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Public Funds for Private Concerns

Essay by   •  February 10, 2011  •  Research Paper  •  2,564 Words (11 Pages)  •  1,331 Views

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The objectives of a private organization will usually differ from that of the government. Managers in private corporations have only one major goal, to satisfy the bottom line. Their endgame is to increase profits and to keep their shareholders happy. Their responsibilities are very specific and can result in going against popular opinion as long as the earnings are maximized. One example of this mentality was railroad executive William Henry Vanderbilt's response of "the public be damned" when questioned about the availability of an unprofitable train service "for the benefit of the public" (Shafritz & Russell, 2005, p. 344).

On the other hand, elected officials serve their constituents. Their primary goal is to get re-elected so most decisions will not fly in the face of public opinion. Due to the fact that politicians do not want to alienate the majority of the voters, trade offs and compromises are made to keep all sides happy. Since government is not-for-profit, money does not have the same effect as it does for private organizations. This is not to say that revenues are not important in government, just that they are not as important. Milton Friedman said that it was up to the government to resolve social problems while private concerns went about their business of making money (Shafritz & Russell, 2005, p. 345).

Despite their obvious differences, business and government sometimes share similar goals and objectives. The two entities can work together to satisfy both of their needs, turning a profit while improving the community or culture. Nowadays, many individuals switch careers between the private and public sector. Additionally, many government programs are outsourced to private organizations since it is clear that their management tactics are more efficient. Employees on both sides share the same technology, they work with similar computer software, and everyone has access to the vast wealth of information on the Internet (Shafritz & Russell, 2005, p. 346).

So, the public and private sectors have attributes in common while their bottom line objective is very different. When the two sides are forced to come together on a project, the outcome is often controversial. The bigger the issue is, the more likely it is to be dragged out through the media outlets. Community leaders come out of the woodwork to weigh in on the topic, often when it seemingly has little to do with their traditional area of expertise. They say that politics makes for strange bedfellows. Every group has its own agenda and sometimes they are forced to get into bed with traditional enemies to get what they want.

This paper will examine the use of large sums of public funding to help pay for a project that mainly benefits a private concern. It will show how the government and business must work together to reach a common goal and it will try to shed some light on the political maneuvering that is made necessary when trying to reach these goals.

The New York Jets have being playing their "home" games in Giants Stadium since 1984. They are the only team in the National Football League to play in a stadium named after another team in the league. This fact has been a great source of embarrassment for the franchise. In January of 2000, Robert Wood "Woody" Johnson IV bought the Jets for $635 million dollars. In the summer of that same year, Johnson contacted executives at Cablevision regarding a plan for a joint stadium/arena at the West Sid Rail Yards in Manhattan (Fatsis & Grant, 2005, p. B1). Johnson, a multi-billionaire member of the Johnson & Johnson family, was not content with the team he owned being a tenant in the stadium where they played their home games. The plan was to build a 73,000-seat football stadium that could instantly transform to a 24,000-seat arena with the flip of a switch. The project went far enough that representatives of both organizations traveled to Japan to see the only other stadium like this in the world. Ultimately, Cablevision, owners of Madison Square Garden, backed out of any proposed deal due to a lack of completed plans for an extended subway line to the site. At the time, James Dolan, second in command of Cablevision, showed no signs of objection to the Jets going ahead with their plans. It was only when Mayor Bloomberg offered $600 million dollars in public funding that Cablevision re-entered the picture (Fatsis & Grant, 2005, p. B1).

Mayor Bloomberg, like Johnson, is a multi-billionaire. People in that financial stratosphere tend to know and look out for each other, and these two are no different. Some of the strings that the Mayor pulled to get this idea off of the ground were quite transparent. The first benefit granted was $300 million in state funds to build a deck over the railroad tracks. It is widely accepted that this deck will be absolutely necessary for any development plan but previous ideas never mentioned that use of state funds. Next was $300 million from the city's coffers to pay for a retractable roof to be built on top of the proposed stadium. This roof would allow the venue to be used for concerts, expositions, and conventions on a year round basis (Kohn, 2005).

Perhaps most egregiously, the Mayor then persuaded the Metropolitan Transportation Authority (MTA) to sell the property for a fraction of its appraised value. The MTA is an admittedly cash-strapped program that is currently cutting services to its subway passengers while its director lobbies for billions of dollars in state funding to stay afloat. Crime on subways is going up and the level of services provided to the common man is going down while sweetheart deals are getting cut so that the rich can get richer (Herbert, 2005, p. A23).

There are other concerns, besides political, that surround the proposed convention center. Speaking to the environmental concerns, the latest designs of the facility have removed wind turbines that were originally planned to generate 60 percent of the power. Green power sources will now provide enough power to meet the demands of all of the football operations. The mass of the building was reduced by 120 feet with the removal of the wind turbines, making for a sleeker design. 20 acres have been set aside for public parks on the North and South Sides of the stadium and the designs call for theaters and museums to be opened to fashion a city promenade along the waterfront (nyscc.newyorkjets.com).

Opponents to the stadium have listed traffic concerns as another issue. The stadium would be near densely populated areas of Manhattan such as Hell's Kitchen, Times Square and Chelsea, and with no new parking lots for the stadium parking will become a nightmare on game days (Herbert, 2005, p. A23). Proponents of the plan will tell you that 97% of fans currently

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