June 17 (Bloomberg) -- Do you want to get into the hottest area of municipal finance? Try stadium-building.

Sure, Congress's Joint Committee on Taxation earlier this year proposed eliminating tax-exempt finance for stadiums, but don't worry.

That was just a proposal. The lobbyists have hardly begun their efforts to defeat it. Municipalities aren't going to stop building stadiums. They're going to keep building them, and financing them with bonds, taxable or tax-exempt. Politicians, one pundit pointed out recently, have an edifice complex.

Anyone who doubts that stadium finance is alive and well can look at the news out of New York this week. Not too long ago, people figured that the stadium building boom had passed New York by. No longer! The city has proposed building new stadiums for both the New York Mets and the Yankees baseball teams, and both would be financed with tax-exempt bonds.

The stadium for the Mets would be convertible to one suited to the Olympics, should New York win in its bid for the 2012 games. Mayor Michael Bloomberg's earlier proposal to build an Olympic stadium over rail yards on the West Side of Manhattan was blocked by the state's Public Authorities Control Board. Nobody is on record as opposing the two new baseball stadiums.

The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

Time to Borrow

Stadiums these days are pretty pricey things, running $800 million or more. The Mets earlier this week estimated that using tax-exempt bonds to build their $800 million-plus stadium would save them more than $10 million a year. The New York Yankees' new stadium will also cost around $800 million.

It's a good time to borrow money in the tax-exempt market. Top-rated issuers are paying around 4.25 percent to borrow money for 30 years. The Bond Buyer's 20 General Obligation Bond Index is now at its lowest level since the waning days of the Johnson administration.

Even if you aren't a top-rated issuer, rates are still cheap. Earlier this month, New York's Westchester County sold $216 million in bonds backed by its share of the 1998 settlement with the tobacco industry. The bonds were rated BBB by Standard & Poor's, and carried top yields of 5.30 percent in 2045.

Pay Their Way

The big difference between the new stadium plans and the ones both the Mets and Yankees thought they had in place with the mayor's predecessor, Rudolph Giuliani, is that both teams are footing more, in the case of the Mets, or all, in the case of the Yankees, of the bill. Under the Giuliani plans, the teams would have split the cost of new stadiums with the city.

But that's New York. Both teams evidently realize that there are advantages to being located in the city and are willing to pay something for that privilege. The same may not be the case for your town, no matter what town it is.

Critics Trampled

And so municipalities will continue to sell bonds to build stadiums, in the hope of attracting new or existing teams. Teams will continue to threaten to leave unless they get a new stadium.

The handful of critics who complain that private owners should pay for their own ballparks, that building stadiums is wasteful, that municipalities should spend their money on better public services and education --well, such people have generally been trampled in the dust.

You may have thought the stadium building juggernaut was running out of steam. It's been 13 years, after all, since the Baltimore Orioles opened the retro park at Camden Yards that sparked the baseball stadium renaissance.

Since then, the Cleveland Indians, Colorado Rockies, Cincinnati Reds, Seattle Mariners, Detroit Tigers, Milwaukee Brewers, Pittsburgh Pirates and Philadelphia Phillies have all opened new parks, financed in whole or in part with tax-exempt bonds, and usually with a hefty helping of public participation.

`Friday Night Lights'

Baseball isn't alone in the stadium mania. Football, basketball and hockey have all been part of the building boom. So has minor league baseball.

So, for that matter, have colleges and universities. ``An Athletic Arms Race,'' the Wall Street Journal dubbed the ``stadium expansion binge'' at more than three dozen schools.

The Houston Chronicle recently reported on a perhaps frightening sign of things to come, when it carried a story on school districts across the state building fancy new stadiums for their high school football teams.

``The $13 million to $27 million stadium with all the trimmings has become almost commonplace, a concrete monument to hometown pride and the pre-eminence of Friday night football in Texas,'' the article said.

`Misplaced Priorities'

The article noted that some critics complained of ``wildly misplaced priorities'' at a time when school districts ``are struggling to pay for teachers and books.'' The Chronicle then interviewed Buzz Bissinger, whose 1990 book, ``Friday Night Lights,'' about high school football in Odessa, Texas, was turned into a highly regarded movie last year.

Bissinger was, predictably, critical, calling the stadium- building boom an epidemic.

``I talk to educators, administrators and coaches all the time, and they tell me, `Yes, sports is really careening out of control.' Then they build stadiums with skyboxes and instant replay. As if a high school needed instant replay. I'm glad to see my book has done no good at all.''

Welcome to the future of public finance.

To contact the writer of this column: Joe Mysak in New York at jmysakjr@bloomberg.net

Last Updated: June 17, 2005 00:05 EDT