Sports Welfare

[Whiskeyjack]

This is a long article, but it's well worth your time. Arguably the biggest scandal in sports.

Because they (theoretically) serve a charitable educational mission with their respective schools, college athletic departments also are considered nonprofits -- a major reason the NCAA clings to the outdated, immoral concept of amateurism, and that big-time football coaches such as Texas’s Mack Brown earn $5 million-plus per season. (When you don’t pay the workforce because you’re technically not a business, all that television money has to go somewhere.) Postseason bowl games enjoy the same hands-off treatment from the IRS, with predictable results: Sugar Bowl CEO Paul Hoolahan earns $645,000 in total yearly compensation; Outback Bowl -- Outback Bowl! -- CEO Jim McVay eared $808,000 in 2009; former Fiesta Bowl CEO John Junker collected a $592,000 annual salary before the fallout from a scandal involving a $33,188 self-celebrating birthday party, a $95,000 round of golf with Jack Nicklaus and $1,200 strip club visits on the company’s (tax-deductible!) tab led to his firing.

In the book “Death to the BCS,” authors Dan Wetzel, Josh Peter and Jeff Passan report that the Sugar Bowl in fiscal year 2007 earned $34.1 million in revenue -- $3 million of that, by the way, via an unnecessary cash handout from the state of Louisiana -- while spending only $22.5 million, clearing a cool, tax-free $11.6 million and finishing the year with $37 million in assets. Not bad for a “nonprofit,” particularly one that Wetzel and company write “gave nothing” back that year -- “not a buck to the Hurricane Katrina reconstruction effort. Not a dime to a New Orleans afterschool program. Not a penny to Habitat for Humanity.”

 

[PraetorianND]

If President Obama is serious about closing tax loopholes, Sports Welfare would be a good place to start. If Congressional Republicans truly believe that government spending needs to be reined in, they should move to slash earmark giveaways like $35,000 for the Alabama Sports Hall of Fame and $73,000 to build a miniature red-brick replica of Oriole Park at Camden Yards. Or curtail the millions in public funds given to bowl games. Or stop allowing college sports boosters and alumni an 80 percent tax write-off on athletic department “donations” that grant fans the privilege of buying season tickets. Or cut the $80 million a year the Pentagon spends on sponsoring NASCAR, cage fighting and bass fishing events. Or revisit a 1997 Congressional decision that reversed an IRS ruling and allowed corporations to keep taking tax deductions for naming rights on college athletic facilities. Indeed, if Washington’s powers-that-be want to get the nation’s financial house in order, it wouldn’t hurt to stop shoveling money at every cash-flush sports-related special interest that comes calling on Capitol Hill -- like, for instance, the 2002 Salt Lake City Olympics, partially made possible thanks to a staggering $1.5 billion in federal handouts.

Wow....

 

[fightincolts]

Eye-opening.

 

[MNIrishman]

Damn, Whiskey, I think you're my favorite poster. You always post good, by-the-numbers stuff, which I as an engineer appreciate.

Since I live in Minneapolis, I am all-too-familiar with the ridiculous goings-on involved with the Vikings corporation and their blackmail of the sports-loving populace of this state. They convinced Vikings fans (the majority) that somehow the stadium had net economic benefits by divorcing the money the stadium "earns" from the discussion of stadium costs. Next, they got Republicans to turn their back on the fiscal responsibility they like to trumpet and persuaded Democrats that education and the poor were worthy sacrifices in the name of saving the Vikings corporation an obscene amount of money, political cooperation on a scale that is rarely witnessed.

I have no NFL rooting interest anymore besides seeing former ND players do well and hoping the Vikings corporation loses every contest.

 

[dshans]

Since I live in Minneapolis, I am all-too-familiar with the ridiculous goings-on involved with the Vikings corporation and their blackmail of the sports-loving populace of this state. They convinced Vikings fans (the majority) that somehow the stadium had net economic benefits by divorcing the money the stadium "earns" from the discussion of stadium costs. Next, they got Republicans to turn their back on the fiscal responsibility they like to trumpet and persuaded Democrats that education and the poor were worthy sacrifices in the name of saving the Vikings corporation an obscene amount of money, political cooperation on a scale that is rarely witnessed.

I have no NFL rooting interest anymore besides seeing former ND players do well and hoping the Vikings corporation loses every contest.

As a fellow MiniApple resident, I agree and feel your pain. The whole episode was – and is – a shameful boondoggle. As much as I like Target Field (home of the Twins) physically, don't get me started on the bullsh¡t machinations that went into its taxpayer funding.

That "revenue" from "charitable" electronic "pull-tab" gambling is falling far below expectations pales in light of the wool pulled over the eyes of supporters of the new stadium and the state legislature. Make no mistake: the taxpayers in Minneapolis are on the hook for decades to come to enrich the owners and players.

Expensive skyboxes do not improve the quality of play one iota. Nor do they present a reasonable ROI to the taxpayers.

(Are you going to watch THE game wherever the MPLS alumni association chooses? It would be good to meet you ... since I dropped Comcast (and therefor ESPN) a couple of years ago I'll need to travel. I'll be the old-fart, Willie Nelson look-alike [as per NeuteredDoomer/Bambi] with a cane and an ND cap with "6-0 In N-O" on the back.)

 

[PraetorianND]

Damn, Whiskey, I think you're my favorite poster. You always post good, by-the-numbers stuff, which I as an engineer appreciate.

Since I live in Minneapolis, I am all-too-familiar with the ridiculous goings-on involved with the Vikings corporation and their blackmail of the sports-loving populace of this state. They convinced Vikings fans (the majority) that somehow the stadium had net economic benefits by divorcing the money the stadium "earns" from the discussion of stadium costs. Next, they got Republicans to turn their back on the fiscal responsibility they like to trumpet and persuaded Democrats that education and the poor were worthy sacrifices in the name of saving the Vikings corporation an obscene amount of money, political cooperation on a scale that is rarely witnessed.

I have no NFL rooting interest anymore besides seeing former ND players do well and hoping the Vikings corporation loses every contest.

So you love the Vikings!

 

[Giroux]

anything is possible these days the ****ing sports players have become *** lickers just for the sake of the money....

 

[Bogtrotter07]

What would happen if a flashlight were turned on all of these back room deals? I mean inside and outside sports. (Would many consider it socialism to pay a fair wage to college football players?) Would our economy grind to a hault? Or would half of our balanced budget be met with a blink of an eye?

 

[Black Irish]

I always shake my head in disgust whenever a story comes along when a sports franchise tries to bleed a city/state dry to build a new stadium while holding the positive economic impact over their heads like a club. I find it hard to believe that a pro franchise can not build a stadium financed entirely with private money.

 

[dre1919]

Excellent post! I would LOVE to rake in a nice salary of $600,000 for running a bowl game. Seriously, how hard does that job have to be in the first place? You have all the things that go with a game...concessions, vendors, permits, merchandise, advertising and whatnot but most of all that is delegated to underlings. To say the compensation is considerably higher than the amount of work done is laughable at worst. I do have to say Jim McVay did it up right with a $1,200 strip club visit! Hell yeah, Sir...Hell yeah.

 

[irishroo]

Public stadium funding

Public stadium funding

Just saw this article on ESPN and thought it could spark a debate on the larger issue at hand - public funding for professional sports stadiums, whether NBA, NFL, NHL, or MLB. As a huge Vikes fan, this has been a major issue in my mind for years, especially after the collapse of the Metrodome ceiling a couple years back.

In my opinion, teams and owners should not receive public funding to build a new stadium, but at the same time the team/owner has pretty much all the leverage in every negotiation I've come across. In the NFL at least, all an owner has to say is "Give us the money or we're moving to LA" and the state and local governments are pretty much screwed.

What are your guys' thoughts?

Miami Dolphins won't pay for stadium fixes -- CEO Mike Dee - ESPN

I'd also like to point out that, with regard to this particular article, what the hell is wrong with SunLife? I was there for the NCG, it seemed totally fine to me.

 

[Zwidmanio]

I don't mind the idea of cities or municipalities paying for some portion of a stadium, as that stadium can bring significant benefits to the areas that they're placed in, but I do find it despicable when a team threatens to leave their town and loyal fans if they aren't built a spanking new stadium.

What's interesting is that I just recently read an article about the new stadium that the Falcons are trying to build. If I recall correctly, they were planning on having 80-90% privately funded and the rest paid for publicly. This is a more equitable arrangement in my mind and should be more the norm, as opposed to the converse arrangement which seems to be the norm.

 

[MacIrish75]

As an Indiana resident, I always look at Lucas Oil Stadium when this subject is broached. In my opinion, the way Indianapolis, Marion County, and Indiana handled the funding of LOS was absolutely the correct way.

If you look at all the business and events (NCAA Final Fours, Super Bowl) that Indianapolis is able to procure because of the stadium, it was as much a win for businesses and citizens of the city as it was for Colts' ownership and Colts' fans.

However, this may be a much easier row to hoe in Indiana, where there are basically two high-level professional sports teams/venues, whereas Florida has 6+.

 

[ND NYC]

Bluth would know more than i on this but... when anyone drops a new stadium somewhere, regardless who built that structure and who paid what % to build it, there are big time costs for states/towns to provide the infrastructure to access these venues (roads, off ramps, new subway stops, access to utilities, etc).

so (in theory) there really is no such thing as a "100% privately funded" professional sports stadium

 

[RyCo1983]

As an Indiana resident, I always look at Lucas Oil Stadium when this subject is broached. In my opinion, the way Indianapolis, Marion County, and Indiana handled the funding of LOS was absolutely the correct way.

If you look at all the business and events (NCAA Final Fours, Super Bowl) that Indianapolis is able to procure because of the stadium, it was as much a win for businesses and citizens of the city as it was for Colts' ownership and Colts' fans.

However, this may be a much easier road to hoe in Indiana, where there are basically two high-level professional sports teams/venues, whereas Florida has 6+.

ROW to hoe bro.


I concur that there is certainly a wrong way to go about getting public funding!
Lucas Oil was definitely handled well.

 

[irishroo]

Bluth would know more than i on this but... when anyone drops a new stadium somewhere, regardless who built that structure and who paid what % to build it, there are big time costs for states/towns to provide the infrastructure to access these venues (roads, off ramps, new subway stops, access to utilities, etc).

so (in theory) there really is no such thing as a "100% privately funded" professional sports stadium

That makes sense for the most part, but I have to mention the Vikings recently-approved new stadium. It will be built on the site of the existing Metrodome, meaning pretty much all necessary infrastructure is already in place. There may be some very minor improvements or changes in that regard, but not anything significant as of now. Theoretically, this stadium could be 100% (or maybe 99%) privately funded.

 

[irishroo]

As an Indiana resident, I always look at Lucas Oil Stadium when this subject is broached. In my opinion, the way Indianapolis, Marion County, and Indiana handled the funding of LOS was absolutely the correct way.

If you look at all the business and events (NCAA Final Fours, Super Bowl) that Indianapolis is able to procure because of the stadium, it was as much a win for businesses and citizens of the city as it was for Colts' ownership and Colts' fans.

However, this may be a much easier road to hoe in Indiana, where there are basically two high-level professional sports teams/venues, whereas Florida has 6+.

How was it done?

 

[MacIrish75]

Here is how Lucas Oil Stadium was funded:

Financing

The estimated stadium cost is $699.2million-$719.6million. It is being financed with funds raised jointly by the State of Indiana and the City of Indianapolis, with the Indianapolis Colts providing $100 million. Marion County has raised taxes for food and beverage sales, auto excise taxes, innkeeper's taxes and admission taxes for its share of the costs. Meanwhile, a small increase in food and beverage taxes in six "donut' counties and the sale of Colts license plates completes the total.

Construction of Lucas Oil Stadium and the expansion of the Indiana Convention Center are considered one project, so financing is lumped together. The budget for the stadium is $675 million, and the convention center is expected to cost $275 million, for a total price tag of $950 million. Once financing charges and interest are factored in, however, the cost rises to $1.8 billion. The debt is expected to be paid off in 2040.

Here's a breakdown of where public funds are coming from:

45 percent -- 1 percent increase in the Marion County food and beverage tax.
22 percent -- 3 percent increase in the Marion County hotel tax.
14 percent -- Revenue from the existing professional sports development area tax being diverted to the project.
6 percent -- 1 percent increase in the ticket tax at sporting venues.
6 percent -- 1 percent restaurant tax in six neighboring counties.
5 percent -- 2 percent increase in the Marion County car rental tax.
1 percent -- Revenue from the sale of Colts license plates.

 

[irishroo]

Here is how Lucas Oil Stadium was funded:

Financing

The estimated stadium cost is $699.2million-$719.6million. It is being financed with funds raised jointly by the State of Indiana and the City of Indianapolis, with the Indianapolis Colts providing $100 million. Marion County has raised taxes for food and beverage sales, auto excise taxes, innkeeper's taxes and admission taxes for its share of the costs. Meanwhile, a small increase in food and beverage taxes in six "donut' counties and the sale of Colts license plates completes the total.

Construction of Lucas Oil Stadium and the expansion of the Indiana Convention Center are considered one project, so financing is lumped together. The budget for the stadium is $675 million, and the convention center is expected to cost $275 million, for a total price tag of $950 million. Once financing charges and interest are factored in, however, the cost rises to $1.8 billion. The debt is expected to be paid off in 2040.

Here's a breakdown of where public funds are coming from:

45 percent -- 1 percent increase in the Marion County food and beverage tax.
22 percent -- 3 percent increase in the Marion County hotel tax.
14 percent -- Revenue from the existing professional sports development area tax being diverted to the project.
6 percent -- 1 percent increase in the ticket tax at sporting venues.
6 percent -- 1 percent restaurant tax in six neighboring counties.
5 percent -- 2 percent increase in the Marion County car rental tax.
1 percent -- Revenue from the sale of Colts license plates.

So the Colts only provided $100 million for a $700 million stadium? I would not be comfortable with that ratio at all. Vikings owner Zygi Wilf is contributing about half, and I still think he's getting a great deal.

 

[Kak7304]

On a related note, did you guys know professional sports leagues like the NFL are considered non-profit and have tax exempt status?

 

[pumpdog20]

Here is how Lucas Oil Stadium was funded:

Financing

The estimated stadium cost is $699.2million-$719.6million. It is being financed with funds raised jointly by the State of Indiana and the City of Indianapolis, with the Indianapolis Colts providing $100 million. Marion County has raised taxes for food and beverage sales, auto excise taxes, innkeeper's taxes and admission taxes for its share of the costs. Meanwhile, a small increase in food and beverage taxes in six "donut' counties and the sale of Colts license plates completes the total.

Construction of Lucas Oil Stadium and the expansion of the Indiana Convention Center are considered one project, so financing is lumped together. The budget for the stadium is $675 million, and the convention center is expected to cost $275 million, for a total price tag of $950 million. Once financing charges and interest are factored in, however, the cost rises to $1.8 billion. The debt is expected to be paid off in 2040.

Here's a breakdown of where public funds are coming from:

45 percent -- 1 percent increase in the Marion County food and beverage tax.
22 percent -- 3 percent increase in the Marion County hotel tax.
14 percent -- Revenue from the existing professional sports development area tax being diverted to the project.
6 percent -- 1 percent increase in the ticket tax at sporting venues.
6 percent -- 1 percent restaurant tax in six neighboring counties.
5 percent -- 2 percent increase in the Marion County car rental tax.
1 percent -- Revenue from the sale of Colts license plates.

I suppose if the residents of these 6 counties voted for this, than it was a good deal. I personally would be against contributing to a stadium that makes it darn near un-affordable to take a family of 4 to a game.

 

[Rack Em]

On a related note, did you guys know professional sports leagues like the NFL are considered non-profit and have tax exempt status?

That is some Grade A bullshit.

 

[pkt77242]

I would be ok with public funding for the stadium if the public received a certain percent of gate receipts back. Say 1-3% as a way of paying it back.

 

[Andy in Sactown]

Too drunk to pontificate adequately on the subject, but to just for the sake of putting Sactown out there, I'm a huge proponent of the offer to keep the Kings in Sacramento.

It's an interesting conversation. The public should [rightfully] expect at least a return on their investments, financial and otherwise.

 

[Bogtrotter07]

That is some Grade A bullshit.

What is the real difference between the NFL and any other corporation? Most corporations pay less taxes that the bigger earners among you. In 1974 my father proved to me that he paid more income tax than General Motors. Probably because it was a recession year, huh?

That is better than the oil companies. We pay them.

 

[phork]

My opinion on public funded stadiums. They are too big to ignore, however, if everyone said to the owners "Kiss my ***" they would have no choice but to build it themselves. I am all good for some public money, with strings attached to good paying jobs.

 

[Black Irish]

I don't like the idea of a sports franchise trying to get money out of a city by holding the "think of the economic benefits it'll bring" cudgel over its head. I'd say the city should turn that logic around on the franchise. Tell them that the reason the team is locating to or staying in a metropolitan area is because that city has a large enough population and the appropriate infrastructure in place to support a pro team (e.g. "New York isn't here because of the Yankees, the Yankees are here because of New York").

Financial benefits to the city are just gravy, the franchise owners shouldn't act like that money is coming out of their pocket and use it as a borderline extortion tactic. And it's not like the extra taxes the local population pays is made up for with reasonable ticket prices. If a city wants to offer tax breaks as an incentive, I can live with that, but no way should local government be chipping in public money to a private enterprise that can easily raise its own capital.

 

[Rack Em]

What is the real difference between the NFL and any other corporation?

NFL = Entertainment - keeps many idiots employed that otherwise wouldn't be

GM = Providing motor vehicles to society - a valuable service

That's the distinction I draw. I get what you're saying Bogs, but if the NFL weren't around who would feel the hit? Vegas? Apparel companies? John Madden?

If GM hits the fan, there could be wider implications (see, Auto Bailout circa 2008).

 

[Bogtrotter07]

NFL = Entertainment - keeps many idiots employed that otherwise wouldn't be

GM = Providing motor vehicles to society - a valuable service

That's the distinction I draw. I get what you're saying Bogs, but if the NFL weren't around who would feel the hit? Vegas? Apparel companies? John Madden?

If GM hits the fan, there could be wider implications (see, Auto Bailout circa 2008).

I meant it the other way. I was just talking about tax policy.

NFL=Tax Exepmpt

Corp America > NFL

 

[Black Irish]

NFL = Entertainment - keeps many idiots employed that otherwise wouldn't be

GM = Providing motor vehicles to society - a valuable service

That's the distinction I draw. I get what you're saying Bogs, but if the NFL weren't around who would feel the hit? Vegas? Apparel companies? John Madden?

If GM hits the fan, there could be wider implications (see, Auto Bailout circa 2008).

As of right now, it wouldn't affect Tim Tebow.