End 'Wasteful' Tax Loophole For Pro Sports Teams: Cory Booker

Your favorite pro sports team will have to dig a little deeper in its own pockets the next time it wants to build a new stadium if a pair of U.S. senators get their way.

On Tuesday, Sen. Cory Booker, a Democrat from New Jersey, and Sen. James Lankford, a Republican from Oklahoma, introduced a proposed law dubbed the "Eliminating Federal Tax Subsidies for Stadiums Act." According to a joint statement from the lawmakers, the bill would close a “loophole” in the federal tax code that allows professional sports teams to finance new stadiums with municipal bonds that are exempt from federal taxes.

Congressman Earl Blumenauer, a Democratic party member from Oregon, is leading a bipartisan companion bill in the U.S. House of Representatives.

Ultimately, their bill is about prioritizing schools and hospitals over baseball and football stadiums, the senators said.

According to Booker and Lankford, municipal bonds are intended to give communities a way to finance crucial projects such as hospitals, schools and roads without needing to pay federal taxes on the debt’s interest. But using municipal bonds to finance sports stadiums funnels money away from these local infrastructure projects.

“There’s no reason professional sports teams that generate billions of dollars in revenue should benefit from tax-exempt federal financing,” Booker said. “This bill would put an end to this wasteful practice and stop diverting dollars away from other critical local infrastructure projects.”

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Lankford said that residents of East Coast states shouldn’t be responsible for subsidizing sports stadiums in Oklahoma… and vice-versa.

According to Lankford, more than $3 billion taxpayer dollars have been used to fund stadiums for wealthy, big market teams such as the New York Yankees, the New York Mets and the Chicago Bears.

“Using billions of federal taxpayer dollars to build private stadiums when we have real infrastructure needs in our country is not a good way to prioritize a limited amount of funds,” Lankford said. “This is an opportunity that we can work across the aisle to address federal government spending.”

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Booker and Lankford released the following details about their proposed federal law on Tuesday:

“The bill would end federal subsidies for stadium financing, but would not prevent localities and states from bidding and offering economic incentives to teams. In eliminating this wasteful expenditure, the bill also unties the hands of local governments to finance their stadium subsidies with taxes on tickets and in-stadium purchases—allowing states to target taxes on the people who actually use and benefit from the subsidy. Current tax law does not allow local governments to finance federal stadium subsidies by levying taxes on stadium purchases.”

Booker and Lankford introduced similar legislation in 2017.

• See related article: Senators Want To End Federal Tax Break For New Sports Stadiums

“The last thing billionaire sports franchise owners need is the federal government subsidizing the cost of their stadiums,” Blumenauer said. “Stadiums rarely produce the economic gains initially promised and drive poor land use decisions while bleeding municipal budgets dry and shortchanging critical programs for working families.”

“We can do better,” Blumenauer opined.

DO SPORTS STADIUMS BENEFIT LOCAL COMMUNITIES?

A 2016 report from the nonprofit Brookings Institution stated that since 2000, a total of 36 professional sports stadiums have been constructed or revamped under financing provided by federal tax-exempt municipal bonds, costing taxpayers more than $3.2 billion dollars.

The study also found that despite billions of dollars of federal funding flowing toward these projects, the new stadiums have limited to no impact on local economic development.

However, the Brookings Institution study stands in contrast to the opinions of some experts, who claim that the presence of a pro sports team is a big boost to the local economy.

When the city council of Glendale, Arizona, agreed to provide millions of dollars in public subsidies to help build and maintain a new stadium for the Arizona Coyotes, Glendale First, an organization in favor of the deal, said that the team and their arena provide support to the local economy that otherwise wouldn't be there.

A spokesperson for the group claimed that sales tax revenue made up 41 percent of Glendale's budget, and a "significant portion" was derived from sales around the arena.

Other supporters of tax breaks for sports stadium construction have included Minnesota state officials, some of whom claim that a $1 billion stadium for the Minnesota Vikings – which was financed with tax-exempt bonds - has spurred roughly $800 million in additional investment in the area.

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