Tax Subsidized Sports Facilities

Michael Hussey of Pushing Rope commented on my post on property tax legislation about the use of sales tax rebates for professional sports facilities:

Any thoughts on the Lightning $2 million-a-year rebate? The Lightning and the Magic are pushing for it. Not sure about other teams. I’m sure they won’t mind.

To which I replied:

I support tax rebates to build sports facilities (and arts facilities for that matter). The Miami – er – Florida Marlins have a bill already to get $2 million more for a new stadium, and the Dolhpins want $2 million more to retrofit Dolphin Stadium to undo the renovations already paid by a rebate to accomodate the Marlins when they moved in.

So, since Miami really wants it … and the Speaker is from Miami… the question is whether the Lightning and Magic will get left out.

The interesting thing is that last year, the Senate put the Magic and Marlins into a bill… but the House stripped the Marlins out and forced the Senate to pass the Magic only bill or none at all… so they passed the Magic bill. I believe Jeb vetoed that bill last year.

He responded:

Jim, I don’t buy the tax rebates as stimulting the local economy. There is no prove that sports franchises provide an economic benefit from the community. In fact, I venture Tampa got badly screwed by Malcolm Glazier. The taxpayers incur the cost and Glazier reeps the benefits. Not exactly a partnership.

I felt this exchange warranted a more full analysis.

First, let me say that I believe major-league, professional sports teams provide a significant impact on their communities. The first impact is psychological, the second is economic.

To be sure, not every resident of a community is a sports fan, or even a fan of the local team. However, there is a significant portion of the community that follows sports and roots for the home team. These fans often refer to their team as “we” – “We” won the Super Bowl! “We” won the Stanley Cup! “We” won the Arena Bowl!

Moreover, professional sports teams do create jobs. While not everyone in a community can apply to be a linebacker or a goalie, there are front-office and game-day jobs that can be filled by the general citizenry. Also, many stadiums allow local charities or school groups to earn money by filling some of the game-day positions.

Also, the athletes themselves do live in our community. John Gruden, Vinny Lecavalier, Mike Alstott – they all have to fill up their gas tanks, have their suits dry cleaned, shop and eat, etc. Their money circulates through the local economy. So does the money of visiting teams and fans.

Let me also say that there is a false premise when people like Dr. Paul Porter at USF downplay the economic impact of professional sports. They generally claim that dollars spent on sports would have been spent on other forms of entertainment – that the overall entertainment dollar is of a finite size. Some even say that having a sports team detracts from other entertainment options.

Again, I point out that other entertainment options do not carry the same level of psychological attachment. The term “fan” – short for “fanatic” – was coined to describe this attachment. Rarely do people describe themselves as “fans” of fine or performing arts. Moreover, sports fans will rearrange their personal budgets to afford game tickets or memorability.

Finally, let me say that these tax dollars are not coming from the general public when they shop at Target or Home Depot. These taxes are paid by people who attend events at these facilities and buy concessions or pay for parking; these taxes are really user fees. If a facility such as Raymond James Stadium or the St Pete Times Forum collect more than $2 million per year in sales taxes, they can keep $2 million to pay their debt on construction.

That is generally the reason I support these subsidies, because without the facilities – the tax dollars would not be collected anyway.

Michael has posted his thoughts on his blog.

What does everyone else think?

About Jim Johnson

Editor and publisher of The State of Sunshine.
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3 Responses to Tax Subsidized Sports Facilities

  1. Joel says:

    The stadiums/arenas that the franchises play in create a large impact outside of the sporting events. In many cases those facilities do not happen without a major sports franchise attached to them.

    If you accept that premise, look at the schedules of RayJay and the SPT Forum and imagine the impact of not having most of the events (the Ford Amphitheatre and maybe the Sun Dome could probably handle some of the concerts the Forum hosts). No Super Bowls (of both football and motorsports), no March Madness, no American Idol tour, etc. Now those other entertainment options may not even be an option.

    As long as the deals are equitable and the teams don’t suck (fun question of the day: can taxpayers demand that Jon Gruden be fired?) I have to believe the overall impact is positive. The numbers could of course prove otherwise.

  2. Joel, made a better sales pitch.

    This is something I wrote about before at other blogs. Every economist study I have read shows zero or negative impact from sports areanas. The problem is local government incur the cost and not the profits. The Green Bay Packers are the exception. Nice try Jim, but Vinny Lecavalier filling up his gas tank isn’t going to sell me.

    Side note: Vinny is finally playing to his potential. I wrote him off. I eat crow for that.

  3. Jim Johnson says:

    I never said that it didn’t cost local governments money. That, to me, is not the issue.

    Local governments pay a cost for a lot of things – parks, libraries, museums, performing arts halls, etc. Some of which are run by private entitites (Florida Aquarium for example). Whether you agree or not, the representatives of the people can spend tax dollars on some crazy things — including the subsidization of professional sports.

    So, I am not saying you are wrong – I am merely saying that it doesn’t matter to me.

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