NFL

The NFL Wants to Block Tax Reform Because It Would End a Common Stadium Subsidy

Cities have issued more than $13 billion in untaxed bonds for stadium projects since 2000, and the NFL wants to keep the cronyism flowing.

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The tax reform bill unveiled this week by House Republicans would do away with the federal tax exemption for municipal bonds, commonly claimed by states and cities to subsidize the construction of stadiums.

The National Football League is gearing up big time to lobby against it, The Wall Street Journal reported this week.

Municipal bonds were made tax exempt in 1986 as a way to encourage investors to buy them at lower interest rates, saving cities money when they need to build new infrastructure or make expensive repairs. While the bonds are designed for building roads, sewer systems, and schools, cities have issued more than $13 billion in untaxed bonds for stadium projects since 2000, according to a recent Brookings Institute estimate.

That tax break is "an unseen subsidy," according to Victor Matheson, a sports economist at the College of the Holy Cross, who is critical of using public money for stadiums. "It's a tax break that we never get to vote on, and it's one that don't even think about and don't see," he told Reason in June.

There's bipartisan support for directing the exemption specifically for public infrastructure, rather than multi-billion dollar playgrounds for multi-millionaire athletes and billionaire franchise owners. Sens. Cory Booker (D–N.J.) and James Lankford (R–Okla.) in June introduced an independent piece of legislation to prohibit local officials from using municipal bonds for stadium projects.

If that prohibition becomes law—either on its own or as part of a revamped federal tax code—those "unseen subsidies" would go away and the cost of those projects would increase. So, too, would public opposition to spending public money on stadiums.

"It's something that the NFL will oppose because we believe that the construction of new stadiums and renovations of stadiums are economic drivers in local communities," NFL spokesman Joe Lockhart tells the Journal's Andrew Beaton.

The 32 team owners who make up "the NFL" in this context are allowed to believe whatever they want, but the idea that new stadiums or renovations are economic drivers is not supported by facts. A landmark study published in 2000 by the Journal of Economic Perspectives reviewed 36 major metropolitan areas that had built stadiums for professional sports teams and found that, on the whole, they represented a drag on the economy.

More recently, a 2015 study by the Stanford Institute for Economic Policy Research, found that "NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city."

Local governments, however, continue to put taxpayers on the hook for football stadiums. In his book The King of Sports: Football's Impact on America, Gregg Easterbrook, a journalist and longtime critic of taxpayer subsidies for the sport, says taxpayers have covered more than 70 percent of the total cost of NFL stadiums built in the past two decades.

Maybe we're heading toward the end of that tradition. President Donald Trump, in between tweeting criticisms of NFL players kneeling during the national anthem to protest police abuse, has whacked the NFL for taking advantage of special loopholes in the tax code.

"Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country? Change tax law!" Trump tweeted in October.

President Barack Obama proposed eliminating tax exemptions for municipal bonds attached to stadium projects as part of his 2015 budget plan, but Congress didn't bite. Maybe, as part of a comprehensive tax reform bill, that component has a better chance of reaching Trump's desk.

For decades, the NFL operated as a tax-exempt entity—insert joke here about football being a religion in much of America—because it was technically registered as a nonprofit. It got nonprofit status from the IRS during World War II, even though no one seemed to know exactly what the league's "nonprofit mission" actually was, because (and this is true) the IRS said it had misplaced the NFL's application and the NFL said it, too, had lost those records.

The loophole for municipal bonds is also kind of an accident, created in the 1980s when Congress voted to close a previous loophole for federal tax-exempt private revenue bonds that had been used to fund stadium projects. Local governments simply turned to tax-exempt municipal bonds instead, as Patrick Hruby of Vice Sports has pointed out.

The league voluntarily gave up its nonprofit tax status in 2015, partially because the special tax status required the league to disclose how much it was paying top executives, but mostly as a public relations maneuver.

When it comes to get subsidies for new stadiums, though, don't expect the crony capitalist NFL give up that easily.

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47 responses to “The NFL Wants to Block Tax Reform Because It Would End a Common Stadium Subsidy

  1. So when the feds let you write off your local and state taxes, isn’t that subsidizing high tax places / penalizing low tax places?

    Why should there be any deductions period?

    1. They’te trying to do away with that too.

      And there really shouldn’t be any deductions at all. Though I can live with the standard deduction for the “have-nots” so that the Block Yomommatards will keep their big stupid mouths shut.

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    2. It really is a semantics issue. Does the failure to collect a tax constitute a subsidy? If I don’t steal your money, am I giving you money? Reminds me of Louis CK’s comedy routine where he talks about all the money he could be giving to charity by selling his expensive car and replacing it with a Hyundai, but “every day I don’t do that I’m killing kids with my car.”

  2. Excellent. It’s about time that Paul Rino and Bitch McConnell actually did something constructive.

    1. If only Donald Dump and Scheming Bannon would stop distracting from their agenda!

      1. Hah, keep ‘me coming.

        1. Hah, that’s an unfortunate typo.

          1. I was going to let it come and go.

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  3. “Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country? Change tax law!”-Trump tweet.

    Anyone who says Trump is pro-cronyism seems to be not paying attention.

    1. But if the NFL teams did what he wanted and banned the anthem protests, then he’d support tax breaks for them. That’s not cronyism?

      1. So Trump has said anywhere publicly that if the NFL does what he says and bans the protests, Trump would support the tax breaks for them? Didn’t think so.

        Trump has publicly said that he supports cutting tax breaks for NFL to who are getting said tax breaks and disrespecting out anthem, flag, and country.

        1. “So Trump has said anywhere publicly that if the NFL does what he says and bans the protests, Trump would support the tax breaks for them?”

          That’s what his tweet implies. He directly links the anthem protests with the tax breaks.

          Whether or not he’d have included this in his tax plan if they complied with his demands is something we’ll never know.

      2. Yes Trump doing the right thing here in reality is cancelled out by Trump doing the opposite, and wrong thing, in an imaginary world where the situation is reversed.

    2. Not sure what his impotent Twitter feud with football players has to do with cronyism, but uh he did appoint his daughter and son in law to jobs in the White House, and had sycophant Steve Bannon as his chief strategist.

      1. The cronyism we are talking about is a supposed free market sports franchise getting taxpayers to subsidize the building of private sports stadiums. That and the relationship inherent in that between NFL owners and politicians.

        You are mentioning nepotism with Trump hiring his daughter and son-in-law in the White House. You seem a bit crazy about the Steve Bannon claim since its neither administrations almost always load their cabinet and staff with loyal persons.

        I am sure you complained this hard when Obama loaded his staff with loyal persons.

    3. That’s one interpretation. The other interpretation is that he’s targeting sports specifically and implementing a kneel tax. That’s what he implied with his threat, and it happened. Maybe that’s too skeptical — maybe he was going to do away with those deductions anyway. But if they complied with his demands about the anthem, would he have pushed this tax?

  4. Municipal bonds were made tax exempt in 1986

    I thought municipal bonds had always been tax exempt, and that that exemption was required by the Supreme Court since early in our nation’s history because “the power to tax involves the power to destroy”. Actually, it was an 1895 decision that specifically said municipal bonds couldn’t be taxed, and that was overturned in 1988. Regardless, tax-free municipal bonds are a lot older than 1986.

    1. Don’t try to confuse the issue with facts

      1. And whatever you do, never include citations; this is the web after all.

  5. “‘It’s something that the NFL will oppose because we believe that the construction of new stadiums and renovations of stadiums are economic drivers in local communities,’ NFL spokesman Joe Lockhart tells the Journal’s Andrew Beaton.”

    For those communities not so fortunate as to have ready access to hurricanes, at least.

    1. “‘It’s something that the NFL will oppose because we believe that the construction of new stadiums and renovations of stadiums are economic drivers in local communities,’ NFL spokesman Joe Lockhart tells the Journal’s Andrew Beaton.”

      I’ll note former Clinton lackey Lovkhart said they BELIEVE they are economic drivers. They have to believe because facts certainly don’t back them up.

    2. Miami voters should never reject a stadium bond then — it’s twice as much economic growth.

  6. “It’s something that the NFL will oppose because we believe that the construction of new stadiums and renovations of stadiums are economic drivers in local communities.”

    “Of course, we ‘believe’ a *lot* of stuff.”

  7. Not taxing something is not a subsidy.

    1. This article left out that sports stadiums also get actual taxpayer money like part of Atlanta’s tourism tax going to the new Falcons and Brave’s stadiums.

      So, while you are correct that not taxing something is not a subsidy- subsidizing the total cost of a private enterprise building project with taxpayer money is a subsidy.

    2. Yes it is, when one special group gets that exemption

  8. Another Libertarian Moment, brought to you by the Trump.

    1. Lol, they each contributed a million to his inauguration. The exemption will stay

  9. They will get to retain it.

    Republicans won’t let their buddies down

  10. So, what are the democrats going to do with this issue? Are they going to support tax breaks for the rich? This is what I live for.

    1. I’m hoping NFL players get really pissy about it. That’ll make it all the better for the league.

      1. How will we tell? They are kneeling for BLM. How do you protest/display for favorable tax treatment?

        1. Beat their girlfriends and have numerous kids out of wedlock they refuse to support?

        2. No, they aren’t kneeling for BLM. They’re kneeling to protest President Trump.

          Colin Kaepernick (and a few selected others) were kneeling for BLM. The larger protests didn’t start until the Orange Avenger started tweeting about it. The larger protest is about the President saying something mean on the twitter-machine.

          If the NFL has chosen to take sides in the culture war, they shouldn’t be surprised if the conservative side decides to fight back.

  11. “Municipal bonds were made tax exempt in 1986 as a way to ….”

    When you make an egregious factual error in paragraph 3, why should i keep reading?

  12. I’m guessing alienating their audience is not the best move the NFL has made. There will be far less pushback against this than there would’ve been even 4 years ago.

  13. “It’s something that the NFL will oppose because we believe that the construction of new stadiums and renovations of stadiums are economic drivers in local communities,” NFL spokesman Joe Lockhart tells the Journal’s Andrew Beaton.

    And then he cited which economic studies?
    And when Andrew, like all good journalists, did his due diligence and checked the results of several recent stadium subsidies, he found and reported what?

  14. A bigger deal for the NFL and other pro sports is if businesses can’t deduct high priced entertainment any more…. Haven’t heard much discussion of that one.

  15. I’m surprised to see so much support here for an increase in taxation.

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