the Staten Island Yankees the appropriate late fees, and negotiate specific fee terms for the team store, retroactive to the store’s first day of operation.

EDC’s response, which is contained in the audit, indicated that both the EDC and the Staten Island Yankees generally agreed with the report’s recommendations. The EDC also indicated that, subsequent to Thompson’s presenting a preliminary draft of the audit earlier this year, the team has remitted several payments.

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