The NFL regular season came to a close this weekend, carrying with it a 9% decline in viewership. While the increase of cord-cutting certainly contributes to the overall downward trend, there is no doubt the NFL is increasingly seen as an antagonist by Americans. From the national anthem protests to the relocation of teams, Americans showed their willingness to dump a sport that was once seen as invincible. However, as we saw with the Republican tax bill, that invincibility still lives in the halls of Congress.
The House version of the tax reform bill eliminated federal subsidies for the construction of professional sports stadiums. But, thanks to the goal line defense by a Republican Senator from Nevada, sports teams will continue to be able to use tax-free bond financing. As quoted in Senator Dean Heller’s (R-NV) press release after the President signed the tax bill into law, “Heller was able to protect the tax exemption for stadium bonds, which is critical to preserving the influx of business and growth associated with the construction of the Raiders stadium in Las Vegas, NV.”
The Raiders were recently approved by the NFL to relocate from Oakland, California to Las Vegas Nevada, and are expected to build a $1.9 billion football stadium on the Las Vegas strip. However, taxpayers are expected to pay $750 million of the stadium through municipal bonds. Roger Noll, a professor of economics at Stanford University says the Raiders would not spend that much on a stadium unless they received a huge subsidy from taxpayers, “If you were going to build a stadium that actually had to be paid for out of the income of the football team, you would never spend $1 billion, let alone $2 billion.”
Professional sports teams use municipal bonds to finance new stadiums that are exempt from federal taxes. These bonds were primarily meant to finance projects that had clear benefits for local taxpayers, such as hospitals, roads, and schools. But during the last few decades, teams have taken advantage of cities, demanding they issue these tax-free bonds in order to build or renovate their stadiums.
Sports owners claim that the benefits a stadium provides to a community outweighs its costs, but many experts have questioned those supposed benefits. According to a 2016 Brookings report, “evidence for large spillover gains from stadiums to the local economy is weak. Academic studies consistently find no discernible positive relationship between sports facility construction and local economic development, income growth, or job creation.” Further, “There‘s no economic or political reason why a federal taxpayer in Oklahoma should subsidize the movement of the Raiders from L.A. to Las Vegas.”
Despite the cost and lack of benefit to communities, Congress sided with billion dollar sports franchises. Since 2000, “$3.2 billion in federal taxpayer money, through municipal bonds, has been used to fund 36 newly built or renovated sports stadiums, and since 1986, $17 billion worth of debt to build sports stadiums has gone tax exempt. According to the Department of Treasury, taxpayers would have saved $542 million over the next 10 years if the stadium loophole were closed.
Republicans, badly needing a win, threw away their chance to close not just this loophole, but dozens of other wasteful loopholes in order to score a win before year’s end. Instead, the tax bill will keep the well-connected, well, connected, and will add trillions to our national debt.
It is unfortunate that in order to pass this bill, a Senator, who’s state’s NFL franchise will soon benefit from the use of municipal bonds, likely withheld his support for the bill unless the stadium loophole was kept open. Despite declining viewership, the NFL is still one of the most watched programs on television, and NFL teams and other sports franchises are still raking in billions. Unfortunately, Congress helped them add a little more to their bottom line by making taxpayers pay for their billion dollar stadiums.
