GOP tax bill would have im­pact on pro, col­lege sports

South Florida Times - - SPORTS - Duke Univer­sity Bas­ket­ball Team By BEN NUCKOLS

WASH­ING­TON (AP) - The Oak­land Raiders de­cided to move to Las Ve­gas largely be­cause Clark County, Ne­vada, agreed to fi­nance a new sta­dium with $750 mil­lion in tax-ex­empt bonds. Now, that tax ex­emp­tion could be go­ing away, leav­ing the county on the hook for even more money.

The GOP tax re­form bill re­leased last week would bar state and lo­cal gov­ern­ments from is­su­ing tax-ex­empt bonds for sta­dium con­struc­tion, a com­mon fea­ture of sta­dium deals over the past two decades. It’s one of a few re­forms in the bill that would af­fect the world of sports.

Get­ting rid of sta­dium sub­si­dies has long been a pop­u­lar talk­ing point in Wash­ing­ton, and it’s not a par­ti­san is­sue, ei­ther. For­mer pres­i­dent Barack Obama’s 2015 bud­get sought to do away with the tax ex­emp­tion for sta­dium bonds. Pres­i­dent Don­ald Trump asked in a tweet last month why the NFL was get­ting “mas­sive tax breaks” amid the con­tro­versy over play­ers kneel­ing dur­ing the na­tional an­them.

“Change tax law!” Trump tweeted. And Congress ap­par­ently lis­tened.

“It’s good pol­icy,” said Ted Gayer, a se­nior fel­low at the Brook­ings In­sti­tu­tion and the lead au­thor of a study on sta­dium sub­si­dies. “It’s al­ways been kind of a no­brainer po­lit­i­cally and, I think, eco­nom­i­cally.”

The Brook­ings study, re­leased last year, found that the fed­eral govern­ment sub­si­dized sta­dium con­struc­tion to the tune of $3.2 bil­lion since 2000. Dur­ing that stretch, 36 sta­di­ums were built or ren­o­vated in part with tax-ex­empt bonds. The Raiders’ sta­dium would get a $120 mil­lion tax break if the law isn’t changed, ac­cord­ing to the Brook­ings anal­y­sis.

Sen. James Lank­ford, an Ok­la­homa Repub­li­can, and Sen. Cory Booker, a New Jersey Demo­crat, cited those fig­ures when they in­tro­duced a bill ear­lier this year to end the sub­si­dies. Rep. Steve Rus­sell, an Ok­la­homa Repub­li­can, in­tro­duced a sim­i­lar bill in the House.

“Us­ing bil­lions of tax­payer dol­lars for the sub­si­diza­tion of pri­vate sta­di­ums when we have real in­fra­struc­ture needs in our coun­try is not a good way to pri­or­i­tize a lim­ited amount of funds,” Lank­ford said. “Tax re­form could be a unique op­por­tu­nity to en­act this into law. I’m pleased this idea is gain­ing mo­men­tum.”

The NFL ar­gues that com­mu­ni­ties ben­e­fit from sta­di­ums be­cause they cre­ate jobs and spur eco­nomic de­vel­op­ment, but many econ­o­mists say cities never re­coup their in­vest­ments and that the fi­nanc­ing deals amount to hand­outs for wealthy team own­ers. A new sta­dium can cause the value of a pro­fes­sional fran­chise to sky­rocket.

“We’ve al­ways be­lieved the con­struc­tion of new sta­di­ums and ren­o­va­tions of ex­ist­ing sta­di­ums are eco­nomic drivers in lo­cal com­mu­ni­ties,” NFL spokesman Brian McCarthy said. “If the idea is to pro­mote eco­nomic growth, this would be a step back­wards.”

Get­ting rid of the tax ex­emp­tion would have a neg­li­gi­ble im­pact on fed­eral rev­enue, bring­ing in $200 mil­lion over 10 years, ac­cord­ing to the bill.

Rep. Dina Ti­tus, a Ne­vada Demo­crat and a pro­po­nent of the sta­dium deal, said the bill would harm her district, which in­cludes Las Ve­gas.

“Elim­i­nat­ing the tax ex­emp­tion for sta­di­ums could cost Clark County more money to build projects that are al­ready un­der­way,” Ti­tus said in a state­ment. “This is an at­tack on lo­cal gov­ern­ments that will take money away from our com­mu­ni­ties and ham­per in­fra­struc­ture na­tion­wide.”

The elim­i­na­tion of a tool that NFL own­ers use to de­fer the costs of new sta­di­ums could be seen as an irony given many own­ers’ sup­port for Trump, who is pin­ning his hopes on the tax-re­form pack­age as he seeks a ma­jor leg­isla­tive ac­com­plish­ment. Red­skins owner Dan Sny­der was one of sev­eral own­ers who do­nated $1 mil­lion to Trump’s in­au­gu­ral com­mit­tee, and he’s look­ing for a site to build a new sta­dium. A Red­skins spokesman did not re­spond to re­quests for com­ment.

Even if the bill be­comes law, teams will still find ways to build sta­di­ums with pub­lic money, Gayer said.

“The over­whelm­ing amount of the sub­sidy comes at the lo­cal level, not at the fed­eral level,” he said.“What’s driv­ing that is, if you’re Las Ve­gas and you want a team, you can’t just cre­ate a foot­ball team. You have to en­tice a team. There’s a fixed sup­ply ... and that cre­ates these bid­ding wars.”


The bill would also get rid of a tax de­duc­tion that many uni­ver­si­ties use to en­tice donors to buy sea­son tick­ets, and it would levy a new 20 per­cent tax on salaries of pub­lic univer­sity em­ploy­ees who make more than $1 mil­lion — many of whom are foot­ball and bas­ket­ball coaches.

Many schools re­quire donors to give thou­sands of dol­lars to a booster fund in ex­change for the right to pur­chase tick­ets. Eighty per­cent of the amount do­nated is tax-de­ductible, and the schools tout the tax ben­e­fits as an en­tice­ment to give.

Get­ting rid of the de­duc­tion will harm ath­letic de­part­ments that use the con­tri­bu­tions to fund sports that don’t gen­er­ate rev­enue, said Liz Clark, di­rec­tor of fed­eral af­fairs at the Na­tional As­so­ci­a­tion of Col­lege and Univer­sity Busi­ness Of­fi­cers.

“We do know that for some ath­letic pro­grams, that this can be a crit­i­cal source of rev­enue,” Clark said. “Elim­i­nat­ing this de­duc­tion will hurt the rev­enue stream and will make it harder for those pro­grams to meet ex­penses.”

Duke Univer­sity, for ex­am­ple, re­quires do­na­tions of at least $4,000 per seat for the right to buy cov­eted men’s bas­ket­ball sea­son tick­ets at Cameron In­door Sta­dium. Michael Schoen­feld, vice pres­i­dent of pub­lic af­fairs and govern­ment re­la­tions at Duke, said get­ting rid of the de­duc­tion was tan­ta­mount to “a tax on ed­u­ca­tion and a tax on op­por­tu­nity for all stu­dents, which is not in any­one’s in­ter­est.”

The tax on salaries above $1 mil­lion would also drive up costs for uni­ver­si­ties, al­though they could save money by keep­ing coaches’ salaries be­low that thresh­old. Some uni­ver­si­ties al­ready keep base salaries low by pair­ing it with com­pen­sa­tion from other sources like pri­vate ath­letic do­na­tions and spon­sor pay­ments.


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