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Tax Code Loophole for the NFL

Alvin Jon Bayle: 01/10/2017

Nothing beats politics more than the unification of the American people through American football. NFL has been one of the most hyped up events for this nation as we celebrate it by wearing our favorite teams Jersey, amassing on alcoholic beverages, spending time with our family and friends, and most importantly the amount of cooking or barbecuing involved just to satiate our hunger for football. It becomes a much more wholesome and different experience for fans once they step inside the football stadiums. They can be heard cheering and chanting for their favorite team while covered in paint of their favorite team’s color. The stadiums themselves are a grand spectacle for the fans to witness as a lot of money is invested into stadiums to make them as aesthetically pleasing as possible. This also begs the question of how much money was invested into creating the stadium and how much return does this investment give back to the city?

Two senators, Cory Booker (D-NJ) and James Lankford(R-OK), have recently introduced a bill “S.1342 – Eliminating Federal Tax Subsidies for Stadiums Act of 2017” that proposes to amend an Internal Revenue Code that finances sports stadiums by getting rid of the municipal bonds, bonds that are exempt from federal taxes, involved in federally financing sports stadiums. Senator Lankford during an interview on CNN mentioned that his state of Oklahoma built the Chesapeake arena using their own tax codes without the use of municipal bonds and with Oklahoma’s own tax codes. Senator Booker during the same interview, with Lankford, wanted to get rid of harmful spending when we are trillions in debt and would rather allocate our federal finances in infrastructure instead. Senator Lankford and Booker have concerns about allocating our federal spending. When it comes to an opportunity cost, the taxpayers must also voice their opinion whether investment should be towards NFL stadiums or into schools, roads, and hospitals? Something Americans will have to consider. What would be the benefit if we end up choosing to invest in NFL stadiums? Many owners and entrepreneurs involved in the NFL have also argued that creating the NFL stadiums will create jobs and be great for the economy but would the revenue create a net gain or a net loss?

 

 

(Senator Lankford(Left) and Booker(Right) taken from https://i.ytimg.com/vi/5SS76LnBws8/maxresdefault.jpg)

A publication for the Federal Reserve Bank of St. Louis by Adam M. Zaretsky in April 2001 has argued that stadiums are not a worthwhile investment for cities. In this publication, he stated:

“The dollars being invested in sports facilities are quite substantial considering the overall contribution the industry makes to the economy. In testimony before the U.S. Congress, economist Robert Baade said that Chicago’s professional sports industry—which includes five teams—accounted for less than one-tenth of 1 percent of Chicago’s 1995 personal income.3 Baade further commented that even when compared with the revenue of other industries, professional sports teams contribute small amounts to the economy. He noted, for example, that “the sales revenue of Fruit of the Loom exceed[ed] that for all of Major League Baseball (MLB), while the sales revenue of Sears [was] about thirty times larger than that of all MLB revenues.””

Still, cities are driven by the idea that playing host to professional sports teams builds civic pride and increases local tax receipts from the team-related sales and salaries. When it comes to salaries, however, economist Mark Rosentraub noted in a 1997 article that there is no U.S. county where professional sports account for more than 1 percent of the county’s private-sector payroll.

In the instance of deciding to build stadiums using only the state’s tax codes, Zaretsky has illustrated that the contribution to the economy will not be as big as how the NFL is trying to suggest. This can also pose problems deciding whether this bill will be beneficial or not if cities and states end up suffering because they decided to finance the stadiums themselves. Having the municipal bonds does alleviate this issue if the federal government helps finance your stadium by reducing the cost for the city; you can still see the return from your stadium during games, not much but because the cost is less for the city they can still reap a higher net gain than if they paid for all the cost themselves.

Teams

(Taken from https://www.stlouisfed.org/Publications/Regional-Economist/April-2001/Should-Cities-Pay-for-Sports-Facilities)

Football will continue to be one of Americas favorite past time. It has all the elements of entertainment and competitiveness that puts us on the edge of our seats cheering for our team but putting things into perspective we should also find time to consider the politics of our beloved sport. Senator Booker and Lankford have kept the nation’s best interest and initially, the bill does seem unattractive but considering Zaretsky’s argument he does make a convincing argument. The sales revenue from the stadium will be less than 1% this is true but this also means that when a stadium is being built the city must carefully consider the cost of the building. If the return doesn’t add up they should not have the authority to ask aid from the government to build a stadium. I support Senator Booker and Lankford’s sentiment that our federal finances should be invested more into the infrastructure of our state’s roads and schools. These will reap more benefit and have more utility than a stadium because we use roads and schools in our everyday lives, not stadiums. Even the maintenance involved is costly. Isn’t it time to reduce inefficient spending and more investment towards the people’s needs?

Featured Image Credit: Photo © Bleeding Green Nation

 

Source:

1) https://www.booker.senate.gov/?p=press_release&id=612

2) https://www.youtube.com/watch?v=5SS76LnBws8

3) https://www.congress.gov/115/bills/s1342/BILLS-115s1342is.pdf

4) https://www.stlouisfed.org/Publications/Regional-Economist/April-2001/Should-Cities-Pay-for-Sports-Facilities

1 comment on “Tax Code Loophole for the NFL

  1. Pingback: Tax Code Loophole for the NFL – The Attestor - PoliSpin

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