stadiums

Trump and the NFL Agree: Taxpayers Should Keep Subsidizing Stadiums

The NFL lobbied hard, and the president reportedly lent a hand.

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Tom Donoghue/Polaris/Newscom

After feuding with the National Football League for months, over everything from how players act during the national anthem to whether the games are violent enough, President Donald Trump appears to agree with the league about at least one thing: Taxpayers should subsidize stadiums.

The Republican-crafted tax reform bill, which is expected to pass both chambers of Congress today, maintains the current federal tax exemption for bonds issued to pay for the construction of stadiums.

An earlier version of the bill, which cleared the House in November, would have done away with that exemption (though public projects such as infrastructure could have been funded with tax-free bonds). The NFL lobbied to kill that change, and the version of the bill that emerged from the conference committee deleted the provision.

Preserving the ability to use tax-exempt bonds for sports stadiums was "a priority for Mr. Trump," according to a GOP aide who spoke to The Wall Street Journal.

"I can't think it's any coincidence that after the House passed a repeal of the tax-exempt bond stadium subsidy, the NFL weighed in publicly—and, I have no doubt, other leagues did so privately—to rail against the measure, and then the congressional conference committee killed it," says Neil deMause, author of the anti-stadium-subsidy book Field of Schemes. "Pro sports leagues spend heavily and well on lobbyists, which is exactly why all attempts to reign in the billions of dollars a year in local and federal subsidies for stadiums have gone nowhere."

Unlike other, more direct ways that state and local governments subsidize the construction of professional sporting palaces, the federal rules exempting municipal bonds from taxation mean that all taxpayers from coast to coast help to underwrite a stadium project. Fans of the Boston Red Sox helped build the new Yankee Stadium in New York City, which relied on $1.6 billion in municipal bonds. Football fans everywhere will underwrite the construction of the Oakland Raiders' new home near the Las Vegas Strip, set to open in 2020 at an estimated cost of $1.9 billion.

According to a recent analysis by the Brookings Institution, more than $13 billion in municipal bonds have gone to 45 major professional sports stadium projects since 2000.

"Tax-exempt muni bonds are presented to voters as not costing them anything, but the result is always that other forms of taxes must rise to compensate," says Gregg Easterbrook, author of the Tuesday Morning Quarterback column at The Weekly Standard. "They're like a restaurant that says, 'Your cheeseburger is free but the soda is mandatory and costs $10 a glass.'"

Almost every professional sports stadium in America has also been granted a special property tax exemption by their local and state governments, Easterbrook points out.

As opposition to stadium subsidies has grown, Congress has at least started paying lip-service to the idea of closing the municipal bond loophole. A bipartisan proposal introduced earlier this year by Sens. Cory Booker (D–N.J.) and James Lankford (R–Okla.) would prohibit local officials from using municipal bonds for stadium projects. Its best chance of passing, alas, was probably as part of the tax bill.

Ironically, the municipal bond loophole that pro teams now use to get back-door subsidies arose because Congress tried to close a different stadium-subsidizing loophole in 1986. Previously, teams had used tax-exempt private revenue bonds to fund construction, but when Congress passed the last major tax reform bill, it said those could no longer be used for stadium projects. So local governments turned to tax-exempt municipal bonds instead.

In the midst of his anthem spat with the NFL in October, Trump took to Twitter to call for ending the league's special tax breaks.

It's unclear whether the president was talking about the stadium-subsidizing rules for municipal bonds in that tweet—but if he really wanted to end the NFL's "massive tax breaks" and "change tax law," the bill set to pass today would have been a good place to start. But it's probably not surprising that a wealthy businessman who for years wanted to own an NFL franchise came around to agree with 32 other wealthy businessmen that taxpayers should foot the bill for their multi-billion-dollar playgrounds.

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  1. Luxury box seats for legislators don’t come cheap for taxpayers.

    1. You have to have somewhere to kick back after a hard week of being corrupt

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  2. It’s pretty bad that they couldn’t just address the stadium bonds specifically, but the original portion of the bill would have effected all ‘private activity bonds’, which could include hospitals and even water/sewer systems.

    It was more so lobbying by local governments that killed this and not necessarily the NFL

  3. HyR bloggers all over seem to be pushing tax increases 1 way or another.

    “Tax-exempt muni bonds are presented to voters as not costing them anything, but the result is always that other forms of taxes must rise to compensate,”

    This is the logic I’ve seen for 35 yrs. that says tax cuts need to be “financed” by other taxes. So it’s some victory for liberty that interest on muni bonds be taxable income? No, fuck you, cut spending!

    1. You know the result of this won’t be that municipalities borrow less, don’t you? Instead they’ll just have to pay higher interest to sell the bonds, because the lenders will pay income tax on it. Thanks a ton.

    2. When the Republicans (and Trump) want a bill that cuts entitlement spending by $1.022 trillion, HnR bloggers oppose it because it isn’t a full repeal of ObamaCare.

      When the Republicans (and Trump) want to cut the corporate tax rate from 35% to 20%, HnR bloggers oppose it because it doesn’t cut entitlement spending–or football stadium construction?!

      It does become tedious.

      Are they opposed to raising the corporate tax rate–if it stops football stadium construction?

      I’m no longer sure.

    3. You’re quoting Gregg Easterbrook, author of the Tuesday Morning Quarterback column at The Weekly Standard. Gregg Easterbrook does not write for Reason as far as I know.

      1. You read The Weekly Standard? Ewwww

      2. There’s a pattern.

        There’s a consistency to the pattern.

        There are arguments coming out of the woodwork about why the Republicans (and Trump) shouldn’t cut taxes.

        I’ll tell you what, let’s play a game: You name an issue, and we’ll see if I can spin it as a reason why we shouldn’t cut taxes–like I’m a writer for HnR.

        1. If you’re looking for ideas on which issue to pick, I suggest mining Trump’s twitter page.

          What could be more important than Trump’s tweets?

          Trump’s tweets are philosophically inconsistent! Why, one minute he’s asking why the NFL stadium construction is subsidized by local taxpayers, and the next minute he’s cutting taxes!!!

          1. Agreed – the president isn’t responsible for his own words.

            1. I didn’t say he wasn’t responsible for his words.

              I said judging him by his words instead of his actions is asinine . . . going back all the way to Plato and Machiavelli . . . only more so in the age of mass media.

              But his words! His WORDS! Look at what he tweeted!!!

              LOL

              Is it better if people believe what their leaders say regardless of whether it’s true?

              Should our leaders keep their promises if doing so is contrary to the best interests of society?

              Is this the first time you’ve ever heard these questions asked?

              Do they not teach Plato and Machiavelli to undergraduates anymore?

              I’ve seen a long list of definitions of what it means to be a real libertarian–some of which are better than others. One of the better ones might be, “A libertarian is someone who understands that politicians shouldn’t be trusted”.

              While the media was chasing down Trump’s tweets about football players, Trump was busy getting congress to slash the corporate tax rate by 40%, completely defeating ISIS in both Iraq and Syria, and deregulating like crazy.

              But why pay attention to that when he just tweeted something about Miss Iraq?

              Go fetch!!!

              1. “Wise men talk because they have something to say; fools, because they have to say something.”

        2. I can pre-spin some:

          Shouldn’t get rid of the medical device tax because doing so results in a net taxpayer benefit to some Medicaid recipients.

          Shouldn’t exempt certain items from retail sales taxes because then cashiers have to retrain or reprogram cash registers. It’s less work for sales taxes to be uniform ad valorem.

          Shouldn’t cut a tariff because the goods are imported from a country whose taxpayers subsidize, or whose people are given little choice but to work at, their prod’n. Shouldn’t cut a tariff unilaterally because the GATT process is more scientific & fair.

          Shouldn’t exempt dietary supplements from a regul’n because they’re competing vs. drugs that are too expensive to develop & license unless the competition is eliminated?but now I’m veering off just taxation.

          The name of the publ’n is “Reason”. It has Objectivist-oriented beginnings & still tends to fancy itself as favoring that which is “scientific”, “rational”, etc., in some cases over matters of individual liberty. I think it was that way w same-sex marriage.

      3. Sure, they quote Easterbrook so they have plausible deniability. Doesn’t the pattern add up lately that they’re quoting people approvingly?

    4. Murray Rothbard had it right that there’s no such thing as a “neutral” or “fair” tax. Therefore arguments that a given tax “distorts the economy” compared to another are silly. Focus on the take.

  4. Also, if f you’re going to use a photo of a stadium construction site being funded by local taxpayers, you should probably use a different photo.

    The new Raiders’ stadium in Las Vegas is being funded by a tax on hotel stays, which means practically no locals are paying for the stadium. The other problem is that the new stadium will also be used by UNLV, which is a public entity.

  5. So, the proposed stadium site in Vegas is within rifle range of Mandalay Bay?

  6. It’s unclear whether the president was talking about

  7. “Preserving the ability to use tax-exempt bonds for sports stadiums was “a priority for Mr. Trump,” according to a GOP aide who spoke to The Wall Street Journal.”

    Who was this GOP aide and why should I believe he/she when he/she does not want to attach their name to it. This whole assertion of hypocritical Trump insistence hinges on it. Looks just like more cowardly ratting if true and worse if it’s not.

  8. I don’t see how the issuance of any tax free bond impacts “the rest of us taxpayers.” The government body issuing such a bond gets to pay a much lower interest rate because the bondholders do not pay income tax on the interest they receive. It is only a benefit to very high income earners, and were it not for Sports Stadium Bonds, there would still be plenty of other tax free bonds to buy. The local authority issuing the bond benefits by saving so many interest dollars, in the very same way that they save interest dollars on any other bonds they issue.

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  10. I am sure that the brilliant sport journalists at ESPN like Jemel Hill, Bonani Jones, and Dan LeBatard will be all over this latest example of Trump’s White Supremacy and retaliation against the NFL players for protesting injustice! Right?

  11. If the government did not subsidize the NFL it would just be all the more difficult to narcotize the public with bread and circuses. But let nobody shed tears for the bare profit margins enjoyed by the NFL. They just concluded a deal with Verizon to live-stream all NFL games, including in-market games, for $500 million (with an “m”) a year for 5 years, for a total of $2.5 billion (with a “b”). No doubt that’s meant to cover Roger Goodell’s lunch bills in the coming contract.

  12. I’m working at Dissertations Help UK Company and i think Let’s add into this that the government should stop paying millions of dollars to the NFL for the patriotic displays.

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