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Jeff Bezos will be able to pull a plug on Amazon HQ2 in NYC: What's in the bet



After wave of protests Amazon executives reviewed plans to put a campus in New York City.

The original plan was called 25,000 jobs in Long Island City and an investment of about $ 2.5 billion. Political protagonists of the plan were forced to change the heart of the company's managers. Due to the influx of businesses over the years and lost tax revenue, it is not surprising that New York Governor Andrew Cuomo has said that the opposition of politicians in the Amazon deal is "correcting the government. "

it is The Washington Post that has published the story. A ploy to get politicians to back down? Maybe. After all, their owner Jeff Bezos happens to be the founder and CEO of Amazon. Due to the fact that he was in the midst of a divorce and a bitter argument with the National Enquirer on suspected blackmail, the last thing he needed was to go into battle with a deal that was all but signed sealed and delivered.

Losing the community and the state is not small. Estimates put an average salary of an additional 25,000 workers to $ 1

50,000. Simple math places a lost tax base of $ 3.75 billion annually.

Is business tax for the community big?

Deal critics often point out how tax incentives for new stadiums have failed to deliver on their economic commitment. The free public tax fund is the financial vehicle of choice that provides favorable financing for projects.

A detailed study in 2016 through the Brookings Institute decides that "The evidence for large spillover obtained from stadia in the local economy is weak. Study studies are ultimately not seeing a positive relationship between the construction of sports facilities and local economic development, income growth, or job creation … "
The above answers the question of why the same thinking does not apply to Amazon or any major corporation seeking to build a high-tech campus in Fun City. Here, any cost benefit analysis in this deal will not be experienced throughout a brief article by you, but here is a fact that seems to have been lost to critics.

Jobs are created and long The benefits to community income are not comparable. A stadium project makes thousands of well-paying construction jobs that all disappear once the structure is complete. NFL teams clearly pay very high wages but by definition, there are not many employees. NFL.com puts the salary stamp of 2018 to $ 177.2 million. It seems like a far cry from Amazon's potential New York annual payroll of $ 3.75 billion.

In any negotiation there is posturing and bluffing. Perhaps, local politicians and others such as the Union, Retail and Department of the Department Store, are currently trying to arrange workers at an Amazon warehouse at Staten Island looking only to pick up some concessions from the internet giant. Although Jeff may be opposed, I doubt it. According to Fox Business, currently the company has yet to lease or buy office space for the project, so it will be relatively easy for Amazon to reclaim its promise.

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In the coming weeks if we find the deals go south, expect a headline on the front page of your favorite tabloid to read: BEZOS TO NEW YORK "It's not personal … it's a tight business."

* During this article some funds managed by David Nelson have long been sharing Amazon.

David Nelson, CFA is the Chief strategist of Belpointe Asset Management.


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