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Thursday, October 26, 2017

 

Why the federal government should stop spending billions on private sports stadiums

Why the federal government should stop spending billions on private sports stadiums

Source: Brookings

"When the New York Yankees completed the new Yankee Stadium in 2009, the final construction bill was an estimated $2.5 billion. Of that, nearly $1.7 billion was financed by tax-exempt municipal bonds issued by the city of New York.

Because the interest earned on the municipal bonds is exempt from federal taxes, a large amount of tax revenue that would have been collected—had the bonds been issued as taxable—went toward the construction of the stadium. In other words, the Yankees received a federal subsidy to build their stadium. How much? About $431 million. That’s a lot of money, but it gets worse.

The loss in federal tax revenues was even higher than the subsidy to the stadium. High-income taxpayers holding the bonds receive a windfall tax break, resulting in an even greater loss of revenue to the federal government. In the case of Yankee Stadium, the additional loss was $61 million. That is, the federal government subsidized the construction of Yankee Stadium to the tune of $431 million federal taxpayer dollars, and high-income bond holders received an additional $61 million.†

The Yankees, of course, aren’t the only team to finance their stadium using tax-exempt municipal bonds. Since 2000, 35 other professional sports stadiums have also been financed with tax-exempt bonds.

In “Tax-exempt municipal bonds and the financing of professional sports stadiums,” Brookings Senior Fellow Ted Gayer, Austin J. Drukker, and Alexander K. Gold quantify the federal  subsidies given to finance professional sports stadiums built or majorly renovated since 2000, and the total loss in federal tax revenue.

All together, the federal government has subsidized newly constructed or majorly renovated professional sports stadiums to the tune of $3.2 billion federal taxpayer dollars since 2000. But because high-income bond holders receive a windfall gain for holding municipal bonds, the resulting loss in total revenue to the federal government is even larger at $3.7 billion. ...."

https://www.brookings.edu/research/why-the-federal-government-should-stop-spending-billions-on-private-sports-stadiums/


Comments:
That's some convoluted logic, seems like; not sure how they can say it costs the taxpayers money when if the bonds were never issued to begin with, how could any savings be realized?   I'm saying that because it's doubtful anyone would buy the bonds if there weren't some sort of significant tax advantage. An article on Forbes showed the avg. municipal bond paid out .2% on a 1yr. bond, .48% on a 3 yr. and .88 on a 5-yr.   I'm not going to go that far and attempt to crunch all the numbers of all the bonds issued to build stadiums, but I have a hard time believing that much money is lost from the tax revenues on that piddlin' amt. of interest.

Maybe if the stipulation were made that only bonds for sports venues were taxable, then I can understand that, but I doubt that would hold up in court and besides that, mun. bonds are also issued for "works for the public good", such as repairs to infrastructure, etc. A good case could be made that a sports stadium IS for the public good, in that it brings economic benefit to the local economy.

I also object to a tax break being labeled as a "subsidy". A subsidy is "a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive."   Many cities and even states offer all sorts of incentives for companies to take up residence (see the latest about Amazon looking for a secondary headquarters and the competition involved in that and the deal Fresno offered, very unique), incentives that include free land to build on or exemptions from local and state taxes and fees. There's not much being said about those, and I bet the taxes lost on those deals dwarfs that of new NFL stadiums.

(and Hollywood is losing a LOT of business to Canada because they're wanting to phase out all the entertainment tax breaks and incentives)

If tax breaks are going to be classified as a subsidy, then I have every right to be outraged at others getting deductions for every child they had on their income tax, for every dime they got to take off because of their mortgage deduction and for every buck they got to deduct for medical expenses on their federal tax return.   It never bothered me before, but if a tax break is suddenly a "subsidy", then yes, it does irk the hell outta me.

At least these stadiums created thousands of jobs and generate millions of dollars that boost the local economy...money that turns over several times in that community, expanding the value of those dollars by a factor of however many times it changed hands locally. That's not even to mention the state AND federal taxes made on the profits from ea. and every transaction, the income taxes from not just the profits, but those taxes on the salaries of those providing the goods and services.

Look, I'm not taking up for these fat cat NFL owners, but I'm mostly arguing against the word "subsidy" being used in lieu of "tax breaks" and other incentives. It stems from a nearly 20 yr. long argument I've had with people while I've been online when they talk about "oil company subsidies". They don't get a subsidy, they get a couple of industry specific tax breaks (along the same lines as some other industries) and get the same tax breaks as do other companies. In fact, oil companies are taxed MORE than are many other "greedy corporations" such as computers, medical and insurance industries.

(I hope this posts without some funky formatting; I first wrote it on a Notepad document, then pasted it into the comment box.

Thanks Mike. Once upon a time municipal bonds were issued by cities to fund certain projects, not related to stadiums. With a decline in the economy we're seeing what's happening with certain cities. I hope the same doesn't happen with stadiums over time necessitating another "bailout" due to declining attendance precipitated by current player controversy.

I use notepad all the time to eliminate formatting prior to posting.
Well, in my long-winded way, I was trying to point out that I don't think the govt. is "losing" any revenue, not with it being offset by the tax dollars taken in by the stadiums and all the money they generate.

Of course, NFL owners are holding their cities hostage w/ threats to move and in at least one case in San Diego which called the Chargers' bluff, we'll see who stands to lose by not giving in.    Cities are also falling over themselves to "bribe" teams to relocate, no different than economic development entities that many towns have created. (even my own small town, which has taken a bath on some of the deals they gave, some loans that were never paid back)

I think this downturn in attendance is permanent; all the owners will have to do to put butts in the seats is to temporarily lower prices. I also think the lower TV ratings are not solely due to the protests, but people fed up with an inferior product, not to mention over-saturation (games on Mondays and Thursdays and literally all day long on Sundays) plus share being lost to other entertainment avenues, such as other TV programs and streaming videos. The movie industry is feeling a similar pinch.

My own ennui is not totally due to the protests; they can protest all they want, they have that right but I dislike it being in the news. I don't remember the anthem being played before ballgames on TV, at least not recently, that cuts into commercial time, you see. Just like they can protest if they want, I can also point out that they're being fuzzy headed with their logic for protesting as well as perpetuating a false narrative.   They're dumbasses, plain and simple .   

I also don't like politics- which is what the protest involve, not human rights - being woven into entertainment. I didn't like it when Bob Costas did his anti-gun rant a few years back and I don't like seeing the headlines when all I want to do is see how the rest of the league is doing.    My boycott also stems from that ennui I mentioned above, that I care less and less about sports as I grow older. It dawned on me the other day that sports are being used to divert the masses the same as were gladiator contests back in Rome, only now instead of bread and circuses, it's football and food stamps.

And, it's annoying to me that everyone is so worked up over these idiots kneeling - the sports equivalent of the ice water bucket challenge, does nothing substantial to change things- and bringing about talk of these non-existent "subsidies" in order to punish the owners for allowing these protests, when the money saved from it won't save a dime in the long run. It's also annoying to me that we're upset over this relatively small tax break for people who buy municipal bonds, yet no one cares about the trillions we throw away on social programs that don't work and never will but want to spend even more on them or all the money we spend trying to police the world.

We're a nation with our house on fire, yet we run back into the burning building to save the baby pictures but not the baby. It's priorities, folks....they're all outta whack.
Correction:   I DON'T think this downturn in attendance is permanent.

I should have used Notepad for my post, I seem to proofread it better.
Thanks Mike. I posted this article for basic knowledge how bonds are issued for stadium construction. I'm not a sports fan so if my cable tv bundle could be itemized I'd delete all sports channels because I resent having to pay for them. Fans will decide where major sports teams end up.

Yep notepad doesn't do grammar or spell checks but still very useful anyway.
Many thanks gentlemen for the relevant outrageous money give away to these very prosperous sports corp with to exorbitant ticket prices to fans.

EXTRA - EXTRA:

How bouts all free, overindulgent & fawning TV air & print coverage?
Thanks Eddessa. Excellent point!
I cut out cable a few years ago; I kept waiting on the "ala carte" option but it never happened. I don't mind Univision, the Spanish channel or BET, Black Entertainment Television, but neither have much content that appeals to me . Ditto for all the news channels or kids programming or dozens of others. The maddening thing is that a cable company will brag that a tier will give you 315 channels, but many of those are shopping channels that they don't have to pay for and other channels that don't charge anything or much at all for the company to have them in their lineup.

I have always said they need a tamper proof box that allows the cable company to program only the channels you want, the "ala carte" option.   Cable IS a public utility, after all, and there's precedent for setting a limit that they can charge for each channel just as electric and gas prices are regulated. For instance, if WGN charges the cable company.50 cents per subscriber, then the cable company can charge .75 cents, a 50% markup, seems plenty reasonable enough. (just an example, I used to have a list of what the various channels charged).    The big problem for me was their tiers; the local company only had two, the basic with the four main networks, plus a couple of other stations plus PBS (and don't get me started on PBS, another pet peeve of mine!!!) for far too much money, then the "premium tier" with all those channels I didn't want but paid for since there were three or four channels I DID want.   I live too far away from any transmitters to use an antenna but then I found out I could watch nearly anything I wanted online.
Thanks Mike. Were it just me internet is all I'd have. I'd cut cable & not have a second thought about doing it.
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