NFL Sacks Taxpayers for Stadium Subsidies and Other Goodies

NFL Sacks Taxpayers for Stadium Subsidies and Other Goodies
September 27, 2013

Eric Boehm

Eric Boehm writes for the Pennsylvania Independent, where this column first appeared. (read full bio)

The National Football League sacks taxpayers from every angle.

The NFL is technically a nonprofit—thanks to a special exception in the tax code carved out by Congress in the 1960s—despite making billions of dollars of profit each year and paying top executives seven-figure salaries.

The NFL is allowed to negotiate contracts that would be illegal for companies like Apple or Exxon—thank Congress again for that one.

And the NFL is able to use its financial and political muscle to get lots of additional freebies from city and state governments, including taxpayer-funded stadiums and free sewer and water services.

Even in states facing billion-dollar budget shortfalls, the NFL has been able to get massive handouts in recent years.

‘It’s About Exploiting Taxpayers’

As Gregg Easterbrook wrote in The Atlantic in September,  the NFL “is about two things: producing high-quality sports entertainment, which it does very well, and exploiting taxpayers, which it also does very well.

The entire piece is worth a read. Easterbrook looks at how various franchises and owners have exploited local and state governments to rake in an estimated $1 billion from the public pot on an annual basis. The stadium subsidies are by far the most expensive and egregious subsidy.

“Judith Grant Long, a Harvard University professor of urban planning, calculates that league-wide, 70 percent of the capital cost of NFL stadiums has been provided by taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’ ongoing costs, by providing power, sewer services, other infrastructure, and stadium improvements,” Easterbrook writes.

When the ongoing costs are included, 12 of the league’s 32 teams “turn a profit on stadium subsidies alone,” he reports, again citing Long’s work.

Free Pass on Property Taxes

After all that, many stadiums are given a free pass on paying property taxes—so the billion-dollar playgrounds for the billion-dollar owners in a billion-dollar league never have to write a check back to the taxpayers.

Nearly every team in the league takes advantage of the taxpayer. Only three NFL teams since 1990 have not either renovated their stadiums or built completely new ones, according to a 2011 study by Victor Matheson, an economics professor at Holy Cross, and Robert Baade, a professor at Lake Forest College .

Those three teams? The Minnesota Vikings, San Francisco 49ers, and Miami Dolphins.

The Vikings and 49ers have secured new stadium deals since the study was published in 2011. Taxpayers will pick up the tab for a majority of the costs of both.

$500M Gift Despite $1.1B Deficit

In Minnesota, the new stadium will include $500 million in taxpayer-funded subsidies. The year the stadium was approved, the state was dealing with a $1.1 billion shortfall.

In California, the 49ers’ new stadium in Santa Clara includes $116 million in public funds along with $900 million in borrowed funds through a new public financing authority that’s ultimately backed by the beleaguered taxpayers of the state and city.

There are plenty of reasons governments continue to hand over tax dollars to the richest sports organization in the United States.

As Daniel Vock of Stateline wrote earlier this year, the NFL holds all the cards when it negotiates with local and state governments.

As finances for states and cities improve, many of their marquee teams are asking for help — and threatening to leave for Los Angeles if they do not get it,” Vock wrote. “That leaves public officials in a bind. They may not want to raise taxes, but they do not want to be blamed for losing a city’s favorite team.

Lowballing Costs, Highballing Benefits

Kennesaw State University economist J.C. Bradbury told Reason TV last month that politicians consistently “underestimate the costs and overestimate the benefits” of building glittery new sports palaces .

Even states that do not have an NFL team can be duped into ponying up public cash.

As Easterbrook notes, the NFL moved its annual Pro Bowl out of Honolulu for the first time in 30 years. A year later, Hawaii voted to pay the NFL a $4 million bribe to bring the game back.

At the same time, the state was facing a budget shortfall and was cutting funding for public schools.

Of course, lawmakers can’t get luxury box seats to their local school board meetings. Maybe if they could, they would have different priorities.

Eric Boehm

Eric Boehm writes for the Pennsylvania Independent, where this column first appeared. (read full bio)