Billionaire investor Gabelli: 'The financially illiterates' screwed up the Amazon-NYC deal
This post has been updated.
The decision by Amazon (AMZN) to pull out of a deal to build a New York City hub in Long Island City sparked controversy across the board.
Opponents of the deal, most notably Rep. Alexandria Ocasio-Cortez (D-NY) and State Sen. Michael Gianaris (D-NY), celebrated the reversal, while politicians like Governor Andrew Cuomo and New York City Mayor Bill de Blasio voiced their displeasure.
Bronx-born billionaire investor Mario Gabelli, who serves as chairman and CEO of GAMCO Investors, didn’t call out Gianaris or fellow Bronx resident Ocasio-Cortez by name but did refer to the “financially illiterates” as the reason why the Amazon deal fell through.
“The screw up in New York City was the financially illiterates [who] didn’t understand that you have to bring Amazon in,” Gabelli said on Yahoo Finance’s The Final Round (video above). “You need to create scale. You need to create vibrancy. You need to create that kind of a feeling, so that next time New York has an air pocket, they’ve got a whole new wave of talent.”
As someone who grew up in the Bronx, he stated that he “understands the virtue” of New York City.
Critics, including Ocasio-Cortez, derided the fact that Amazon would receive $3 billion in subsidies from both New York City and the state for opening a location in LIC. They also raised concerns that it would drive up housing costs in the area, thereby pushing out lower-income residents, and congest the local subways.
“When Amazon, who doesn’t need the money, is squeezing the government for billions of dollars just to show up, we’ve got a problem,” Gianaris told CNBC.
However, the tax breaks would have actually been over a 15-to-25-year period.
As Yahoo Finance previously reported, “[Amazon] endured more than a month of city council grillings over the deal to come to Long Island City and had embarked on a charm offensive with fliers and an open letter to Queens residents touting potential benefits of the company’s new location.”
One of those potential benefits was the fact that New York City would have become a new “tech hub” of sorts. When Amazon made its initial announcement that HQ2 would be in LIC, Apple and Microsoft both revealed that they would be expanding their presence in NYC as well.
The HQ2 move would have brought at least 25,000 new jobs with it, paying an average salary of $125,000.
“What we were talking about with the Amazon jobs was a unique opportunity,” Julie Samuels, Tech:NYC executive director, previously told Yahoo Finance. “So to the extent that job growth will continue to be incremental, that’s great and we want to incentivize that. But it’s a real missed opportunity to go from between 25,000 and 40,000 jobs to zero.”
Gabelli agreed — and he went further.
“If you didn’t think it was a mistake, you have to be financially illiterate,” Gabelli said about the reversal. “It’s not the 25,000 people. It’s the whole impact on psychology. It’s the impact of the multiplier effect of people that come in.”
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