Frank Bernheisel: The View From Here
Frank Bernheisel
Frank Bernheisel
Posted 12.12.17
Just Outside Washington


That so-called tax reform stadium scam

What is in the American tax bill, that is the question. Some good news -- in the House bill there is a provision that ends the federal tax subsidy for private sports stadiums. Who would have guessed it!.

This provision is not in the Senate bill. This means that the conference committee of representatives from both houses of Congress, which is scheduled to begin work on a final bill this week, will have to reconcile these two bills. The final bill ought to adopt the House provision.

Current tax law allows stadiums subsidized by local governments to be financed by tax-exempt municipal bonds and the interest paid to bond holders is exempt from federal taxation.

This is a tax subsidy for private sports stadiums and for the highly profitable teams.

So, how much are we taxpayers paying to subsidize these private stadiums?

According to the Brookings Institution, over the 15-year period starting in 2000, 36 professional sports stadiums were built in the U.S.which were subsidized by the federal government through tax-exempt bonds. The cost of this subsidy was $3.2 billion. The new Yankee Stadium, completed in 2009, is but one example. Of the construction cost of an estimated $2.5 billion, $1.7 billion was financed by tax-exempt municipal bonds issued by the city of New York.

Because the bond holders pay no federal taxes on this income a subsidy is created, and further the Yankees paid a lower rate of interest on these bonds. In other words, the Yankees received a federal subsidy to build their stadium of about $431 million and the bond holders received an additional $61 million.

As mentioned above, the tax legislation that passed the House in November included a provision that forbids professional stadiums from being financed with tax-exempt bonds, but the legislation passed by the Senate in early December did not. Some say that the stadiums help local communities but research says otherwise.

But, even if you think sports stadiums help local communities, there is no economic justification for federal subsidies for such stadiums. Why should residents of Wyoming, Maine, Alaska, or Virginia (the most populous U.S.state without a major professional sports league franchise playing within its borders), pay to help the Raiders relocate from Oakland to Las Vegas?

They should not!