The National Football League season will open tonight in New Jersey’s Metlife stadium, the only NFL stadium that was built without some sort of public support. All of the other NFL venues either received direct subsidies for their construction or benefit from other publicly funded improvements.
And NFL franchises are certainly not the only ones benefiting from taxpayer largesse. According to an analysis by Bloomberg News, taxpayers have spent $4 billion on subsidies for sports structures since 1986 via tax exemptions that come along with the bonds used to finance stadium or arena construction:
Tax exemptions on interest paid by muni bonds that were issued for sports structures cost the U.S. Treasury $146 million a year, based on data compiled by Bloomberg on 2,700 securities. Over the life of the $17 billion of exempt debt issued to build stadiums since 1986, the last of which matures in 2047, taxpayer subsidies to bondholders will total $4 billion, the data show.
Those estimates are based on what the Treasury could have collected on interest from the same amount of taxable bonds sold at the same time to investors in the 25 percent income-tax bracket, the rate many government agencies assume. In fact, more than half the owners of tax-exempt bonds pay top rates of at least 30 percent, according to the Congressional Budget Office. So they save even more on their income taxes, a system that U.S. lawmakers of both parties and President Barack Obama have described as inefficient and unfair.
These bonds raise money to pay for construction and improvements, enabling wealthy franchise owners to avoid paying for their own stadiums or fancy new upgrades. Individuals who invest in the bonds then receive tax exemptions, lowering government revenue; so the subsidy for stadium construction “comes out of the pockets of every American taxpayer.” Using bonds to finance stadium construction is nothing more than a transfer of taxpayer money to wealthy franchise owners whose teams can be worth billions of dollars.
This is just the tip of the iceberg when it comes to the public money thrown at sports franchises. For instance, Dallas Cowboys owner Jerry Jones pays no property taxes on Cowboys Stadium, saving his franchise $17 million per year.
Franchises often use the threat of moving to a new city to extort more expensive facilities and ever bigger heaps of tax exemptions from fans and politicians loathe to see the local team disappear. But states and cities should really question whether new stadiums for already wealthy individuals are the best way to spend often scarce taxpayer dollars.