Anyone familiar with ESPN knows that the self-titled Worldwide Leader in Sports calls Bristol, Connecticut home. What we know now, thanks to a report from the New York Times, is that Connecticut taxpayers are handing the company millions of dollars in tax credits each year — and have given the biggest broadcaster in sports hundreds of millions over the last decade.
All of those are thanks to business tax credits meant to keep ESPN in Bristol, and Connecticut Gov. Dan Malloy (D), according to the Times, is all too happy to loosen his purse strings for the media giant:
ESPN is hardly needy. With nearly 100 million households paying about $5.54 a month for ESPN, regardless of whether they watch it, the network takes in more than $6 billion a year in subscriber fees alone. Still, ESPN has received about $260 million in state tax breaks and credits over the past 12 years, according to a New York Times analysis of public records. That includes $84.7 million in development tax credits because of a film and digital media program, as well as savings of about $15 million a year since the network successfully lobbied the state for a tax code change in 2000. [...]
“After I was elected, this was one of the first companies that I came to,” Mr. Malloy told reporters after the groundbreaking ceremony, standing next to a senior ESPN executive, according to a recording of the event. “I made it clear that ESPN’s needs were not going to be ignored by my administration.”
While politicians — especially at the state and local level — love to dole out tax credits like these, it’s hardly clear whether they are necessary or effective. The Institute for Tax and Economic Policy (ITEP) found that all told, states and localities are handing out some $50 billion in business-incentive tax credits each year, but that “evidence suggests that tax incentives are of little benefit to the states and localities that offer them, and that they are actually a drag on national economic growth.” As ITEP tells it, taxes are “rarely the deciding factor in whether a business chooses to hire or invest within a state’s borders,” since they account for less than 2 percent of the cost of doing business. Nine of 10 decisions subsidized with tax incentives would happen anyway, ITEP’s report found.
And yet, states keep giving this money away, and the sports world is one of the biggest recipients. Professional franchises have become experts at milking huge tax incentives out of their states and cities by threatening to move if they don’t get new stadiums replete with property tax breaks and other handouts. Nike successfully lobbied the state of Oregon for a major tax break in 2012. And now, even as ESPN brings in billions of dollars a year, it’s getting help from its home state and taxpayers too.
Malloy’s justification for the handout is that ESPN is a great business for the state of Connecticut, and given that it employs 4,000 people in Connecticut alone, that’s certainly true. The question, though, is whether handing a billion-dollar media empire millions of dollars in tax subsidies is the best use — or even a necessary use — of public resources. Considering the available evidence, the answer, as it almost always is when it comes to subsidies in sports, would seem to be no.