Taxes

The Philadelphia Eagles Won the Super Bowl, but They'll Lose on Tax Day

The tax man always wins, and professional athletes take a bigger hit than most.

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Charles Baus/Cal Sport Media/Newscom

The Philadelphia Eagles won the Super Bowl when they defeated the New England Patriots last night. But it's the tax man who really always wins.

Because the game was played in Minneapolis, the $112,000 bonuses paid to each player on the winning team (and the $56,000 bonuses paid to the losers), will be taxable in Minnesota, which has some of the highest personal income tax rates in the country. Each member of the Eagles will end up paying about $7,200 of their Super Bowl bonus to the state of Minnesota. That comes on top of an estimated $23,500 federal tax hit for each of the winning player's shares.

And that's just the start. Minnesota also imposes a so-called "jock tax" on athletes that visit the state for practices and games. Income earned during the days leading up to Sunday's big game will be taxed at the state's top marginal rate of 9.85 percent. Only California has a higher jock tax, and even states with no personal income taxes—like Texas and Florida, both frequent Super Bowl hosts—still hit up professional athletes, coaches, and team staff with special taxes.

Robert Raiola, chief of the sports and entertainment group at PKF O'Connor Davies, a New York–based accounting firm that specializes in working with athletes, tells Philly.com that most players on the two teams would have spent about a week in Minnesota during the lead-up to the Super Bowl. That works out to about 3 percent of their total working time for the year, and their tax bills will vary depending on how much they earned during the season. Raiola told Time that Patriots quarterback Tom Brady, who earned about $15 million in salary this year, could end up owing Minnesota roughly $43,000.

While stars like Brady can make tens of millions of dollars annually in salary alone (and yet more in paid endorsements), the average NFL player makes $1.9 million—considerably less than the average in America's other major sports. Still, that works out to more than $3,300 in state taxes owed simply for spending a week in Minnesota. And of course those players still owe taxes in Massachusetts and Pennsylvania, along with every other state where they played a road game during the season. Tennessee is the only state without a jock tax.

You may find it difficult to feel bad about the tax hurdles that come with being paid a lot of money to play a game for a living. Even so, jock taxes are fundamentally unfair, targeting income earned from a handful of high-profile professions.

"The problem I have is [visiting athletes] are not receiving benefits that other people in that state receive who are paying the tax. It's unfair that the athletes get singled out," Illinois tax specialist Mark Goldstick told Stateline in 2014. "If an attorney makes a million-dollar deal in that state, they are not made to pay the tax, they are not pursued. But the fact that an athlete was in the state is in the box score."

Chris Stephens, a law clerk with the D.C.-based Tax Foundation, writes that states like to tax visiting pro athletes because they are perceived to be easy targets for taxation. Their schedules are published in advance, some have very high incomes, and as non-residents, they cannot vote to voice their displeasure with the tax.

While some teams in low-tax states can use their location to attract highly sought after free agents, players and team staff have no choice about where they play road games. And no one is going to turn down an opportunity to play in the Super Bowl because of the potential for a multi-thousand-dollar tax hit. But all those special tax bills might help explain why more than three quarters of professional football players find themselves in financial difficulties within a few years after retirement.

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  1. With those buff, strong, young bodies of theirs, and fat paychecks, they get little sympathy from me. They should be paying BODY taxes!

    Think about it… I invest time-labor-money into my real estate, I have to pay more taxes, because my property is more valuable now. When athletes and movie stars get training and diet supplements and plastic surgery and what-not, to make their BODIES more valuable, likewise, to make it “fair and square” against me as a homeowner, they should be paying “body taxes”!!! If I can’t pay my real estate taxes, I get “taxed” out of my home? For them? Same deal? They should be “taxed out of their bodies” if they cannot pay!!!

    1. Stop giving them ideas!

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    2. Every country has rulers. Why? The public supports the concept of being ruled. Once that concept is accepted the public loses control of their lives. They self-enslave.

      All that is left is to form groups that prey on each other as their power shifts, creating a dog-eat-dog society. This is a self-inflicted state of constant conflict, i.e., chaos. Yet the public vilifies anyone who advocates no rulers, anarchism. The victimized public support their exploiters. Think about it!

  2. So why schedule a Super Bowl in Minnesota? The league I assume got something out of this. And, more importantly, Philadickia can suck it.

    1. Yeah, we’ll be sucking the Lombardi Trophy for at least a year now.

      Minnesota got it so that they could show all the corporate sponsors in attendance how spiffy their new stadium is.

      1. “we’ll be sucking the Lombardi Trophy for at least a year now.”

        This has become my problem with team sports in general. The moment the season ends, the previous year’s achievements evaporate, and have to be replaced by preparation for the next year. Congrats and all, but it really doesn’t matter at all.

    2. It was one of the sweetners offered to get Minnesota to spend billions of tax payer dollars on a new stadium for the Viking.

      Which makes it odd to complaining about taxing professional athletes given the level of public subsidy it gets.

      1. Excellent point.

      2. Which makes it odd to [be] complaining about taxing professional athletes given the level of public subsidy it gets.

        Especially since there is no history of libertarian opposition to public subsidies of stadiums and professional sports.

        1. Especially since there is no history of libertarian opposition to public subsidies of stadiums and professional sports.

          You must be a newbie here-there have been several stories in Reason in the past year alone complaining about this.

          1. You must be a newbie here-there have been several stories in Reason in the past year alone complaining about this.

            I’ve been commenting here for almost 15 years with the same handle. I thought a /sarc tag would be overkill.

            1. A /sarc tag is never overkill.

              Nevah evah!

      3. I agree. Ideally we’d have neither, but if the government refuses to rescind the goodies, then I won’t find the motivation to oppose these taxes on anything other than esoteric principle.

      4. I was going to say something along those lines. Cities need money to hand over to billionaire owners to build stadiums. Sweet deal for owners. They get public money to build a stadium without risking their own money and get to keep 100%.

        And then get to screw municipalities when it suits them.

  3. Taxpayers in the state of Minnesota are in the hook for half a billion dollars of the stadium they played in. I think that counts as receiving services from the state!

    1. That’s just the beginning. After the interest on the debt, Minneapolis is on the hook for closer to $700B. Plus there is the ongoing operational subsidies, etc, etc

  4. The average “jock tax” victim gets a LOT of quite direct government services during their short visits – use of the field in the taxpayer funded stadium and direct, individualized police protection (and possibly motorcades) at the game and hotels are more than most locals will EVER receive.

    1. Also, not to be mean, how many of the athletes voted for the same idiots who passed these taxes in their home states, since most states have them?

    2. Plus 4 free years at a state university.

  5. The average “jock tax” victim gets a LOT of quite direct government services during their short visits – use of the field in the taxpayer funded stadium and direct, individualized police protection (and possibly motorcades) at the game and hotels are more than most locals will EVER receive.

    1. Good points.

  6. I still don’t understand why the Eagles didn’t just fly Frodo straight to Mount Doom.

    1. “I still don’t understand why the Eagles didn’t just fly Frodo straight to Mount Doom.”

      It’s a little known fact that Eagles like lean and cooked hobbit snacks. Hence, they showed up when dinner was done.

    2. I thought it was because the flying Nazgul could still get them until the ring was destroyed.

      And the eagles were sort of messengers of the gods. And gods love dramatic tension.

      1. The eagles also don’t particularly care for dealing with mortal affairs. They’re fairly isolationist and Sauron was more of a danger to the settled races.

  7. Eagles players are lucky: PA’s personal income tax is a flat 3.07 percent.

  8. Do they have to declare the rings as taxable income?

    1. Another good point, that’s a helluva lot more valuable that the $112k bonus.

  9. considering the damage done by winners and losers and the extra security i have no problem with this. i would gladly accept a $7200.00 tax of $112,000.00 payout

    1. I think the real problem is that if they play one game in Minnesota (or a lot of states), they have to pay income tax on their whole salary. So Brady who makes $15M/yr calculates his MN income as $288k ($15M/52) +$56k for the Super Bowl. Then he has to pay roughly 7% on that which is $24k. So he effectively paid half of his Super Bowl pay in state income tax in a state he doesn’t live. Then he’ll of course have his home state income tax and federal income tax.

      A couple of years ago, there was an article in Forbes that one of the starting quarterbacks would pay more in income tax on his Super Bowl pay than he earned on the Super Bowl.

      As other people have pointed out, the NFL is a crony racket, so it is hard to feel sorry for these guys who benefit from the cronyism, but it is hard to agree with such taxation policies.

      1. Thanks for pumping out the numbers. Can the income be demarcated into days, or are weeks the smallest unit?

  10. I wonder if they tax all pro-sports? MLS pays so little that here in the NYC area the grunt players have to room together to afford it.

    But all those special tax bills might help explain why more than three quarters of professional football players find themselves in financial difficulties within a few years after retirement.

    Nonsense. They can afford accountants to take care of that stuff. The reason they have financial difficulties is because they make poor spending decisions.

    1. The 4-year minimum base salaries for players in this year’s draft are as follows: $465,000 (Year 1), $540,000 (Year 2), $615,000 (Year 3), $690,000 (Year 4).

      You are exactly correct, they make plenty.

      1. Not only that but apparently they’re fully vested in the NFLPA pension after only 5 years (which sounds ridiculously short until you realize that the average NFL career is actually only ~3.5 years), and they get $10,000 a month ($120,000/year – not too shabby) for the rest of their lives.

        A friend of mine’s son played High School football with a guy who went on to play in the NFL for 5 years. Nothing special (although obviously good enough to make it 5 years, so there’s that), backup defensive back/ special teamer. He had to retire after 5 years because he wrecked his shoulder. He saved all of his money from his playing days, I think the only expenditure he made was a couple of relatively modest houses – one for his parents, one for himself and that’s it. He now lives off his pension and coaches at his old HS alma mater part time to keep from getting bored.

        The only ones I feel a little bit sorry for are the ones who weren’t good enough or lucky enough to last the 5 years. They don’t make enough to last the rest of their lives and often times don’t really have any other skills outside of football. And even though their careers are short, a lot of times the damage to their bodies is already done. Although even then, they made their choices.

    2. We under rate the impact of (poor) decisions and choices in our lives.

      Gronkowski, as an example of someone thinking of the future, invests his salary and lives off his endorsements.

      1. Gronkowski, as an example of someone thinking of the future, invests his salary and lives off his endorsements.

        Not as dumb as he seems. I heard Marshawn Lynch did/ does the same.

    3. Young guys do live their bookers and blow

      1. Love their hookers and blow. Hate autocorrect

  11. Taxation without representation.

  12. The golfer Michelson made noises about moving out of CA because of Meathead’s millioniare’s surtax. The press gave him stick about it, so he shut up.
    But I’m pretty sure he spends more than 6months per year in FL with the other golfers.

    1. Didn’t that also happen to Mickelson a couple of years back?

  13. No one should be taxed because ‘they are perceived to be easy targets of taxation”. The sleaze that reside in most state legislatures perceive everyone this way so to complain will probably only serve to widen this practice to include others.

  14. Exactly how does MN get a claim on a portion of the entire salary? The players regular salaries are paid during the regular season, the only pay they receive for the playoffs are the bonuses for each round plus whatever bonuses are in their contract. That would be the only pay earned in Minnesota.

    1. “Tennessee is the only state without a jock tax.”

      I think Texas has zero income tax … even for jocks.

  15. They say ‘jock tax’ but their eyes mean ‘cock tax’.

    “It’s unfair that the athletes get singled out,”

    1) Life is unfair; even unjust.
    2) Cash. Cow.

  16. The Phillies, I mean the eagles were cheered on by Mike Trout, the best player of a game that actually requires high level of skill.

    Heavily armored players catch rice shaped ball made out of pigskin, runs to the end zone to score. 90% of the world says “Yawn”.

    Football is also one of few sports where you have a secondary method of scoring. I hope the XFL gets rid of field goals other than extra point attempts. Either you score by reaching the endzone, or you don’t. I’ve seen football games where teams milk the clock to death after field goals.

    1. Footballs are usually made of synthetic leather.

    2. Rugby has basically the same thing as a field goal.

      Do you think basketball should get rid of the 3-pointers and free throws?

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  18. Don’t care about sportsball. I just go to the parties and pick up the women that every male ignores during the game.

    1. This guy gets it.

  19. Taxes that are targeted at a particular group should be challenged as bills of attainder.
    Basically, they are punishing a group that has no ability to counter the action.

  20. How many players stop to think about taxes? I bet they all leave that to an accountant who has little incentive to advise them of the philosophical/political issues. Still, it would seem the player’s union would work to boycott the states that have the “jock tax”.

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